RIM – I'm not going to say it

But I did say it.

RIM’s 28% drop today ties perfectly into my last post. What is weird is that all the analysts were “shocked” that RIM had to spend more money on advertising to fend off the iPhone, spend more on R&D to make better phones, reduce profit margins to compete on price, and cut margins to go after consumers.

The writing was on the wall folks. If you expected RIM to keep those silly margins, you are blind. RIM makes cheap hardware, but because they were competing with Windows Mobile and selling to business customers that are not sensitive to price, they could keep those margins and sales growth.

Good luck RIM, see you when your market cap is under $10B.

Here are some fun links:

RIM is the next Palm

I have been meaning to post this for a while, got sidetracked, then ended up holding off as my prediction seemed to be coming through. Yet given RIMM’s recent resurgence, I feel my window has reopened. Let’s look back a bit to understand the Palm parallel. Shortly after its IPO, Palm went on to have a peak market cap of about $85B and was the darling of handheld computing, perched to lead the revolution. But then they made crap for years, and the market cap is now hovering at around $800M. Today, RIM has a market cap of about $73B. It’s NOT a $70B company. The writing is on the wall, and here are some reasons:

The iPhone
This one’s easy, but the biggest threat to Blackberry’s ongoing growth is the iPhone. The application infrastructure and user interface are without question the future of mobile computing.

RIM is a one-trick pony
Let’s be clear about one thing, RIM’s value is based entirely on one service it provides: push email. That’s it. It doesn’t make the best phones out there, they aren’t particularly sexy or usable outside of the core emailing functionality, and push email isn’t that defensible.

RIMM vs. AAPL Stock
It’s incredible but true that RIM has been outperforming Apple for the last 3 months, 6 months, 1 year and 5 year periods. Is that sustainable? RIMM today is worth half as much as Apple. Think about that. To use the venerable Chewbacca Defense “IT DOESN’T MAKE SENSE”. Apple makes the best computer operating system, the best computer hardware, the best music players, and the best phone.

RIM is on the wrong side of the innovator’s dilemma
I feel strongly that RIM will not reinvent its way to ongoing relevance because of their focus on the physical keyboard.

BlackBerry’s Quest: Fend Off the iPhone – New York Times: “THERE’S a reason that R.I.M. is averse to the iPhone’s glass pad. ‘I couldn’t type on it and I still can’t type on it, and a lot of my friends can’t type on it,’ says Mike Lazaridis, R.I.M.’s co-chief executive and technological visionary. ‘It’s hard to type on a piece of glass.’”

Note to Mr. Lazaridis: as the actual act of typing becomes a smaller percentage of the total time spent interacting with a particular device, the incremental speed benefit of having a full tactile qwerty keyboard is reduced. And that’s not even talking about the fact that in many cases, people type faster on the iPhone’s virtual keypad (myself included, I’m much faster on my iPhone than on my recently-retired BlackBerry Curve).
So good luck RIM, but you’ve peaked.

Disclaimer:I do own a (small) amount of Apple stock, a MacBook, an iPhone 3G, and until recently, a Blackberry Curve. Also, I am NOT an investment adviser, and the information in this column does not represent a recommendation to buy or sell stocks.

FSTA Conference in Chicago

I just wrote on the The Fantasy Sports Forum. We had some good clean fun at the game and after at the bars in Wrigleyville.

We also were able to compare notes about our various funding, startup, sports, and marketing experiences. Even brief informal conversations provide a great opportunity to get a feel for what you are doing. Yardbarker is about a year and a half further down the path from us, and Pete had some great insights about heading down that path.

Mike, DJ, and Pete are based in the Bay Area. We talked about the benefits of being out there, versus here in Boston. I’ve got my thoughts about that issue, and that is something I will probably dedicate an entire post to. The density of startups out there (especially Web 2.0 companies in SoMa) is really incredible. Where we are in Cambridge is pretty dense, but still doesn’t compare.

DJ and Pete had only been to Chicago once before, but Mike grew up on the north side of the city, so we had a chance to explain to the rest of the guys why Chicago is the best summer city in the country, but they pay for that the rest of the year.

