Is the cloud the beginning of Skynet?

I recently went to see the latest Terminator movie, Terminator Salvation. I have to say that I’ve always been a great fan of this movie, even though I don’t really believe in such a catastrophic future. Nevertheless, after watching the movie, which was pretty decent by the way (a little soft at the end though), I start thinking about how smart Skynet is depicted in any of the Terminator movies. I though, hey, if you could just nuke the datacenter where Skynet is, you would eliminate it. But then I started thinking about cloud computing.

For those unfamiliar with cloud computing (those familiar can skip this paragraph), it’s basically a new way of using computational resources (I’m oversimplifying the idea here though). Instead of buying or renting servers to deploy any web application, you rent computational power from a provider and pay by the hour. In a simple way, companies with spare computational capacity on their own servers, will rent you that time for you to use. There is no need to buy expensive hardware or maintain it. Instead you use the computational units the time you need them and as many as you need. That way you can take care of temporal spikes of usage in your applications by means of using more computational units and switching them off after the spike. The cool thing about it is that you don’t need to care about the underlying hardware you are using, nor the replication of your data. That is, the cloud system will maintain several copies of your data transparently so that if you loose data, you’ll still be able to recover it.

So, back to Skynet. Most cloud computing systems are built so that they are extremely reliable, that is, if any of the servers that are used fails, the system will switch to a new server transparently. The end user won’t even notice the underlying hardware had a problem. The same happens for the data too. Those advances are part of a field known as high reliability and, although it’s not perfect, they are getting there. In a close future, few web applications will experience downtime because of faulty hardware or problems in the datacenter (like the recent lightning that struck an Amazon datacenter). That means that servers will be so extended that even if you nuked one of the cloud provider’s datacenter, systems won’t go down. Most probably a bunch of other datacenter all over the world will take over and you, as a user, wont notice anything.

Now, if you think about Skynet and strip out the AI, the backbone of it is just what cloud computing is trying to achieve right now. How many years more will we need to build a system that has not a single point of failure? Scary thoughts…

LeWeb and Paris

Last week I had the change to attend, for the first time, to LeWeb conference in Paris. LeWeb, organized by French entrepreneur Loïc Le Meur and his wife Geraldine, has become one of the most important Web conferences in Europe in past years.

This is the second time I attend a European conference, being FOWA @ London, the previous one and I have to confess that the feeling was different this time. When I went to FOWA I was impressed. There were some amazing keynotes and I got to know plenty of people. It really gave me a taste of what was out there in terms of tech startups. It actually put my feet on the ground and reset many of my expectations with my own tech startup.

LeWeb was quite different, the keynotes where stellar, even more that the ones at FOWA, nevertheless, my experience was distinct. A year has passed, I’ve met plenty of new friends, most of them working in tech startups and my own perception of the tech startup world is much more advanced now that my company is starting to operate with beta users. As a side note, it’s also true that once you are in this particular industry, you start to demystify many of the key players an so, talks that a while back seemed amazing to me, no longer have that effect.

So, this time, it wasn’t about getting a grasp of the market, but it was more about getting in contact with possible clients and partners. To that extend I succeeded in meeting very interesting persons and had an amazing time hanging with many European startups.

The keynotes were different from the ones at FOWA. The ones at FOWA had, in general, a high degree of technical content. The ones at LeWeb where much more business oriented and some of them where very inspiring. All in all, I think I like the LeWeb formula the most. Being a tech geek as I am, there is a problem with tech keynotes. Working all day as a developer, you really don’t want to listen to more developers talking about the same stuff you do at work. On the other side, some of them that might seem like amazing talks, become CEOs and CTOs PR talks. I don’t really get it, if you are doing a tech talk, give it, but don’t put a cool title for your keynote and then talk about what your company does and how well are you growing.

