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Blogged by Doc & Dave

Every wonder what happens when two A-list bloggers reference your blog?

More surprising is that Doc called me a “writer.”

Churchill Club, Top 10 Tech Trends

Last year this was a great event. They discussed 12 trends. By my count, they went 5 for 12, but had some direct hits that were not obvious last year. This year was less interesting, and very poorly produced.

But anyway, here are the trends with my thoughts as well. Keep in mind these are supposed to come true in the next 2-3 years.

1. Doerr – NextWeb. See my post on Web 2.0 conference below. General agreement among the panelists. Doerr singled out Blogging and RSS twice.
Of course I agree, I am betting my career here.

2. Dyson – Personal Electronic Health Records emerge and create opportunities for data sharing, protection and search. Panel was skeptical.
This happening in 2-3 years is laughable. When the boomers retire and taxpayers are hit with the triple whammy (shrinking number of taxpayers, increased number of retires, and escalating healthcare costs) maybe there will be enough force to break through the inertia. We are still 15-30 years away from this happening.

3. McNamee – There will be no major waves of enterprise technology spending equivalent to Windows, Y2K or ERP for 5 years. He elaborated to say that the next big trend will be Web Services, but today we do not even understand the processes we need to automate. Thus we are in a DIY period for IT. Investors in public software companies will suffer. Panel disagreed. Doerr – web services are happing today. Schoendorf – this is a bullish sign, next 2-3 years will be a golden age.
Disagreeing with McNamee is perilous, but I will. We are through the dry spell. Companies are looking to IT to drive competitive advantage and IT is looking to vendors, particularly start-ups. In our corner of the world, we see revenue being generated and processes being automated with RSS everyday.

4. Schoendorf – China is the next global innovator. China is the first big threat to the quality of life of Silicon Valley. The panel disagreed mostly due to timing reasons.
I agree strongly. I particularly like the second sentence. Currently the Valley leads the world in entrepreneurship. As a result, many people of modest talent and work ethic enjoy a fabulous quality of life. As China asserts its scale and people advantages, this will change. To stay on top, leading companies must work with Chinese nationals, not just to leverage low cost labor, but to do R&D, and to open a new market. Else our children will inherit a world with the majority of the global 2000 companies being Chinese companies.

5. Perkins – Mainstream media and entertainment will relent to the “Open Source Media Revolution” leading to a mini-boom for content creators, blogging and social networking tools and application developers. He elaborates to say that any media company that does not open up to sharing, collaboration, and transparency will not have consumers trust and will parish. Panel felt this happened last year.
I agree, but the boom will be in attention paid, not in revenue or profits.

6. Doerr – Stem Cells will be a medical revolution and California will lead it. Panel agreed, but felt it will take more than 2-3 years.
I don’t follow this market, but I hope he is right.

7. Dyson – Cell Phone text messaging will boom in America and be used for many new applications including personalized marketing and drug compliance. Panel agreed.
I think SMS text messaging is still too hard. When Treo 600 type functionality is bundled with service, mobile applications will explode.

8. McNamee – Consumer Technology and Content that targets people over 30 will be more successful than products that target younger people. He sites demographic trends, average iTunes users being over 30, Finding Nemo being the number one selling DVD and the fact that those under 30 do not buy but share/steal. Panel disagreed. Doerr did a scholarly job of refuting and Schoendorf noted that globally this is ridiculous.
I disagree that it will be more successful, but it is worth noting that there are lots of tech savvy folks over 30 for the first time in human history.

9. Schoendorf – Digital Living – Throw out your TV, DVDs, CDs and Stereo because it is all obsolete. From here is will all be stored in one place and transmitted wirelessly. Panel was mixed. Doerr thinks no one would trust this job to Windows. Dyson felt sharing will drive this trend.
I agree, but sadly, my wife doesn’t.

10. Perkins – A cultural move to IT as a utility in computing will keep the IT business growing. Panel agreed.
Obviously the panel has never sold a service to IT. This is a complex and long term trend that has more to do with the IT department’s employee incentive system, than to do with technology.

Last year they had audience participation at the end. I wrote down “RSS revolutionizes communication,” They did not read it. But it’s still my top pick. As Dave Winer says, if you don’t have some apprehension about pushing the publish button, you are not doing a good job of blogging. Time will tell who is right.

But the TV show or the band?

Adam Curry is the biggest thing since Survivor.

I did not expect to like his show. What could that big haired egomaniac from the 80’s have to offer? Teach me to be guided by my prejudices.

Dailysourcecode forever changes the media business. Web-based entertainment heretofore has been like early television – filmed radio shows. Curry shows us how to move the camera and produce content specifically to the medium.

That’s a big statement, but Dailysourcecode reminds me of the first time I saw the Real World or Survivor – this is big idea, and they nailed it. Let us not forget that Survivor executed on many new ideas that are now commonplace – unscripted entertainment, diverse talent, humans and game theory, heavy editing to create human stories within the game, and dramatically lower production costs made even lower by product placement. With Curry, it’s the clever use of blog-style community feedback, remix culture and un-edited reality entertainment all delivered via a new distribution channel that allows time shifting and user control.

Freed from the constraints of government regulation, and media company ownership (no need to appease a desired demographic) Dailysourcecode is a fountainhead of new ideas with a revolutionary distribution model. Listen to it when you want. And if you find parts boring, fast forward.

Compare this to NPR or Howard Stern. Their content is heavily edited and only occasionally interesting. They try to put the best stuff on during drive time. If you are not in your car, tough. And the commercials – 20 minutes straight at times with the Stern show. Dailysourcecode is not better, it is much, much better.

The question is how many Adam Currys are our there? While many can duplicate his ideas, what holds the show together is his strong editorial personality. I suspect there are lots of future Adam Curry’s who will find their niche in our increasingly diverse culture. Thousands of mediums with thousands of messages.

And look out, because this disintermediates big media and the government. They lose, we gain and the transitions are ugly. But what can lawyers and lobbyists do to some guy in the Netherlands? Probably lots of bad stuff, but what about 10,000 guys around the globe? Ultimately Big Media will have to compete and settle for a smaller audience and less control.

He just needs a good tagline. How about Dailysourcecode, it’s got the eye of the tiger.

McNealy was right!

Make sure you are sitting down before you look at this site. Enter an address (or name) and it returns a list of everyone who has contributed to a political party or presidential candidate near that address. It includes name, home address, occupation, amount and cause. It even includes a handy map. It’s a dream come true for direct marketers and identity thieves. Enjoy spying on your neighbors!

Bet you will be thinking twice before you contribute to a political party.

If Mary Meeker Writes It, It Must be True

Interesting research from Morgan Stanley today. Basically she postulates that blogs are going to be huge – user generated content + easy syndication + the Long Tail equals money making opportunities for the internet behemoths. She likes Google because they own Blogger and can monitize via Adsense, Yahoo because they have the distribution to win in aggregation and can monitize via Overture, and eBay because they have reputation and a way for everyone to make money beyond advertising. Surprisingly barely mentioned – MovableType, Amazon and Microsoft.

But before I order my GulfStream over the internet, I must point out this is a really long term for a Wall Street analyst to be writing about. Most Wall Street research is about actions to take based on quarterly outlook, mixed with occasional thought pieces with mentions of companies who might go public in the next 12 months. I can’t see blogging/RSS effecting any public company’s quarter for many years. A straw poll at Gnomedex (with a dozen A list bloggers in the room) revealed that only a few people were making a hundred dollars a month off their blog.

Corporations using RSS as a more effective way to talk to their customers, on the other hand – well, we will be talking more about that later.

Who wants a licensing software company in decline?

Over at Bill Burnham’s blog he is suggesting that HP acquire BEA. Well I hope Carly has learned that buying a sinking commodity business in not a good idea. Yes, BEA is getting hurt by Microsoft and Oracle, but their real problem is JBoss and the LAMP platform (Linux, Apache, MySQL, Perl, Python, PHP).

If a developer wants to build an application he/she can ask the CFO for a $100k Oracle/BEA P.O. or they can download JBoss and/or LAMP for free. The developer’s downside is that the support is spotty for all applications and non-existent for the combined stack – developers can’t count on Sourcelabs & Spikesource being around in 10 years.

And therein presents a huge opportunity for HP. Of the solution vendors they alone lack an app server and a dbase. Now they turn this strategic gaff into an advantage by offering support for JBoss/LAMP. To their credit, HP has quietly become a force in Linux servers (Debian is run by an HP employee) and they have a nice relationship with JBoss. Cozy up to MySQL (or buy them) and you have:
1. $25k to $50k per server solution price advantage over IBM.
2. Recurring support revenue that would have gone to BEA/Oracle
3. Open source developers helping do your R&D
4. Commoditized your competitor’s high margin products
5. An exciting vision for customers and employees.

