Overheard: We should all go to AA to cure our addiction to judgement.

Just got schooled in the Gettysburg address. Truly inspirational.

Business, Power & Democracy - Why Investors Should Welcome Wikileaks

People who spend a lot of time thinking about business often find themselves thinking about two important very unrelated subjects: psychology and economics.  At a macro level, over long periods of time, I believe that markets are largely rational and that the principles of free markets drive the best results and growth.  But that's over the long run.  In the short run, markets can be irrational and results truly bizarre if not actually counterproductive.  And, unfortunately, the short-run can last for distressingly long period of time.

Overall, the life span of most companies is amazingly short.  Brand names like AT&T may endure, but the AT&T of today has little in common with the AT&T on 10, 20 or 30 years ago.  Companies are more likely to collapse or be acquired than manage change effectively.

Democracies, by contrast, seem to endure for a very very long time.  There are lots of reasons for this that don't bear upon how business should be conducted, but there may be some very salient ideas.  Indeed, the major industrial democracies have track records that far exceed that of any company - they deliver growth and stability through periods of enormous change.  Governments that are not democracies, by contrast, don't seem to last nearly as long.

So why are dictatorships and corporations more likely to collapse while democracies tend to reform?  Because power corrupts and democracies have the most effective methods for controlling and limiting the corruption that result from abusing power.

First, let's deal with power corrupting people.  It's long been suspected but increasingly psychology and experimentation have proven that the corrupting impact of power is immediate, universal, and almost impossible to resist.  In ways both big and small, people in power seem unable to control or contain themselves.  Once a person gets power, they almost instantly become more selfish, lie more, and believe that their abuses of power are worth forgiving while transgressions by the weak are not.  The idea that power corrupts used to be a clever cliché, now it's proven fact.

So, let's assume power corrupts people in ways big and small.  That means Presidents, of companies and countries, are, from the day the become powerful, on a painful, slow slide to irrelevance brought on by their own corruption.  The more powerful you get, the more corrupt you get.  Corruption really just means helping yourself to whatever you want in a way that gives you unfair advantage over other people.

And corruption inevitably leads to impaired judgement.  When people don't disagree with you, when everyone likes your ideas, when you always get a raise even when other aren't - you lose track of what works and what doesn't.  And once your judgement is impaired, it's only a matter of time before you take your whole organization or country down with you.

People who acquire power in democracies get corrupted as well.  But with a difference: they get held accountable.  Not quickly, not perfectly, and not always, but frequently enough to make a difference.  The balance of power between legislative, executive and judicial branches as well as the strength of a free press all combine to restrain and limit abuses of power and prevent those in power from changing the rules to suit themselves once in power.  Data dumps like Wikileaks, messy though they are, help drive accountability when they get plugged into a free press and an independent judiciary.

All that accountability is very inefficient in many ways.  It makes democracy slower than dictatorship and it has a high overhead cost.  But it works very well over the long run and it responds extremely well to big, existential challenges like wars (the real kind, not the pricing kind).

Governments in modern democracies have already applied quite a few of these ideas to companies.  They demand ever increasing levels of disclosure from corporations.  And all that disclosure has, in fact, improved corporate governance substantially and brought ever more investors into the market.  Beyond that, the bigger the company, the more they could probably benefit from increased levels of transparency and accountability.

Investors could demand it, but boards are usually too timid and insider-ish to provide it.  Instead, governments will need to force more and more disclosure.  But they are slow too.  So count on technology to deliver it instead.  Imagine the impact it would have if the expense reports of every top GM executive suddenly were released online.  Investors might demand to see more results and less waste.  What if the internal memos of Chrysler executives were to be made public?  The petty internal politics of positioning and budgets might suddenly look very very stupid and short-sighted in the cold light of day.

Some of these revelations might be very important, others quite trivial.  People would say "yes, we pretty much knew this was already happening." But the the full revelation of the truth is quite different from a supposition.  Facts made public are different fundamentally from guesses made in the dark, even if they are directionally the same.  In short, it's difference between a whisper that a government is corrupt and a brutally honest diplomatic cable.  And it's the difference between cocktail party gossip and Wikileaks.

Ok, I'm back from the holidays. Regular posts to resume tomorrow.

