PETEGRIF

The First Round Capital lawsuit - 2 Observations

A recent blog post by Josh Kopelman of First Round Capital outlines the story of the lawsuit that they and NEA successfully brought against Best Buy for a cynical appropriation of a portfolio company’s IP.  It is a feel good story.  I do however have 2 observations.

Firstly, it is ironic that this blog has been greeted by an avalanche of support from the same audience who vociferously critique software patents. This wasn’t a patent case but it was an IP case. I’m not going to spell out the irony of this but it wouldn’t hurt to give this point some thought. The one-sided conventional wisdom that rails against IP and patents is IMHO extremely dangerous.

Secondly, the blog post refers to the ‘hundreds of thousands of dollars’ they paid lawyers to pursue the case. This implies that such an investment is necessary to bring such a suit and this is misleading. In the event that a company has a case as overwhelmingly strong as implied in the piece there is no need to do other than find a contingency attorney.  This is the perfect case for contingency. A strong case against a company with deep pockets

On the Importance of Form Factor

A huge amount of attention has of late been focused on mobile.  It is understandable, that’s where the huge growth has been of late. This attention has inevitably led to tedious recitations of how ‘the web is dead’ which nonsense can be safely dismissed. Less obvious is what user experience means in a world of multiple form factors. A feasible end state is not one in which we all toss out our desktops and work on smartphones but rather one in which people have multiple devices with very different form factors.  It is not yet clear quite how we will divide labor amongst these devices but imho this is the way we are headed.

Is there a clue that anyone with money and market muscle is giving this some thought?  Well actually yes there is…and as is so often the case, it is Google.  In an interesting piece “Form Factors Exploration” (http://www.chromium.org/chromium-os/user-experience/form-factors) the writers explore 5 different form factors, and they don’t even touch on the smartphone and phablet. Why might Google be interested in such things? Imho the answer is simple…without a web there is no crawling, without crawling there is in indexing, without indexing there is no search and without search there is no Google.  In short Google has the most direct business interest in preserving a crawlable web. This web is indeed being eaten away at on the small form factor end by smartphone apps and on the desktop by siloed environments such as Facebook.  All the more reason then to develop technologies that (a) compete with apps (b) offer distinctive value that is hard to replicate in non-web environments.  Large form factors are ideal for case (b).  If I were Google I would indeed be pushing for cheap high quality screens with a UX hard to replicate on a smaller form factor.

The Web is Dead - #yeahright

Whomsoever is still laboring under the misapprehension that the web is dead hasn’t been watching Google.  The web giant has a profound strategic interest in the web remaining relevant and so is continuing to develop technology to continue to push the web to new heights.  Google IO 2012 demonstrated the blistering pace they continue to set.

The set of technologies that surround Chrome is unfolding into a rich development environment the aim of which is to provide a native style experience ‘in the browser.’  

One component of this strategy that continues to fascinate me is Native Client, which continues to evolve and NaCl alone may well harvest significant market share for Google.  Why?  Because if you can run games natively in the browser and if games continue to gain market share and become the dominant form of entertainment and if other browsers don’t support NaCl (even though it is open source) then gamers will install Chrome.  Having installed it new users will discover it is a great product.  More users for Chrome.  Hence the market will continue to bifurcate with IE being the workplace default (even as Google attacks MS’s citadel with chromium devices and google docs/apps), and Chrome for everyone else.  Poor Mozilla will get squeezed in the middle.

So Imho a combination of the efforts of Google to constantly reinvent the web and the overlooked significance of form factor mean that the web is not only not dead, it is thriving.

(I recommend a prolonged period on Youtube sucking up the presentations from Google IO 2012)

Security Meltdowns in the Air

A raft of recent exploits in which attackers have used sophisticated attacks to break through defense thought to be impenetrable for all practical purposes makes it plain that system security is going to rear its head once again as a critical issue.  The novel techniques used in the Flame malware and the recent success of cracking the RSA’s SecurID 800 device in 13 minutes are examples of such exploits.  The combination of  (i) lax security practices, (ii) “build your own parallel low cost supercomputer at an affordable price” and (iii) mathematical advances to reduce the search spaces, is moving the goal posts to the point that it has to be only a matter of time before criminal enterprises move beyond simple exploits and into serious security cracking.  One feels a major fraud is in the making.

Is the web dead? Hell no. And it ain’t no zombie neither!

This is a persistent contemporary meme but whilst it makes great link bait and I don’t blame mobile startups pushing their wares, I don’t buy it.

The proposition generally takes the form that mobile is killing the web and the argument, if you can call it that, is that apps are trouncing the web on mobile and mobile is growing like crazy, here and perhaps more importantly overseas in countries like China.  Furthermore, people are spending more time on mobile.  Indeed, they may even be spending more time on mobile than on PC like devices on the web.

But is it credible there are no enduringly use cases for web applications?  Can’t the web do anything better than a mobile app?  Isn’t it possible that a more likely outcome is that the web will continue to have a healthy existence for those valid use cases and that mobile apps will live alongside - each doing what they do best as determined by the market?

Perhaps history can teach us something.  Has the rise of social networking sites killed off all sites that aren’t ‘social?’  No.  Of course not.  Because there are valid use cases of businesses that just aren’t focused that heavily on the social graph and don’t benefit that much from social data.

Imho the ‘web is dead’ argument ignores the following:
a) there is value in links and there is some content better suited to the web than mobile apps
b) some content and some applications require a bigger form factor than mobile
c) some applications benefit from heavy integration of a great deal of different sorts of data and functionality - hard to do in an app.  Apps can nibble away at well defined ‘mini tasks’ but are not at their best when the application more complex and the workflow just ‘is’ tricky.  Not everything can be distilled into something simple.
d) the fact that people are spending more time on mobile than on PCs does not mean that their PC usage is cratering.  Most mobile time is new time.  People are using mobile in buses, on trains, snatching moments here and there all through the day and this time adds up but it isn’t the same kind of usage and the new usage doesn’t automatically displace the old.  The total time people are spending online is increasing.
e) most mobile usage is games and a subset of social networking activities.  A lot of this activity is not replacing traditional time online.
f) mobile is very well suited for short bursts of tasks and games but not for content creation
etc etc
Basically, mobile and desktop/laptop will coexist in technologically mature societies like the US.  Despite the valid enduring use cases for desktop/laptop the situation will likely evolve differently in countries such as China.

#Amazon crushing #tablets - told you so :)

Nobody likes a smartass. But what the hell. Here’s an extract from my post on this blog from April 21, 2011.

"Amazon has so many of the required pieces to create a soup to nuts offering.  The hardware is the tip of the iceberg but even here they have demonstrated remarkable competence with the Kindle.  They already have in place the world’s most sophisticated consumer merchandising operation.  They have the credit card information of countless millions and the trust of those consumers.  They have an enormous scaleable IT infrastructure in place.  Can you imagine browsing music, video, apps on an Amazon device and then purchasing with one click and getting fantastic customer service?  It could happen.  I suspect we will see Amazon enter the market this year with a very low cost device and become a huge player."


UPDATE:

Apparently Amazon are no longer crushing tablets.  Apparently their sales have “plunged.”  This article is worth reading.  ”Kindle Sales Plunge Made Amazon.com’s Gross Margin Look Better.”  http://seekingalpha.com/article/557151-kindle-sales-plunge-made-amazon-com-s-gross-margin-look-better  The article concludes that “The Kindle fire suffering the same fate so early, also means that Amazon.com’s attempt to mitigate Apple and Google’s dominance has already failed.”  This sounds unduly final in a market only two years old, but if Amazon’s entry into tablets has indeed run into a wall this is profoundly important for the whole market.  It is certainly possible to imagine Amazon competing at the low end but impossible to imagine at the high end.  So the question arises - if there a low end what is Amazon’s problem?  Either there is no low end tablet market or they have a product problem. It seems unlikely that there is no low end market and a product problem can in principle be fixed. The reason this is of general importance is for other manufacturers.  The number of competitors actual or potential with a soup to nuts offering is extremely small.  What does Amazon’s experience mean for them and their products?

Is Android a strategic asset to Google? (Part 2)

Last time we entertained the possibility that Android wasn’t as strategic as people might imagine.  More specifically, that Google might do better by attempting to emulate Apple - leveraging Motorola to go head to head with Apple - a soup to nuts offering.  It’s a possibility, but let’s now explore the possibility that Android is indeed strategic.  What would that imply? 

Firstly, radical steps are required to avoid the fragmentation that is hurting the whole infrastructure.  That means possible licensing changes.  Secondly, what on earth with Google do with Motorola.  When they purchased them I (along with others) thought it was for the patents and expected them to divest the rest of the business as fast as possible.  It’s been a while.  So if they don’t intend to go up against Apple, what’s the point?  A friend advises me that it’s just a tough asset to sell.  Makes sense to me.  Ironically, its very existence makes the Android problem more acute.  

So whether Android is or isn’t a strategic asset the status quo is not stable.  

Tim Cook - Apple & Intellectual Property

“I’d highly prefer to settle versus battle,” Cook said. “But you know the key thing that’s very important is that Apple doesn’t become the developer to the world. I’ve always hated litigation. We need people to invent their own stuff.”

Right on.

More Facebook functionality = better Facebook?

For some time I’ve had the uncomfortable feeling that Facebook is jumping the shark.  Not from desperation or lack of imagination, but from a creeping ‘featurism’ that is undermining the core experience.

IMHO Zuckerberg’s instinctual understanding of the social graph and his ruthless pursuit of that vision were brilliant.  There had certainly been ‘social’ or ‘community’ sites before, but his vision created something distinctive.  To his great credit he took bold chances and pushed the envelope (e.g. wrt privacy and sharing) beyond what his critics and even what his fans considered appropriate, yet he was vindicated beyond people’s wildest dreams.  This success stemmed from a vision of a world in which sharing is its own reward (if you haven’t read Facebook’s ‘Statement of Principles” then please do - it is an excellent statement of core values that inform Facebook and its relationship with its users).

But with great power and great reach comes great expense.  A business model must be found.  And users must be retained.  So there the pressure to continue to evolve the offering is intense.  Then there is the world of mobile and the onslaught of apps to be fended off. So continued change is to be expected but whereas many previous iterations felt bold some of the more recent offerings feel more questionable.

Obviously Facebook has access to gigantic amounts of data and makes its moves advisedly whereas I have nothing more than a prickly feeling at the back of my neck to go on.  But whereas the feed and photos are critical, the plethora of recent sharing add-ons is starting to feel as if the pudding is being over egged.  Surely it can’t be a realistic goal that everything you could possibly do or like be captured by one site to rule them all?  Isn’t there a danger that the search for the ultimate graph results in so many probes and shares and random pieces of content that it just starts to feel noisy and messy?  Let’s assume that it is perfect right now - the exact amount of content and solicitation of user input - what does that mean for where it goes next?  Is there a natural end to what any one such site can elegantly incorporate?  And if that is true then how does such a site prioritize?  IMHO photos are so emotionally laden that they are such a core offer.  But is everything?  The newspapers you read?  The mobile apps you use?  Is it possible that recent changes, which have certainly been heavily tested, represent local optima and the overall experience is suffering?

The more Facebook takes on the harder it is to digest and elegantly regurgitate.  Right now, it feels as if it is starting to have indigestion.

Is Android a strategic asset to Google? (Part 1)

At the Oracle Google trial Larry Page recently stated that he wouldn’t say that Android is a critical asset to Google.  Predictably this initiated cries of derision.Jay Yarow, for example, on BI “But that’s just dumb.  Android is very clearly critical to Google.  Otherwise it wouldn’t be investing so heavily in it.”  

Maybe Yarow and others are right.  But for the hell of it let’s just entertain the alternative possibility. What if Google has recognized that Android is a damaged brand, that it will be difficult or impossible to stop the carriers ‘adding value’ to standard issue Android and thereby continuing to fragment the offer compared with Apple’s clean offering?  (Let’s bear in mind that the Wintel alliance did not allow analogous fragmentation) What if post the Motorola purchase they have decided that rather than sell off the hardware business and hold onto the patents they will instead use the hardware business to launch a soup to nuts offering to compete head on with Apple (and Amazon)?  What if they think that a fragmented Android that doesn’t even guarantee them search on a carrier’s phone truly isn’t strategic?  They do all the heavy lifting for what benefit? What if they believe that there is a potentially an enormously bigger business for them competing head on with Apple than dicking around with carriers and hoping they get search revenues?  Apple has shown just how big a business being a leading smartphone provider can be.  And has shown what a soup to nuts offering means.  And how much consumers like it.  Google has the potential to provide such an offering.  What if Larry has decided that’s the way to go?  It is certainly an enormous business opportunity - much bigger than Android - and to grow Google Larry needs HUGE wins. If he’s thinking along these lines Android (as a free source offering) really wouldn’t be strategic any more, would it?  Just maybe he was saying what he really thinks?  

Business bs, hagiography and the correlation fallacy

Journalists and a remarkable number of tenured academics in reputed business schools are prone to inferring causation from correlation.  In the paradigmatic case they observe a successful company and try to infer why it was successful by reading the tea leaves.  Superficial characteristics of personalities and their personal style are elevated to new business principles to be emulate.  IMHO the overwhelming majority of such supposed analysis is mind-bendingly appalling.

Consider the case of Steve Jobs and Apple.  I have absolutely no knowledge of the truth of the reports but by all accounts he could be a total asshole - inconsiderate, dictatorial, unfeeling and manipulative.  He was however professionally successful beyond the wildest dreams of anyone but Alexander the Great.  So the process begins…why was he so successful?  Perhaps his assholedom was in fact an essential ingredient of his success?  Maybe conventional management theories have not sufficiency embraced dictatorship.  And so it goes.  Book after book, basking in the reflected glory and selling snake oil for the credulous. 

IMHO success is rather less easily captured.  In any large population there will be successes.  And what makes those companies successful is certainly in some measure a function of execution, but it is also in large part being in the right place at the right time.  Alfred E Neuman could have been in charge of IBM in the sixties and they would have continued to hit the jackpot and Steve Jobs could have presided over post WWII British shipbuilding and he could not have arrested its decline in the face of low cost foreign competition.  Timing the rise and fall of the tide is a powerful thing as King Canute discovered.

