Microsoft Bids $44.6B for Yahoo!

To go with yesterday's M&A news, Microsoft has bid $44.6B for Yahoo! That's a pretty big threat to Google, and already Yahoo! shares are up 50% and Google is down nearly 10%. Of course, one wonders what it would be like to integrate the diverse offerings of Microsoft and it's Live strategy and Yahoo! with it's zillions of other acquisitions over the years. It's not just about M&A cash, it's about executing on the integration afterward that really counts.

Josh Poulson

Posted in category “Business” Friday, Feb 1 2008 09:28 AM  |  Permalink  |  No comments  |  No trackbacks

Amazon Buys Audible.Com

I admit I haven't written in a while, but here's a more interesting story than the political cess that's been depressing me lately. Amazon is buying out Audible.com for $300M. I've been an Audible.com subscriber for years and I've been buying from Amazon.com since the mid-90's, so this is an interesting merger to me. Amazon's recommendation engine and related electronic materials will be a welcome addition to the always-good-quality Audible books and podcasts.

Josh Poulson

Posted in category “Business” Thursday, Jan 31 2008 11:50 AM  |  Permalink  |  No comments  |  No trackbacks

Milton Friedman

Influential economist Milton Friedman has died. While he can be damned for inventing withholding he is to be lauded for his unabashed love for capitalism for enabling freedom. He was the founder of the Chicago School of monetary economics, in contrast to the Keynes and Austrian schools (among others).

I especially enjoyed his 1980 PBS series Free to Choose, which I've highlighted here before. Hopefully it will reappear on Google Video again soon.

Update: The Financial Times has a great biography up already.

Update: Some folks don't know about Friedman and withholding. This article explains it best.

Josh Poulson

Posted in category “Business” Thursday, Nov 16 2006 09:35 AM  |  Permalink  |  No comments  |  No trackbacks

Google To Buy YouTube?

According to the Wall Street Journal and TechCrunch, the “do no evil” company that self-censors content for Chinese customers is in talks to buy a video service that censors content for liberals. Rumored valuation is $1.6B.

10/9 Update: The WSJ says the $1.65B deal will be announced after the market closes today.

10/9 After Market Close Update: It's a done deal. Reportedly YouTube will remain relatively independent within the Google hegemony. No news on whether YouTube will cease “doing evil.”

According to Google:

When the acquisition is complete, YouTube will retain its distinct brand identity, strengthening and complementing Google’s own fast-growing video business. YouTube will continue to be based in San Bruno, CA, and all YouTube employees will remain with the company. With Google’s technology, advertiser relationships and global reach, YouTube will continue to build on its success as one of the world's most popular services for video entertainment.

This does not bode well for a lack of evil:

The separate agreements with CBS, Vivendi's Universal Music Group and Sony BMG Music Entertainment come less than a month after YouTube reached a deal with Warner Music Group Corp. On Friday, Google was reported to be in talks to acquire the video site for $1.6 billion.

So, now we have “fake but accurate” CBS and “rootkit” Sony in the mix with “no gun rights” CNN/Time-Warner.

Do I have any more high-tech bridges I can burn in this posting?

Josh Poulson

Posted in category “Business” Friday, Oct 6 2006 08:43 AM  |  Permalink  |  No comments  |  No trackbacks

HBR IdeaCast

Primarily because I read Harvard Business Review and Harvard Management Update I recently checked out HBR IdeaCast, Harvard Business Review's experiment with Podcasting. I'm an infrequent reader of another Harvard-related experiment, HBS Working Knowledge, as well.

HBR is not entirely new to podcasting, however, as they have been publishing key excerpts of both of the above publications through Audible.com but it appears that Audible may have been doing the lion's share of the work for them.

The first six episodes have been oddly named, with a hodgepodge of Artist, Album, and Genre settings, making them hard to find in my list of publications on iTunes. Also, as an iTunes Podcast, several of the items were truncated by iTunes's pathetic downloading system. I resorted to going directly to the HBR IdeaCast page and downloading the items directly with FlashGot. When Audible delivers my content through iTunes, I don't have this problem although I've seen it with other podcasts.

The content has also been a tad disappointing for someone that gets HBR and HMU. It's sometimes a rehash, and sometimes a repeat, of information I already have! Such is life, I suppose, since this is free and those other items are paid by subscription. The web page above, however, is a poor promotional tool. I hope that once they clean it up it will be as professional as the other products that come out of Harvard Business Review.

HBS Working Knowledge, in contrast, has improved their look and emails me important new articles as they arrive. I'm hoping that the material that was going into the Harvard Negotiation Newsletter (no longer available through my subscription) migrates there.

Josh Poulson

Posted in category “Business” Saturday, Jul 8 2006 10:04 AM  |  Permalink  |  No comments  |  No trackbacks

Eben Moglen Keynote

Eben Moglen's 6/6/06 Keynote for the Red Hat Summit is a must hear. I wish they had posted a transcript.

Josh Poulson

Posted in category “Business, Linux, Politics” Friday, Jun 9 2006 12:58 PM  |  Permalink  |  No comments  |  No trackbacks

Private Equity

Today's Wall Street Journal has an opinion piece about how many public firms have been moving to private equity, despite the expenses and other problems. The piece indicates a drive to private firms has been the ready availability of capital here (hedge funds and other private equity firms have impressive returns) and avoidance of Sarbanes-Oxley reporting requirements.

Let's look at it from the other side. Startups often get Angel and VC money to get going (private equity) so what is the impetus to finally IPO? The primary reason to IPO is to let the Angels and VCs get their money back out of the investment, but now it looks like rolling over into private equity is the way to go. A smart VC would have a system for performing this rollover and for prepping the company for this eventuality. A smart hedge fund would now fund early startups, VC rounds, and mature private firms all under one umbrella.

Looking at Vonage's IPO it was a disaster for them to go public. If they had done a well-structured and prepared private equity deal it might have gone a great deal better. I am a Vonage customer and was given the option to go in on the IPO, but it didn't look good for me. (I'm focused on building equity in the house at the moment.)