In contrast, LeWeb had very refreshing talks that touched very dear subjects to me, inspiration, neuroscience and music. Funny enough the keynotes I liked the most were the ones that had nothing to do with technology or big tech companies. The most amazing presentations, in my humble opinion, were these ones (in no particular order):

• David Weinberger
• Itay Talgam, Conductor
• Linda Avey, Co-Founder, 23AndMe, Inc.
• Helen Fisher, Visiting Research Professor, Rutgers University
• Paulo Coelho, Author
• Introduction with Morten Lund – Chief Ideologist, Lund XY Global Ventures
• Robin Good, New Media Innovator, Explorer, Independent Publisher,
Master New Media
• Chris Anderson – Curator, TED
• Joichi Ito, CEO, Creative Commons

I specially loved Chris Anderson’s talk which nearly got me crying. I also had the joy of talking with him for a few seconds after his talk (thank you Luis Rull for pushing me to approach him) and managed to give him my business card, which, of course, he won’t read. But anyway, it made me immensely happy to talk with him as it’s one of the persons I have a deep respect for. You can find most of the keynotes in ustream, so check some of them out, they are worth it.

Finally and as a side note, I had the impression the organization was, ironicaly, quite disorganized, which lead to a chain of problems which bugged everyone during the conference. You could reduce them to cold, lack of food and lack of Wifi. Three things which are indispensable in any conference and all of them failed the first day. I hope next year the organization pulls their act together and get those issues fixed as the rest of the conference was a blast.

I’ll be going to the Lift Conference in February 2009 with my friends from Sandbox Network, so if you plan to attend don’t hesitate on dropping me an email.

The curse of the short term vision

One of the biggest problems I’m encountering over an over again is the lack of vision of most people. Then I realized it’s not really a lack of vision, it’s just that people make decisions only based on short term information.

I’m sorry guys, but I believe that’s one of the worst curse our society suffers. The typical conversation goes like this: “Yeah, it’s a great idea/project/company but, how are you going to make money in 1 year?” or “ohh, yeah that’s a great idea, but it won’t work now, you need the next generation to do that”. Few things work on the short term and, of those that work, most of them are bad for some other reason. Just take a look at the recent financial meltdown, greed and short term vision brought all markets to their knees.

I guess it’s easier to take decisions based on the current state of affairs, you have fresh data and choices “seem” clearer. Nevertheless this is just an illusion, because data is fresh, the moment you take it into account it’s already outdated and worthless. Doing plans or strategies based only on current data is pretty myopic and dangerous as you don’t know if the next curve is right ahead of you. Not only you don’t know if the curve is ahead you, but even worse, you don’t even know what will you do if you reach it.

For example, some days ago I was looking at a bunch of graphs from one of the biggest financial company in the world and I realized something. Most graphs and charts always show an exponential or linear growth rate of something. Paradoxically that stroke me as a lack of mid and long term vision. Expecting something to behave in the same way forever is just the simplest thing to do. Granted that no one knows exactly when things are going to flip, but anticipating things is a must if you want to survive. Those analysts just do the easiest thing, because growth has been positive in the past years, this will be the case for the next 10 years and if things start to go downhill we’ll just reissue a new report adjusting it. Is that vision or laziness? Is that what you pay an analyst for? Again, you can make mistakes, it’s normal you don’t know the exact date and time of when something important is going to happen, but you should at least expect downturns down the way.

There are plenty of examples of this behavior and I really suffer from it. Why is it so hard for people to think about the future and not just the present. Why do people, even if they grasp the value of something, keep reverting to the short term solution? Another example: “Oh, I want a house, I know mortgages are madness right now, but I really want the house so I’ll buy it, I know I can rent something and that would be the wisest thing to do, but I really need to own that home!”. Couple of months later we all know how things have ended…

I wonder how can we make people start thinking about things in the mid or long term. Anyone knows a secret formula for this? We should teach this mental gym at school. I think this is how things work now:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A: hmmm, how do you expect me to know that? Solution 1 works now doesn’t it? Then let’s stick to it.

And this is how they should work:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A1: hmmm, well I have no clue, I’ll research future patterns and then I’ll try to give an estimate guess.
   A2: hmmm, yes, analyzing all the data we have from current trends we can do an estimate guess that this solution will hold in the future.

An important point is that decisions have to be always reevaluated, specially if they are long term minded, as new information might change the way things look like, but thinking about not only what will happen now, but in a near future will, most probably, alleviate a lot of pain.