How confident can you be of the opinions of these analysts?  Not very. One thing you can be confident of is that if Apple falters, if it totters, then there will be no shortage of analysts who knew all along that such a culture was brittle, vulnerable in the face of setbacks.  

Why does this matter?  It matters because false recipes peddled by parasites to sell more books or publish more case studies don’t help anyone.  They look good on shelves in airport bookstores but they just muddy the waters and their magic recipes can confuse would be entrepreneurs and managers.  Real leaders understand themselves well enough to know they cannot pretend to be someone else to try to emulate their success.  For better or worse they will create a company in their own image, either consciously by managing the culture or unconsciously by failing to manage it so that it evolves by default.  In consequence some personalities create companies fraught with infighting whilst others have harmonious teams.  Either can be successful and either can fail.  There is no magic formula.  All a leader can be is the best he/she can be so accept that fact and get on with it.  Books on Steve aren’t going to help.  Most of the people who write these books couldn’t manage their way out of a paper bag and btw - you’re not Steve.  So ignore the hagiographic bogus analysis and do your best to time the tide.

Rumors of the death of the PC, the web and today’s dev frameworks are greatly exaggerated.

It is fashionable to declare various aspects of our current IT world dead.  Current supposed corpses include the web itself, PCs and any development framework that is not realtime concoction of js and node.  Obviously technology continues to evolve but are these things really doomed?  And if so, how long before we all know it?

IMHO the rumors of death are greatly exaggerated for several reasons.  Firstly, we just don’t know how users will respond to some changes that are afoot, secondly, some infrastructure changes take time to become sufficiently robust for anything other than pioneer applications and thirdly the fact that a change may be disruptive and is embraced by those who would disrupt doesn’t mean that a noisy advance guard has influence in proportion to the size of its megaphone.

Consider the death of the PC.  Apparently we are entering a post-PC age.  But are we?  What is clear is that new connected devices are gaining mind share and increasing access in circumstances where connectivity would otherwise have been impossible.  This is not new.  Laptops enabled access which would have been impossible if you had to carry around a tower.  I love smartphones and tablets, but I hate entering real data on them and apparently I am not alone.  Is it clear quite what the division of labor will be between these devices?  Do we even understand what the form factors of choice will be?  It’s not clear to me.  I have an iMac, Macbook Pro, a Macbook Air, a Kindle, an iPad, an iPhone and a Galaxy Note.  If use them for very different things.  And a device like the Note makes one wonder quite where the line between a tablet and a phone is.  It may well be that it is very different for different people.  I suspect that many of us will end up with multiple devices and that an ultraslim like the Air will be in the arsenal.  The fact that ALL computing is no longer done with a PC does not spell death for the PC.

What of the web?  Apparently the explosion of apps and the growth of one page sites that are actually js apps means the web is on its way out.  We will all be happily using stovepipe apps on mobile and reluctantly occasionally accessing websites that aren’t really websites.  IMHO this is highly unlikely for the foreseeable future. There is an enormous amount of content ‘on the web’, which can be accessed by URLs and this is incredibly valuable. Furthermore, many of the organizations who have put this information up on the web have an interest in it being readily accessible - not everyone is Facebook. And even if this were not true the massive inertia will make changing this situation take forever.

Last but not least, development frameworks.  Old style frameworks like RoR are doomed in the face of the wave of new js ‘frameworks’ like Meteor.  It’s exciting stuff, but client server computing is not revolutionary and it will take years before any such new framework is battle tested to the point that any sizable organization will risk their conservative ass on it.

The point is not that new and exciting things will not come along, nor that change is not afoot - it most certainly is.  But statements to the effect that this or that is ‘dead’ are IMHO way overblown.

Instagram & Community - a key strength

Unsurprisingly, much has been made of Instagram.  But IMHO there is one truly important fact, publicly available, that has escaped attention - the attention the company paid to building community.  A quick search of meetup.com reveals that there are 1051 Instagram communities holding Instameets.  And this was no accident.  Of the 12 employees listed in a BI piece, 5 were engineers and 5 were community managers!!  That is a remarkable distribution of effort.

Facebook & Instagram - inevitable

I am in the happy position of having said “I told you so” - on Fred Wilson’s blog.

Pete Griffiths 13 days ago Edit …There are other players but imho Instagram is the class act - they are more than a set of filters. Fb should just buy them. Strong synergy. :)

Obvious deal and the huge premium is not surprising.  Instagram clearly have massive upside as standalone - they can probably quickly pick up another 30 million users (Android) so suddenly FB is looking at buying the company with 70 million users and good prospects and having to pay any more.  I am sure they wanted to do the deal earlier but probably needed the IPO to assure the Instagram side that there was a real exit and seeing the execution on Android helped.