Tomorrow we are presenting at the Web Innovators Group in Cambridge (about 1 block from our offices). It’s also my birthday. I’ll make sure to post something about that, I’ve got a huge backlog of posts.

Why Startups Fail – Agreement among contrarian points

About a week ago there were a couple of very interesting blog posts about why startups fail, taking different view points:

Why Startups Fail: David Feinlab, Mohr Davidow Ventures

vs.

How “Why Startups Fail” Fails: 37 Signals

Both are very interesting reads, and I won’t go through point by point to comment on them. I’ll just pick one point that both posts agreed with: The need for an Entrepreneur with a capital “E”. Both stress the importance of someone willing to make decisions, organize a clear vision, and help implement that vision. As the CEO of YouCastr, that is a role I am intimately familiar with.

In general, the role of a CEO is pretty amorphous. It is not directly measurable the way that sales (number of customers) or engineering (product progress) are. This is even more true for an early stage startup, where the role and the company are constantly evolving. One of the typical paths for a tech startup is the evolution from a product focus to a marketing focus. Ben Yoskovitz has an interesting post about the Evolution of a Software Startup from engineering and product focused, to sales and marketing focused.

It’s interesting to read about the importance of that Entrepreneur, and it’s something I take to heart. I set a pretty high standard for myself, but not letting my team down is an even bigger motivator. They believe in me, and as Dharmesh Shah says, “Success = Make Those That Believed In You Look Brilliant”.

Chrysler's Ridiculous Promotion

Does anyone else find it just absolutely inane (I can use a number of other adjectives as well) that Chrysler is offering a $2.99 Gas Guarantee? On pretty much every level you look at it, it’s just silly.

As a promotion, it feels pretty empty, because you can do the math pretty simply and realize that if you’re saving, say $1 per gallon, and use 20 gallons a week (which is a lot), you’re going to save about $3,000 over the course of the three years that the promotion runs.

From an environmental standpoint, it is encouraging consumption of something we all know is bad for the environment.

From an economic perspective, it is deliberately going against the market forces that are pricing gas so high.

From a marketing perspective, is it really sending the message you want? Are customers happy that you’re looking out for them, or are they looking at it as a band aid for more serious problems in the economy and in your fuel efficiency.

When Southwest buys oil futures to insulate them from potential jet fuel price increases, it’s brilliant. When a car company uses the collective national fear of rising gas prices to sell cars, it’s deceptive and evil.

Shame on you Chrysler.

Social Media’s Holy Grail: Identity

Social Media’s Holy Grail: Identity – and why Facebook will figure it out

There is a lot of discussion around the web about moving towards a more unified way to manage your online persona. Data Portability has brought a lot of attention to this space, and all of the big players are responding with their own initiatives. It’s exciting to see things moving in the right direction. It’s also interesting that the conversation is shifting to focus on identity, which I consider one of the biggest latent values of Facebook (more on that later).

Identity on the web and why it’s important
In the early days of the web, anonymity was the norm, almost encouraged even. It was portrayed as an alternative world where you could be something else. At the time this was seen as both an advantage, and also as a reason that the internet has too much noise and will never truly rival established businesses.
By and large, the focus on anonymity is dying down. We are moving towards an internet where it is acceptable and encouraged to be yourself. Part of this is people getting more comfortable with the ever present online world, and part of it is that the improved technology and wealth of information on the web makes it increasingly difficult to avoid having an online footprint. And if you already have information out there, it’s better to control and curate that, instead of having someone else do it. We are seeing this move towards identity all across the web, everywhere from personal blogs to social networks, Twitter to Amazon to LinkedIn. People are comfortable sharing more about themselves, but they are increasingly comfortable with a verified true identify on the internet.
Why Facebook can solve this
In its early days, Facebook required people to be who they said they were by limiting registration to people with a .edu email address, which almost invariably was formatted in such a way that your true name was used in that same .edu email. That created a culture of creating your true identity, linking up with real friends, in a safe environment. This culture was so entrenched, that even when they opened up so that anyone could join, people by and large consistently create accurate profiles and use their real full name. It’s nice not to have to mentally map a series of online usernames to people’s actual names.
So what Facebook has created is the largest, accurate, self-mainteined identify validation in the world. On Facebook you can pretty quickly validate if someone is who they say they are through pictures, mutual friends, name, colleges, etc. Notice the focus on accurate and self-maintained. Both of those are important. Myspace is lacking on the former, online directories lacking on the latter.

Facebook connect: Getting closer
A step I have been predicting for a while, Facebook has announced their Facebook Connect platform, basically creating an ability to leverage this identity that they have created, as well as the social graph. The value of this is incredible on a number of levels. As a user, I hate having to recreate my profile and social graph on all of the sites I use. As a founder of a social media company, I want to encourage people to create profiles on my site, while also understanding that it’s a barrier to entry that I wish I could avoid.
In addition to convenience, it has a number of incredibly serious and truly useful applications. Validating identity can address phishing attacks. It can prevent spam email by creating an framework where you can validate the source of the emails. It can simplify online banking, credit cards, and other purchases. It starts entering a territory that moves far beyond simple social networking.

Why others can’t (or won’t) solve this
I’ve laid my case for why Facebook will figure this out, and it’s really built around the nature of their social network being based on real people and real names. However, it’s important to look at some of the other potential solutions, and why they can’t or won’t figure this out.

OpenID doesn’t work
Whenever this topic about identify and single sign-on comes up, people invariable clamor about OpenID and how that’s going to solve everything. But it hasn’t, and it won’t. I understand the technical advantages of using URL’s as the core identify, but realistically it’s too cumbersome right now. I’m a huge techie, and I don’t use OpenID for a number of reasons. First of all, I can never quite remember my AIM issues OpenID. Where does the dash go, is it ‘openid’ or ‘open-id’, where is the slash, etc. Second, not that many sites are actually using it. And finally, even on a site that accepts it, it doesn’t really work that well. I want it to remember me, yet every time I use it somewhere, but instead I have to enter the entire ID and password. My point is that OpenID has created the right conversation, but is not the right solution.

MySpace is irrelevant
MySpace has made some strong moves recently to try to become more open, but realistically, aside from bringing us seizure-inducing profile pages, they are not an innovator. Additionally, MySpace has never had a solid identify backbone, resulting in a ton of spam profiles (Facebook is starting to see this, but has better mechanisms to address it), lack of clarity between people, bands, companies, groups (Facebook has done a good job of having companies create Pages to prevent this), and random user names that are difficult to pin down to the actual person. For Rupert’s sake, I hope the rumors of him trying to cash out are true, because MySpace’s value has certainly peaked.

Microsoft Passport was a non-starter
It failed for two main reasons:

  1. Nobody wanted (or still wants) to trust Microsoft with that type of central control to their core informaton
  2. It was too aggressive from the start, wanting to force everything to a central database that didn’t even exist

But the Passport history is interesting, because it shows that this is valuable to Microsoft, and was probably a factor in their investment in Facebook. The New York Times had a recent blog post highlighting this analogy:

Can Facebook Build a Better Passport? – Bits – Technology – New York Times Blog: “This is similar to what Microsoft tried and failed to build with its Passport system. AOL tried, too, and no one noticed enough to remember that it failed as well. More recently, there has been a movement towards a standard known as OpenID to allow people to log in to one site with an ID issued by another. But so far, it is too complex to use and hasn’t gotten much traction.”

(Via NY Times.)

Google and Yahoo aren’t moving fast enough
Realistically either one of these have the potential to address these concerns, but neither is moving fast enough to do something. Google is slowly opening up the value of their current sign on. I can use my single gmail account name and password to sign into all of my google services, but it’s still lacking. For example, the tie-in with YouTube is still pretty iffy, and their half way support of OpenID isn’t helping. Yahoo has a huge user base that they are now trying to make more social. But again, I wouldn’t bet on them figuring this out. Plus, realistically, Yahoo users are not on the bleeding edge of the web, and are likely to be the early adopters of this new direction.

Facebook as the Switzerland of the web?
Whoever (if anyone) ends up controlling or brokering identity on the web, will have to be neutral, trusted, and safe. In order to be neutral, it cannot profit directly off of that identity control. It will need to build a deep trust, given that identity will likely be the most valuable online currency. And it will have to create the safe and secure mechanisms to transfer that currency around the world.
Sounds a lot like the Switzerland of online identify management.

