Author: Paul Elosegui

Jack Welch: “Anyone Can Squeeze a Company”

The debate between long-term and short-term concerns never stops in a company, specially in growth industries. Google is already having “The Debate”, in its “we are a technology company rant”.

It takes place between the operations and the strategy teams. Between the Chief Operations officer and the Visionary founders. For a successful company, they are the two faces of the same coin. Long term can’t survive without short term. The daily grind can’t succeed without the long term investment. It is a bad sign when the debate stops.

Corporate managers, with the rational black-hat, excel sheet approach rarely push the creative, disruptive agenda. So it is refreshing to get Jack Welch weighing in on the creative class side: he states that “anyone can squeeze a company”.

“Look, anyone can manage for the short term just keep squeezing the lemon. And anyone can manage for the long just keep dreaming. You were made leader because someone believed you could squeeze and dream at the same time. They saw in you a person with enough insight, experience, and rigor to balance the conflicting demands of short- and long-term results. Performing balancing acts every day is leadership

from Jack Welch on leadership, in his new book “Winning”.

Corporate class warriors are no longer solely central to corporations. A healthy company needs creative and disruptive skills, not just an admin and management team. The mix is not easy though; corporate culture has difficulty with uncertainty, risk, irrational decisions, volatility, disruption, and continuous change. Takes strong corporate management to be continuously challenged in this way.

Watch a video Jack speaking at an MIT lecture

World of Warcraft Smartmobs

World of Warcraft has hit the creative class hardcore, as detailed by Joi Ito, creative class guru. Joi’s latest obsession is his World of Warcraft guild in which he is the mayor of a 300 strong collective of enthusiast soldiers.
Joi describes how he has learned to stay connected to his Virtual Reality world, without necessarily being absent from the real world. Real life enhanced by virtual reality. Rheingold’s Smartmobs becoming a reality.
It is easy to dismiss Joi, and his antics. I recently heard a respected technology academic say jokingly “at least Joi has not gone into pornography”. But Joi works bottom-up, the appearance of a thing does not deter him; he is not hamstrung by corporate class prejudice. And his description of the real-time remote coordination of 100 strong raid should make any technologist sit up and listen.
Dont miss the video of Joi Ito et Loic Le Meur, les jeux en ligne

Is Google a media or technology company ?

When asked recently, Eric Schmidt’s answer to the question was

It’s better to think of Google as a technology company. Google is run by three computer scientists, and Google is an innovator in technology in our space. We’re in the advertising business, 99% of our revenue is advertising-related. But that doesn’t make us a media company. We don’t do our own content. We get you to someone else’s content faster.

The question is central to many web service companies. What is our core competency ? What is a must for our future ? Are we technical, are we media, or are we marketing & sales deal makers ?
Choosing advertising and selling is extremely tempting. Operationally and day-to-day these skills and departments have the biggest impact on the bottom line.
But time again technology disrupts the market. Your core competency must be in whatever disrupts your market most. One constant, in words of innovation guru Seth Godin, is that safe is risky; you innovate or you die.
For web service companies, it is technology that is disrupting the market. You miss the boat in technology, even when your revenue is from advertising, and you are sunk.
from LA Times inteview of Eric Schmidt.

Net Neutrality fight continues

The war between large telecom corporation interest and society interests continues. Battles are joined on a wide front, principally in the states where the commercial and society interests are most salient.
The week opened with a set back House rejects Net neutrality rules . But the effort on public interests behalf is widening. Google, MSN, Yahoo and now eBay are but a few of the players who have joined the fight.
As the final House vote earlier this week drew closer, lobbyists and CEOs from both sides began stepping up the pressure. eBay CEO Meg Whitman e-mailed more than a million members, urging them to support the concept, and Google CEO Eric Schmidt on Wednesday called on his company’s users to follow suit.
The fight continues however. Net neutrality’s crowded field

Bill number Lead sponsor(s) What it proposes Status
S.2360 Wyden (D) No two-tier Internet Still in Senate committee
S.2917 Snowe (R) and Dorgan (D) No two-tier Internet Just introduced
HR5417 Sensenbrenner (R) and Conyers (D) Antitrust extended to Net neutrality Awaiting House floor vote
HR5273 Markey (D) No two-tier Internet Still in House committee *
HR5252 Barton (R) and Rush (D) FCC can police complaints Net neutrality rejected
S.2686 Stevens (R) and Inouye (D) FCC will do a study Senate committee vote expected in June
Source: CNET News.com research

While the initial debate was on whether broadband providers could block certain Web sites, it has moved on to whether they should be permitted to create a “fast lane” that could be reserved for video or other specialized content. But as Google’s Brin stated, there can’t be a fast lane without a slow lane.
Debate will no doubt rage on evolving issues.

The next Google will come from outside the US

A great quote from Danny Rimer, the EU venture capital partner behind the Skype company. But, if not from the US, will the next Google come from Europe ?

Danny is getting a huge amount of mainstream Julie Meyer has been trying to close a fund since she exited from “First Tuesday” 6 years ago. Similarly Jon Snyder and Marting Bloom at Cambridge Accelerator Partners, and Marc Goldberg at Occam Partners.

