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May 30, 2006

Coming up: Vivisimo CEO, a chat with the dark horse search engine company; John Kish CEO of Wyse Technology spells out the end of the desktop; Dan Berg CTO of Sun Services tells of adventures in Central Europe; plus, SVW Leader Sponsor news!

By Tom Foremski for Silicon Valley Watcher

- Memorial Weekend is but a memory as SVW swings into gear with an interview with Raul Valdes-Perez, CEO of Vivisimo, the dark horse search engine company that is fast carving out a solid business in enterprise markets. Interview coming up this week along with a white paper from Mr Perez on why behavioral marketing is barking up the wrong tree.

- I chat with John Kish, CEO and President of Wyse Technology, yet another savvy buyout from Garnett & Helfrich Capital, the Silicon Valley mid-sized VC buyout firm that's going places. Find out why thin computing is burying the desktop. It's the economics (and security.)

- I catch dinner with Dan Berg, CTO of Sun Services. It's been about six months since we last spoke and Mr Berg tells of life in Prague and the innovation bubbling up in Central Europe. "Silicon Valley is still the Mecca," he says.

- Also, exciting news on SVW Leader Sponsors, some announcements coming up! Who says bloggers don't have a business model :-)

O'Reilly/CMP lawyers warn"Web 2.0" phrase users...

By Tom Foremski for Silicon Valley Watcher

Use the term Web 2.0 and you could get a nasty letter from lawyers representing the interests of O'Reilly Media, the Sebastapol, California based publisher owned by Internet 1.0 pioneer Tim O'Reilly, and CMP Media. The target for now, is an Irish conference organiser:

From Tom Raftery's I.T. views:

One of these events - the upcoming Web 2.0 half-day conference is the target of a cease and desist letter (below) from the legal team of O’Reilly publishers. Basically O’Reilly are claiming to have applied for a trademark for the term “Web 2.0″ and therefore IT@Cork can’t use the term for its conference. Apparently use of the term “Web 2.0″ is a “flagrant violation” of their trademark rights!

Ironically I invited Tim O’Reilly to speak at this conference last February and his response (which I received on 15th of February) was

I would love to be able to do it, but my schedule is just too full for an additional international trip.

So Tim was aware of the event in February but decided to wait until 2 weeks before the conference to set the lawyers on us.

As I mentioned, IT@Cork is a not-for-profit organisation and doesn’t have the resources available to O’Reilly - what do people suggest we do?

Bad news for the gazillion of me-too Web 2.0 startups out there. But great news for everyone that is absolutely sick of hearing the term.

At SVW, we prefer Internet 2.0 because this next stage of the Internet is about far more than web browsers. RSS, for example, has nothing to do with web browsers and all to do with Internet 2.0. There is no trademark on Internet 2.0. Jump ahead of the Web 2.0 pack and use the term Internet 2.0!

You can even use this catchy phrase in your business plan: Xyz.com moves beyond Web 2.0 and is an Internet 2.0 company.

Edelman grabs top slot in Silicon Valley PR

By Tom Foremski for Silicon Valley Watcher
Edelman, the world's largest privately held PR firm late last week announced it had acquired A&R Partners--a deal that creates Silicon Valley's largest PR firm.

It's part of a series of aggressive, strategic moves by Richard Edelman, the CEO of Edelman. Mr Edelman has also been acquiring the PR industry's top bloggers, such as Steve Rubel, who writes Micro Persuasion, and Phil Gomes. Plus a recent deal with Technorati will extend Edelman's ability to monitor the blogosphere internationally.

The acquisition of A&R comes at a time when the demand for PR services is rising rapidly as Silicon Valley VC firms fund a new generation of what some call "Web 2.0" companies. The large number of such companies is increasing the noise level which makes it difficult for them to attract attention without professional help.

Large Silicon Valley tech companies are also increasing their PR spend as traditional forms of advertising are slipping in their effectiveness because of the turmoil in the media sector. Traditional and trade media publications are transitioning to online business models but the change is disruptive and there are fewer publications.

Public relations is potentially more cost effective than some forms of advertising. Intel recently boosted its PR spending with several deals spanning its global markets.

Pam Pollace, who used to head Intel's communications team is now at Edelman as director of the US Technology Practice.

Here are some of the details from the press release:

Edelman Acquires A&R Partners, Emerges As a National Leader in Tech Public Relations
Friday May 26, 10:00 am ET
Deal combines largest independent global PR firm with leading independent technology agency in San Francisco Bay Area

NEW YORK, May 26 /PRNewswire/ -- Edelman, the world's largest independent public relations firm, announced today that it has acquired A&R Partners, Silicon Valley's largest independent technology PR firm. The move significantly expands Edelman's global tech practice and makes it the leading agency in the San Francisco Bay Area and one of the largest technology practices in the state.
Edelman's Mountain View office will merge into A&R's San Mateo headquarters, creating a nexus of technology PR expertise to serve clients throughout the world. The combined Silicon Valley operations will be called A&R Edelman.

The acquisition of 115-person A&R includes its offices in San Mateo, San Diego, Los Angeles, New York, Washington D.C., Denver, Portland and Louisville.

"Edelman has excellent technology clients; we have done strong work in technology for decades. Our goal is to play a global leadership role in this market. With this acquisition, technology will become our third largest practice after consumer and healthcare. A&R Edelman catalyzes our global technology team, creating instant global technology communications leadership," said Richard Edelman, Edelman's CEO.

The integration of A&R will push Edelman's annual revenues to more than $300 million globally and $200 million in the U.S. The combination of the two agencies will create one of California's largest technology practices. Edelman currently has California offices in Los Angeles, Sacramento, San Francisco and Mountain View.

Bob Angus and Zelda Rudin founded A&R Partners in 1986. The agency has ranked #1 in revenue in Silicon Valley for the past four years and has received several prominent industry awards, including PR Week's Mid-sized Agency of the Year and the Holmes Report Tech Agency of the Year, both in 2004. The company also has consistently ranked among the top PR agencies to work for in the U.S. by The Holmes Report.

Bob Angus, A&R's president, said, "Our decision to join with Edelman is all about extending our global reach, adding new services and practices for our clients and giving our people more opportunities for growth. At the same time we will help move Edelman's tech practice into a leadership position in the U.S. Edelman is an outstanding fit for us, both strategically and culturally. We share the same vision, interest in our people and passion for results."

"They think like we think. We have known A&R and Bob Angus for years; we share a common approach to our business," said Pam Talbot, Edelman's U.S. CEO.

Talbot will oversee A&R's acquisition by Edelman, and A&R's president Angus will report to her as president, A&R Edelman. He will also become director of Edelman's U.S. technology practice, working closely with Pam Pollace, president of Edelman's global technology practice.

Pollace said, "This acquisition will expand our strong tech practice, strengthen our global credentials and extend our experience across the board -- in mobile computing, digital entertainment, social networks, enterprise software, semiconductors, security and beyond. This will create new growth opportunities for Edelman in a revitalized technology PR sector."

Edelman is the world's largest independent public relations firm, with 2,000 employees in 45 offices worldwide. AdvertisingAge recently named Edelman as the best PR firm in its 2005 "Best Agencies" issue while PR Week awarded the firm its "Editor's Choice" distinction at the start of 2006 and named it best large agency of the year. Edelman's network includes four specialty firms -- Blue (advertising), First&42nd (management consulting), StrategyOne (research) and BioScience Communications (medical education and publishing) -- making it possible to provide clients with a comprehensive spectrum of communications services. Visit www.edelman.com for more information.

Key Facts:

A&R Partners Edelman

Revenue 2005 $14.1 million $261 million

% Revenue
growth over
2004 17.6% 13.6%

Founded 1986 1952

Management President and Managing Founder and Chairman -
Partner - Bob Angus Daniel J. Edelman
Sr. Partner - Zelda Rudin Global CEO - Richard Edelman
Sr. Partner - Maria Amundson US CEO - Pam Talbot
Partner - Lisa Auslen Vice Chairman - Leslie Dach
Partner - John Derryberry President, Global
Partner - Todd Irwin Technology Practice -
Partner - Mark Rawlins Pam Pollace

Staff 115 2000 (21 Silicon Valley)

Offices San Mateo(HQ), New Co-headquartered in the
York, Washington D.C., U.S. in New York and
Los Angeles, San Diego, Chicago, with offices in
Denver, Portland and other major U.S. cities
Louisville -- 45 offices Globally

May 24, 2006

Edelman's Technorati deal and the blogosphere...

By Tom Foremski for Silicon Valley Watcher

[This stomach bug has taken the wind out of my sails for a few days, my apologies about the backed up emails I hope to get to them in the next few days...]

Edelman's deal with Technorati is interesting. For an undisclosed sum of cash Edelman, the world's largest private PR firm is financing Technorati's expansion into the rest-of-the-world blogosphere. It's a savvy move, not one without risks, but Richard Edelman has been out in the forefront in trying to understand the blogosphere and the need for tools to measure influence and reach within the entire (global) mediasphere (of which the blogosphere is a subset).

There are lots of comments on the deal out in the ether, but none seem to get it. We won't know unless we know the terms of the deal, either way its a bold move.

So far, Edelman has hired the top PR industry bloggers and it is moving ahead on a course that I do not see other PR firms following. And I think it is because they don't understand the nature of the game.

Edelman's moves are very interesting because they are potentially game changing, they are risky, and bold. Let's see if the other the-game-is-still-the-same PR firms figure things out. Can they be fast followers? I don't think so . . . but I'd love to be proved wrong.

Technorati has had problems scaling its infrastructure but that's probably because it has done a masterful job on branding. It really understands the psychology of the blogosphere and it has managed to keep that balance of being a good community citizen along with its right to monetize what it is doing.

Technorati has managed to almost privatize the trackback--a key element of the blogosphere. Trackbacks seem to have stopped working but if I look at my Technorati links there are many links that don't register as trackbacks. I've no idea why that is the case but Technorati offers a solution.

May 22, 2006

This&That: Beyond Blogging; Take the man out of Manhattan; Beet TV; OutCast dinner; Blake leaves WetFeet and PR; Personal APIs; The Net DVD release

By Tom Foremski for Silicon Valley Watcher

[I've caught one of those stomach bugs and am a bit low to the ground at the moment, but the blog must be fed(!)]

Last week I was with Chris Heueur over at the de Young, we were trying to do a podcast but it was surprisingly busy and this was a mid-week afternoon. So we popped back to his place in Duboce Triangle and recorded the podcast there on his deck in the gorgeous sunshine, in between pauses in his neighbor's lawn mowing activities.

It was a great conversation and Chris is using some of it for an event in Washington.D.C. called "Beyond Blogging 2006: The future of communications." (I didn't realises there was anything beyond blogging :-)

. . .

You can take the man out of Manhattan...and put him in Mountain View. That's what I learned last week when I met with Joshua Schachter, the founder of del.icio.us, the social bookmarking site. It explained why he had that New Yorker's expression on his face which can be summed up as slightly horrified.

On learning Mr Schachter's plight, I offered my condolences. He said he was still looking for decent restaurants in Mountain View, and he had heard that some places might even be open until midnight.

He told me he had spent 10 years in Manhattan and loved the place. After Yahoo acquired his company, he moved to Silicon Valley. "At least people here have heard of del.icio.us."

He says that Yahoo people ask a lot of questions but let him run the business group as he pleases. Yahoo provides the technical infrastructure, which is a big help. I couldn't get too much out of Mr Schachter on the record, but he says to look out for an interesting announcement this summer.

. . .

I recently spoke with Andy Plesser, from New York based Plesser Holland Associates and he tells me his video blogging venture over at Beet TV is doing well. One of his latest posts features Silicon Valley's most famous publisher, Tony Perkins, now at AlwaysOn.

And you might even see myself on Beet.TV very soon...

. . .

The Outcast CEO dinner last week is always an event worth attending. It didn't have quite the same energy as last year, but a lot interesting people showed up. I got to catch up with one of my favs, Satish Dharmaraj from Zimbra.

And the dinner-time show was provided byPeter Hirshberg from Technorati. Mr Hirshberg's presentation was funny and very insightful. I particularly loved his "Who wants to be a VC" a video that featured a group of 11 year old girls presenting business ideas to each other and deciding on who would get funding. I have an 11 year old daughter, Sarah, so I can relate very well. BTW, I recommend VC firms hiring a few 11 year old girls as consultants--they asked better questions than some of the real VCs :-)

. . .

I was sorry to hear Blake Barbera, is leaving the PR industry. Blake's WetFeetPR blog rapidly became one of the best sites on the subject of PR. Good luck in your next job Blake!

The future of PR is in the hands of Blake's generation and often it is these younger people in the PR agencies that know more about this emerging world of new media/new communications than their older colleagues. They haven't yet been taught what can and cannot be done, and they often have unique insights on PR and some of its ludicrous and wasteful practices.

. . .

I was thinking about how everybody seems to have a different way of communicating with the world. Some prefer email, others swear by instant messaging. I think we should all publish our own API to the world.

In the same way that an API (Application Programming Interface) tells software developers how an application or web service interacts with other software/services, a personal API would do the same.

I'm not sure what the right format to express a personal API would be but mine would be something like this:
Tom Foremski API

Email: Good but because of volume I sometimes miss emails and other times it can take days to answer. You can resend to make sure I saw it but please no phone calls. I have to impose daily email blackout periods of several hours at a time because I need uninterrupted time to write.
IM: Don't use it.
Cell phone: Good, please use especially when urgent or time related. It's okay to call anytime, I will answer if I can.
Desk phone: I don't give out this number.
Meetings: I like meetings and prefer them instead of email or phone in establishing relationships.
FAX: I don't use it.
Mail: Only for checks.

. . .

The Other Cinema recently released "The Net: The Unabomber, LSD and the Internet." It's an interesting documentary by a German team and it's fascinating to see how our tech culture in Silicon Valley/Bay Area became intertwined with that of a serial killer.

There are some great interviews in the DVD extra section. Stewart Brand and John Brockman offer several interesting stories on how part of the the computer industry became affected by the counter-culture movement in the early 1960s and the connection to the Beat writers.

For a really unique insight into the Internet, its creation and organization, the interview with Paul Garrin is fascinating and well worth buying the DVD to see. Mr Garrin has a truly unique perspective and his insights certainly set me thinking about things Internet-related in new ways.
From the description of "The Net."

This exquisitely crafted inquiry into the rationale of this mythic
figure situates him within a late 20th Century web of technology – a
system that he grew to oppose. A marvelously subversive approach to the
history of the Internet, this insightful documentary combines
speculative travelogue and investigative journalism to trace
contrasting counter cultural responses to the cybernetic revolution.

http://www.othercinemadvd.com/net.html

May 18, 2006

RightNow: The Microsoft of Montanna and the philanthropy of success

By Tom Foremski for Silicon Valley Watcher

I'm a big fan of Greg Gianforte, the CEO of RightNow Technologies and I was mortified that I almost missed him the other night when he was in town. Somehow the meeting time didn't sync up with my Treo, fortunately I was downtown and we managed to connect.

Mr Gianforte is a serial entrepreneur; RNOW is his fifth startup and is one of the leading CRM software-as-a-service companies and is going like gangbusters. It recently reported another blowout quarter.

His greatest passion is in starting companies and giving startups advice. He has given me plenty of great advice.

One time at a conference, a few people over heard some of the pearls of wisdom he was handing to me, and very soon there was a crowd of entrepreneurs around him, following him around the hallways, asking him questions about the many intricacies of leading teams and building dreams. He loved it, and I didn't hear him say "RightNow" once in more than two hours....

You might say that Mr Gianforte isn't keen on venture capitalists, and that would be a kind way to phrase things. You can find out more by reading his book, published late last year: Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money

RightNow is headquartered in Bozeman, Montana; it also has offices in Silicon Valley and overseas locations. And it is growing fast. "We're hiring on average one person per day," Mr Gianforte said. I said great, maybe I can run some job ads for you, I've been meaning to start a jobs board (coming very soon).

The other thing I like about Mr Gianforte is that he isn't afraid to challenge his competition in the media, and on the speakers circuit. Not everybody has the cojones to do that, or to challenge him (unfortunately.)

The other thing I like about Mr Gianforte is that as he grows more successful he takes on larger social projects. He is a spiritual person and somebody that wants to create a lot of value in his community. For example, he estimates that RightNow's payroll in Bozeman has reached more than $300m and each $1 bounces around about five times within a community. That means more than $1.5bn in products and services--a huge amount for a state where average salaries in rural areas are just $11K per year.

Mr Gianforte's latest social project is to retrain people in small Montana towns to become specialists in various HR functions. The idea is to encourage companies to "outsource to Montana" and help revitalize some of the towns in the state.

"Even if only some of the people in these towns find work, that money will make a big difference in those communities," he says.

That's a characteristic of many entrepreneurs, I've noticed. They like being successful, making money--but they love being able able to make a big difference in the world, especially where they live.

- - -
Related stories:

Startup advice (you have to read this!)

Most startups should avoid venture funding, not pursue it

Some of Greg Gianforte's thoughtleader columns in SVW :

Water into wine: monetizing open source via on demand

Serial advice from a serial entrepreneur

RightNow, right time, right place...tales of the newrules enterprise

You can also purchase his latest book, "Boot Strapping Your Business,"
through our affilate link.

May 17, 2006

Next week: I'm speaking at PRSA Counselors Academy in Savannah

By Tom Foremski for Silicon Valley Watcher

I'm looking forward to next week when I'll be speaking at the PRSA's Counselors Academy conference in Savannah, Georgia. I've never been to Savannah, but I've seen the city in a movie and it looks fabulous.

The conference collects some of the most senior people in the US public relations industry and I'll be speaking on the topic of the new media and the new roles for journalists and PR people.

As communications professionals we are all involved in fast changing times, and there is a lot of fear and misunderstanding out there on the new media, how to interact with bloggers, how do companies change their communications strategies, what are good practices, what not to do, and many other issues. I hear the same questions wherever I go, and although I am a media entrepreneur and my main interest is in launching media ventures, I am increasingly being asked to provide consulting services to companies, public relations firms, and also large media groups.

And that's what the Leader Sponsors of SVW will receive, first access to my consulting time, which is a limited resource.

I hope to see some of you in Savannah!

Cherry picking advertising and not paying for the journalism

By Tom Foremski for Silicon Valley Watcher

Cherry Pickers.jpg Google can sell advertising for much less because it doesn't have to pay for any journalism. Newspapers, TV and radio sell advertising so that they can pay for the journalism.

Craigslist can operate a global classified ads business with just 18 people and do it on a shoestring because Craigslist isn't paying for journalism. It can cherry pick the classified ads business from newspapers and do it insanely cheaply because it doesn't have to pay for the journalism.

So who will pay for the journalism?

Google News cherry picks the best of 4,500 global news sources and it doesn't even want to monetize the business. Therefore there is no way in hell that other media companies can compete against that--because they have much higher costs--and the largest cost is paying for the journalism.

So who will pay for the journalism? You might ask why do we need a professional media class, when we could empower a citizens army of amateur journalists, as some are trying to do.

The reason we need a professional media class is because amateurs do an amateurish job. And that is bad because our society, our economy, depends on high quality information.

In the IT industry, all software engineers know GIGO. This stands for garbage in, garbage out. It refers to the quality of the data that a software program processes. If the data is corrupted in some way, or the source is unreliable, then the end result will also be the same.

We need high quality media in abundant quantities so that we aren't harmed by GIGO.

Professional journalism is a vital pillar of our society, it is sometimes called the Fourth Estate, right up there alongside the Church, Government and the People. Yet professional journalism is fast disappearing because the business models that supported it are disappearing.

I've been asking for more than a year, "what happens if the old media dies before the new media learns to walk?" Media is how society "thinks" it is how we figure out solutions to important problems.

And we have some very big problems ahead that demand the best, high quality information. There is Bird Flu, there are huge political issues to deal with, there are enormous ecological challenges ahead.

Yet we have a sick media sector that is getting worse.

So who will pay for the journalism? Last week Eric Schmidt, Google's CEO seemed irritated in answering the question "when will you monetize Google news?"

But this is an incredibly important question because if Google was determined to monetize Google news, then it would associate some value to the content. Then the content producers could charge Google and any others, and funnel back the money to produce high quality news media.

That would be a virtuous cycle and Google News would be supporting an extremely important and extremely vital resource that is a pillar of a healthy society: high quality professional journalism.

Instead, it cherry picks the best and refuses to try to monetize the news it copies, which compounds the problem because it associates no value to it. Yet our society, our businesses, associate a tremendous amount of value to high quality journalism.

Google is inadvertently blocking the ability of news organisations to monetize their work. That harms our ability as a society, and as an economy, to make the best decisions.

We need to have a vibrant professional media, competing to produce the best, high quality news media. Because then we are likely to make the best decisions, and choose the best future.

I'm hoping Google will recognize that "Don't be evil" means nothing and that "Do some good" is what Google founders and employees would rather be doing (that's probably what the Founders meant so say).

Google has a chance to do some good on a massive scale. And Googlers love big challenges; the Gordian Knot of this next phase of the Internet is how to pay for the journalism we need. Google could become the saviour of the Fourth Estate rather than one of its pall bearers.

- - -
[Published in an experimental format across different sites, the first part is here, the second part is here.]

Bad Competitors and Cherry Pickers - a lethal combination

By Tom Foremski for Silicon Valley Watcher

Cherry Bot Pickers.jpg As more and more business products and services become digital, they become vulnerable to what I call "cherry pickers." Competitors can target highly profitable businesses because those businesses provide a high price umbrella.

IBM for example, spawned a massive "IBM mainframe compatible" industry three decades ago, because of its high price umbrella on mainframes.

Those companies with highly profitable business groups are sometimes using those profits to help support less profitable, sometimes rarely profitable, business groups.

Hewlett-Packard, for example, has over the years managed to use its highly lucrative printer business to help it support its PC business, and its information technology business. It could be said that H-P's sales of printer ink, at various times over the past decade, have subsidized its other business groups for many years.

And that's why H-P's most valuable intellectual property is the design of its printer ink cartridges--which prevents copycats providing printer ink at sharply lower prices.

H-P has managed to stop cherry pickers from running off with its printer ink business and allowed it operate large, rarely profitable business groups. Those business groups have provided a lot of value, to customers, to employees, and to their surrounding communities around the world.

But other companies, other industries, haven't managed to stop the cherry pickers. That's especially true for the media.

Google News is a good example of a media cherry picker. When launched in 2001 Google News quickly became a fabulous success. It was the first aggregation of news stories copied from thousands of news organisations, and published in a very accessible user interface. Google News scans thousands of mainstream media news sites, copies and publishes the headline and the first paragraph and a photograph. It is a very good service.

It's an extremely low cost for Google, the news stories are harvested by machines, and they are presented by machine. At the bottom of the Google News home page you will find this text proudly displayed:

The selection and placement of stories on this page were determined automatically by a computer program.

Google News was one of the first services it launched, one of many dozens today, yet it does not monetize this service. At last week's GOOG press day, its executives were asked if they would monetize news, the answer was that it was on the list, but that there were some more important projects that would be monetized first.

One of the journalists asked, where on that list is Google News? Eric Schmidt showed a little exasperation when he answered, saying, that it is obviously below the cut off point...

(Please continue reading...)

May 15, 2006

Could nationalism limit Google's ambitions?

By Tom Foremski for Silicon Valley Watcher

It was not ethical for Microsoft to drive out companies in its adjacent businesses. Yet time and time again, Microsoft moved into markets which had established companies in them and they took over those markets leveraging its dominant position in PC operating systems.

Apart from the conviction on illegal anti-trust charges, there seems little to distinguish MSFT and GOOG business strategies. And that is something that Google should be careful about.

In the 1980s, the US semiconductor industry managed to persuade the US government to make it illegal for foreign companies to sell memory chips below their cost of manufacture. It was called "dumping" and it was a practice that harmed the chip industry, led to lost jobs and threatened the future of many semiconductor companies.

Google is "dumping" lots of online products onto global markets. What is to stop say, China or France, from blocking Google's online services because they are being "dumped" onto their markets? I'm sure it wouldn't take much to prove that Google's actions are harming some small Chinese or French competitors.

And it is dead easy to block data packets. I can't see any nation allowing large foreign online companies to dominate the online worlds of their domestic commercial sectors. Old-fashioned nationalism comes in handy sometimes. And I predict that Google's limitless business plan will run into limits far sooner than it expects.
. . .
More on this subject on Tuesday.

[This is an experimental publishing format, a distributed column across different web sites. The first part is here. The second part is here. The first part leads you through all three sections.]

The limits of Google's limitless business model

(A distributed column.)
By Tom Foremski for Silicon Valley Watcher

Is it OK for Google to launch numerous businesses and not seek to monetize those businesses? Is it OK for Google to take advantage of its huge scale, its global operations to muscle into new markets and create businesses and not monetize those business groups?

Is GOOG acting in a similar way to Microsoft, when it used its huge scale, its global operations to muscle into new markets and businesses and not monetize them?

When I was at the Googleplex HQ last week for the annual Press Day, Google announced four products. It already has a multitude of products, ranging from web based email, to desktop applications, and even drawing and photo management software. Also, sophisticated web analytics, web site creation software, maps, instant messaging, news, and lots more.

Only a tiny fraction of those products are monetized, the rest are free, and free of advertising. Larry Page, co-founder called them "experiments" and said that they are "beta" products.

He can call them what he wants but each one of those products competes with many much smaller companies, and the fact is that the smaller competitors cannot compete. Because Google has the scale, it can integrate those products into a global operation and global platform because of its size.

And it can continue doing this again and again. Its organizational structure is that its engineers spend one-fifth of their time creating new online products and services. Its development teams are self-forming, and don't require any extra investment, Google already pays their salaries for their regular jobs, it gets the innovation for free.

This means it will continue to produce ever more products and services, again and again. At the Press Day event Eric Schmidt, the CEO announced a "limitless" business model for Google, he said the company saw no limit to its expansion and predicted that it would become a $100bn revenue company.

(Please continue reading part two....)

May 12, 2006

Google's garden lunch press party...

By Tom Foremski for Silicon Valley Watcher

I've been thinking about Google since the Press day. And thinking how much I still like the company, and that more and more of my friends are now working at Google. Not to mention the fact that I've seen Google, just like Yahoo, grow up from a two-room operation into a mega-media company.

And I've known these people, such as Eric Schmidt, many years--before Google was even a twinkle in Larry and Sergey's eyes.

And the Google Press Day was a familiar thing, familiar faces on the media side, and on the Google side.

When we broke for lunch, we sat outside in the gorgeous Norther California sunshine, around umbrella sheltered tables, enjoying being amongst each other, acting in the same way the other groups of people do when they know each other, and like each other. And that's how a lot of the media and the Silicon Valley companies interact.

A free lunch in pleasant surrounding doesn't mean that media coverage of Google or any Silicon Valley company will suffer. I takes more than that to buy off the media than a very fine cafeteria lunch in the sun, and everybody knows it. Such gatherings and interactions are essential for both groups get to know each other, and develop professional relationships so that fewer misunderstandings and mistakes occur.

To outsiders, to the readers of the media that were represented at the Google Press Day, it might seem like a cosy situation, maybe a tad too cosy.

However, I can assure you that journalism has a long tradition of biting the hand that feeds it, even pausing to put some steak sauce on it, and resuming the meal with gusto.

That's why you will see some great stories some good, some not, about GOOG coming out of the press corp. I've got one or two sizzling hot pieces in the works myself and you'll see the first one in a day or so.

May 11, 2006

Howard High: Join in this live tribute to Intel's retriring chief spokesman

By Tom Foremski for Silicon Valley Watcher
This is a live, online tribute to Howard High, chief spokesman for Intel, who is retiring from the world's largest chipmaker. Howard won't be gone for long though, I'm betting he'll be back in Silicon Valley within a few months, waist deep in setting up one of the most important ventures we've ever seen.

For myself, his retirement strikes an important note in my life because Howard's name has been a familiar part of my everyday world for 25 years. Because that's how long I've been covering US technology companies as a reporter for London-based magazines, and then the Financial Times. It seemed that on every important Intel press release, the contact information always listed Howard High.

And as a young reporter in London, it was sometimes intimidating for me to call Silicon Valley, and try to hold a smart and educated discussion. But Howard was always patient, and took a lot of time to educate me on the science and the chemistry of semiconductors.

In fact, talking with Howard I realized that I have a University degree in Chemistry from London University! Strangely, I tended to forget this fact because my chemistry education was sublimated by my other experiences--but now, chemistry became relevant again.

Anyway, I have lots more to write about Howard and how wonderful he is. And please use the comments section of this page to leave your message, article, photo, whatever. We'll evolve this page further, and after a while we can combine the material into a Wikipedia entry.

I look forward to your involvement in this live online tribute...

Here is part of a bio I found from the Hartford-Institute where Howard has been featured as a guest speaker:

Mr. High has held a variety of positions covering company products (i.e. microprocessor products) and corporate capabilities (i.e. chip design, sub-micron VLSI manufacturing, environmental, health and safety, and financial issues). He has worked with business, broadcast, trade, and foreign press in addition to industry analysts, financial analysts and government officials over the years. He has significant international experience.
Mr. High has served as Intel's representative on the Semiconductor Industry Association's (SIA) Communications Committee for the past decade and a half - serving as that committee's chairman during 1993 and 1994.

He is a graduate of California State University, Hayward. Mr. High received a B.A Degree, Cum Laude, in 1976. In 1998, Mr. High was named one of Upside Magazine's 100 Most Influential People of the Digital World.

Mr. High is also the Chairman of the Board of Trustees of California State University, Hayward's Educational Foundation and will speak to everyone as an integral part of the CSUH educational community.

Here is Tom Abate, San Francisco Chronicle's veteran business reporter:
From a recent article: http://www.sfgate.com/cgi-bin/blogs/sfgate/detail?blogid=19&entry_id=3953

Intel Corp. spokesman Howard High retires today after 27 years of fielding questions from tech reporters like me. Obviously the chip giant has prospered through far more important turnovers, starting with the passing of its guiding light, Robert Noyce.
But the character of a big company is a many-faceted jewel that is cut, in part, by the interactions of its public relations staff and an often-skeptical press corps. I've dealt with Intel on tough stories over the years. Howard High always set the standard of behavior for the PR side of the news divide.

Big ideas like Silicon Valley are like mosaics assembled by many little hands. One of those honored old hands steps out of the game today. It's only fitting that those of us who remain send best wishes his way.

May 10, 2006

Mass media masses at the Googleplex

By Tom Foremski for Silicon Valley Watcher
[To skip to the Google presentation report click on the extended entry...]
Google's Press day started at 9.30 am but it was closer to 10am by the time I got to the Googleplex H.Q, an hour away and a traffic crawl from San Francisco. One of the security people kindly let me slip in through a side door and into the large, darkened auditorium where CEO Eric Schmidt was wrapping up his talk.

In the gloom of the room I managed to find an empty seat and when the lights came up I noticed I was sitting right in front of my good buddy Om Malik, his Omness, curator of the very fine news blog GigaOm. Om was looking good, there was something debonair about his demeanor. I later found out that it was because of his recent trip to New York where he managed to disengage from the online world and reengage in some traditional therapeutic offline pursuits.

[I've long maintained that when bloggers start engaging in therapeutic offline pursuits, then we will know that blogging has finally arrived. I'm hoping to become a test case myself... BTW, Adam Lashinsky, senior writer at Fortune, noted that if this trend continues, it could reduce the number of blog posts--which is another benefit ... :-) ]

I also found myself sitting next to my old boss at the Financial Times, Richard Waters, which was great because I hardly ever get to see any of the old gang. We joked about how no FT journalist that has ever worked in the San Francisco bureau has ever gone back to London. Richard said it would happen, one of these days.

And I was also sitting next to Karsten Lemm, the German reporter for the top magazine Stern. Karsten noted the irony that the Google wi-fi network in the room was down, yet Google wants to provide free wi-fi to San Francisco and other municipalities.

And there were many other familiar faces in the room. Obviously, David Krane, one of the long time senior communications people was there, and I got the scoop on the second Google-Yahoo joint venture, which is scheduled for delivery in November (congratulations!). The first joint venture is now 14 months old, how time flies.

It was a pleasant surprise to see Courtney Hohne, a new hire on the GOOG comms team. Courtney was working at Outcast Communications and was one of its veterans, spending more than three years at this San Francisco boutique PR agency. I told Courtney I had recently lunched with her former Outcast colleague Emma Wischhusen, now at Hewlett-Packard. Apparently both Courtney and Emma turned in their notices the same day.

It's not easy replacing people with the abilities that Courtney and Emma bring to an organization. I've known Margit Wennmachers and Caryn Marooney, the founders of Outcast, for many years and I'm sure they are pleased to see that Silicon Valley's leading companies recognize the top quality caliber of their staff. [Are you done brown nosing yet....? Ed.] Yes.

Then we had lunch outside in the sun. But, let me tell you what happened in between. Here are some quick takes, and quick picks, more to come later.

I got up and asked about click fraud, and Alan Eustace, head of engineering said that click fraud was not a significant problem and that the company was able to deal with it. I asked if GOOG would allow an independent third party, such as Fair Isaac the credit card fraud monitoring firm, to monitor click fraud rates, he said no.

I asked Omid Kordestani, senior vp of global sales [GOOG's first business operations employee] about the continuing trend of smaller proportion of GOOG's advertising revenues coming from third party web sites, such as the New York Times, that are members of its AdSense advertising network.

It used to be about half of ad revenues came from it's own sites (AdWords) and half from third party sites (AdSense.) He said that AdSense would continue to decline as a percentage of total advertising because the company had already signed most of the big content providers and so the potential for expanding AdSense money was constrained by the supply.

Eric Schmidt, CEO said:
-GOOG sees no limit to growth. It has adopted a limitless business strategy. [This means no business is safe from Google.]

-No plans to monetize Google News.

Alan Eustace, head of engineering said:
-GOOG's index is three times larger than anyone's, more than 8bn pages but wouldn't say how big.

-GOOG is investigating complaints about Big Daddy, the nickname for the latest crawl of the Internet using a new set of algorithms. Lots of web master complaints about lost or lowered page rankings.

-Link exchanges and leaving links in the comments sections of high ranked web sites "doesn't work and hasn't worked for a long time." [I wish Google would publicize this, it would stop a torrent of comment spam that is plaguing millions of web sites.]
-GOOG is developing technologies to outsmart smart operators of web site networks using unspecified high tech methods to game GOOG's PageRank system.

-Every time GOOG completes a crawl it finds up to 20 percent new content.

-about 25 per cent of search queries are brand new.

-Google's PageRank algorithm, which determines the importance of a web site, monitors about 200 different "signals."

-More than 1,000 computers are used in processing a single search query.

From the exec panel, the final presentation, featuring the co-founders Larry Page and Sergey Brin. Mr Brin was in his trademark black T-shirt, and Mr Page in a striped shirt.

-Mr Brin and Mr Page and Mr Schmidt said:
-Microsoft is a convicted monopolist.
-We don't spend much time thinking about Microsoft. We don't see much value in focusing on what someone else is doing. We want to focus on innovation.
-We want to solve new problems not old ones.
-There can be many winners in markets.
-We've probably abused the term "beta."
-GOOG is becoming more open and transparent about future plans to stop rampant speculation.
-Openness does not extend to guidance on future quarterly financial reports.

Also: Google launched four products today including new Desktop applications, etc. Google is grabbing for more of the PC "real estate" with products such as Google Gadgets which creates mini- internet applications. [This allows it to move beyond the web browser since no browser is needed to use them.]

Google needs more content so that it can sell more advertising and one way is to get experts to point to the best web sites on specific subjects (I thought Google's algorithms were supposed to figure this out?] Google Co-op is a way groups of experts can collaborate around specific topics (too bad for Seth Godin's Squidoo. Here he is in February, sharing his wisdom with Google...]

Google Trends is a way to query GOOG's search results. This will be very interesting and will put Google at the heart of any cultural analysis of our online behavior.

More to come later...

Here is the Press Day webcast.

From GOOG on new products:

- Google Co-op is a way for users to help us improve search. It lets people and organizations label web pages and create specialized links related to their unique expertise. Whether it's information about a hobby, a profession, or an unusual interest, everyone can contribute to making Google search more relevant and useful for the entire community.
- Google Desktop 4 gives you another way to improve search, by personalizing your desktop. New "Google Gadgets" deliver an array of information--ranging from games and media players to weather updates and news--straight to your desktop.

- Google Notebook (which we'll be launching next week) is a personal browser tool that lets you clip text, images, and links from the pages you're searching, save clippings to an online notebook, and then share notebooks with others.

- Google Trends builds on the idea behind the Google Zeitgeist, allowing you to sort through several years of Google search queries from around the world to get a general idea of everything from user preferences on ice-cream flavors to the relative popularity of politicians in their respective cities or countries.

Google Media Day: What questions would you ask?

By Tom Foremski for Silicon Valley Watcher
Wednesday morning will come very quickly, I will be up, bright and bleary eyed, a little too early for my normal work schedule, because it is Google media day.
[I sometimes joke that crypt-space is a lot cheaper than crib-space especially in SF...]

I'll be there at the Googleplex in Mountain View, which is a stone's throw from San Jose, the US city with the lowest murder rate because everyone is very sleepy.

I'll be up and active with the best of the San Jose-ians because Google is a fascinating, mesmerizing company. And I want to ask Larry, Sergey, and Eric Schmidt, some tough questions. But before I go, please let me know what you would like to ask them.

Click fraud is one question that I'm sure GOOG will need to reckon with. I will certainly bring it up. And you know what? I bet click fraud is a lot worse than anyone is admitting. Because you can mask any internet address, it is so easy, only the obvious amateurish click fraud gets caught and counted.

But I think GOOG, YHOO and maybe even MSFT can beat click fraud. Especially GOOG because it has its web server analytics software already installed on huge numbers of web sites.

That means it can track clicks and traffic in a myriad of detailed ways. It has the means to not only avoid attempts by search engine optimization companies to trick its spiderbots into recognizing a site as being more important than it is, but it can also track a lot of traffic, where it originates and where it goes next.

If Google can track where the traffic originates by means of its resident web analytics software--combined with its spiderbots roaming the Internet--then it could be streets ahead of its competition in weeding out click fraud. (There is one another company that is better positioned to tracking IP traffic: VeriSign [VRSN]--I will reveal its secret business strategy in a future post . . . ;-)

In the meantime, let me know what questions you'd like to ask Eric and the team.

May 9, 2006

More chatter about Bad Competitors ... and the New Media Age

By Tom Foremski for Silicon Valley Watcher
[One of my replies was getting long so I thought I'd turn it into an entry (I love this format!)]

This relates to my Bad Competitor series, part one and part two.

David Tebbutt commented:

It was good to spend time with you last night. Not enough for all the subjects we wanted to talk about.
Kind of you to mention me in the blog. You're right about 'veteran' but it sounds a bit ageist. I guess I'll get used to it. :-)

I'd like to suggest a minor tweak to your words:

"Bad competitor startups will succeed because what they have is so much better than what is available, it is a no-brainer."

I'm not sure "because" is correct. I'm sure there are some lousy startups with indifferent products and services. It reads to me as if "bad competitor" automatically means "better".

I've noticed a similar tendency in the arguments about the blogosphere and journalism. (A subject close to your heart. And mine.) A lot of people try to assert that blogs are better than MSM just because they're blogs.

Fair point David. I was using Bad Competitor as describing a company that had already attained such a status although only one in 20 startups will get to be a BC...
PS: Regarding your age, I could have used "old fart" instead of veteran :-)

Anyway, I think most of my colleagues in the media are very veteran, with 15 to 25 plus years experience. And there aren't that many able to replace them, I could get excellent first mover advantage if I could persuade them to join me...unfortunately journalists are extremely risk averse.

This is a pity because now is the dawning era of the technology-enabled journalist, the Media Engineer! The days when Geek gods ruled the world are over--we have plenty of technology and plenty of geek engineers from an alphabet soup of countries.

I thank them all for all the wonderful technologies, the super smart and super easy development tools (that even a journalist can learn in a weekend or so...) and the almost free server and bandwidth infrastructure.

For $40 per month I have the publishing power of a small country.

Now it is about publishing: back and forth, ... Internet 2.0 is a push-me-pull-me technology that magnifies the value of the Internet tremendously.

And that's where media engineers will prove their worth: they will produce and technology-enable the content.

To succeed in the new world you need great content and an understanding of how to use the new media technologies to competitive advantage. It's all about the astute use of technology to distribute, present, and involve an audience.

But you also have to create exclusive, smoking-hot compelling content--and that's not that easy.

I bet there would be a considerable first mover advantage to the first new media company. For example, you could corner the market in top journalists for very little money. You could employ at least two for the price of one geek engineer (Robert Scoble) :-)

Soonr: How to make (almost) free cell phone calls to anywhere...

By Tom Foremski for Silicon Valley Watcher

Soonr, a startup that gives you access to your PC applications from any cell phone, recently introduced a cool way to use Skype to make extremely cheap international calls on your cell phone, and also very cheap domestic calls--if you have the right calling plan.

I got a briefing on it last week from Soonr CEO Martin Frid-Nielsen: you download a little app onto your PC then using your cell phone you use Skype on your PC to place a telephone call. Within a few seconds, you get a Skype incoming call to your cell phone connecting you and your target phone number. In this way, you can make international calls on your cell phone for pennies instead of the 40 cents and above rates your cell phone network charges.

In my case, it is even cheaper because I get free incoming minutes on my Sprint calling plan, which means I'm not using up my monthly minutes.

But won't the cell phone companies get a bit upset with this, I asked? "Most people will be using up their monthly minutes, so it helps to drive their revenues," says Mr Frid-Nielsen. Check it out here, it's free. http://www.soonr.com/

More from Soonr release:

SoonR Talk works with a person’s PC like a switchboard to set up their calls. Users simply click on the buddy they wish to talk with and SoonR Talk tells their PC to call their mobile phone using SkypeOut, then instructs Skype to call the buddy and places the user into a conference. SoonR Talk can even create calls with multiple users from the mobile phone. Just like on the PC, SoonR Talk shows which buddies are online and if they are not there, a user can IM them so they can see the message the next time they are using Skype. SoonR Talk fully supports Skype chat.

SoonR Talk is the latest offering in SoonR’s line of services that delivers the power of a person’s PC to their mobile phone. Other SoonR service features include SoonR Desktop, that lets people search and access the files on their PC desktop and SoonR Organizer, that lets people check their Outlook email, calendar and contacts – on any mobile phone with a browser, without the need for synchronization or installing software on the phone.

Open copyright - use as much as you want of my work

By Tom Foremski for Silicon Valley Watcher

I've decided to remove any restrictions on my copyright on Silicon Valley Watcher. Anybody can use my work freely, and they can make money off of it, as long as I am recognized as the author and all links in the article including back to SVW remain in place.

That's all I ask, if you want to use my work then please give me the proper attribution. Don't just grab it and use it as a honey pot for Google AdSense and strip out my authorship and the links in the article. I'm letting you use it for free and all I ask is attribution--doing the right thing won't cost you a penny and it will avoid any legal issues too.

Why am I doing this? I'll give you one half of my answer: there is no decent business model for online journalism right now...

Part 2: More on Bad Competitors...Silicon Valley is full of them

By Tom Foremski for Silicon Valley Watcher

[Here is Part 1]

There is a strange phenomenon that I've encountered and it seems other people have had a similar experience [I was talking with veteran UK journalist David Tebbutt (Thinkerlog blog) last night about this].

I will sit down to write an article on a topic and I know what I'm going to write....yet I end up with something completely different. It's as if I'm "thinking" through my fingers. Until I sit down and start writing, I never know what is going to be the end product because the act of writing can change the article.

So, with the "Bad Competitor" post on Monday, I've been engaged in some online debate on this topic and I've realized a few things. I've realized that Silicon Valley is full to the brim with bad competitors.

By bad competitors I mean other companies trying to commoditize your business while defending their core business, thus everyone is vulnerable to a bad competitor, someone that can provide a product or service at a fraction of your costs.

So for the newspapers, an excellent service such as Craigslist, which monetizes less than one percent of its business, is a "bad competitor." There is no way newspapers can compete.

And there are thousands of startups in Silicon Valley that would absolutely love to be the "bad competitor" in their target market. In fact, that has to be the base line for any startup--that it can provide the product or service that is ten times as good for one-tenth of the price. Okay, this is just my rule of thumb, but you get the picture, the startup's solution has to be massively compelling to overcome adoption/switching costs.

Bad competitor startups will succeed because what they have is so much better than what is available, it is a no-brainer. And that is the way capitalism works--money finds the path of least expense--if it is allowed to.

And so the future leads to a form of capital entropy. Anything that has a cost structure high enough, that can be attacked, will be attacked. Any business that has high profit margins is extremely vulnerable to attack by a "bad competitor."

But bad competitors are only bad to the victim companies--the market loves them because the customers benefit. However, after many millions, billions of these challenges to accepted business models, at some point, we will reach a interesting point in the evolution of our global society. We will have come to a point of maximum efficiency--what happens then?

Let me put it another way. About 12 years ago or so, I remember the thrill of interviewing Dr. Eric Drexler, one of the pioneers of nanotechnology. And the interesting thing was that Dr. Drexler was not much interested in the mechanics or the science of nanotechnology.

He said that the way our industries are progressing: manufacturing, chip industry, chemical sciences, biological sciences etc, we would get our nanotechnology society sooner or later. At the time, he estimated about 15 years. Clearly, it might be another 15 years from now, but whatever--it is not a long period of time.

What struck me was this: he said, what happens when we can make anything ten times better for one hundredth the cost? How will that affect our society?

And that is exactly the path we are headed--what happens when we can make any product or offer any service for one hundredth of the cost and at least ten times the quality? What kind of society will we have?

Clearly, it will be a society that will be completely and utterly alien to ours. It will be a society where not everyone will have to work, in fact work will have to be redefined completely.

Will it be a golden age or a frightful age? I don't know, but that's where we are all headed and we will probably see it in our lifetime...

May 8, 2006

Top Silicon Valley execs are Out for Blood! Charity fundraiser starts online May 8

This just in from Stacy Libby at Voce Communications:

Seagate CEO Bill Watkins -- along with eBay President Bill Cobb, Symantec CEO John Thompson and Solectron CEO Mike Cannon -- are out for blood. They’ve joined forces to support a major fundraiser for The Leukemia & Lymphoma Society, which invests in blood cancer research and patient services. The fundraiser – appropriately named Out for Blood -- is a charity auction on eBay running May 8-18. The site -- www.ebay.com/outforblood - goes live tonight.

These high-profile Silicon Valley tech executives have graciously donated their time to support this fundraiser. They have created one-of-a-kind opportunities for bidders to spend quality time with them, such as one-on-one lunch meetings and rounds of golf.

Items Up for Auction

· Lunch with Bill Cobb, President of eBay North America: Cobb oversees the marketing, strategic planning, and business development for all of eBay's North American businesses.

· Lunch with John Thompson, CEO of Symantec: Symantec is the global leader in information security and availability, helping customers secure and manage their data. Under Thompson’s guidance, Symantec went from a $632 million consumer antivirus company in 1999 to an enterprise security player with $2.5 billion in sales in 2004.

· A round of golf with Bill Watkins, President & CEO of Seagate Technology and Mike Cannon, CEO of Solectron: Under Watkins’ leadership, Seagate was named Forbes magazine’s Company of the Year in January 2006. Cannon recently addressed global business leaders at the World Economic Forum in Switzerland.

· