Always New Mistakes

January 30, 2008

Because every word counts: Twitter experiences

Filed under: Business, Technology — Tags: , , , — Alex Barrera @ 3:47 pm

Recently I started using Twitter. I must confess I wasn’t very fond of it. I just didn’t understand what use I couldtwitter.png get out of it. Even though I’m still not a great fan of the service, I have to admit that it gives me some value. Many people try to describe Twitter, and most of them end up saying that it’s like a chat (irc, icq, etc.). My own definition would be that “Twitter is a slow motion chat where you get to decide who talks in it“. The key and really interesting part is the decision of who talks in the chat. For me that’s a huge difference between irc and Twitter.

From a business perspective I use Facebook to see what key people in my industry are doing. I can monitor which events they are going to, with whom they are talking, what posted items they are sharing. Again, the good thing about Facebook is that I choose who I want to be friends with. Nevertheless, one of the differences between Facebook and Twitter is that, for Facebook I always need the friendship to be approved, while on Twitter (except for protected accounts which are rare) I can follow whoever I want.

As for the quality of the information I must say that it’s just different. If you want to write about something and it’s long enough (be it more than 2 phrases) you’ll probably write it down in your blog. But if it’s just a link you want to share or an idea about something, you don’t have a tool to share it to a wide audience. Granted that you could write it as a blog post, but you risk burning your readers with a high frequency of posts with very few content. So, that’s where Twitter gets into action. It allows you to post your short musings to a different kind of audience. Getting back to the quality of the information, the good part of it is that you get to choose high profile twitters that you think might say or share interesting things. For example, Martin Varsarsky, Jeremiha Owyang or Mike Butcher are good examples of that. Again, if you don’t like someones content you can always “unfollow” them with no repercussion.

Finally, while reading a book from Ricardo Semler (Angel, thank you so much for the recommendation), I read a very good quote from Mark Twain: “I’m sorry I wrote a long letter, I didn’t have time to write a shorter one“. It holds an awful big truth, it’s harder to write small but meaningful texts than big cluttered ones. So that got me thinking about Twitter and its repercussions on heavy users. How will a 140 character restriction will transform there way of writing and even thinking? I suppose this is something we won’t see at first, but in the long row. I know that I’ve changed the way I listen to people. I’m so used to crawl hundreds of blog posts a day that I look for the essence of things and only if I like the essence, then I’ll read the whole post. This way of working is transcending into my offline life. Now I always find myself telling people to cut the crap and to get to the bottom line (I must say that people in general and in Spain specifically talk, way too much and say way too little).

I also think that, in the same way bloggers evolve and the way they write posts change with time (for better I hope), the same principle applies for Twitter. At first users just write about there life, and then they start to shift away from that and into a more information rich environment (this doesn’t applies to everybody though).

In conclusion, Twitter covers a different niche than blogs or Facebook dies and it targets a different audience. That being said, I recommend people that consider themselves information junkies to give it a try if you haven’t. You can follow me on my Twitter account and hopefully I’ll start changing what I write there. Twitter should read: “What are you thinking?” instead of “What are you doing?”.

January 28, 2008

Synergies do matter

Filed under: Business — Tags: , , , , , , — Alex Barrera @ 10:55 am

imag0274.jpgDuring Christmas I took a trip to Venice with my family. One of the days we decided to go to a classical music concert in one of Venice’s churches. Being a big music fan, as I am, it was pretty exciting. The concert was the 4 seasons from Antonio Vivaldi (If you haven’t listened to it I highly recommend it) and it was gorgeous. On our way home I thought about the concert and I was amazed at the musical complexity of the composition (the last time I listened to it was a long time ago). I thought about how music now our days isn’t half as complex, in musical terms, as it used to be. Not that I don’t like current music, I do very much, it’s just that it’s not as technically brilliant. And what has this to do with synergies? A lot actually, composers like Vivaldi, Wagner or Mozart came to Venice during a period where the arts and music were flourishing there. If you were a composer or a painter you had to be there, at least for some months. Venice, and Italy in general, became the center of the Renaissance and the most important place to be if you wanted to be someone. Many famous painters and composers had their studies in Venice and students traveled all they way around the globe, just to study with them.

Now, taking about the present, we are experiencing something similar in Silicon Valley. Some people argue that if you have a tech startup you need to be in Silicon Valley. Some others argue that it’s not necessary, that you can find similar tech hubs in Europe. There has been a lot of buzz about this, specially between Paul Graham and Ryan Carson (organizer of the FOWA conferences). Some argue that you need to be there because it’s where the VC money is, because it’s where all the big tech companies are, because it’s a place where you can find good engineers.