I’m sure many readers have experienced this in one way or another? Care to share?

Image credits: www.ashesandsnow.org, pe.elmstreet-online.com

6 things you shouldn’t do when pitching a VC

Very recently I had the change to listen to several pitches presentations and I understood many of the critics VCs and Angels say about them. When you’ve listen to 3 in a row you start to see a pattern. The following are a couple of lessons I learned by doing my own pitch and listening to the rest.

1. Do NOT add a balance sheet and/or cashflow analysis slide if you haven’t been asked for. First of, the slide will probably be crowded with numbers which the VCs won’t have time to read. Secondly, balance sheets should be in the business plan so there is no need to show them in a 20min pitch. And finally, adding that information is just looking for problems. If by any chance you screw up your numbers (which you have a fat chance to) and a VC notices it you’ll won’t look good.
2. Add the amount of investment you are looking for and from whom. This was my personal bad, I forgot to add a slide with the amount I needed to start my company and what type of investors I was looking for. Theoretically you wouldn’t need to add the type of investor as if you are pitching to one, you’ve already chosen, but in my case it was an heterogeneous jury so I got asked.
3. Ugly presentation design does matter. A presentation pitch isn’t just some random slides where you show your business idea, it’s your brand. In the same way you carefully choose your cloths (or at least you should) when giving a presentation, you should carefully choose your slide design. Please, avoid using canned designs, when you listen to 10 presentations a day, trust me, you can tell when it’s canned. Avoid using ugly color combinations like blue background with yellow letters or standard MS Word titles (yeah, you know which ones I mean, the rainbow title!). And for god sakes, don’t use pixalated images.
4. Answer the question. This might seem straightforward but what I saw is that most of the time, the CEO is so nervous that when asked a question they answer something completely different with no connection what so ever with what they had been asked. This makes you look bad, makes you look as if you didn’t listen or didn’t understand the question, or both.
5. Don’t tell the story of your company. I’m sure you wrote it in the business plan, no need to add a slide about it. Investors want to hear the problem and the solution, not your fancy background which I’m sure it’s interesting, but not for a 20min pitch.
6. Do NOT show fancy market size graphs. This is something Guy Kawasaki stresses and I agree with him. All presentations tend to have a slide with a graph from _insert_your_favorite_analyst_firm_here_ with the market size which, of course, is always huge and getting bigger. Simply, don’t. Throwing some numbers isn’t bad, but please, be original and avoid the “the market is huge and growing” song. And do yourself a favor and avoid any mention to the infamous “” if you don’t have detailed information to back it up.

I have to say I learned a lot by watching a couple of pitches and I now understand why VCs say what
they say. Most presentations are identical, same structure, same market charts, same texts. Be original and listen carefully to VC questions and suggestion, it will help you get better with your
presentations, at least it worked for me.

Want to add another point? Please leave a comment! And remember, if you like this blog, subscribe to the RSS feed here.

Why well funded startups waste money?

Sometime ago I had a conversation with a friend who asked me how much money I though was needed to get my startup going. I told him I though it would take 100.000€ to bootstrap it in the US, but that  it might be less. I still remember his skeptical face. I though he was going to tell me it was way too much, but to my surprise he told me it was way too low. I realized then that there is a great gap between bootstrappers and corporate drones. Enterprise people need like 5x to 10x more cash than what a bootstrapper needs but the truth is that this is just an illusion. It’s not true you need 10x more cash, it’s just that you aren’t used to save money.

As always, nothing is black or white and there are exceptions to this, but most of the time it’s just people flushing money down the drain without any real results. I really feel it’s because the money isn’t theirs and so, they don’t feel the pain it is to earn that money. Nothing like having your own savings at stake to think twice about spending it in stupid things.

The problem isn’t that corporate guys think this way, the problem is that I’ve seen many startups behave the same and I must say, it really shocks me. Wasting money is a bad habit, specially if you
are starting up and I think most companies don’t make saving money and resources a critical part of their company’s culture. For me it’s something fundamental in an organizations culture. Everyone should think about this, even when there is plenty of money, wasting it should be avoided.