Tries required to complete one call on T-Mobiles "4G" network: 9.

Can Yahoo Be Fixed?

I think so.  The company is going through terrible pain right now - downsizing hurts a lot in Silicon Valley - perhaps more than elsewhere.  Engineers and creative people, while they can work well under pressure, don't like the extraordinary stress that comes with layoffs.

Yahoo is certainly in disarray, at least for the moment.  That's what a layoff and reorganization does to people - it creates anxiety and stress and fear.  Those who lose their jobs are devastated - and that seems true even when didn't necessarily like their jobs - and those who stay have survivor guilt.  Either way, nothing productive gets done for a while.

But is Yahoo is some kind of permanent downward spiral?  I'm not sure.  The site search stats don't seem to point to an imminent tail spin (though this reflects just one of their business areas):

Site traffic data from Alexa.com

But what should Yahoo do to right the ship?  The network of companies across the valley provides a continuous stream of innovation for Yahoo to access.  And they have been making some very good buying choices - but not doing a great job of post merger integration.  As a result, all these amazing properties like Flickr and Delicious are not revitalizing Yahoo, despite a lot of love from their customers.

Since it's Monday morning, let me offer some Monday morning quarterback suggestions:

1. Wield That Axe.  As much as it sucks, killing products and slashing costs are essential to turn-arounds.  When Steve Jobs returned to Apple, he axed many beloved products and made painful cuts. 
2. Standardized & Streamline Processes.  From procurement to hiring, companies in turn-around situations need to free up money for big investments in growth and innovation.  That means aggressive process management and cost control.
3. Get focused on core businesses.  The truth is, I don't really know what Yahoo's core business is, but they should find out.
4. Spend big on innovation.  Internal and external.  Buy companies and build big, exciting projects.  That's where the savings goes.
5. Integrate.  Yahoo is a web conglomerate.  Work like one -make the different pieces of Yahoo feel like a real, integrated network, not just a collection of sites.

If I have a crticism of Carol Bartz, it's maybe that she is being too timid.  Nobody who does this job is going to get any love.

The Endless Junk-Food Parade

I thought we were living in healthier times.  Apparently not.  The endless parade of Junk-Food seems to mark the holiday season at my kid's Montessori.  Mashmellow covevered gingerbread house? Check.  Cupcakes? Check. Cookies? Check.

Try putting a toddler to bed after that much sugar.  Heck. Try keeping the toddler away from that much sugar.  It's a recipe for tantrums now and then tantrums later.  Notwithstanding Google's best efforts, I'm starting to really hate Gingerbread.

Product Installation & Set-up, The Cisco Way

Silicon Valley is have a consumer products renaissance.  Companies are actually making stuff that people want to buy - like Apple, HP, and Cisco.  (A nice change from the time when it seemed like everyone would exit hardware).  But sadly, the consumer experience is still not so great - especially when it's Cisco you're talking about.

I bought a new Cisco wireless camera to put in my kid's bedroom.  I wanted to check if they were in bed and asleep instead of playing with toys without having to poke my head in the room.  My mother was worried that now that both are no longer in cribs, we'd have potential fighting once the door closed.  Turns out there's no fighting going on at all.  In fact, they're as cute as can be with each other.  If my youngest starts crying, the oldest goes over to check on him and sometimes gives him a hug and a kiss.  

If only I could give that kind of love to Cisco, who nearly gave me an anuerysm trying to set up the camera.  A short summary of the faults:

• Set-up software does not match the manual description
• Set-up software is available for Mac and PC, but only on CD
• Downloadable version only works on the PC
• Camera sound only seems to work if you used the "Thick client" on the PC side
• Web client shows video only, not sound
• Set-up software only available as Wizard.  If you have any problems, you must start again from the beginning

I had to run through the software five times on two machines to get the camera working.  Now that it's working, it's ok, but not exactly an Apple-class experience.

The whole experience reminds me that Cisco's consumer product strategy seems to have gone badly wrong.  Linksys has failed really move beyond routers into audio and video in a successful way and Flip appears to have been purchased just before the entire video camera industry disappeared.  And remember the iPhone naming dispute with Apple?  Nope.  Neither do I.