It will be interesting to see if there's a correction that swings the pendulum away from the over-regulation of Sarbanes-Oxley, and whether some firms grow for decades without ever going public. However, there seems to be an incredible inertia that drives regulation and never erodes it.

Josh Poulson

Posted in category “Business” Saturday, Jun 3 2006 11:10 AM  |  Permalink  |  No comments  |  No trackbacks

CNN's “101 Dumbest Moments in Business”

CNN is running a feature covering 2005's “101 Dumbest Moments in Business”, worth reading if you need a giggle.

Some of my favorites:

18. Perhaps they should change the motto to “Don't be stupid.”
New Google employee Mark Jen adds a post to his blog in which he says he spent his first day in an HR presentation about “nothing in particular.” Apparently, Jen snoozed through the company's strict disclosure rules. In a subsequent post, he reveals that the company expects unprecedented revenues and profit growth in 2005, projections that Google has yet to share with Wall Street. Jen soon receives another presentation from HR: a pink slip.
38. Jeez, it's just a little beeping noise. Don't go having a heart attack.
In June, Guidant recalls 50,000 heart defibrillators—about 38,600 of them already implanted in people's chests—that might, in rare cases, short-circuit when they're supposed to deliver vital electrical jolts. The recall comes after the devices were reported to have failed at least 45 times, including two instances in which the patients died. Guidant fixed the flaw in devices made after mid-2002 but neglected to inform doctors and continued to sell units produced before the fix. The recall advises patients that, should the device malfunction, it will emit a beeping noise, at which point they should contact their doctors or head to an emergency room.
45. May I see my ID?
In February, ChoicePoint—the self-proclaimed “leading provider of identification and credential verification services”—admits that it sold the personal data of 145,000 people to a number of unauthorized recipients, including an identity-theft ring in Los Angeles. ChoicePoint thoughtfully offers the victims a free credit report—but still makes them pay to see the detailed information that was provided to the criminals. The incident kicks up an identity-theft furor serious enough to draw congressional hearings; the company later reports the incident cost it $21 million.
51. How much extra does it cost to have the telemarketers join our loved ones in the great beyond?
The Direct Marketing Association rolls out a Deceased Do-Not-Contact list to stop calls to dead relatives. The fee for preventing telemarketers from reaching to the grave: $1 per person.
64. Told you we shouldn't have rented that list from the Department of Homeland Security.
Blaming a mailing-list vendor for providing bad information, JPMorgan Chase apologizes for sending a form letter about its credit card services to an Arab American man in California addressed to “Palestinian Bomber.”
66. No late fees. Honest. Sort of.
In January, Blockbuster kicks off a “no late fees” policy. The catch? If customers keep their movies more than a week past the due date, their credit cards are charged for the full purchase price; when they return the items, their refund comes minus a “restocking fee.” By March the company settles with 47 states for $630,000 and agrees to pay refunds to consumers who felt misled.
69. The irony is rich. Shareholders, alas, are not.
In June, H&R Block announces a review of its recent financial statements, estimating it will find discrepancies in its favor of about $19 million. Two months later it reveals that the review found $77 million in errors—in the other direction. The company explains that it had “insufficient resources” to identify and report complex transactions in its corporate tax accounting.
94. Thus giving a whole new meaning to “crash-test dummies.”
After a live demonstration of the radar-powered automatic braking system in Mercedes-Benz's new S-Class sedans turns into a nationally televised three-car pileup, the company claims that the steel walls of the safety center where the test took place interfered with the radar and confounded the system. An investigation by the Stern TV network, however, shows that the demonstration was staged (albeit poorly). Mercedes later admits it knew all along that the system would not work inside the safety center and had enlisted the vehicle's driver to “simulate” the experience.

Make sure you check it out.

Josh Poulson

Posted in category “Business” Thursday, Jan 26 2006 06:41 AM  |  Permalink  |  1 comment  |  No trackbacks

Guy Kawasaki's “Top Ten Lies of Entrepreneurs”

Via Signal vs. Noise I found Guy Kawasaki's latest piece, “The Top Ten Lies of Entrepreneurs.” This is a great list:

  1. Our projections are conservative.
  2. Gartner says our market will be $50 billion in 2010.
  3. Boeing is going to sign our purchase order next week.
  4. Key employees are set to join us as soon as we get funded.
  5. No one is doing what we're doing.
  6. No one can do what we're doing.
  7. Hurry because several other venture capital firms are interested.
  8. Oracle is too big/dumb/slow to be a threat.
  9. We have a proven management team.
  10. Patents make our product defensible.
  11. All we have to do is get 1% of the market.

I've encountered thoughts like these reading through business plans in my own preparations for finishing school, and there have certainly been plenty of similar lists I've seen on the various VC blogs and in the book The Monk and the Riddle by Randy Komisar with Kent Lineback. Perhaps these are obvious but they deserve restating for people that think they're immune to this.

What's more important about this latest top ten list is the commentary by Guy and Jason Fried's “Guy Gets It Right” post at Signal vs. Noise. Guy collects what his response would be if he was the VC listening to the pitch and gives some good advice. Jason's advice is similar.

