Mitch's Blog

Much has been written about the new numbers on Apple’s accelerating market share against Windows in the last few weeks. The Business Insider article giving Apple all the credit for making this happen made me wonder–Is it really only Apple who should get credit?

Certainly Apple has done a few things that have enabled its position in the market beyond simple iPod/iPhone/iPad halo:

1. Moving to Intel. This enabled fast virtualization to come to the Mac vs the old x86 emulation software or weird boards to add x86 processors to the Mac. This meant anyone could run Windows on a Mac for the cost of Windows + $50 for VMware Fusion, or dual boot if running OS X wasn’t in the cards. This reduced cost and risk for folks who wanted to make the switch. Moving to Intel also enabled some of the focused word on smaller machines, such as the Air. I can’t imagine IBM or Motorola spending the R&D dollars to develop PowerPC chips of sufficient caliber and thermal characteristics for a MacBook Air; they didn’t even have the business justification (or technology) for a PowerBook G5.
2. Building the best hardware and doing it at a ridiculously good price. Remember when laptops like the 11” Air were premium products for executives and no one else? Now the 11” notebook is the 2nd cheapest Mac.
3. Great marketing. The Mac vs PC commercials are accessible to anyone. Changing the game from a geeky-specification driven purchase to actual objectives or, as was the original vision, an appliance purchase.

But more broadly, applications have changed:

1. Web-based email. Whether you use web-based email at work or not, many folks use web-based email at home. With Google Apps, lots of businesses can avoid Exchange mess. When my company was bought last year, I had to migrate from Google Apps to Outlook. It really sucked. I’m glad to be using Google Apps again.
2. Web-based applications are big in business as well. Salesforce and plenty of other vendors provide serious apps for business. I worked at a Fortune 500 a dozen years ago where every engineer had a Sun workstation on their desk for minimally one reason: Access to the bug system. Can you imagine? A $25,000 piece of hardware just to use one proprietary tool that didn’t need Sun performance or really anything else that Sun was providing? Every engineer had a Windows system as well for Outlook and the requirements-tracking software too. It was an expensive operation.
3. I can’t tell whether or not the Microsoft anti-trust settlement helped with some of the progress we’ve seen. Samba works with Active Directory, finally (though it didn’t until 2003); there’s many client and server implementations of Exchange (which is part of what enables Google Apps, Zimbra, perhaps also Apple Mail to play in an Exchange world?). Bruce Perens wasn’t excited back in 2002, but I don’t know what his perspective now would be.

These influences, in addition to the incredible excitement that Apple has built around first the iPod and later the iPhone and iPad, have enabled Apple to get to where it is today. I don’t think the halo effect, without the above, would have been enough.

I’m sure I missed plenty of influences. What do you think?

Recently I received a query via email that I thought would make a good blog post:

How do you conceptualize what software would be useful to an industry? More specifically, how did you determine that VMware storage automation applications would be useful in a large context to industry, and how did you design your method of accomplishing this task to be more efficient and desirable than the internal to VMware and your competitors?

You don’t have to answer in specifics of course, but I’m suffering from a classic “coders block” on applications that might be useful to a broad context and wondered if you had any advice on that topic.

I have brought seven products that I either invented or co-invented to market, and worked on about six other products in a major way.

The products that were successful came out of the following criteria:

1. What am I uniquely able to bring to market? I.e., what are the capabilities of my own technical skills, knowledge, and other people that I know who I could convince to work for me? What scope of products can we create? What ideas, out of that entire range of possibilities, are unique and are based on insights or experiences that few others have?
2. What’s missing from the market place? Of the things that I can uniquely do, what of those can be applied to things missing in the market?

Any market worth being in is busy. If no one is there trying to make money to solve the problem you’re solving, with some type of offering, it’s not worth being in that market. Some of the market scoping you can decide–and how you decide this will drive how you talk about your offering. If you scope too narrowly, no one will fit your target audience. Scope too broadly and no one will be able to find you. Sometimes it is tricky to know what market you’re in; you might think you’re selling software, but your customers buy your product as insurance. Or maybe you think you’re selling shirts but you’re actually selling a lifestyle.