The reasoning behind these affirmations is, somehow flawed. In my opinion there is only one reason why it’s desirable to be there: synergies. It’s not about the money, there is plenty of money a startup can use (business angels, banks, loans, corporations, etc.). It’s not about the big companies (kind of. I’ll explain this later), you won’t succeed with a bad idea even if your office is across Google’s campus. It’s not about good engineers, you can find them elsewhere. Granted it’s harder, not because they don’t exist, but because they are scattered. So, if it’s not about all the reasons I underlined before, then what is it?

The single reason for being at the Valley are synergies. Due to its importance, Silicon Valley attracts very smart people. It works as a huge talent magnet. And it’s not only Silicon Valley, it’s Stanford and UC Berkeley as well. What I’ve seen while I was over there (yes, I’ve there for some months), is that people aren’t geniuses (some are synergy_ball.jpgindeed, but there are very few), it’s all about the environment. Having dinner over there typically involves at least 3 or 4 top persons of a given field, be it computer science, biology, literature, chemistry, mathematics, etc. Your ideas are evaluated by top notch scientists every single day and at every single conversation. That means that if you idea is bad, you’ll know about it pretty soon. On the other side, you’ll get incredible feedback and ideas from around you. That’s something you don’t find easily. I mean, you might get ideas from your buddies in your local town, but you won’t get feedback from the guy that invented Internet. Trust me when I tell you that there is a great difference in the quality of the conversations. And that’s what happens, you eventually start getting “smarter” by being around smart people. You adjust your line of thought to theirs and you boost your personal limits. That’s a synergy. It’s not about the sum of the ideas, it’s about boosting the collective ideas to levels well beyond the sum of each individual one. Obviously, Silicon Valley won’t transform you into a smart guy if you don’t have the brains.

sk-c-1367z.jpegAs I said before, it’s not about working next to Google, it’s about talking with the guys at Google and an infinite exchange of knowledge. Another good thing about synergies is that they generates feedback. Once you taste it, you get more and more and more. The more you get, the more you want. That means that you try to contact more and more people and your social network grows and grows. People at the Valley are always open to new ideas and newcomers and they try to foster healthy discussions. I talk about this because in many countries, specially in Europe, people don’t discuss, they don’t ask questions or worst, they can’t find people to discuss ideas with. And even though you might find a small group of persons you like to chat and argue with, it’s just at such a small scale.

If you read the first paragraph again, you’ll hopefully see the parallelism between the Renaissance and Silicon Valley. Why were there a huge number of awesome Italian painters during those centuries? It wasn’t a local dna anomaly. It’s because the brain is incredible plastic and can work at different rates depending on the outside stimulus. If these are smart stimulus, your brain can set into its higher gear, if the frequency of the stimulus is sparse, it won’t adapt to such high processing levels.

There is a problem with this environment though. It’s well described with this phrase: “can’t see the forest for the trees“. When you are surrounded by the same people and work on the same things, you can’t see the big picture and that can be very dangerous. That’s probably one of the worst characteristics of Silicon Valley. You always need to stay in touch with people from different places to avoid loosing the “big picture eye”.

I don’t want to make this post about how Silicon Valley is the greatest place in the world because it’s not. I just wanted to analyze the power of synergies and how the moment something gets democratized it diminishes the power of synergies. And that’s another problem with synergies. They withhold an incredible power, but at the same time they are very hard to obtain. You need just the right environment and that’s not always possible. For example, some centuries ago, University was something exclusive. It gather the best of the best. It was the center of all enlightenment and so it promoted synergies. Everyone that went to University (generally speaking) was there because they wanted to learn (and because they where wealthy also).

At some point, University was democratized (in Europe) and many people that couldn’t afford it where suddenly able media_20543_en.jpgto study and obtain a higher education. This was something incredible, as it promoted literacy in many places, but strikingly it had some secondary effects. This democratization rendered the high intellects apart, diminishing the power of previous synergies. The more mainstream something becomes, the more difficult is to build synergies. This is because in a big group of people, the norm is that most of them don’t care about learning. I say this last phrase with great grief as I would wish it could be the other way round. Nevertheless, when most of your environment thinks like that, it’s much harder to find brilliant people as they are scattered all over the place. Again, don’t get me wrong about this issue, I’m not defending the elite schools or Universities either.

In conclusion, getting the right balance between elitism and mainstream and being able to maintain a reasonable number of synergies can be a very tough quest. So, have you ever been part of a synergy with someone? What are your experiences?

