Weblog Without Honor or Humanity

The ghost of ArsDigita.
I just started reading Entrepreneur America in which Rob Ryan, founder of Ascent (a succesful company founded in 1989 and sold in 1999 to Lucent for $25 bilion) who currently runs boot-cams for entrepreneurs, tells us how to create a succesful business. The book looks very promising. In the first chapter I found this:

One extreme example of a Technoid team I recently saw comprised over twenty “rocket scientists.” They had created incredible Web sites to build community and encourage collaboration - the users were interacting with the sites so much that they were basically generating the great content.

They were a freeware company, which meant that the software was given away. Revenue came from charging clients who wanted the company’s expertise on using the software. For that, clients paid $1 million to $2 million a year. Obviously the company didn’t need many customers to be a successful revenue-generating company. So far so good on the business model.

The problem was that the company had, at that stage, no administrative team, no sales or marketing people. It had engineers, and lots of them. In fact, when I met them they were hiring an accountant, but the accountant had to be able to code. Not all Technoids are this hard-core about the engineering thing. But given the strong bias of this particular founder, I was sure that even the receptionist answering the phones was probably going to be an engineer.

The company was a loose confederation guided by the founder and his co-founder. When I looked at their business model I realised three things. It was good, but they didn’t have the business people to handle the management issues.

He had promised the rest of the engineers that they would be able to cash in their stock at some time in the future. But he didn’t know how to do this while also keeping thight management control over his company.

After I met with him briefly, I pointed out a few key things. There were several potential companies that could spin out of his technology and, with some hard work and a little luck, eventually go public. But it would take time and several milestones before that blessed event. First, we needed a predictable revenue model. Second, we needed a management team with a track record of working together at that company.

I ended up drifting away from this team. I believe it could have been fun, but only if the founder were a little less Technoid.

Damn me if he doesn’t describe the fallen ArsDigita. So here we have another theory why ArsDigita failed: PG was too much of a Technoid. (And let’s forget Rob mixing up freeware and open-source).

Selling Microsoft.
Selling Microsoft is a solid book by someone who knows what he’s talking about. Doug Dayton, the author, was an Account Manager for OEM at Microsoft and in this book shares his ideas on how to be a succesful salesman. The book is a mix of sales-specific advice and generic “how to manage yourself” advice. Worth reading.

High Tech start up.
I bought High Tech start up because I’ve mistaken it for a different book on the subject of start ups I’ve wanted to buy because of good reviews on Amazon.com. The subtitle of this book is “the complete handbook for creating successful new high tech companies”. Completness is a weakness of this book. Author wanted to cover all the steps of creating a new company, from getting the idea, drafting a business plan, getting VC funding to doing an IPO. He did cover all of those topics but the result is just a boring lundry list of things to think about. It won’t hurt to read it but in real life nothing will be like what’s described in the book.

Recruitment is just like dating. Forums on Joel On Software are interesting on average but some posts are much more interesting than others, like this one on the power of endorsements.

Developping for cell-hones. Interesting post on slashdot about differences between BREW and J2ME (2 different platforms for developping apps for cell-phones).

Blown to bits.
I procrastinate by reading books. Recently I’ve been procrasting a lot which resulted in finishing about 5 books. Blown to bits is one of them. The main theme of the book is how the new economics
of information (enabled by Internet) are changing some of the businesses. Main thesis is that there is often a trade-off between reach and richness. E.g. a bookstore chain offers a great reach (i.e. they are present everywhere) but because of that they have to limit richness (i.e. number of books they offer). Amazon, thanks to the internet, can offer both richness (a lot of books) and reach and is one of the examples how Internet blows this trade-off to bits and as a result challenges established players in the market. First chapter has a great story of how Encarta blew Encyclopaedia Britannica to bits. Interesting read.

How to make an app. Brent describes his plan for creating small apps. Shortened:

• define precisely what the app does
• sketch UI on paper
• sketch UI in Interface Builder (that’s a Mac OS X RAD-type tool, for those stuck exclusively in Windows)
• write list of milestones (each milestone should be small)
• do the milestones, one by one

Finishing things is the hardest things.