My first serious business was a Mac software business, selling casual games that were targeted to smart women in their 40s who wanted a tough mental challenge. This was an underserved market at the time–few casual games existed beyond Tetris and few were sold with a concept of being “difficult”. Anyone can “match three” like Bejeweled, and lots of people like doing it, but can you solve this puzzle? With my first product for that business, I hadn’t quite identified what the target was–in fact, the first game was more of a concept test–could I finish a product, release it, get people to my web site, get them to give me their money, send them a license key, support the software, and so on? As it turned out the answer was yes. The second game I did was much more targeted to my audience defined above–and sold 100x more copies. While there was nothing specific in the game tailored to women, and I certainly had plenty of male customers too, I wrote advertising messages and picked placements that were targeted to women because I felt that my message was unique and unexpected vs other ads women might expect to see in those places.

The word “innovation” has gotten a lot of attention these days. I took a class at MIT’s Executive training program last year on managing innovation in large organizations. One of the key things one of the professors pointed out in the class was that innovation without solving a customer need is completely useless. This should be fairly obvious, but I’ve seen plenty of people lose sight of this fact.

So when you’re building a new product, you need to be solving a real customer need. That brings us back to the original question: What process enables you to figure out what would be useful?

At my last company, my partner and I spent hours just chatting about ideas–I would estimate over the course of four years, we spent over 800 hours brainstorming. What if there was a way to do X? What about Y? What if you did Y but with a hint of X? Would anyone care? We were developing products in an industry that we knew well–I had about 4 yrs of experience in that market and he had about 15. So we knew a lot of the attitudes of our customers, a lot of the concerns, some of the common problems that those customers face day in and day out. We were bringing our understanding of that market to a semi-new but semi-related space. We kept the brainstorming going from the very beginning when we first had the idea all the way through until when I left the company after we were acquired. We came up with several ideas for things we never shipped and a few key ideas that we did ship and did well.

Tied into our brainstorming, we did a lot of market research. Long before we had employees or venture capital, I was pounding the pavement, visiting customers, calling customers, searching Google for people posting in forums about the problems we wanted to solve, and posting on Twitter inviting people working with certain tools in Boston or San Francisco out for having a beer with me. We also did surveys with Constant Contact to help quantify what we were finding organically with people we could manually reach. The organic side helps find stories, and structured surveys with the right audience can help define priorities or narrow a focus once you’re able to describe better what you think is important.

If you want to build something big, you need to attach to a market trend that is real. Lots of people understand this, which is why you see so much “Mobile is the next big thing”, “Cloud is the next big thing”, and so on. But you still have to solve a real problem–in a market trend that is real–and not get creamed by the big players in that space. We felt the virtualization trend was real, so were comfortable attaching to that. Lots of companies saw this as well and tried building small, simple products, such as performance monitoring tools for VMware–but VMware is good at adding those features pioneered by third parties to their own management applications. At the end of the data, these companies were just publishing numbers exposed by VMware APIs into a UI or reporting system. The bar to duplicate that was very low. So you have to focus on problems that are hard to duplicate or spaces that are related but not in the big vendor’s core competencies.

There’s lots to be said about the process of inventing new products. Many people talk about Clayton Christensen’s book The Innovator’s Dilemma, but from a process perspective, some of the activities discussed in one of his other books, The Innovator’s DNA, is worth reading to see how folks approach solving these problems. I have had a copy of The Product Manager’s Desk Reference by Steven Haines in my bookcase for a while now, and while I haven’t read it cover-to-cover, it does cover a number of the research activities required to build a new product all the way through launch. And of course, there is the classic book Winning at New Products by Robert Cooper.

Elsewhere on this blog, I have previously written about some related issues with starting a new company. If you are starting a new company, be sure to check it out!

I keep getting asked the question, “Does the Nest thermostat save you money?”

I can only blush and say, “I don’t know.”

Isn’t that a bit silly? I have a “Thermostat 2.0″ and I don’t know the answer to this question.

Sure, it’s been a warm winter. But that’s not really the point.