Cisco's consumer product strategy seems lost.  What is the point of selling only commoditized routers and video cameras?  How are they really contributing to the surge in video usage by consumers and shaping the demand for increased broadband?

Buying Skype or one of these new video calling apps would have a bigger impact.  Or maybe Boxee or Roku.  All of those would have a bigger impact, except that they impinge upon the strategic imperatives (closed systems, copyright extremism) of their customers (big cable and big telecom).

Cisco's Focus is on B2B, not B2C.  Image from Cisco.

No Cloudbooks for Wikileakers

The assault on Wikileaks and the recent focus on content protection has shown how hard it is to delete digital information once it's out there.  The Internet, as a whole, seems more friendly to openness than keeping secrets.

That said, it seems unlikely that serious libertarians will embrace cloud services wholeheartedly just yet.  The Google cloudbook sample - CR-48 - is making the rounds of technology journalists and bloggers.  It's a neat piece of hardware and the network computer is an idea whose time is coming (again). - but if you're serious about disseminating other people's information or keeping your own private, it's probably not for you.

As COICA and ICE have shown in recent actions against alleged pirates, governments can cut off your Internet and your finding.  Having your own PC and the ability to move across network connections and distribute content may be the safest way to keep the flow of information free and open.

Open source encryption (Truecrypt) can protect your data while the next generation of BitTorrent services will make any form of centralized shut-down even harder.  Both are designed for use by individuals on their own hardware rather than in vulnerable cloud services.  Having your own fully functional hardware gives users more control and that's something that some users are not going to want to give up.

Google's Cloudbook sample unit - CR-48.  I'm guessing Julian Assange doesn't want one.  (Photo Mike Saechang on Flickr CC)

Android Phones Are The Biggest Bandwidth Hogs

The iPhone ushered in a new era of bandwidth consumption - so why, many people wonder, are Android phones actually bigger bandwidth users?  Actually, they're pretty close to iPhone users, on average, but the reason Android may have an edge is the lack of restrictions that Android places on users.

To conserve battery and manage performance, the iPhone restricts your ability to muti-task, and with restrictions on multi-tasking come restrictions on the amount of data you can use.  Take away those restrictions and...voila...more data consumed.

As the iPhone has gotten more powerful and Apple has relaxed restrictions on multi-tasking, we can expect to see virtually identical usage profiles across the two platforms.

Lots to do...(Picture Flickr CC)

Danger! Mobile Feature Fatigue Ahead?

Are we running out of great new features with which to dazzle smart-phone buyers?

The last few days have been an enlightening few for me.  I just purchased a new Motorola Droid 2 Global Edition from Verizon.  This is one sweet phone: a 1.2 ghz processor, keyboard, screen, removable battery and it comes on Verizon's rock solid network and with the option for Verizon's best-in-class international data plan.

There's only problem: I just hated it.  People said they could not hear me and the battery lasted typically no more than 3-4 hours before needing a charge.  Power levels dropped by 10% every hour, calls dropped, and the screen was sluggish and unresponsive.  At first I thought I got a dud unit, but after consulting with other users and Verizon, it seems that my experience is not ideal but also not exactly unique.  The high processor speed and the addition of Bluetooth, WiFi and lots of unfettered multi-tasking is a killer.

Unable to find another phone I liked on Verizon, I started looking around and settled on either the Motorola Defy, the MyTouch 4G or the Nexus S.  The Nexus is not yet available and, being American, I need gratification right now.  I went to a T-Mobile dealer and tested out the MyTouch4G and the Defy and compared them side-by-side with the Droid 2 Global.  My take-aways (in addition to a new Motorola Defy):

• Some level of sluggishness pervades the Android UI on all devices regardless of make, model, manufacturer or CPU speed.  I couldn't really tell the difference in usability between the Defy (2.1) and the MyTouch or the Droid 2 - which have faster processors and a newer rev of Android.
• Battery life seems to be the killer app.  Reviews and anecdotal testing suggest that some phones do much better than others with battery life despite very similar-seeming specifications.
• Android 2.2 doesn't seem to be noticeably better than 2.1.  I found only one issue on the Defy which was the lack of a built-in tethering application, a problem I solved easily enough by rooting the phone and adding wireless tether.

