Shaving With Occam’s Razor

I’ve been a little bit lazy recently. I promise I’ll do better!

Here’s my latest column from the Khaleej Times. Enjoy.

http://short.ie/yx53e3

I’m pre-empting my KT column ever so slightly with this post, but I’m interested to read that both Informa and Juniper research have both released reports suggesting that Android device sales will be greater than iPhone sales by 2012 (or 2013 in Juniper’s case).

I have been saying for a while now that Android devices were going to be huge. The operating system is easy to understand, looks cool, and has pretty much all of the features of the iPhone. Now that developers can charge for apps in the Android Marketplace, we’re going to see an increase in the number of applications available. At present, there is more choice and variety in Apple’s App Store. I’d happily wager that won’t be the case within 12 to 18 months.

I wasn’t mad on the G1 (although it seems Nokia like it - their forthcoming N97 has a lot in common with the design of the HTC device), but it did what it was supposed to do - it showcased Android, and it worked. Pretty and cool can come later. And they are coming. I saw a few Android enabled handsets at the recent Mobile World Congress in Barcelona, and they looked the business.

The most interesting thing that struck me was that the coolest handsets I saw were not made by Motorola, Nokia, Samsung or LG. The handsets that I wanted were made by the Chinese company YuHua. It’s worth checking out their website to take a look at their business model. It’s a pretty interesting idea. That’s an aside. The real point is that a small, unheralded manufacturer have managed to make a device that made me want to ditch my iPhone. With Android being open source, we can expect to see a lot more innovation from smaller companies like YuHua. We can also expect to see cheap handsets hitting the market before too long.

The real opportunity with Android is that it’s going to appeal to the 98% of people who won’t be able to afford an iPhone. Imagine the uptake in mobile Internet when Motorola release a cheap Android enabled handset. What’s more important is the impact this will have on the developing world. The reality is that a huge propotion of the world’s population - particularly those in Africa, the Middle East and parts of Asia - will have their first interaction with the Internet on a mobile device. I would suggest that there is a better than average chance that the device they use will be mass produced (maybe even by YuHua), and will run on Android. The iPhone will always make a pile of money for Apple, and future iterations of that device will doubtless have fans (me included) salivating. For the rest of the world, Android will be king.

Incidentally, for more on Google and the mobile opportunity in the developing world, have a read/look over what Eric Schmidt (Google CEO) said to Charlie Rose here.

I should start by giving credit to my friend Conor for the title of this post. We are both working on a few different projects at the moment, so our interaction tends to take the form of @ replies on Twitter or short form email exchanges. Anyway, Conor made the joke that in these grim times, it’s a case of work your bollox off, or get laid off - which he called a kind of Darwinistic ideal. Which brought me back to thinking about economic Darwinism.

Economic Darwinism is the same as any sort of Darwinian theory. It’s based on the survival of the fittest. Which encompasses survival of those willing to work hardest. If you look at the people on my Twitter feed, you’ll see posts from people who starting work at seven am, and are still taking calls and working at 10 or 11 that night. Granted, a lot of those people are entrepreneurs; for whom the concept of an 8 hour day or 40 hour week is laughable. However, I see the same patterns developing with a lot of my friends, who don’t run their own businesses. The worrying thing is there are also those for whom the cull is coming.These are people that, during the boom years, could keep you waiting on hold, or keep you waiting at home for them to come and fix a problem. The people who were getting paid absurd amounts of money while providing poor customer service. The people who thought they could get away with this indefinitely. And it’s a long list of people - from those in the construction and allied industries to restaurateurs and publicans.

Niall had an interesting piece on his blog recently, saying up to 25% of restaurants on one bank’s books were in trouble. If that’s even partially true across the board, then the ‘hospitality’ industry in this country is in for a real kicking. With that said, maybe it’s no harm. I’m lucky enough to eat in restaurants reasonably frequently. And the honest truth is that a lot of places are rubbish. Bad service, average, samey menu as everywhere else, and frankly, rubbish food. Will economic Darwinism close these places down? Absolutely. Not even Ramsay’s patented Kitchen Nightmares approach could save them. Is this a bad thing? Yes and no.

Obviously, as a small business owner, I hate to see anyone go bust. The reality is though, sometimes people have to accept the reality of their situations. I have met a great many business owners who have been unwilling and frequently unable to see the writing on the wall. I am using the restaurant industry as an analogy, but it applies across the board. If you treat people like shit, and serve them crap, then you don’t deserve to stay open. Simple as that. Survival of the fittest.