I've not had a plan torn apart by a VC, yet, but I've watched others tear apart presentations. I'm not sure I could offer any advice over and above the list of don'ts above. Perhaps I should mention a list of dos:

  1. Do make projections with solid supporting evidence. The market itself, and perhaps your target segment, could be relatively easy to define and show. People prefer to invest in growing markets and growing companies so you need to show growth is likely.
  2. Do acknowledge what the experts are saying. Gartner is making numbers up with projections, but they tend to know what they are doing when they do current market research and analysis. There are plenty of other experts to consider too.
  3. Do indicate what customers you have lined up, that you understand their unmet needs and that they are going to benefit by your proposed solution. If you present a plan that doesn't focus on customer pain you aren't going to be taken seriously.
  4. Do indicate what skills and strengths you have and what gaps remain to be filled. If you are asking for money to grow a sales team, make sure you have someone on board that knows how to hire sales people and has experience doing so. Nothing scares me more than a plan that says a team of five people is hiring a hundred people in the next year and that team has product development milestones in the first quarter.
  5. While it's true that anyone can do what you're doing if they made the same choice, indicate what you are doing to sustain a competitive advantage. Indicate why others would have a difficult time decided to do what you're doing.
  6. Similar to the previous item, talk about what barriers lay in the way of others that want to do what you're doing. For example, a competing drug would have have to go through FDA approval, or people in this kind market are extremely loyal so because we are first to solve their problem and sign them on, it will be hard to steal them away from us.
  7. Do indicate where your money has come from and what investors are already at the table with a piece of the pie. Some angel investors are amazingly good for your credibility. The dedication of the founders in mortgaging their lives to the gills is important for gauging their passion.
  8. Instead of insulting the big players in your market, indicate how it would hurt for them to make the same choices you've made. Southwest Airlines made a series of strategic decisions (no connecting flights, no first class, all planes are 737s, no checked luggage) that resulted in a way to attack a market with prices lower than others, and when Continental tried to copy them with Continental Light, it hurt their other business that relied on the high margins offered by other choices. Beating the big boys relies on strategy, not arrogance.
  9. Do indicate that your management team can do what it takes and is dedicated to making it work. History is good, but passion is important. (I'm echoing Guy and Jason here)
  10. Yet again, it is more important to indicate how you will sustain your competitive advantage rather than relying on IP to save your bacon. The IP wars are miserable and expensive, so rely on something else to protect your hard work. Part of the cautionary tale here is that all it takes is a big idea. It takes a good idea that makes someone's life better (besides your own) and the skills and willingness to make it work.
  11. Guy nails this one. Indicate how you will dominate a niche of the market and expand that. Read Geoffrey Moore.

There you have it. I'm not sure I added anything that was not also obvious, but maybe it's good to say it all again.

Amazon.com links:

Josh Poulson

Posted in category “Business” Monday, Jan 9 2006 08:25 AM  |  Permalink  |  No comments  |  No trackbacks

Gates Fears IBM

Bill Gates, currently showing his face at CES keynote, has cited IBM as the biggest threat to Microsoft, surpassing Google and Apple:

“The biggest company in the computer industry by far is IBM. They have the four times the employees that I have, way more revenues than I have. IBM has always been our biggest competitor. The press just doesn't like to write about IBM,” said Gates.

Don't I like to hear it? After all, IBM is the biggest proponent of open standards in the world, too.

Josh Poulson

Posted in category “Business” Thursday, Jan 5 2006 10:35 AM  |  Permalink  |  No comments  |  No trackbacks

Fog Creek Software Management Training Reading List

Joel Spolsky over at Fog Creek Software has developed a Software Management Training Program which hopes to be practical and comprehensive:

Thus: how do we develop the next generation of managers? We don't really want to hire MBAs, because there's too much evidence that MBAs substitute book-learnin' for common sense or experience. We'd much rather hire someone who created and ran a profitable lemonade stand than someone who has taken two years of finance courses at Harvard, especially since the Harvard MBA is going to think he knows a lot more than he really does.

I've been watching for more developments. Recently Joel published the reading list. I have a lot of the ones listed in my library, and I even have some of them in MP3 format. There's a few more that I need to look into.

The real question is “What is missing?” There are a few in my opinion.

The Chasm Companion is a step beyond the recommended Fog Creek-recommended Crossing the Chasm. It's focused on implementation issues, and less about the chasm stage of the Technology Adoption Lifecycle.

There needs to be a little bit more emphasis on strategy in a management training program. I see Competing on Internet Time on the list, but I think there are better choices. Competing on the Edge delves into the trade-offs of high-tech business strategies and the timing of their implementation. Blue Ocean Strategy looks into the strategy of innovation and where best to compete.

It's important to understand getting projects done, especially software projects.

Patrick Lencioni's leadership fables, and the related field guide on teams, are important reading for understanding how teams work and the priorities of a team leader. Any of them are a great leap beyond the suggested One Minute Manager.

I found Reframing Organizations an important text on organizational theory as well.

Finally, I don't see any books on Writing, Business Law, Finance or Valuation, but I suspect that's far afield. If they are needed, I'm sure others will suggest appropriate texts.

Josh Poulson

Posted in category “Business” Monday, Nov 28 2005 12:00 PM  |  Permalink  |  No comments  |  No trackbacks

Business Handedness

Last night the December issue of Harvard Business Review landed in my inbox and it had an excellent article by Geoffrey Moore called “Strategy and Your Stronger Hand.” The main idea of the article is that businesses have to choose between being supporting “Complex Systems” or a “Volume Operations.” When companies try to straddle this dilemma, they cause problems for themselves.

The best strategic moves for a company are ones that supplement rather than complement the company's current dominant business model. This is a form of saying “stick to your knitting” but requires a new understanding of the knitting involved. A better metaphor would be to say that companies should favor their dominant hand.

This is an interesting insight, because I have perceived that an important decision for a business is where along the continuum from products to services companies wish to operate. Inherent in that choice was whether to handle volume operations oneself or to outsource it and focus on adding value in some other way.

Moore's article indicates that it's a more complex choice. Does your organization want to seek out customers and make complex custom solutions for them (the example used was IBM Global Services, the consulting arm of IBM) or does it wish to deliver products for thousands or millions of customers making a small amount of money on each sale? IBM shows up on the opposite hand of Dell. Obviously both companies make money, but they do it in quite different ways. Also, each company rises and falls as new innovations take hold in the marketplace.

Moore indicates that these two models are the only ones that scale to large organizations. There are other models when it comes to small businesses, but at some point you must choose between being a McDonald's or being Ruth's Chris. It's very hard to be both. In another vein, at some point your custom-built PC business needs to decide between making custom solutions (hand-built servers for specific purposes, tied with maintenance and support) for a small number of customers or mass-producing the most popular PC designs for a large marketplace.