So, after looking at three different phones with radically different prices and features, I selected the cheapest and least powerful one: The Motorola Defy.  And after 18 hours with it, I think I'm going to like it.  Though T-Mobile doesn't have great coverage in Woodside, it's decent and WiFi calling works nicely in my house.

I found the overall speed of the device comparable to the theoretically much faster Droid 2 Global and I love the ruggedized, water-resistant shell.  That makes this phone just perfect for drops, kiddie drool, and bike rides in the rain.  And if water-resistance and better battery life can help sell a under-powered phone with a down-rev OS version, what does that mean for the industry as a whole?

Smartphone buyers have been driving huge gains in the mobile and wireless business.  They are still a minority of the overall market and so there's lots of raw volume growth left.  But smartphone buyers have also been driving very high average selling prices and a very very frequent cycle of upgrades.

The iPhone is a good example: first it re-invented the category, then it re-invented the market for apps, and then it added multi-tasking and video-calling and re-invent mobile gaming.  With each of these step changes, early adopters have jumped on board.  But what next?  Like laptops before them, we may have fewer step changes we can offer consumers to drive a rapid upgrade cycle.

There's still a lot coming on the horizon: LTE and multi-core processors to start with, and while both will drive the earliest adopters into an upgrade cycle, they offer little for ordinary consumers to get excited about.  These new features will help enterprises deepen their use of mobile, offering secure virtual machines (announcement) and secure alternatives to giving employees 500GB hard drives.

For consumers, however, the real action is at the low end of the smart-phone market where bargain-priced smartphones that offer all the same major features as premium ones but with a bit less polish and oomph are going to drive explosive growth.  LG, for example, missed out big time on the early Android gold rush but they seem to have a blockbuster hit on their hands at the lower end of the market.

Underpowered, Down-Rev, but still very good.  Image CC Flickr.

Who's Afraid of Stale Content?

Everyone, apparently.  The movie industry is running scared of Netflix - even though the movie industry has done everything it can to cripple Netflix.  How does that work?

First, let's be clear.  Netflix's watch-now content is stale.  In the movie industry, about 70-80% of all money is made on a movie in the first 30 days after it's release.  That's true both for the box office and for movie rental.  Netflix has to wait 28 days for physical DVDs and Blu-Ray and they have to wait up to another 90 days for most digital content, if they get it at all.

That's not the fault of Netflix: the movie studios have engineered the release windows to minimize the risk of channel conflict.  First, you watch at the movies, then on a physical DVD or a premium rental, like iTunes for $5, and then lastly on assorted other media from RedBox to Netflix to non-pay-per-view cable.  The result: all of Netflix's content is pretty stale the day it arrives.

I think the impact of stale content shows up in Netflix's business results: churn is high and usage is relatively low.  Churn is much higher than for cable TV or even for premium cable movie channels.  And usage is low - many people do try it out, but few seems to watch over and over again.  Americans watch lots of TV.  Lots and lots of it.  But not too much Netflix.  Even people who have Netflix watch-now are probably only watching 1-2 movies a week.

The actual rate of Netflix watch-now viewing is not publicly released, as far as I can tell.  Netflix says that a high percentage of total subscribers are using the online service but they have never said what the average rate of usage is for this service - and I think there's a reason for that: it's probably quite low.  I've tried to develop costs models and based on that work, it seems like usage is not more than 1-2 full movies a week at the high end and maybe as little as 1-2 movies a month at the low end for online users.

The gap between Netflix usage online and actual TV watching probably comes from several different areas:

1. Fresh Content.  Cable TV and Hulu have fresher content - especially for TV.
2. Ease of Use.  Netflix is ubiquitous but the UI leaves a lot to be desired compared to Hulu or iTunes.
3. Live Content. Online services don't really offer live content like Football games which are still key for ratings in the world of regular TV.

Despite these problems, Netflix has Hollywood running scared.  They run an enormously profitable business and they have the cash to throw around and buy content.  Like old cable TV stations, one day they are buying re-runs, the next day they are commissioning original movies and series.  Netflix has gotten good at offering up alternatives and managing queues - so at least some users don't notice that the content is stale - they have a large queue of movies and TV shows they're catching up on anyway.