Talk: How Thayer prepares you for entrepreneurial endeavors

Last Wednesday I went up to Hanover, NH, to give a talk to a group of Thayer students and faculty at an event called Celebrating Thayer. Thayer is the engineering school at Dartmouth College, where I graduated with a Masters in Engineering Management in 2004, after completing my undergraduate engineering degree at Dartmouth as well.

I have transcribed as much of the talk as I remember from memory, based on my notes. When I give talks our speeches, I think and talk in outlines, not in fully written text. So I actually wrote this after the fact, not before. If you were actually there, let me know if you find any inconsistencies.

“How Thayer prepares you for entrepreneurial endeavors”

Thank you Ashley for the wonderful introduction, and for inviting me to speak here tonight. Now I won’t stand here and apologize for delaying your dinner, or promise to be as short as possible. Instead, I’ll promise to try to make this talk interesting and useful.

As Ashley mentioned, a little over a year ago I, along with two other Thayer grads and a fourth founder, started a company called YouCastr. It started with a basic idea, and continued progressing one step at a time. First we began meeting with the full team every week, then we started building the actual website. We incorporated sometime in June, and every step of the way it became more and more real.

Last summer we were working consistently around 120 hours a week between our day jobs and the startup. Most of that time was spent coding, building the website, working towards launching our private alpha. The day we finally launched our small private alpha, it was a truly exhilarating feeling.

It was a bit like the scene in the Matrix, towards the end, when Neo gets up after being shot, raises his hand to stop the bullets, jumps into Agent Smith, explodes him, and then flexes as the hallway bends around him. Well, that morning, on my walk to my day job down a tree lined Commonwealth Ave in Boston, I closed my eyes, flexed a little, and felt the corridor of trees bending around me.

A couple of weeks ago I was having dinner with my sister and some friends, and we were recalling that story. They, along with everyone else who I’ve told the story to, thought I was a bit of a freak. My response was: “I understand, but I believe”. I understand that I’m not really actually bending the world around me, but I believe in the abstraction.

On that note of entrepreneurial thinking, I wanted to talk about three key skills and areas that are extremely important to entrepreneurial endeavors, and how Thayer does a great job of preparing you for those.

Intellectual Flexibility and Curiosity

First of all, when you’re starting something new, you are most likely doing something you’ve never done before. If you’re being really innovative, you may be doing something that nobody has every done. In order to succeed in that type of situation, you have to be willing to get outside your comfort area, and to learn new skills. You need a desire and willingness to learn and become an expert in something new.

Dartmouth in general approaches education with a liberal arts approach, which is one of the main reasons I came to Dartmouth. More specifically, Thayer does a great job of fostering this intellectual flexibility with its multi-disciplinary approach to engineering. There are no departments in Thayer, so you are forced to study a range of engineering fields, some of which may be outside of your comfort area. Mechanically focused engineers study controls and electrical engineering, and vice versa. This really fosters an ability and desire to learn new things, which is critical for a startup.

Willingness to get your hands dirty

The second key thing that is required is the willingness to get your hands dirty, to actually do work. In a startup, there is no marketing department, no PR department, no engineering department, no janitorial department. Everything that gets done has to get done by someone on the team. Nothing is beneath you. For example, last summer I spent most of my time coding, even though I’m not a developer. As a team, we do all of our development in house, which has given us an ability to innovate quickly and more effectively.

At Thayer, this focus on doing and getting your hands dirty is reinforced from day one, starting when you machine your own Stirling engine in Thermodynamics, all the way through the graduate school classes. Don’t take for granted the fact that you actually machine your own components in the machine shop. I have plenty of friends at other engineering schools that never machine their own parts. Instead they make a nice drawings, with correct tolerances, and give it to the “black box” machine shop to get a final part. The danger with that approach is that you don’t appreciate the manufacturing aspect, and you don’t learn how to make that aspect of it better. When you get your hands dirty, you have a deeper understanding about what you’re doing.

Confidence

The last and probably most important trait is confidence. When you are doing a startup, the odds are against you. Sometimes it feels like you are taking on the world, and sometimes you actually are. You are going to be fighting against bigger, better financed, more established competitors, and in order to do that, you need to believe in what you are doing. You need to believe in your team, your abilities, and the reason you can do this. Having the confidence to move forward among these risks and uncertainties is incredibly important.

Thayer reinforces this confidence by focusing heavily on projects. When you do a project, you really own it, you can wrap your head and hands around it. When it’s done, you can hang your hat on it. Whether it’s designing and manufacturing a suspension for the DFR car, or building a satellite to launch into space, the success or failure of that project is in your hands. That is incredible rewarding, and builds a lot of confidence. The faculty here puts a lot of faith in the students. This allows you to fail, but when you succeed, you can really take satisfaction and ownership in that.

One final point to keep in mind is risk. Startups are inherently full of risks. The key is not to take risks blindly, which is reckless, or to avoid risks entirely, which is very limiting. The key is to understand the risk, and understand what your comfort level is. And remember, that there is a risk in NOT taking risks.

Conclusion

Thayer has fostered an intellectual flexibility and curiosity through it’s multi-disciplinary approach to engineering; has created the desire and discipline to get your hands dirty and do the actual work, and has engendered a deep sense of confidence through a project based curriculum. Given Thayer’s unique approach and the skills you gain here, you should realize that you are extremely well prepared to go out there and succeed.

So as you all go forward, into entrepreneurial and other career paths, I would implore you to seek to understand the challenges, understand the pain, understand the risks you’ll face. Understand that the odds are against you, that you’ll be entering charted territories. Understand all of that, but believe.

How not to sell: Never buy a dishwasher from Best Buy

I just finished one of the most painful non-purchases of my life. Thank you Best Buy.

About 3 weeks ago, I walked into Best Buy with the simple goal of buying a dishwasher to replace the one that broke in my apartment. I found a nice, mid-range Frigidair, and went to purchase it. I conveyed that I wanted the full installation, and the salesman signed me up for that, scheduled the installation, and I walked out seemingly happy with the transaction, looking forward to having a working dishwasher again. But that’s when the fun was just getting started.

The first error was that the salesman actually sold me the wrong installation service. Apparently the “Deliver and Reconnect” service that I bought, doesn’t actually mean “Reconnect”, unless it applies to the trivial and worthless service of plugging in a microwave. It really just means delivery. So now I had to purchase the true “installation”, refund the previous one, and re-schedule the appointment, which requires a licensed plumber in the case of the dishwasher. So, at this point I’m mildly annoyed, but stuff happens.

The day rolls around for the re-scheduled installation, and I hear nothing from Best Buy. Great, getting more annoyed. I call again, talk to a manager, review the process and reschedule for a third time. And they did it again, no call, no show, wasted another installation opportunity. Now I’m really annoyed, but that’s not even the kicker.

I went today to the store to give them one last chance. It’s a pretty simple request: deliver, install, and haul away. That’s it. But Best Buy has different people doing the installation and and the delivery/haul away. The delivery company doesn’t disconnect the old dishwasher, and the installer doesn’t deliver or take the old one. Now I’m completely incredulous. What they are proposing is completely worthless to me.

They are proposing the following convoluted three step process:

  1. Schedule the “disconnecting” of the old dishwasher, with the “installation company”
  2. Schedule the “delivery” of the new dishwasher (and the haul away) with the “delivery company
  3. Schedule the “installation” of the new one with the “installation company”, which will likely be a day AFTER the delivery.

I don’t know who thought this up, but it is ridiculous. I don’t want to coordinate 3 visits with 2 companies to do what should be a simple smooth installation.

As a customer, I don’t CARE what your internal processes are, I don’t CARE what you need to do to figure this out. All I want, is for someone to come, take away the old dishwasher and install the new one in one fell swoop. That’s it. I don’t want to wait an extra day with a new dishwasher sitting around my kitchen because you have set up a broken system where the people installing it are different than the people delivering and hauling away.

They need to spend more time reading Seth Godin’s blog, and less time expanding their product lines with things that don’t work. As for me, I’m off to Lowe’s.

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