Moore concentrates on the various choices that result from the selection of the model, and the implications for all functions of the organization. He points out the negative consequences of acquiring an organization with the opposite handedness (recall Compaq merging with DEC, for example). To me, it seems like he's got another book in the works, because he is clearly laying out a plan of attack for either hand, and the mixed model of trying to do both sets of activities in one organization. We'll have to see if it's another Crossing the Chasm or Inside the Tornado.

It's a great article, and with HBR you can usually get reprints in a few months. For this one, look for Reprint R0512C or 2394 on Harvard Business School Press's website.

Amazon.com links:

Josh Poulson

Posted in category “Business” Sunday, Nov 27 2005 09:55 AM  |  Permalink  |  No comments  |  No trackbacks

Peter Drucker

Peter F. Drucker, writer of a multitude of management books and articles, has passed on. The Wall Street Journal, which published many of his articles, deeply respected him:

Mr. Drucker invented management—not as a practice, but as a field of study. It was he who first asked managers to decentralize their operations and treat their employees like humans—in the 1940s. The concept of “knowledge work” is his coinage, from the 1950s.

I have to agree. While many companies are still adopting ideas he pioneered, his contributions led us away from the dehumanizing “scientific management” of Frederick Taylor and towards a more synergistic relationship between people and business.

President Bush awarded Drucker the Congressional Medal of Freedom in 2002.

The Financial Times also grieved his passing:

Drucker's reputation, among many practitioners and theorists alike, as the father of post-war management went back to two of his early works, Concept of the Corporation in 1946, and The Practice of Management in 1954.
The former, a study of the workings of General Motors, was the first detailed account of the way a large company operated. The latter contained pathfinding work on such varied topics as the key role of marketing; the importance of clear objectives, both for the corporation and for the manager; and the need to balance long-term strategy and innovation against short-term performance.
This early work laid the foundation for such basic principles of modern business as asking: “What business are we in, and who are our customers?” It dealt with the recruitment and development of executives, the proper role of boards of directors, the defence of profits as an essential foundation of future survival, and the development of the responsible and productive worker.

Of Drucker's books, I've only read a few, but I've liked them all. I could only wish to have 95 years of groundbreaking work under my belt. I'm having enough of a hard time just reading everyone who came before me.

Amazon.com links:

Josh Poulson

Posted in category “Business” Saturday, Nov 12 2005 08:51 AM  |  Permalink  |  No comments  |  No trackbacks

Minimum Wage vs. Staff Jobs

Details on progressive intent with the minimum wage from the Marginal Revolution:

Unlike today's progressives, the originals understood that minimum wages for women would put women out of work - that was the point and the more unemployment of women the better!

They go on to recommend Tim Leonard's paper “Protecting Family and Race: The Progressive Case for Regulating Women's Work” to learn the secret history of the minimum wage.

It's pretty clear that government regulation that forces employers to pay a minimum amount will limit the number of people employers will hire, but this idea that the original intention was to limit the penetration of women into the workforce is new to me.

(Those who do not know the history of the word “staff” will take longer to get the pun.)

Josh Poulson

Posted in category “Business, Politics” Tuesday, Oct 25 2005 05:09 PM  |  Permalink  |  No comments  |  No trackbacks

Genetic Testing on Employees

Yesterday my employer did another in a long series of firsts by coming out against the use of genetic data of its employees.

Dear IBMer:
During our lifetimes, the practice of medicine and society's approach to healthcare have changed in fundamental ways. But what lies ahead—perhaps in the next decade alone—seems likely to eclipse that progress dramatically.
Along with any change in an important area of science or society, new and often difficult policy questions inevitably arise. And that's uniquely so for healthcare. Business, government and the research community have a responsibility to address these issues. I am writing today to tell you about an important step that IBM is taking to do so.
Of all the work now taking place across the life sciences, none perhaps has the transforming potential of the pioneering efforts to unlock the secrets of the human genome. IBM is already engaged in many of the technology innovations springing from the revolution in genetics and IT—from “information-based medicine” (which seeks to transform care by marrying genomics with clinical treatment); to our Genographic Project, where we're helping National Geographic to map the scientific history of our genes' migration; to the innovation flowing from our Blue Gene supercomputer.
This work is enormously promising—but it also raises very significant issues, especially in the areas of privacy and security. The opportunity the world has to improve life in the century ahead through genomics-driven, personalized medicine and preventive care will only be realized fully if it also takes into account the protection of genetic privacy. We must make this a priority now.
For that reason, I have signed a revision of IBM's equal opportunity policy, first published by Thomas J. Watson, Jr., in 1953. IBM is formally committing that it will not use genetic information in its employment decisions, a policy we believe is the first of its kind for a major corporation. You should know that IBM does not actively seek to collect genetic information—but at times, and increasingly in the future, employees or their family members may choose to share it, for example, in order to facilitate participation in information-based wellness programs. In anticipation of such circumstances and other situations that we cannot fully anticipate, we are today establishing that business activities such as hiring, promotion and compensation of employees will be conducted without regard to a person's genetics.
It has been IBM's long-standing policy not to discriminate against people because of their heritage or who they are. A person's genetic makeup may be the most fundamental expression of both. So, we are taking this step today because it is the right thing to do—for the sake of the innovation that lies just over the horizon, and because it is entirely consistent with our values and with who we are as a company.
Samuel J. Palmisano
Chairman and Chief Executive Officer

There have been news stories about this, but I figure people would actually like to know what the memo said.

Josh Poulson

Posted in category “Business” Tuesday, Oct 11 2005 09:42 AM  |  Permalink  |  2 comments  |  No trackbacks

The Real Story of Informix Software and Phil White

The Real Story of Informix Software and Phil White should prove to be an interesting book. I was with Informix from August of 1997 until the database business of Informix was bought by IBM in 2001. I joined just after Phil White had left the company under a cloud due to needed restatements of earnings that changed the very positive Informix Software from a big seller to a slow loser. Great products, but something happened to suck its life away.