My guess is that the Nest replaces two very simple types of thermostats: Programmable thermostats that had very simple schedules and thermostats with little to no schedule. What I’d really like is a way to put in my old thermostat program into the Nest web interface and have it show me the delta energy-hours saved (or not) for auto-away, the learned schedule, and remote adjustments. I almost never touched my old thermostat, but the schedule the Nest has learned is extremely non-trivial. Being able to understand the difference of how much the furnace would have run with the old schedule vs the new schedule would be very useful. Dollars saved (or burned) could be modeled by asking for the estimated energy price for the furnace per month (last month my furnace operation cost me about $170).

ROI modeling is complex and it can be hard to work up a model that feels legitimate. But I think for Nest, it could be done easily. If Nest had an API exposed, it would be easy for a third party to build some ROI tools as well.

When ROI can be easily expressed, the vendor can benefit from excited users talking about their ROI. But for now, I just have to say, “it’s a cool thermostat” when people ask me if it’s saving me money.

If you’re providing a tool or service, work with your customers to see if you can improve your ROI models. It’s an iterative process, but if you can nail it, you’re that much closer on your next deal. Would-be customers of Nest who ask me about the ROI story aren’t getting a good answer.

(Yes, the Nest includes some data on saving energy, but I really want to know how it compares to what my old thermostat would have done. And I want to see that energy saving data shown on the device itself on the web site and iPad apps. Those are my primary interfaces to the Nest, not the thing on the wall.)

For the last four years, I’ve been a happy business Comcast Internet customer. I just have Internet and voice with Comcast; no TV. I have 5 static IP addresses, and until earlier this month, Comcast has been rock solid with only a few minutes of downtime here and there. I am an outlier when I say that I love US Airways and I love Comcast. I don’t know anyone else who goes around saying stuff like that. In some areas, you might get hanged.

In January, I decided I wanted more speed, but I debated–should I upgrade to 105 Mbit down/20 Mbit up (about $380/mo) or 50/10 (about $190/mo)? I talked to the Comcast sales rep on Jan 4th and she suggested trying the 50/10 and see how it goes. So I said let’s do it. My install window was set for 3p-5p on Friday, Jan 6th, since they needed to upgrade my modem.

On Jan 6th, at 4:50pm, a Comcast tech knocked on the door. “If this goes well, I’ll be out of here in 20 minutes.”

The Comcast tech was a great guy, I really liked him. However, he was hanging out in my network closet until 9:30pm that night. My girlfriend asked if she should clean up the guest room so he could spend the night.

Why was he at my house so long? The initial modem configuration was a bit tricky to make sure my static IP addresses got moved to the new modem. This took a few minutes. After that, he wasn’t getting the speed that I was supposed to get–about 1 Mbit/s up. He replaced the modem. He replaced the line to the street. He called tech support several times. He eventually gave up and went home. The next day he called me and said there was some kind of signal interference issue in my block and that it would take a few days but it would get solved. I really liked this guy and I really liked Comcast, so I was easy going about it and ran SpeedTest.net on a regular basis. A few days later, around Jan 10th, the problem was fixed and everything was good. I was a happy Comcast customer.

I didn’t push the SLA issue with Comcast, but one of the reasons that the business Internet is twice as expensive as residential is that there is a shorter SLA. I work at home when I am not on the road and I require working Internet access. I initially wired my closet for both Verizon and Comcast, but never felt I needed to add Verizon–Comcast has been that solid. I am not sure what constitutes an SLA breach in this case, but let’s be honest, I couldn’t upload 500 MB files during this time–pushing large files to my co-lo in Texas would eventually fail. If I had a major deadline that needed this kind of activity, I would have been toast. But I didn’t and I liked Comcast, so I let it slide.

On Feb 2nd at 10:45 am, my Internet connection died. At 10:50 it was still down. I called the business support line and got a tech window of 1pm to 3pm. I noted to the woman on the phone that this was pushing the boundaries of the 4 hr SLA. She said it was all she could do. She might as well have been a United Airlines employee.

Around 2pm, a tech showed up. “Oh man, static IPs… I am not too good with those!” (paraphrased). He was a really nice guy, but not sufficiently trained for business Comcast deployments with static IPs. However, he knew this and so he called a co-worker who also came over. These two guys and a third guy on the phone spent 90 minutes in my house pondering the problem. The guy on the phone realized that my old modem had been recently deployed across town at a cafe with my configuration data in it. Once they realized that, they were embarrassed, apologetic, and noted that this happens constantly. What kind of business is Comcast running? One of the techs mentioned that they often deploy DVRs that are “erased” “refurbs” with old people’s personal data and recordings on them.