I also think, that all of these bailouts are counter productive. I can understand the need to recapitalise banks. And I understand the fear of letting one of the big three car makers in the US go bust, but aren’t these bailouts simply perpetuating a system that has failed. Why have the big three been losing market share? More people have been buying imports. And why have they been buying imports? Cause GM, Ford and Chrysler haven’t listened - haven’t produced higher quality cars that get better mileage and have higher resale values. Will $25 billion dollars make them listen? Unlikely. Look at how the banks have behaved since they were bailed out. Humility and gratitude? Not quite. In a truly Darwinian environment, some of the banks would have folded. The least shitty would have survived. Life would have continued. Have we solved the problem or merely postponed the inevitable on the banking front. I hope the former is true, but I suspect the latter may come back to bite us on the ass.

So what to do? This is one the best articles I have read in years. Thanks to Lloyd Davis for the link. Read it. And then think about it for five minutes. And then read it again. I’m not saying it’s perfect, but it’s a start. The old systems are going to be around for some time to come. That’s not to say that they’ll survive. This Global Credit Crunch, or GCC as my acronym-loving girlfriend refers to it, could be the start of a Darwinian cull. A spasm of sorts that will hopefully address some of the fraudulent charlatanry of the recent past.

In the meantime, I know a lot of people disagree with him, but Jason Calacanis’ 120% time idea is not such a bad one. I’m not in total agreement with the 6 day work week. I’m not sure how Tim Ferris would react to the idea. However, working slightly harder for slightly longer is not necessarily the worst advice in the world right now. I look at the people I referred to earlier, who are busting their arse, day in, day out; offering great products and services, and I hope that they, and me are the ones this particular bout of natural selection avoids.

So Wired magazine reckons blogging is dead. It’s all about Twitter, Facebook and various other microblogging tools and social networks. So is it time to cancel my domain renewal and stop writing? No. It’s not. There’s no denying that some huge ‘blogs’ have come to prominence over the last while. And there is a lot of noise out there - some good, some bad.

At the same time, there is a huge opportunity opening up for bloggers and particularly (in my opinion) for people and/or organisations who are involved in liveblogging. These guys are doing some cool RSS feed applications for the iPhone and for Android. Now, I know a lot of people are saying that this will result in a lot of rubbish applications in both the App Store and the Android marketplace, but it’s also true that it will bring a lot of good blogs into people’s lives in a more accessible fashion.

Why liveblogging? I’ve been thinking about this a lot recently. Especially in terms of the sporting world, which I have been a part of, in some way, shape or form for the last decade. A lot of my friends work in offices. In said offices, Internet filters prevent them from accessing all manner of sites - from facebook to news sites. This means they’re out of the loop on everything from inane commentfests on people’s photos on social networking sites to announcements about world events, sports and so on.

Thankfully I’m not in that situation, but I am away from my computer for chunks of the day, and one of the things that annoys me the most about the iPhone and the App Store is that there aren’t enough applications that give me the news I want to read. The New York Times app looks great, and has fantastic content, but it’s buggy as hell, so I’ve deleted it from my phone. The Bloomberg app is pretty good, but it can lag a lot, and it is very slow to update. I’m amazed there is no BBC app. I’m astounded that none of the Irish or English papers haven’t put together a half decent application for the iPhone. They’re not expensive to make. They might not be massive revenue generators right now, but being on the second bounce of the ball is never a bad thing if it’s cheap, cheerful and easy to do.

The Apploop guys open up a new opportunity for some level of grassroots/guerilla reportage on all manner of events. It’s a great opportunity for people who are trying to start out in journalism. Like everything else, the good will out. A lot of people won’t bother with liveblogging, but if they do, I think they can tap into something. I’m not saying it will make a millionaire of them, but it would be a good way to get started in journalism. And I’m not just talking about liveblogging. I’m sure there would be a huge amount of interest in kyte or qik feeds of any number of press conferences. The protests at Dail Eireann today, the announcement of the squad for the Autumn Rugby Internationals - all of these things have a significant audience who cant be there for one reason or another. It’s small scale stuff here in Ireland at the moment, but it will get bigger. And in the States, it has the potential to be huge. Hopefully someone will take the bull by the horns and try it. Blogs are hardly dead. They’re at a crossroads, and where they’re headed is pretty exciting.

via slumpolitics

The pride of Johnstown, PA

Rick’s post the other day covered the same issue. Grim.

The Xbox Live constituency might not seem like the most important in the world. Especially in the context of the current American Presidential race. Consider this though - there are more than 12 million Xbox Live users at the moment. In terms of American states, that would make Xbox Live the seventh largest state, with around 20 electoral votes. Obviously that’s a very silly thing to say, as not all of those 12 million users have a vote in the election, given that a significant chunk of that 12 million live outside of the US. It’s still an interesting statistic.

It would seem that someone in the Obama campaign has been paying attention to this. Jalopnik has a cool link to some in-game photos from the new Burnout game on the Xbox Live platform. Have a look…

In game advertising is nothing new. Anyone who has played any of the EA Sports franchises over the last few years will be aware of the level of advertising going on - particularly within the FIFA games. The Xbox Live/PS3 Online communities offer brands and individuals a more dynamic form of advertising, allowing them to update and change advertising hoardings around the track (in the case of Burnout) on an ongoing basis.