From the Sterling Hoffman newletter the author Steve W. Martin gives us this tidbit:

If you had bought $32,000 worth of Informix stock at its 1991 low you would have made $1 million in just two short years. The incredible success of Informix Software and its growth to $1 billion in sales by the end of 1996 should rightly be credited to Phil White, Informix's President, CEO, and Chairman of the Board. Although White engineered one of the most stunning turnarounds in Silicon Valley history, he was also the person responsible for its shocking collapse in 1997.

He makes it sound like I joined a sinking ship. However, I believed pretty strongly in Informix's products, and worked to make them even better. Such is life, eh? While there was a shocking collapse before I joined in 1997, it was well on its way to recovering its lost ground. I believe the later collapse had other causes, key of which was the Ascential acquisition.

More on this after I read the book some day. (School is busy again.)

Amazon.com links:

Josh Poulson

Posted in category “Business” Monday, Oct 3 2005 01:46 PM  |  Permalink  |  No comments  |  No trackbacks

Top Ten Signs your Employer Has Changed to a Cheaper Health Plan

10: Your annual breast exam is done at Hooters.

9: Directions to your Doctor's office include, “Take a left when you enter the trailer park.”

8: The tongue depressors taste faintly of Fudgesicles.

7: The only proctologist in the plan is “Gus” from Roto-Rooter.

6: The only item listed under Preventative Care Coverage is “An apple a day.”

5: Your primary care physician is wearing the pants you gave to Goodwill last month.

4: “The patient is responsible for 200% of out of network charges,” is not a typographical error.

3: The only expense covered 100% is “embalming.”

2: Your Prozac comes in different colors with little M's on them.

And the number one sign your employer has joined a very cheap health plan:

1: You ask for Viagra, and they give you a Popsicle stick and duct tape.

From Grandma Lissa…

Josh Poulson

Posted in category “Business” Friday, Aug 19 2005 03:26 PM  |  Permalink  |  No comments  |  No trackbacks

European Union Rejects Software Patent Law

The EU parliament overwhelmingly rejected a sweeping software patent law by 648 against, 14 for and 18 abstentions. It is unlikely that a new attempt will be made for some time.

The bill had been loaded down with 170 amendments intended to limit what could be patented, producing an unlikely coalition of both open source and patent advocates. Many hope that this outcome will curtail the current practice of seeking patents on software (from the Wall Street Journal):

The Greens who led the opposition said they hoped the European patent offices would now take a more restrictive view on patenting software. “MEPs have given the software patents directive a third class burial,” said Eva Lichtenberger, an Austrian parliamentarian who led the party's effort on the bill. Patent officenrs “must halt its current practice of granting patents for software, a practice which there is no legal basis.” They “must think now about creating policies that benefit not only big business.”
Supporters of the bill hope that this backlash will be avoided. “As I've always said it is better to have no directive than to have a bad directive,” said Sharon Bowles, Liberal Democrat and a patent attorney.

You can read more about it here and here.

I am a little torn on this issue. On one side I do think that software inventors deserve a little reward for their hard work, and copyright doesn't seem to be enough. On the other side, I know that little companies can be ruined by getting hauled into patent courts, even if they have all the merits on their side. There has to be an easier way.

Josh Poulson

Posted in category “Business” Wednesday, Jul 6 2005 08:49 AM  |  Permalink  |  No comments  |  No trackbacks

Linkedin.com Reaches 3 Million Users

While my own network at linkedin.com is only 88 direct people and 1.7 million by the fourth degree, last night they signed up their 3 millionth user.

Linkedin is a service that allows you to network with your trusted colleagues and friends as a way to help you get referrals for either jobs or businesses. I've been working at reconnecting with folks I've worked with up to twenty years ago. It's amazing how many email addresses you can find when you have archives going back to the mid-90's, but most of those addresses are bogus. If it wasn't for google, I'd have a hard time finding some people.

I have not yet convinced Misty to make use of Linkedin to stay connected with her friends in nursing, and my dad is too deep in the throes of the infamous bar exam to spend time on it, but some of my colleagues have picked it up and run with it.

I like Linkedin, though. It's already found me a couple of job opportunities and referrals that I liked.

Josh Poulson

Posted in category “Business” Friday, Jun 24 2005 06:55 AM  |  Permalink  |  No comments  |  No trackbacks

Has the Enterprise Software Market Matured?

BusinessWeek includes pieces from S&P sometimes, today they had a item about mergers in the software industry. What I found more interesting, though, was their forward-looking predictions. According to Standard & Poor's, there are too many players trying to sell into the enterprise software market:

In our opinion, there was, and still is, too much capacity in the industry, particularly in enterprise software. This overcapacity has created a great deal of pressure, in our view, for enterprise software providers to discount their products, particularly at the end of any given quarter.

As a result, customers are turning to suites:

Additional reasons for further consolidation, in our view, are that the software industry is growing in the low- to mid-single digits, as opposed to the double-digit growth of the 1990s, and customers are starting to limit the number of outside vendors they deal with. In this environment, we believe the larger suite providers are better positioned to gain market share.

That's an interesting observation. When such things happen it's because the market has become saturated and buyers are treating such products as commodities. While it may be the case that ERP tools are commodities, the recent experiences I've had in my New Product Development course lead me to believe there are still things to be done in the PDM space.

My recent experiences with PeopleSoft tools make me wonder how those guys are still in business. IBM and Intel use their tools for job searching, and they stink! If that's the general public face of PeopleSoft they are not long for the world.