At this point I was losing my patience. My connection had been down for 5.5 hours. I had Comcast guys in my house for a total of 6 hours on multiple days with a total of 11 hours of downtime for what should have been a 10 minute operation. Comcast was sending out guys who were unqualified to work on my account and being very liberal with my time, patience, and SLA.

So after the Comcast techs left, I told @comcastcares on Twitter what I thought. @comcastwill was very active and responsive and indicated a “local leader” would get in touch.

Today, five days later on Feb 7th, I asked @comcastwill if there was any update. He indicated that Comcast had been trying to email me at my @comcast.net address. Why not email the address where my bill goes? Who knows? I have never read my @comcast.net address and have no intention of doing so now. @comcastwill fixed this and shortly thereafter I received an email from “Sharon” asking me to call her.

I had a few minutes this afternoon before a conference call and rang Sharon from “The Executive Office of Comcast” (their words). She said that Comcast was very sorry and would like to offer me a credit on my account for all the aggravation for taking my Internet connection down due to their own negligence.

Comcast reached deep into their pockets, did some soul searching, and concluded that this hassle caused by my desire to give them more money was worth about…. $6.

I literally laughed. “Why wouldn’t I switch to RCN right now?” In this area, I can pick between TWO cable companies as well as Verizon. She said, “I can credit you up to $20 but that’s all I can do.”

Sure I had short patience left for Comcast, but this was absolutely infuriating. I asked @comcastwill on Twitter, “Why did you guys waste my time for $6?”

Remember, the worst part about this is that it was self-inflicted. I decided to give Comcast more money, they botched it, and then offer me a credit of $6. If I keep this level of service with Comcast for four years, as I have for the last four years, that is $10,560 to Comcast. And I don’t even buy TV from them. Who made the assessment that a $6 credit is appropriate? Who thought to themselves, “If I were in this situation and the vendor offered me SIX DOLLARS–less than the price of a QP with Cheese meal at McDonald’s–I would be satisfied?” Isn’t Comcast supposed to be better than this? Aren’t they the model for customer service on Twitter?

I know sometimes things go wrong. I make my living designing and building technology products for medium and large businesses. Some of my customers pay a small amount of money ($20k) and some pay a lot more. I’ve been embarrassed when customers call with problems. That’s why I didn’t give the tech or Comcast any crap with the issues on the upgrade. But there is a point at which mistakes are no longer mistakes and instead are pure incompetence. What exactly is the process for wiping modems at Comcast? Apparently there isn’t any. Business, especially big business, requires process to ensure proper execution. Business also requires handling the exceptional cases when the vendor drops the ball and has to make it right. I cannot imagine taking a $6 discount to any of my customers.

I want a working Internet connection and I prefer it to be with Comcast. But I also want to be treated with respect. My consulting rate is a little higher than $1 per hour. But why turn this into a credit game? Get creative. Send me a Nordstrom, Amazon, or an Apple gift card. Send me a “Get Well Soon” bouquet for my Internet connection. Or call me, admit that you completely screwed up my upgrade, and have an actual conservation with me about it–find out the whole story before deciding “$6 and if he pukes on it, $20″. Don’t try to slice and dice what my time or Internet connection is worth. Because to me, it’s worth a lot more than anything that Comcast could reasonably offer.

Although this post focuses on the $6, the inhuman hand-off to an admin authorized to go to $20 but completely unaware of what went on really irks me too.

Update March 14, 2012: Someone from the “Comcast Executive office” called me yesterday and we chatted a bit. He said he would try to do a little bit more for me, but was very clear my contract doesn’t require Comcast to do anything. In any event, Comcast credited me an additional $103 + the bonus $20 + $7.11 (vs the $6 calculated above). I am glad the fellow called, apologized, and treated me like a valued customer who merits some respect. It took a while but they got it done.