What really strikes me is that the same behavior can be observed on peoples lives. Plenty of people ask us how are we (me and my girlfriend) able to live the way we do. The answer is that we don’t pay for stupid things. When someone tells you that they’ve spent 600€ in a pair of shoes I just roll my eyes. And don’t get me wrong, if you can spare 600€ a buy some awesome handmade shoes, please be my guest. The problem is that 99% of the times, people just can’t afore to do that and they buy them either way, which I must say, it’s just stupid if you ask me.

Sadly the only times I see companies trying to save money is when they need to bump their profits for the next quarter. The problem with this is that it’s too late. Creating a culture takes time and you can’t just reverse crazy spending overnight. Employees should feel that if they waste resources it’s their own payroll money they are wasting. The more you save, the more you get back at the end of the month.

And yes, I know, some readers are thinking, hey but I do save and my payroll is the same, instead those greedy bosses of me are earning much more to my expenses. This is both, true and sad, that’s why new entrepreneurs should start thinking about this issues from day one. Transparency is key for this to work and the problem is that not everybody is willing to be transparent. I would love to think
that money doesn’t changes people, but it’s not true, but if you have some solid guidelines and stick
to the basics I’m sure we could do much better.

Have you seen crazy spending in your company, in your startup? Tell us about it!

Image credits: www.savingadvice.com

Would you buy a cool Twitter name?

Leo Borj asks a very interesting question, should we start registering potentially valuable Twitter names, like if they were domains? This is a very common practice with domain names known as cyber squatting. You register a domain name with the idea of selling it in a future for a higher price to a 3rd party. You could also call it, name speculation. The domain squatting is a quite profitable market, albeit it sometimes touches some ethic boundaries. Anyway, the real question is, is it worth doing the same with Twitter names?

In my opinion, it might be worth trying, although there is a fundamental flaw. With domain names, it gets down to who registers it first (except in cases where you can probe that someone else is using a registered mark with nasty intentions and even though, it’s hard to get it back if you aren’t a multimillionaire corporation). In Twitter that law doesn’t holds, or better of, doesn’t holds always. Instead you have the following general condition:

We reserve the right to modify or terminate the Twitter.com service for any reason, without notice at any time.

As you can see, if you play the squatting game, you have a very high risk of having your account suspended if Twitter deems so.

Another question that arises me is, would people follow an account that isn’t from a real person nor a company nor a brand? I mean, would you follow a Twitter user named: @sexy_toys ? Personally I wouldn’t, but hey, I’m sure some people would if that account follows them first (the problem with this is that after the recent spam limits imposed by Twitter you have a fair chance of having the account suspended).

And finally, would you sell your Twitter account, either directly to 3rd persons or indirectly selling ad Tweets? I’m sure this is going to hit hard, I do think it would work if you play it well. Some basic ground rules I would like to see:

• Don’t spam your followers. Some recommendations are ok, but don’t transform the account into a damn billboard
• Don’t advertise things that no one cares about or that don’t have nothing to do with your Twitter audience.
• Don’t advertise or recommend something you don’t like or haven’t tested. It’s bad for your followers and it’s bad for your reputation.

After all, I’m a true believer of what Dave Winer sometime said: “because perfectly targeted advertising is just information.“

What are your opinions on the matter?

Next generation search engines

I was reading Scoble’s post about Windows Live Search and I realized what the future of search is going to look like (or so I think). I realized that the users don’t know how to express in a written way what they are looking for. Most of the times, you type a couple of keywords that should, theoretically, yield some results from which you can identify the one you are looking for. Human powered search engines like Mahalo have the same problems. They rely in human beings building pages with the most relevant information about a topic, but if you are looking for something not that common you’ll run into problems. Last but not least, semantic search engines like Powerset are closer to the goal, but there is still a big hurdle in the user’s way. How do you phrase, as a user, the information you are looking for? You need to type a phrase, but it’s not that obvious what that phrase should be, making it hard and slow to search things.