If Hollywood is going to build real competition to Netflix and iTunes, it's going to have to do several things to create real competition.  And the longer it waits, the less likely it is that even these strategies will work:

1. License content more widely.  Amazon and others want to offer subscriptions and rumor has it they will have the ability to do so soon.  Good start.
2. Improve Participant Economics.  Apple has set a benchmark that provides 70% of content revenue to partners.  That's great for partners, but it's actually a starvation diet for distributors.  No problem if you're Apple - that's not how you make money.  For other companies, however, making a profit on a 30% gross margin is quite tough to do when transaction sizes are so small.  A $1 transaction can cost about $0.35 to process on PayPal. Even more than pricing and revenue share, studios should embrace more flexible business terms that will allow new providers to experiment with new types of packages.
3. Enable Channel Competition.  Right now, no matter what you pay, channel conflict is not really permitted - the sequencing of releases is established and unbendable.  That's a shame because while nobody is likely to upset the theatre release process, more competition between secondary channels would ultimately be beneficial. With the right amount of money, there's no reason why an HBO can't emerge on the web without any cable infrastructure.

Right now, despite all their problems and shortcomings, Netflix and iTunes are tracking towards very dominant online positions.  With just two online leaders, that won't leave a lot of choice and negotiating power in the hands of the major studios.

Hollywood, by Loop-Oh

What's the difference between a Virgin MiFi and a Sprint MiFi?

Same device.  Same network.  Same company too.  The difference: one of them comes with Sprint's pricing: $60/month for mobile broadband and a 5GB limit.  The other comes with Virgin's much more generous prepaid plan of $40 per month and no cap at all.

The market says: The Virgin branded one is worth $150 on eBay and the Sprint one is worth about $50.  The Sprint one does allow some roaming on Verizon where Sprint lacks coverage, but the market clearly thinks that's not worth much at all.

Hey Blogger: Why Is A Screen Shot Automatically Rejected?

A Screen Shot of my PC file system has been rejected by 

Lately, Blogger has started "screening" pictures that you insert in your blog.  And they get to decide if your picture is legit or not.  Screen shots captured by Copernicus are, apparently, not legit.  I don't know how they decide to rule out certain pictures, but it's obnoxious nonetheless.

What's On My Mac?

I love tweaking and tuning my laptop for just the right performance.  Here's my collection of favorite applications that get re-installed every time I buy a new Mac:

So many apps...so little time...

1. Adium

The instant message application for the Mac.  Supports just about everything from Lotus Sametime to Facebook.


2. AppCleaner

Helps get rid of my mistakes.  Good, but not perfect, for cleaning up the extra files that apps leave lying around.


3. BreakAway

Yank your headphone cable out of the Mac at the wrong time and you'll be blaring loud music to everyone on the plane or in the coffee shop.  With this program, if you pull out the headphones, iTunes is paused.


4. Copernicus & Capture Me

Two excellent screen / window capture programs that enable you to take snapshots of applications and windows.


5. Evernote

I have Evernote on everything.  It's my notepad now.  Everything goes there.


6. InsomniaX

This application (must be used carefully) can prevent you MacBook from going to sleep when the lid is closed.  Useful for downloading your e-mail when dashing between flights.  You must be careful to avoid overheating the machine.


7. SoundSource

A nifty pull-down that lets you easily switch between speakers, headphones, and bluetooth headphones for your listening pleasure.


8. ReNicer

Nice and Re-Nice are Unix commands for changing process priorities.  ReNicer puts a GUI on top of that and automatically prioritizes what you're working on in a Window over background processes.  This improves the usability of the laptop when you're running lots of background applications.

9. Typinator

This program automatically expands simple text and fixes type-ohs in every program you use.  Reviewed by Pogue in the New York Times, it's a huge productivity tool.


10. Proximity

This program is a bit tricky, but once I got it to work it's quite neat.  It can activate or de-active the screen saver whenever your bluetooth equipped mobile phone comes in range.  That means when you walk away from your PC, it can lock automatically, and it can unlock just as easily when you come back.  The automation is nice, but setting it up was difficult.  Not for the non-technical user.