Danny concludes with

Innovation is not a problem in Europe. But the lack of a unified market to sell that innovation, or even give it away, is a problem – and so is the paucity of investors willing to back it. “The next Google is more likely going to come from outside the US,” says Rimer. “Whether it’s in Europe, I am not sure. A lot of things have to change

European entrepreneurs will have to work extra hard if the next Google is up to them.

Net neutrality impact on startups is being overlooked

Net neutrality effect on online media startups is being overlooked. In Susan Crawford’s latest analysis on Explaining net neutrality, she argues that net neutrality will be better for society as a whole. The issue is more critical because it impacts on the seed bed of economic growth; startups, company creation and entrepreneurs.
Small company creation is the biggest contributor of economic growth. Additional telecom fees impact small startups most, and will be a real growth killer for media and technology startups. Net neutrality has a direct impact on this most delicate and important part of society.

Guy Kawasaki on – How to create the next Silicon Valley


Guy has come up with a great article on How to Kick Silicon Valley’s Butt. Guy’s extensive experience advising Apple’s independent software partners, and years of advising startups shines through. If only politicians would listen. Here are my favorite pointers
ON ATTRACTING AND HARNESSING THE CREATIVE CLASSES

  • Beautiful, but not gorgeous, surroundings California is beautiful. The weather is good. It s fun to live here. No matter how great an entrepreneurial environment Cleveland creates, it s always going to have people wanting to move away.
  • High housing prices. If houses are cheap, it means that young people can buy housing sooner and have kids. When they have kids, they can’t take as much risk and don’t have as much energy to start companies.
  • Cities, crowds, and high- if not over- population. The pressure of these conditions make people jealous of each other; this in turn makes them compete. Cities also bring people together to work. People can’t telecommute to a startup. People need to get together to bounce ideas off one another, argue, and cajole.
  • Absence of multi-national companies, especially the finance industry. If your companies have to compete with conglomerates or banks like Goldman, Sachs throwing money at people, it’s going to be hard to get anyone for a startup. Pity the startups in New York, London, and Singapore.
  • Focus on educating engineers.The most important thing you can do is establish a world-class school of engineering. Engineering schools beget engineers. Engineers beget ideas. And ideas beget companies. End of discussion.
    If I had to point to the single biggest reason for Silicon Valley’s existence, it would be Stanford University—specifically, the School of Engineering. Business schools are not of primary importance because MBAs seldom sit around discussing how to change the world with great products. Mostly they care about how to get interviews at multi-nationals and consulting firms.
  • Send the best and brightest to Silicon Valley. I can hear the complaints already: “This will lead to a brain drain which is exactly what we are trying to prevent.” This attitude misses the essence of entrepreneurship: it’s not about preventing bad things, but fostering good things.
    The goal is to infect them with the disease called entrepreneurship and show them that there can be more to life than “a job;”. Sure, some people will never return—like me. But those who do return come back with a much broader perspective on what life and a career can be. Maybe they will build another Silicon Valley because they’ve seen it done before. Here’s a dirty little secret: Silicon Valley is more a state of mind than a physical location, and you can’t alter a state of mind by staying a home.
  • Celebrate your heroes.Every region needs its heroes. These folks take role modeling to an extreme; they have names like Steve Jobs, Bill Gates, Ted Turner, Steve Case, Anita Roddick, and Oprah Winfrey. Kids need heroes, so that they can say, “When I grow up, I am going to be the next Steve Jobs.” In many places, a successful person is pulled back down because of jealousy. Sure, there’s jealousy in Silicon Valley, but our way of dealing with it is to try to outdo the person, not pull her back down.

ON THE GOVERNMENT NOT MEDDLING

  • The short answer is that the government should not do much except provide more funding to the engineering schools.Unfortunately, that probably won’t seem like enough to most people.
  • Dont create a venture capital fund. The thinking here is that a government created venture capital fund would kickstart entrepreneurship because of the influx of money. However, if there’s one thing you can depend on in venture capitalists, it’s greed. If you show them good engineers with good ideas for good companies, they will appear by (private) plane, canoe, dogsled, and camel. Such a region doesn’t need to create a fund. A supply of capital does not create demand from entrepreneurs–at least not the kind of entrepreneurs that you want.

Guy has definately burnt his bridges with European politicians. Most European politicians know that you cannot delegate entrepreneurship and economic growth to the market and the masses. All you get is creative destruction, market disruption, and upset all the old encumbent monopolies. You bad boy !
Jacques Chirac, the french president, is so upset with these Google upstarts, his government is funding a French alternative. The state knows best.
A case in point are the entrepreneurs that have been successful in continental Europe. Disrespectful, unpredictable, and irreverent. Why do these individuals always try to beat “The System”?. How is a career politician supposed to work with individuals so outside the established network. They don’t even wear suit and tie!
Joking aside, the proportion of successful EU entrepreneurs that secured their funding from US and UK sources rather than EU sources is sadly high. Obviously, there is nothing quite like greedy money.
Guys definately pulled his punches on labour laws. Mr Paul Graham seriously let rip on the need for labour flexibility at the recent Amsterdam XTech conference. Not a popular view in France.
Guy has my vote for EU president.