Image credits: pburch.net, rijksmuseum.nl, gla.ac.uk

January 24, 2008

The Explanation Problem and why we suck at it

Filed under: Technology — Tags: , , , , , — Alex Barrera @ 12:57 pm

I’ve come to believe there is a huge knowledge gap between early adopters and “the rest”. Most of the early adopters are very tech savvy and have a special gift for understanding how things work. I confess I’m an early adopter myself and even though I love to be one, sometimes I feel I’m very disconnected with the rest of the world. This is specially true if you are an entrepreneur and you need to pitch your idea to investors, friends, potential users, etc. And of course, most tech entrepreneurs are early adopters, so it’s common.

question-mark.jpgThe problem arises when you are talking about something normal to you, be it Twitter, Facebook or Seesmic and part, if not all, of your audience isn’t an early adopter. You’ll probably get questions like “Sees.. what?. Suddenly everybody is looking at you demanding an explanation because, of course, 99% of them had the same question. Now, for someone that lives and breaths technology, it’s very hard to explain a new concept or service. We tend to use other tech terms to aid us in our quest to explain something which in the end just confuses your audience even more.

Of course, the reason behind this is that early adopters don’t think in the same way the rest of the world does. They’ve been absorbing such a huge technological background that they think everybody is like them and that everybody is capable of going from A to C without talking about B (because of course, B is rather obvious… or is it?). This problem isn’t unique to early adopters but to many other professionals like doctors or architects.

Now, I was reading Lee LeFever’s latest blog post where he gives the key for the explanation problem. I have to confess it was an “AHA” moment. Lee just nails it! He explains:

Often, when someone asks “what is…”, they really mean “Why does it matter to me?” By considering what matters to someone, the answer becomes different and more likely to give them information they can act on.

Why does it matter to me? What is that going to give me? How can I use that to make my life easier? These an similar questions are the cornerstone of this vexing problem. If you, like me, are used to deal with your family’s computer problems you might be aware of how hard it’s to explain our world to non tech geeks. Personally I tend to over explain the question instead of answering “yes” or “no” which is what really matters to my speaker. From now on I’ll try to answer asking me first the “Why does it matter to me?” question.

So, why this post matters to you? Because it will enable you to explain your knowledge to a wider audience.

Image credit: scanned.wordpress.com

January 9, 2008

America’s downfall: Hey teachers, leave us laptops alone!

Filed under: Business, Security — Tags: , , , , — Alex Barrera @ 12:58 am

Today I read this article via Slashdot: U.S. courts consider legality of laptop inspections. I’m shocked! Sinceprivacy-is-not-a-crimel.gif 9/11 we’ve seen many changes on border policies, but this one is, in my opinion one of the worst. It’s become increasingly difficult to do business in America. Believe me when I say this with great grief. I love America and coming from a Montessori school, my way of thinking and acting is much more American than European. Nevertheless, making business with or in America has become a nightmare, not only for foreigners, but also for locals.

It’s already close to impossible to get a working visa (H1-B), and even with an academic visa (like myself) you get questioned, fingerprinted and eye scanned. International conferences that used to have Las Vegas or other American cities as residences are beginning to shift their locations to avoid problems with their foreign speakers. Even speakers that come all the way from Europe to help and train the guys from NSA are being deported because of problems at the American border.

And now what? Well, it seems that now you can’t even bring your laptop with you! Don’t get me wrong, I understand that under some circumstances, it’s paramount to confiscate and analyze a hard disk in search of vigilancia.gifevidence. What I don’t get is why I have to give away all my personal information WITHOUT any warrant. I’m not a law expert, but from what I understand, if you want to confiscate a computer in someone’s house you need to seek a warrant first. That means that you’ll have to hand some evidence to a judge first and then you’ll be able to take the hard disk. What this court proposes is that while you have your laptop at home you are protected by the law, but the moment you try to travel with your computer they can bypass the law and search your hard disk. Well, I think that’s just wrong, very wrong. Not only because I don’t have a right for privacy, but because if I’m on a business trip I’ll loose my laptop and all my business data! So again, this attitude just keeps non American business people from traveling to the US. Considering that America is heading to a major recession and that the dollar is so weak against the Euro, I don’t think that’s the best strategy.

Anyhow, I do understand the reasons behind many of the new bills being approved, but I truly think there are better ways to deal with this. Again, this is just my humble opinion. I would love to hear what Americans thinks about these issues. Any takers?