11. Growl

An excellent, simple, and attractive tool for alerts, Growl displays updates to your programs like new mail or new instant messages discreetly in the upper right of the screen for a few seconds.  It integrates across multiple programs too, making it easy to consolidate all those announcements.

12. EarthDesk

My favorite screen background, it shows various views of the earth, with or without clouds and current weather.  A neat, living wallpaper that's always changing and endlessly fascinating.

13. KeyReamp4MacBook

A long-winded program title, but perfectly accurate.  I don't want to totally remap my keyboard, but the one thing I cannot live without is the "forward delete" key - standard on PCs but not Macs.  The delete key on a Mac does what the backspace key on a PC does, but there's no PC delete key.  This makes it possible to remap one of the option keys to that function.

More elaborate remappings are possible too, but not ones I bother with.

14. TrueCrypt

TrueCrypt is the benchmark for encrypting files and keeping your personal information private.  On the PC, you can do whole disk encryption.  Not possible on the Mac, but you can use it to encode specific files and folders if you think it necessary.

I use Apple's secure folders and that seems to be "good enough" for everyday security.  I am not sure if it is enough to secure my PC against serious, determined intrusion, but that's not my main concern.

Once You Go SSD, You Can't Go Back

I traded in my MacBook Pro last month for the new MacBook Air.  My initial device had some problems but one free replacement later, I know I will not be able to go back.  This MacBook air has a slightly slower processor than my MacBook pro did, but that doesn't matter.  Once you use an SSD-equipped laptop, you can't go back.

For office work, the speed simply cannot be beaten.  So much of what you do depends on loading and unloading files or searching for information.  All of those are pretty much instantaneous with an SSD.  As is booting up and resuming from sleep.

In the airport and on the go, this thing is amazing too.  In the past, opening the laptop for a quick e-mail check could be a maddening exercise in frustration.  Standing near the gate and hoping to get your e-mail in 3 minutes before departure - all too often those moments were ruined by the interminable wait to resume.  Even if the resume worked well, you might find your whole PC slowed to a crawl for no discernible reason for a few minutes.

Virtual memory is another revolution.  On a hard drive, it's painfully slow.  With an SSD, it's almost unnoticeable.  I used to see my MacBook slow to a crawl when using my VMWare PC instance.  All that swapping and hard drive activity caused paralysis on other applications.  Not even noticeable with an SSD - the swapping is so fast.

Now it's true that SSDs are pricey, and I had to settle for half the size of storage that I had before.  But even then, I still have a lot.  The entirety of my business files: thousands of documents and powerpoints: just 17 GB.  With discipline, I could probably have worked comfortably with the lowest end MacBook Air out there, with just 64GB of storage.  With most media on my iPhone and back-up in the cloud, it's do-able.

A power gaming machine this is not, but for everyday use, I think I will never be able to go back to a regular hard drive on any machine.  Forget any kind of benchmark test that looks at CPU performance.  Even when I've loaded all my crapware and other stuff on the laptop, boot-up to usability still happens in under 30 seconds.  Resume is under 5 seconds.

Sayonara.  Flickr CC Mac Users

Battery-Back Up TV: Toshiba Delivers, Long Overdue

I used to live in Nigeria.  The national power company was then known as NEPA (Nigerian Electric Power Authority) or, more honestly (Never Enough Power Anywhere).  Everyone who was anyone had a back-up generator for their home.

But people who are not "anyone" - e.g. most people who live in emerging markets - back-up generators are an unobtainable luxury.  And while TV remains the most essential form of entertainment for people, power cuts can make ruin a good evening.

Toshiba has released a perfect solution: a battery backed-up TV that can run for 2 hours.  Targeted at emerging markets, it could be a big hit.  The product is called PowerTV.  Unfortunately, it doesn't look to me like something that may be fully executed.  All the TVs look like they are pretty large and sporting state-of-the-art LED displays.  Nice, but probably out of reach for the people who suffer most from regular power failures.

This is perhaps a typically Japanese failing: a promising idea ruined by over-engineering.  Having worked so long in Japan, I have seen it time and again: an unwillingness to sacrifice performance for affordability.  Too bad, because it's a great idea.  But not to worry: I'm sure Vestel or someone in China or India will have an affordable version of this out soon.

Image from Toshiba site.  Slashgear report, press release (in Japanese) link