Josh Poulson

Posted in category “Business” Monday, May 9 2005 10:08 AM  |  Permalink  |  No comments  |  No trackbacks

GM, Ford Junk; I Like My Dodge

Standard and Poors are dropping their ratings for GM and Ford debt to “junk” status, making it much harder (therefore more expensive, as the expected return will be much higher) for them to issue bonds. This new rating moves them out of “investment” grade and into the realm of speculation if you sell them capital.

I wonder how much this has to do with the climbing cost of gasoline. The fact that Ford is in the mix indicates, to me, a failure of their Escape hybrid launch. GM has had cost troubles for years, so that's less of a surprise.

I drive a Dodge, and I've been looking at the new Charger and the Chrysler 300C for a while now.

Josh Poulson

Posted in category “Business” Thursday, May 5 2005 09:56 AM  |  Permalink  |  No comments  |  No trackbacks

Quarter Point and a Correction After Release

The Federal Reserve raised the rates a quarter point today, the eighth time in a row they've raised rates. The Federal Funds Target Rate is now 3%. That was expected.

What wasn't expected was a late-day change to the released report adding this sentence to the second paragraph:

Longer-term inflation expectations remain well contained.

This statement was included in the four previous statements, and its omission from today's report was an error. The street had already started buzzing because it was missing…

Who says little words don't count?

Observers have watched the Fed reports closely to spot indicators of deflated consumer confidence or inflated consumer prices. Every sentence has a clear meaning to the analysts on Wall Street.

Josh Poulson

Posted in category “Business” Tuesday, May 3 2005 02:19 PM  |  Permalink  |  1 comment  |  No trackbacks

Dell Scammed Us

A couple weeks ago someone from Dell called us up and said that Comcast indicated that broadband was available in our area, and as valued Dell customers were we interested? Regular readers will note that I've been using satellite broadband from DirecWay for a couple years now and it's not exactly as good as the DSL I used to have in downtown Portland. In fact, the one second plus latency of the system is miserable for VPN.

Well, we jumped at the chance, especially when they said that it was only a $50 fee for “professional installation.” They needed some information for renting the modem and so on, but we went ahead.

Later, supposedly someone from Comcast called us, but we missed the call. So my wife called Comcast up and tried to figure out where we were in the system. They had no record of us and, in fact, the closest address that could get broadband from them was over two miles away.

So, I have to decide now between the possibilities that someone in Dell is both an aggressive seller and an incompetent executor or that I just got scammed by a pretty smart cookie. All the ticket information I took down, except the 800 numbers to call, are bogus, so I'm leaning towards “scam.” I don't see any charges on my credit card, yet, so I'm still not sure what the deal is.

Anyone else out there get nailed by this?

Josh Poulson

Posted in category “Business” Thursday, Apr 28 2005 09:33 AM  |  Permalink  |  5 comments  |  No trackbacks

Microsoft Demonstrates Vaporware

Trust the client operating system platform monopolist to demonstrate vaporware:

Microsoft on Monday plans to show off pretty much the dream portable computer—a tiny tablet computer as thin as 10 sheets of paper with a camera, a battery that lasts all day and a price of about $800.
The only problem is that it's still several years from reality.
Microsoft commissioned the 6-inch-screen prototype, but still doesn't know exactly when it will be commercially feasible. It will probably come at least a year or two after the arrival of Longhorn, the new version of Windows set to ship at the end of next year.

It's always fun to demonstrate something cool, but why talk about a price point when you're years away from shipping in volume? Well, in order to stifle the development efforts of your competitors, that's why.

Today Microsoft finally ships a 64-bit operating system platform so many years after it killed its DEC Alpha program. I'll be the first to admit I as enabling 64-bit database engines over six years ago when I was at Informix, and I was hardly the first to do it. About time Microsoft joined the party. We'll see if they follow up with a 64-bit SQL Server right away.

Josh Poulson

Posted in category “Business” Monday, Apr 25 2005 09:44 AM  |  Permalink  |  No comments  |  No trackbacks

Patent Resources

Groklaw has collected a page full of patent resources. There's far more there than you may really want to read, but it's good to look through.

Josh Poulson

Posted in category “Business” Friday, Apr 22 2005 12:25 PM  |  Permalink  |  No comments  |  No trackbacks

National Medal of Technology Award for Watts S. Humphrey

Watts S. Humphrey was awarded the National Medal of Technology for his contributions to the discipline of Software Engineering. He is best known for the Software Capability Maturity Model (SW-CMM), the Personal Software Process and the Team Software Process.

The National Medal of Technology is the highest honor awarded by the President of the United States to America's leading innovators. A formal ceremony took place March 14, 2005, at the White House.
The National Medal of Technology is given to individuals, teams, and/or companies for their outstanding contributions to the nation's economic, environmental, and social well-being through the development and commercialization of technology products, processes, and concepts; technological innovation; and development of the nation's technological expertise.

Humphrey's books were always clearly written but were considered “overhead” by far too many programmers and considered “userful” by far too few software engineers. It's good to see that he has been recognized for pushing the limits of software quality, even if most shops seem to support the idea of “good enough.”

(Hat tip to Grady Booch.)

Amazon.com links:

Josh Poulson

Posted in category “Business” Tuesday, Apr 5 2005 01:22 PM  |  Permalink  |  No comments  |  No trackbacks

Managers vs Employees; Citizens vs Representatives

I got this information from an IBM information page, but I summarized it myself.

The Labor Relations Institute of New York has done repeated studies on what employees want and what managers think employees want. The results are typically different:

What managers think employees want:
  1. Good wages
  2. Job Security
  3. Promotion and growth opportunities
  4. Good working conditions
  5. Interesting work
  6. Personal loyalty to workers
  7. Tactful discipline
  8. Full appreciation for work done
  9. Sympathetic understanding of personal problems
  10. Feeling “in” on things
What employees say they want:
  1. Full appreciation for work done
  2. Feeling “in” on things
  3. Sympathetic understanding of personal problems
  4. Job security
  5. Good wages
  6. Interesting work
  7. Promotion and growth opportunities
  8. Personal loyalty to workers
  9. Good working conditions
  10. Tactful discipline

What would really be interesting to see is a study that compared what employees say they want and what they actually respond to. Well, actually, there's been a lot of studies about that. Everyone wants to feel like they are part of something bigger than themselves and managers should endeavor to make sure employees understand, influence and are a part of the “big picture.”