So will McCain fight back? Will we see his campaign taking ads within the Splinter Cell game? And most importantly for those of us here in Ireland - which side will get their Lisbon 2 ads into games the quickest? My money is on Ganley & Co…..

As mentioned in my previous post, Sequoia had a CEO’s meeting recently where they advised companies on what to do in the current economic climate.

This is the presentation the companies were given. It’s not exactly fun reading!

The 56 slides of doom

There was an interesting comment on TechCrunch the other day. Basically, the poster was suggesting that the recession in general, and the slowdown in the housing market were both good things for the tech sector and start ups. The poster’s point was that once investors realised that putting their cash money into a market which is tanking at an incredible rate was a bad idea, they would then start to look around for other areas in which to invest their money. The reality is, sadly, a lot more complicated.

John Maynard Keynes was quite a clever guy. He was a prescient guy to boot. 72 years ago, he wrote a book called “The General Theory of Employment, Interest and Money”. It’s worth reading. Especially if you ignore when it was written. There was an op-ed piece in the Washington Post not so long ago which talks about the book, but I’ll summarise. Keynes posited that investors were occasionally siezed with so-called ‘liquidity preference’. In a nutshell, this means that they’re scared shitless of investing in anything but the most safe and sane areas. That’s why the price of gold has been going up, and why sales of Treasury securities have increased in the US. They’re traditionally the safest places to put your money.

So, is it realistic to assume that the current climate will benefit start ups and companies looking for Series A/B funding? Unlikely, given that the financial markets at the moment are characterised by blind panic and fear. Back to Keynes for a minute - his idea was that “when disillusion falls upon an over-optimistic and over-bought market, it should fall with sudden and even catastrophic force. Once doubt begins, it spreads rapidly.” Anyone who has watched the markets over the last few weeks will be well aware of how true that statement is. Here in Ireland, the level of doubt surrounding the liquidity (or lack thereof) of some of our leading banks was such that a phone in radio show on the subject almost caused a run on two major institutions.

The simple reality is that investing in startups is incredibly risky. How many businesses fold every year? In the tech sector, I have met VC after VC and investor after investor who only want to invest in the next Google. In many cases, they’re not interested in products or services with the potential to generate revenue, with the possibility of an IPO or buyout down the line. They are interested in giant killers, despite the fact that those companies are not exactly ten a penny. Even when a VC company or major institutional investor does pump money into a company, how many of them actually earn that back? The truth is that VCs and investors are taking educated guesses like the rest of us. Are they more educated than our guesses? Occasionally. More often they’re throwing shit against the wall to see what sticks. You can indulge yourself and do that when you have massive amounts of money behind you.

Now though, just like the rest of us, times are tough for VC firms and investors. Valleywag has a great story about a recent CEO’s meeting at Sequoia Capital. For those of you that don’t know them, Sequoia are a company who have invested in some of the biggest companies in the world - Google, Apple, Yahoo, Paypal, Youtube - you get the idea. They are clever. And very rich. And even they are taking a step back. Their companies are being told to cut costs, slash staffing levels and focus on making money. They also suggested that companies who aren’t making money are going to struggle to raise funding.

To be honest, they are right. If people think of the popular image of Silicon Valley startups, they think of all the perks that people enjoy - from free smoothies to free massages to games rooms and all things in between. I think it’s a pretty safe bet that those days are over and done with. Even Google are cutting back on the perks. A lot of that stuff was just reckless indulgence. Convenient if you worked there, but indulgence nonetheless. Indulgence that was effectively licensed by investors. I think the picture will be a lot different over the coming years. As companies come under increasing pressure to cut costs and make money, the management and VC/investor liasons are going to have to become far more imperious, Darth Vader types presences in their offices. Less fun and games and more work will be the order of the day. I’m not suggesting life in startups was easy before now. It will just become a lot more like work as most Joe and Jane Publics know it.

So just how bleak is the future for innovation and startups? There is no doubt that the recession will be deep, and it will be bad. There is no question that the amount of funding available to companies will be significantly reduced. However, it will also serve to focus people’s minds. Only the very, very best will be within as ass’s roar of getting any form of investment, and even that will be predicated upon an amazing product and an even more amazing business plan. Notional business plans that rely on unrealistic future advertising revenues will be bumped to the bottom of the pile. I suspect that companies that have some sort of freemium model will be better placed to raise money. I think we’ll see a grudging acceptance that the subscription/paid model still has legs. And I think we’re going to see a lot more collaboration. We need to. There are too many companies doing variations of the same product. Pooling resources and ideas is not always easy, but it works. Two/three/four/more heads are a lot better than one.

This isn’t the end of the world for innovation. And it’s not the end of the world for startups. There will always be investment. There will always be VC companies. There will always be new products and new ideas coming to the marketplace, regardless of the industry. It’s just wheat from chaff time.