As Christianson taught us, commoditization moves value to adjacent layers. In this case, to services and perhaps hardware – areas where HP is a leader. The downside – this is sure to annoy important business partners like Oracle and Microsoft – but no more so than buying BEA. And it is not in Oracle and Microsoft’s interest to push more business to Dell.

So now that I have cavalierly “fixed” the enterprise side of HP. Let me note that they should spin out the consumer PC and imaging divisions into a new company. Said newco should acquire Adobe, and perhaps Macromedia. By making these products work together (which they don’t today) HP would be far and away number 1 in imaging and web development from professional to consumer.

The result is two companies, that wall street can understand. In a year HP shareholders will have $40 a share combined, easy.

Rule of 111?

Bain Capital Ventures has published a great summary of their research into successful software companies. If you are in the software business read it immediately. It hit on many of the themes of this blog.

Quality of customer value proposition is the key to any business. This can only be discovered working with customers.

Don’t scale the salesforce until you have a repeatable process.

But it includes a couple of additional insights – Price to profitability from day one. Of course, you can only do this if you have a strong value proposition.

Successful software companies follow the rule of 126. $100 million in revenue, 20% EBIT margins in 6 years. Of course they are looking at licensing companies. I wonder how many of the companies who made it to 126 crashed and burned a few years later due to the licensing models. My guess – most of them. Can you even build a $100 million licensing company in the world of open source?

I would like to see a similar metric for software as a service companies. As I look at this universe I don’t see any 126 companies. is a six year old company on a $120 million run rate. RightNow is a 9 year old company on a $50m run rate, but they had a very slow ramp. They are both GAAP break even or about 10% EBIT if you throw in deferred revenue. Yet they trade at 15x and 9x run rate revenue respectively, so wall street sees their prospects as pretty good. The rule of 111 – $100m, 10% EBIT, in 10 years?

You’re a nobody if you don’t have an iBook and a Treo

Yes, I am at the Web2.0 conference this week and I must say it has been very good – I could write several pages. Total A list of technologists and business leaders. My lunch table today – Ron Burgess, Tim O’Reilly, Mitch Kapor, Doug Carlston and Dan Gillmor. Too bad the room was so loud and I missed the good stuff.

Anyway, the big theme of the conference is that leading companies should open up their core competencies via loosely-coupled API and RSS syndication to allow new distribution models and product offerings. Basically the web services vision of 2001 + RSS and now featuring tangible proof of modest success – Amazon, eBay, Google. What I am still struggling with is the value for non .com companies. What is the value for a manufacturer? A real estate developer? Pretty thin.

Another big theme is China. I have not been there but from the tone of Mary Meeker – it’s their century to lose. Bill Janeway of Warburg (who cracked a private jet joke that went completely over the audience’s head (such a rarefied world) claims they have done more deals in China in the last 18 months than in the US.

Thoughts on Gmail

I got a Gmail account at Gnomdex (now that’s a geeky introductory sentence!). It has been fun to send out sarcastic e-mails to friends – “I am part of the technology elite, and you are not.” Overall it is not what I expected.

On the positive side – it is lightening fast. They must cache the entire service in memory. It’s the first web mail that rivals POP/IMAP for usability. Supposedly Gmail will generate an Atom Feed, which would be a great feature (reading RSS would be nice too). My account does not have a UI related to Feeds. I tried an auto-discovery at the Inbox screen. NewsGator asked for username and password, but then failed to find a feed.

On the negative side, I have used it for 24 hours and it has been unavailable twice already. In addition, whatever scripting tricks they are using for persistence has crashed all open browser windows (yeah, IE) three times. Seems odd for a company known for its technical acumen. Finally, I find the “conversations” part of the UI confusing.

Anyway if Steve Gillmor is right that this is the first step in Google taking over Office, then Microsoft can milk that cow for many years to come.

Sharing and Communicating

I have been working my way through IT Conversations – I burn them to MP3 and listen to them in my car – seems efficient to me, but most people think I am a geek for doing it.
Anyway a couple of absolute gems:

Dan Bricklin “People pay to communicate with those they care about.”
That’s the technology business in 9 words. He cites people talking on cell phones about the most mundane things vs. the failure of Mmode type content.

And related thought from Joi Ito – he rambles so I paraphrase – Blogging is a set of standards for easily creating, publishing, syndicating and sharing micro-content (today text and pictures, later music and movies). Micro-content is produced by consumers who pay to share. This stands in stark contrast to mainstream content producers who mass produce, distribute and charge money. The importance of blogging is misunderstood because businesses always overestimate consumer’s desire to consume commercial content and underestimate people’s desire to share and communicate.

Thought I would share that.