European VC investment increasing

European venture funds increased 44 percent in 2005 and are nearly at the same level as 2001, according to figures compiled for the European Private Equity and Venture Capital Association. The amount of money raised for high-tech companies in particular doubled last year to €5.59 billion from €2.47 billion.
Although restrictive market environment still hobble growth of small companies, Europe is competing more evenly with Silicon Valley.
One of the reasons is vastly improved productivity. Cheap hardware, free open-source software and cheap broadband reduce the need for staff recruitment. One of the big achilles heels of European startups. A technology based business can be efficiently created with few staff. Sidestepping the labour law overheads of potential layoffs down the line.
Neither does Geography matter as demonstrated by Indian IT and call-center outsourcing. Internet and the telecoms infrastructure allows cheap global distribution regardless of where the company HQ location. In contrast to US startups, most European companies suffer from poor local markets before accessing a stronger US and UK markets. Companies more frequently plan for an international presence right from the start. Counting on a strong demand market from the start makes investment easier.
Danny Rimer a rennaissance Venture Capitalists at Index Ventures, happy talking about Linux Kernel details and term sheet minutae, points out that the Open Souce advantage is also European. Linux, the open-source computer operating system, was created by Linus Torvalds in Finland. Last month, Trolltech, a Norwegian company that markets its software on the open-source model, said it was taking its shares public. MySQL the Linux of the database world is Swedish. Open Souce based business models are being used by startups all over Europe.
Another particularly European niche is peer-to-peer computing/ The Kazaa network, over which copyrighted song files are exchanged freely, began in Sweden. After that success, its founders turned right around and started Skype Technologies, the Internet phone company that eBay bought last year for $2.6 billion, or $3.4 billion. A third European specialty is community-building networks, like Lunarstorm of Sweden or Habbo Hotel, which is likely to reach €60 million in revenue this year.
Let’s hope for a good spring and summer, they have been a long time coming.

All Strategy and No Tactics

entrepreneur sethgodin innovation

Two of my favorite thinkers, Richard Feynman and Seth Godin in the the same blog entry. How about that ? I have Seth’s The Big Moo and Richard’s Surely You’re Joking Mr Feynman on the same bookshelf. One is nobel laureate physicists, the other a marketing guru. What can these guys have in common ?
Seth is quoting one of Richard’s more serious stories, about not fooling yourself and always looking for the truth about why things work. Do not just copy what is the fashion of the day. Clearly they are both conceptual fanatics. Always looking at the concepts and fundamentals of why things work (or don’t work).
On a few occasions I have been asked what makes a good entrepreneur and innovator. Being an Oxford PhD, I like thinking that understanding why things work, being conceptual, is a must. Never copy a marketing design or business model unless you have understood why its going to work for you. Right ? Maybe not.
One of my partners often tells me “Who cares why its selling, lets just copy it and we will learn a lesson if we flop”. And he has a track record you do not argue with.
As I see it, a good entrepreneur is often just perceptual. Reacting to, adapting and copying things he sees in the market. By the time a deep thinker has finished strategizing and working out the market landscape, an impulsive copier has tied up the market. Sometimes you just have to copy and work it out afterwards.

How Google Runs its Innovation

After several attempts at structuring their development process, Google has arrived at the 70-20-10 rule. Eric Schmidt, the Google CEO, alleges the rule was arrived at through some clever maths from Sergey Brin. An unlikely story, since getting an innovation process right is, like cooking, more an art form than a hard Science.
Initially, Google attempted a classical structured engineering process. The structured BCG matrix approach is excellent for incremental innovation. Maintaining a product in a competitive position, by measuring function or feature points of products in the market. Google abandoned this engineering management approach concluding that while productivity was high creativity and innovation were poor. The process is poor at discrete innovation, at launching new products.
Eric Schmid outlines their current process as follows:

1. 70-20-10 Principle: By the most recent analysis, Google is not as high as 70% in the core of search/ads, so now they’re reshifting the focus again to adjust (in other words, we’re doing more search again…).
The 20% represents Google’s bargain with technical people, allowing them to roam free to encourage creativity—where all the most interesting products emerge.
The 10% is for wacky ideas that might not work out but feel worth pursuing.
2. An “exhaustive drama of arguments and reviews” in “ceaseless GPS [Google Product Strategy] reviews—so much that it’s produced a recent internal traffic jam on the servers with so many such teams.”
3. A monthly formal revenue force and reordering around product investment.
“The goal is to systematize anything…The only way to deal with the growth in scale, is a systematic approach to each and everything we do…Google’s making significant storage/computing capacity investments, reusing and combing data from one application to another….”

An interesting glimpse on how you maintain creativity and disruptive innovation once your company and staff mature. The continual GPS (Google Product Strategy) Reviews are akin to Microsoft’s continual paranoia of potential threats to their dominance. This is likely to be a core objective for Larry and Sergey, as the future of the company hinges on a continual flow of creative disruption from its development staff.
Google’s innovation process certainly intrigues many people Google’s secret sauce recipe.
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