Is that really so hard?

I think that understanding should be applied to citizens, too. Citizens want to understand, influence and be a part of the big picture for their town, county, state and country too. They want their voice to be heard. But I wonder. Do they really make good decisions?

I'll leave that question open.

Josh Poulson

Posted in category “Business” Wednesday, Mar 23 2005 09:44 AM  |  Permalink  |  No comments  |  No trackbacks

March, 2005 Economic News Looks Good

Yesterday all the focus was on the Italian journalist who was wounded (and her protection agent was killed) when the engine block was shot out of their car. However, some good news has come down the pike.

The Labor Department reported Friday that U.S. nonfarm payrolls grew by 262,000 last month after a downwardly revised 132,000-job increase in January. But December's payroll reading was marked up to an increase of 155,000 jobs from the earlier 133,000 jobs, leaving a net gain of 8,000 jobs for the December-January period.

Also, more people started looking for jobs:

The unemployment rate rose to 5.4% in February, up from January's 5.2%. The unemployment rate is calculated using a separate statistical survey from the payroll figures. The household survey from which the jobless rate is drawn showed a 97,000-job drop in employment at the same time that the civilian labor force grew by roughly 153,000.

The market had a great day yesterday with the Dow Jones index rising almost a full percent, and NASDAQ coming up six tenths of a percent. I would like to think it was responding to good news about employment (and the relative stability of inflation) rather than celebrating the return of Martha Stewart.

So what bad news balances this out? Gas prices are definitely on the rise. Oil has made it to $52 a barrel now, and could run up as high as $60 in a repeat of last year's spike. This one hits close to home for me, since I have a 38 mile commute. (It takes a long commute to get fifteen acres to yourself without having to amass a fortune first.)

Josh Poulson

Posted in category “Business” Saturday, Mar 5 2005 07:47 AM  |  Permalink  |  No comments  |  No trackbacks

Fighting Walmarts in Cedar Mills, Beaverton

Walmart wants to come into Beaverton, Oregon in a little community called Cedar Mills. It's near a high-rent district called Forest Heights, but it's also near a major interchange (US 26) and is in the middle of suburban Portland. On the radio this morning I heard a comment that “no one that lives here would shop there.”

That's a goofy argument against a store from a company that leverages its size to bludgeon suppliers and offer the lowest average prices possible. One has already learned that becoming a millionaire (a common fable in Forest Heights) requires saving money rather than spending it. Walmart is a good way to do that. Don't those rich people in Forest Heights want to keep their money?

Even if no one in Forest Heights shopped at Walmart, all the folks in the valley might be interested. After all, this is suburbia down here where the oxygen isn't so thin.

I've never really understood all the fights against Walmart. Sure, it competes handily against little mom and pop stores, but stores that sell commodities are well aware of the damage of price wars. They should focus on what value they can add to demand those higher prices rather than relying on legal and community pressure to keep out the large chain stores.

Josh Poulson

Posted in category “Business” Tuesday, Mar 1 2005 09:21 AM  |  Permalink  |  6 comments  |  No trackbacks

The Software Patents of Trading Technologies

Today's Financial Times has an article about the predatory behavior of Trading Technologies, a firm that has been awarded two software patents in the UK, presumably based on its US patents 6,772,132, 6,766,304 and 6,828,968. I couldn't find the European patents in question. These patents are broad enough that many entry-order systems could be covered by the claims. The article indicates that Trading Technologies also has eighty more patents in the pipeline.

While Pamela Jones at Groklaw laments the prodigious number of software patents in Trading Technologies pipeline, it is also important to look at the effect on the financial markets.

One of the patents appears to describe any trading order entry system that displays market depth (essentially the difference between highest bid and lowest ask prices) and allows a trader to select (with one click) a region of prices in which to place an order it could affect a large number of home-grown or commercial trading software. The next patent describes the fancy table that is used to describe the market. The third appears to patent the idea of using multiple colors to make a more readable chart, although the added value comes from specifying additional colors to parameters of the table on the fly.

So why do patents on visual analysis and order entry tools matter to us? Because Trading Technologies is actively suing and getting settlements from other trading software companies:

TT… has won damages for patent infringement from the Chicago-based brokerages Kingstree Trading and Goldenberg Hehmeyer, both of which settled remarkably quickly.
The independent software vendor has launched another case of patent infringement against eSpeed, the electronic arm of the US brokerage Cantor Fitzgerald. Earlier this month the judge, in an interim decision, made comments favourable to TT’s case, saying that eSpeed had not raised substantial questions against it.

So, that would make trading software with useful analysis tools and order entry systems a bit more expensive. Is there more than that?

TT has proposed to the four main futures exchanges—two in Chicago, plus Euronext.Liffe and Eurex—that it should be paid a fee for not starting patent infringement cases against them. It has taken out full-page advertisements in the Financial Times and The Wall Street Journal setting out its argument in an open letter. TT wants 2½ cents for each side of a trade, which would amount to revenue of about $130m annually.

That's the key bottom line. It's trying to leverage a patent that holds for a couple decades into a permanent licensing agreement. “Pay us five cents a future trade forever, get sued, or not be able to show market depth with one-click trade orders for 17 years!”

In addition, there's a time limit on the decision.

TT’s open letter said that if the exchanges rejected its request for 2½ cents per trade, it would instead raise the price of its software and step up its litigation programme. But it also said it might accept a takeover offer if the right offer emerged.

Well, you never get rich without being brazen, but these guys are playing hardball. You can read their open letter to the future markets here.