I was reading a forum where people were talking about the new Swivl and saw someone complaining about the name “Swivl” being too weak for a “copyright”. I’ve seen a lot of confusion about what the differences are between a copyright and a trademark, a copyright and a patent, and a patent and a trade secret. Briefly,

A copyright protects a work that is authored. In the case of a technology product, this includes the source code, the documentation, and also marketing materials such as the web site or datasheets.

A trademark protects a word or other way to identify a brand. In the case of a technology product, this includes the name of the company, the name of the product, and any logos or slogans tied to the brand identity. Trademarks may be claimed but unregistered (TM) or registered (R). Trademarks apply to a specific category of products or services, which is why it’s fine that we have Delta Airlines and Delta Faucets.

A patent protects inventions or discoveries. In the case of a technology product, this can be pretty broad—an algorithm used by the software¹, a way to build a product, or some other invented technique.

A trade secret is something that is not revealed and kept intentionally secret because it is something of value. Companies must mark any information as confidential as part of reasonable efforts to keep such information secret. The classic example of this is the Coca-Cola formula. There is no protection of a trade secret if someone else can clean-room reverse engineer the secret.

There is a balance between patents and trade secrets; a patent provides broad protection but the science behind the invention must be disclosed in return for that protection—and the patent does eventually expire.

By no means are the above descriptions detailed, exhaustive, or legal advice, but they are brief and understandable. For more information, visit these pages:

• US Copyright Office FAQ
• US Patent and Trademark Office on Trademarks
• US Patent and Trademark Office on Patents
• Wikipedia articles on trade secrets and reverse engineering

Many thanks my friends and colleagues who reviewed this post prior to publishing.

¹ When embodied in something real. And there’s the argument about whether or not software is real. Anyway, the goal of this post isn’t to debate this point.

Recently I did a quick interview about how I used Twitter at my last company. As I was answering questions, I realized there are three major activities that I used with Twitter:

1. Promote ourselves (so that people find us)
2. Research customer needs and identify new customers (we find people)
3. Competitive intelligence.

The third I thought was particularly interesting as most of the blather (er, blog posts) on the web are about (1) and (2), but not (3). Of course, searching Google for “competitive intelligence twitter” has about 21,000,000 results and I didn’t have time to go through them all.

Here are some thoughts based on what I’ve done for competitive intelligence with Twitter in the past:

You may want to know what their engineers are working on and doing. Using LinkedIn, you can map companies to teams with names. Those individual profiles may have links to personal Twitter accounts or you might be able to find those people with Google and Twitter Search. Engineers talking about tools or technologies may reveal what they are working on or new areas under investigation.

Of course, LinkedIn is gold mine in and of itself—too many employees say too much in their LinkedIn profiles about what they are working on. There have been several times where I’ve asked my employees to tone down what they are saying on LinkedIn.

You might care about what the sales folks are doing. Where are they traveling? Not all sales reps are going to tweet “just landed BigCo!” but they might check-in on Foursquare at a restaurant across from BigCo’s west coast office. Using Foursquare and Google Street View and Google Maps, you can quickly reverse map who someone might be meeting with or spending their time.

I recently took a class at MIT where one of the professors was Dr. Jay Paap, a management consultant who has done a lot of work on developing competitive intelligence frameworks. One of his papers (PDF) is an excellent summary on sources of intelligence and these generally map back into the social media world (so don’t disregard this because it was published in 1995).

The flip side to all of this, of course, is that companies need to be very careful what is being posted. When I worked at Motorola 11 years ago, the company was hugely paranoid that the cleaning crew might be Nokia employees. There were weekly sweeps of the office and reports on who had unlocked computers, file cabinets, papers left out, whiteboards not erased, etc. Documents had various levels of confidentiality classification and corresponding trash cans. I haven’t worked at a company that paranoid since, but I have brought some of those policies into my own work.

What are you doing to gather or evade competitive intelligence?

I bought a drill from Sears on their web site yesterday.  Buying online meant a small $7.50 savings, so I opted to buy it online with “Store Pick-up.”

At 9:20 am this morning, I got an email from Sears saying my order was ready for pick-up.  I went to the store around 2:00 pm in the afternoon.  If you’ve never picked up an order from Sears, it works the same way as when you buy an appliance in the store–you go to the Merchandise Pick-up area and scan your receipt at a kiosk.  This puts your name in a queue and your name appears on a TV monitor.