UPDATE: I just read this post from TechCrunch which shows the dramatic trend US tech companies are taking due to the working visa cap and other problems with foreign workers. It’s clear that even US companies are looking outside US for new places in which they might continue growing. And I wonder, isn’t the working visa cap suppose to create more jobs for US citizens? Sadly, numbers tell a different story.

UPDATE2: New indicators of current state of matters in the US: “From 1994 to 2004, U.S. firms increased the number of people they employed in R&D jobs outside the United States by 76 % and employment within the United States by 31 %, while U.S. subsidiaries of foreign firms increased their U.S. R&D employment by 18 %.

January 7, 2008

Valuation snowball

Filed under: Business — Tags: , , , , , , , , — Alex Barrera @ 7:17 pm

Even though investors, entrepreneurs and industry leaders say the current technological bubble is different from the one in 1999, things are starting to get out of hand:

  • SugarCRM: Raises $14.5 Million
  • Ice.com: Raises $47 Milliondollars.jpg
  • Pudding Media: Raises $8 Million
  • Meraki Networks: Raises $20 Million
  • Affinity Labs: Acquired for $61 Million
  • Moniker: Acquired for $65 Million
  • Onaro: Acquired for $120 Million
  • Apertio: Acquired for $206.5 Million
  • XIV: Acquired for $350 Million

All those deals come from last week’s Techcrunch posts. I just did a quick search at TechCrunch’s archive from 2006 and I found some interesting statistics. Lets compare the ratio of deadpooled startups in 2006 versus deadpooled startups in 2007:

Deadepooled companies in 2006:

http://www.techcrunch.com/2006/01/10/searchfox-to-shut-down/ http://www.techcrunch.com/2006/05/04/want-to-buy-a-search-engine-2/ http://www.techcrunch.com/2006/06/15/myspace-nukes-singlestatus/
http://www.techcrunch.com/2006/06/20/myspace-feeds-the-deadpool-nukes-another-startup/ http://www.techcrunch.com/2006/06/29/couchsurfing-deletes-itself-shuts-down/ http://www.techcrunch.com/2006/08/16/ajax-calendar-kikocom-goes-on-ebay-offers-to-delete-accounts/
http://www.talkcrunch.com/2006/09/06/episode-11-elliot-noss-talks-about-kiko-acquisition/ http://www.techcrunch.com/2006/09/21/exclusive-zookoda-auction/ http://www.techcrunch.com/2006/10/04/audioblogger-joins-deadpool/
http://www.techcrunch.com/2006/10/16/livelocker-calls-it-quits-enters-deadpool/ http://www.techcrunch.com/2006/12/30/rawsugar-in-deadpool/

Total: 11

Deadepooled companies in 2007: See TechCrunch post.

Total:55

Granted that counting TechCrunch posts isn’t rocket science and that might not be the most accurate data source. Nevertheless, it’s quite interesting to see that the number of companies that went out of business this year is 4 times higher than in 2006. I haven’t counted the number of launches in 2006, but I guess the number is quite smaller than in 2007 (34 of them reported by TechCrunch).

The number of millions invested in tech companies also suffered an acute increment. In 2006 the investment ranged from $3 to $15 Millions with an average investment of $12.94 Million (all data taken from TechCrunch’s archive of 2006, and don’t reflect exact numbers at all but just a quick, probably biased, approximation).

A comparison with the investments I showed at the top (an average of $22.37 Million) makes my mind blow. In 2007 the number of investments, and the total amount of money per investment grew considerably (these approximated values don’t account for Facebook’s recent investments which would only rise the average).

What is the problem with this you might think? Well, not much at first. It’s great that so many companies are getting investments. It’s a good indicator of strong economical growth in the tech industry. The problem arises when companies start getting valued higher than they really are. It’s true that it’s very hard to valuate a company, specially a dot com company with millions of users but no revenues, but some of the acquisitions and investments are just crazy.

social-bubble.png

On one side it’s great news for all entrepreneurs like myself. It’s getting easier to get investment and it’s also easy to reach a good exit deal thanks to all the acquisitions we are seeing. On the other side, it’s a dangerous situation. I reckon we won’t experience a bubble burst as big as the one in 1999, but when this trend stops we’ll have to face hundreds of deadpooled companies and many VCs will lost big amounts of cash. As a side effect, hundreds or even thousands of engineers will be laid off. I don’t like apocalyptic visions, but I’m afraid there is way too much expectation and we will suffer this. As many economist know, the market will self regulate itself. Just watch and see!

Image credit: bigmouthmedia.com

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