So will futures trading be hampered by software patents, cost more because of software patents, or will the European Union reject software patents and move the future of the futures markets to foreign soil because US Patent Law is so forgiving of software patents? The clock is ticking…

Josh Poulson

Posted in category “Business” Thursday, Feb 24 2005 09:33 AM  |  Permalink  |  No comments  |  No trackbacks

Judge Orders Ethics Refresher for Law Firm

Via Walter Olsen at Overlawyered he find this article at law.com.

A federal judge in Fresno, Calif., has ordered the entire 80-lawyer firm of Lozano Smith back to school for a refresher course in ethics as a sanction for repeated misrepresentation of facts and the law in a dispute over aid for a learning-disabled student.

Apparently the behavior of the firm was so egregious that it earned a significant sanction:

In a scorching 83-page opinion, Wanger said Lozano Smith, its lead attorney in the case, Elaine Yama, and the district engaged in “repeated misstatements of the record, frivolous objections to plaintiff's statement of facts, and repeated mischaracterizations of the law.”
In his highly unusual sanction, Wanger ordered every one of the firm's 80 lawyers in seven cities to undergo six hours of ethics training and ordered Yama to take 20 hours.

It's not often I see so uplifting a court opinion. Not only will this firm have a hard time doing any business with public schools in California, it will have trouble getting respect in court. Elaine Yama may not be with the firm any more, but apparently this has been a long-standing problem with the firm as whole:

“The Lozano law firm, in my opinion, has established an indisputable culture of deliberate, systematic institutional abuse across California,” said Jo Rupert Behm, past president of the California Learning Disabilities Association.

However, one always wonders what law firms do for revenge…

Josh Poulson

Posted in category “Business” Monday, Feb 21 2005 10:40 PM  |  Permalink  |  No comments  |  No trackbacks

Changes in High-Technology Research Funding

As a continuation of ideas I picked up in my MST classes, I have been interested in stories about the level of funding of basic research. Yesterday, MIT Technology Review had an article called “Follow the Money” looking into the President's new budget and its effect on basic research funding.

First, the good news.

The appetite of venture capitalists for investing in new technologies is rebounding: in 2004, venture capital financing in the United States was up 8 percent from the year before, following three years of decline.

The resurgence of VC money is an indicator to me that the market is turning around. It is also an indication to me that private funding of basic research is growing in attractiveness. More on that later.

Venture capitalists never entirely stopped investing in companies with technologies just emerging from the lab. But after several years in which high-risk investments were unpopular, many startups developing innovative technologies (especially in such areas as nanotechnology and new genomic approaches to medicine) are starving for capital.

This one I have trouble with. When I was looking into these areas with relation to my coursework we were interested in finding ways to get private firms to leverage the research facilities here in the Pacific Northwest. Much of what we examined was around nanotechnology, especially in relation to microprocessor development. There seemed to be a lot of activity in the firms we examined.

The article goes on to applaud an increase in research funding, even if 80% was targeted at Defense and Homeland Security projects. It did point out that the National Science Foundation had “the first cut in NSF's budget since 1996.” and the National Institutes of Health only had a 1.8% increase. To me, that might encourage the firms that rely on that basic research to fund more of it.

The article does have a point, though. It claims that research funding “has become too skewed toward relatively mature technologies.” That is a serious problem since, to me, funding of basic research makes a lot more sense than funding later stages in the innovation life cycle. ROI from basic research takes decades to quantify, so a broader program to support it makes a lot of sense. ROI for the later stages where technologies are applied and turned into products is easier to calculate because the returns come sooner. Even in the case of defense products, it might be more beneficial to allow private concerns to compete on how efficiently they can create useful solutions rather than funding such activities.

While valuations of later-stage venture-backed startups have begun to bounce back this year, valuations for younger startups have not. In addition, say experts, some venture capitalists are focusing on certain pockets of technology, such as those relevant to homeland security and biodefense, where the focus is more on developing and deploying existing, well-established technologies than on inventing innovative new ones.

So, the VCs have brought more money to the table, but they tend to put it in areas where the risk is lower. That is, if the basic research and even applications of that research are funded by the government, they get to fund the less risky productization of that research. Makes sense to me. The higher the risk factors, the harder it is to identify projects able to adequately cross the hurdle rates demanded by even these less risk-averse investors.

Indeed, the combination of venture capitalists favoring later-stage startups and the continuing trend of large corporations investing less in speculative research is creating an innovation vacuum, according to some experts.

From a Physics perspective, nature (and markets) abhors a vacuum. If there's money to be made in that space and someone can make a good case for it, a firm will arise and VCs will fund them that can take advantage of the need to do this basic work. However, because of the risk, the returns will have to be high. The other factor, in my experience, is that government abhors high realized returns. They tax the snot out of anyone that realizes significant income. A firm that fills this space, therefore, cannot realize income over short periods, but must continually reinvest to incur expenses to bring down its tax liability.

What sort of investor appreciates this sort of capital sink? The long-term one. Are there many of those left?

2004 was a strong year for companies going public; the number of IPOs and the amount of money they raised reached their highest levels since 2000. What’s more, the value of mergers and acquisitions involving venture-backed companies was 76 percent higher than in 2003—all of which means that venture capitalists once again have the prospect of lucrative exit strategies and the motivation to invest in startup companies.

VC's love middle-term projects. Ten years is pretty much their window. So the budget is indeed skewed incorrectly. Let the VCs fund the middle-term Defense and Homeland Security projects that will surely be purchased if threats continue to exist (they will). I agree with this article. The skew of government research grants must be biased towards basic research and away from the shorter-term projects that have caught their interest.

Josh Poulson

Posted in category “Business” Friday, Feb 18 2005 09:58 AM  |  Permalink  |  No comments  |  No trackbacks

HP's Ouster of Carly Fiorina

The initial flurry of Carly's exit stories yesterday is dwarfed by the prodigious output of armchair quarterbacking this morning. The Wall Street Journal, Business Week, the Economist and even regular news outlets have stories this morning. What caught me by surprise, though, was a piece in today's MIT Technology Review entitled, “