Now, the big problem again is writing down what are you looking for in a way the search engine understands it. How about another approach? How about a search engine that reads your mind so that it knows what you are really looking for? Most readers must have had a good laugh with the former statement but I have to say that mind reading devices are a big reality with their own field of expertise called Brain – Machine Interfaces (BMI). Several gaming companies are already using these devices to allow their players to control virtual avatars with their minds.

And how do these devices work? Generally speaking, it’s a helmet that reads neuron impulses in several areas of your brain. In the gaming example, they read the brain areas dedicated to movement, mapping neuron firing patterns to an specific movement in the game. This technology is still giving its first steps in the commercial arena, but I’m pretty sure  we’ll see more and more devices working with it.

Now, is it a big stretch to say that we can use similar devices to read our search intentions? It is indeed, it’s something that is still out of reach. Not because of technology but because of a lack of Neuroscientific data that can be use to pinpoint which brain areas we use when searching online. But it’s just a matter of time (I’m talking about 5 to 10 years here).

Big problems with this type of search, you not only need a web index, but a neuron firing pattern index and an engine to understand them and translate that into a web search query. Another big issue is brain privacy. Your neuron firing patterns would need to be transmitted through the Internet and stored somewhere. That’s a source of major privacy concerns that should be address before using a search engine like this.

Nevertheless, and with all the problems than might arise with an idea like this, I truly think we’ll someday see something like this and I have to say it will be awesome. I don’t know if any company is currently investing in developing a mind controlled search engine, but it would be a great project for a big company like Google, IBM or Microsoft.

Do you like the nextgen search engine? What problems do you see with it? Would you use something like that?

Sick of brands

Some days ago I was looking for a place to have lunch and I ended up eating at a wok restaurant. While I was eating I realized I’m getting sick of branded restaurants, shops, etc. Small restaurants are disappearing, giving place to branded chains that popup all over the place, alas Starbucks. It’s not that I have something against a particular brand, it’s more I’m sick of having my choices reduced to a minimum.

The same applies to many other industries. In the fashion industry I’m seeing the same. Big branded chains with shops all over the place. The good thing is that some of them do understand the problem. The biggest fashion retailer of the world is Inditex, a Spanish company, who’s flag ship brand is Zara

. You have them all over the world. The bad thing about Zara is that they’ve crushed most of their competitors. The good thing, to an extend, is that not two single shops have the same type of clothes. They geo-analyze their shops and pump different types of clothes according to the local neighborhood market. Of course, this is just to a certain extent and not all clothes are different.

The solution? As Zara is doing, keep the brand, create different shops. And I’m not talking about creating different brands under the same company (Inditex has Zara, Massimo Dutti, Oysho, etc.), but about different shops within the same brand. Of course, this is VERY expensive, but it would at least give us more choices. You wouldn’t talk about Zara anymore, but about the Zara in main street, Zara in Union Square, etc.

What do you think? Is the global brand also getting on your nerves? What would you suggest?

Image credits: semaforoverde.com

Knowing your audience

Yesterday I went, as usual, to the monthly local entrepreneur meeting in Madrid called Iniciador. Rodolfo Carpintier, Spanish business angel and CEO of the only Spanish tech incubator named Digital Asset Deployment (DAD). His keynote was brilliant, some old school tips and some real pearls of wisdom.

First tip: Are you sure you need the money? I’ve personally heard this advice many times during my latest trip to Silicon Valley and I have to say I share it 100%. Sometime entrepreneurs think that it’s all about rising VC, but not all ideas need VC. Most of them don’t. Mine neither, or so I think (yet).

Second tip: Know who your audience is. This is an old one, but still worth remembering. Don’t go and pitch a VC when what you really need is seed capital. Vice versa, don’t go to ask for seed capital if what you need is $5M to start running. This is also true for entrepreneurs looking for developers, directors, etc. I had one guy come to me yesterday asking me if I wanted to be his marketing director. I respectfully decline and the incident got me thinking. Don’t go to an entrepreneur meeting looking for that profile, it’s a waste of time. Most of the people going to those meetings are looking for the same and already have their own ideas, startups, etc.