In this particular instance, I stood waiting for 4 minutes and 30 seconds.  A guy came out of the warehouse and called my name.  He said, “your order will be out in just a second,” and then he closed my name out of the queue.

I stood and waited.  In fact, I waited for 30 minutes.

I had enough time to see that Sears has a large poster in their waiting area.  This poster was about their customer service metrics.  It indicated that in the last 30 days, 100% of their customers didn’t wait more than 5 minutes.  (This poster was in the style of those “Accident free for X days” posters at other venues.)

So there’s at least two scenarios here:

1. Sears staff members are lying to management.
2. Sears management has a policy to lie about their metrics to customers.

Presumably there’s hire/fire or bonus incentives around these metrics for someone in the chain of command.  In any event, honesty about metrics is critical to evaluate your business.  Lying to yourself and your customers about your metrics leads to wrong decisions internally and insults customers.

While I was waiting, another fellow was waiting for a patio set.  He observed that he had been “served” in under 5 minutes, moved out of the queue, and yet he had to wait another 10 minutes.  He saw the monitor and I made sure to point out the metrics poster, so that he got the full experience.  This was a fellow of retirement age who (probably) wasn’t drafting a blog post in his head while he was waiting.  But he wasn’t impressed with the overt lies.

Be careful how you apply metrics in your business.  You might get the numbers you want, but will your customers get the experience you thought those numbers reflected?

I get this question a lot. I wrote this down as my standard answer.

First, you need to be sure you are building a product people want. This means doing market research and talking to potential customers before you do anything else. It sounds obvious, but building something people want is the hardest part. When you’re evaluating whether or not people want what you’re building, you need to hear people say, “OK, when can I buy this? I need this right now.” Potential customers who say, “Yeah, that sounds like a great idea” are misleading–that kind of response means you haven’t gotten them to the mental finish line such that they want to buy. It is crucial to understand the difference between these two reactions.

If you are serious about starting a company to the point that you or your partners are quitting your jobs, you need to go ahead and legally form the company. You can “do it yourself” but I recommend finding a respected attorney familiar with the law of where you are starting your company. In particular, you should have employment contracts between all partners and the company, and you should have intellectual property assignment agreements between all contributors and the company.

Without these basic agreements in place, your company can suddenly be in a position of being (1) un-fundable by VCs or other capital sources, (2) un-acquirable, (3) sued by a partner who has dropped out or feels he has been wronged. And of course, without some non-compete agreements, a partner can leave and potentially take know-how of your business to start a competing company.

Do not depend on a ‘gentleman’s agreement’ of what will happen when someone leaves–even if everyone trusts everyone and everyone has known everyone else for many years. In every company I have ever started, someone has left before the first product was ready to go to market. In one case, that tanked the company and the remaining partners, including yours truly, lost many thousands of dollars.

Setting up a company and getting these agreements in place is relatively cheap, even with a high-end law firm in an expensive city. The cost is essentially zero compared to other start-up costs and it will save you serious stress and money down the road.

Hire an attorney who specifically deals with business. I would not hire a “front door attorney” who “practices whatever comes in the front door.” Ask for references from businesses that were once starting out like yours. Also, you will need a CPA to keep you in-line with the IRS and other government agencies. The CPA will cost you much less and, in some ways, be a far greater value. I wouldn’t start a business without either of these people on my “team”. I’ve done it the wrong way and the right way–and the right way is MUCH better and less stressful.

When you’re just starting out, it can be very easy to fall into the trap of thinking that what you’re doing isn’t going to be “big” or “maybe it’s not important enough” to be worth protecting. But if you have quit your job to do something, it must be big and important enough to justify taking some basic precautions such as these. Chances are living expenses while you build your product will dwarf the costs of protecting yourself–there’s just no reason not to.

Of course, if you’re building a company alone, you might not need much of the above–I am really referring to scenarios involving 2 or more people. If you’re going at it alone, you might still need protection from contractors you hire, though.

See also: Top Ten Legal Mistakes Made by Entrepreneurs. I also recommend this book which covers the above scenarios and many other issues.

Finally, this is not legal advice.

(This is from my office FAQ; it felt more appropriate here.)