Third tip: Have a risk plan in place before going shopping. For me this was one of the best tips. It’s most often forgotten in most business plans. You need to show that even if you fail, if all hell breaks loose, you’ll still be able to return some money to investors.

There are many more tips, but I just wanted to highlight some. And excellent book for these type of tips is The Art of Start from Guy Kawasaki (still haven’t finished it yet, but I’m enjoying it very much).

Care to share some more tips?

Twitter as a marketing tool

It’s been twice in a week that I’ve talked with Marketing and Communication people about using Twitter for their companies and the answer has always been NO. It really strikes me, specially because both companies are part of the Tech Industry, one of them is even a well known startup.

The response I always get about Twitter is: “We don’t use it because it’s only for early adopters and geeks“. While this has been the case until very recently, Twitter is gaining critical mass at an amazing pace. Just to throw some numbers, Twitter has a daily reach of approximately 0.1% according to Alexa. That means that 0.1% of the Internet users access Twitter each day. But, that’s not the only thing, according to Biz Stone the Twitter API gets 10x that traffic, bumping Twitter’s daily reach to a very nice 1.1%. Right now it has broken the early adopter barrier and you can start seeing a more general use of it by online users. That’s the reason I think it’s the best moment to start using Twitter as a Marketing tool.

Why is Twitter a Marketing tool? Because it allows persons and/or companies the following:

a) Give a human face to the company
b) Keep your customers up to date with the latest news of the company
c) Listen to your customers feedback
d) Interact one to one with your customers
e) Keep key influencers (tech gurus, bloggers, journalists, etc.) updated about your company
f) Brand tracking

Who should use Twitter as a Marketing tool? Not everybody of course. Twitter users have a tech profile, although this profile is being widened by other online non-tech users day by day. This is something that many old school marketers don’t grasp. Everyday the digital breach between the online and offline worlds is diminishing. Currently you can see baby boomers buying food, books or flights through the Internet. You can see them chating, emailing, commenting on forums or writing blogs. Some of them are real social network junkies. Marketers have to understand that the profile of an Internet user is becoming much more general than it used to be.

So, again, who should use Twitter as a Marketing tool? I would say that it should be used by anyone with a company that is related to the tech industry. That would be websites, blogs, newspapers, software vendors, hardware vendors, musicians, … hell, everyone that can make business through the Internet. Right now that is mostly everyone!

Why are people going to adopt Twitter? It’s very easy, Twitter is Free and Simple. The sophistication level needed to use Twitter is close to 0 for any single Internet user. It’s ease of use is one of its strongest points. Also, the need to be connected and to know what is happening in other people’s lives is something inherent to humans. Humans are curious by nature, Twitter lets you be curious about other people at a never seen scale. The best proof of this are social networks like Facebook. What’s the real value of a social network? Simple, stay connected with your friends, or in plain English, know what your friends are doing. In that sense Twitter is much simpler and faster than any social network out there. In my humble opinion, it’s just a matter of time before all the social network late adopters take over Twitter.

Finally, why do I say it’s now the best moment to start using Twitter? Well, Twitter, as what happens with blogs lets you build a big audience. And the key concept here is “build”. You can’t start using Twitter and expect a relevant audience of 10.000 users following your account. Why do I say relevant? There are many Twitter users which think that if they follow many people they’ll get followed in exchange and while it’s true that this happens (byproduct of our society, people feel bad if they are being followed but they don’t follow you back), these type of users aren’t really listening. That’s why, even though you can do that, you won’t build a relevant user base. Your messages won’t be read by the users you want. The funny part of this is that the people that follow thousands of users just to get more followers, are usually so called “Marketing experts“. That’s pretty ironic if you ask me, as they should know better. So trust me when I say that building a reliable audience on Twitter takes time and good, thoughtful messages. That’s why it’s important to start now, so that when Twitter goes mainstream your company has already a good number of followers. As they say, the more number of follower you have, the faster you’ll get new ones.

Any experience with Twitter and your company? Please share it with us! Are you a Twitter user already? Follow my Twitter user http://twitter.com/abarrera

UPDATE: I found a very good hands on example of using Twitter as a Marketing tool.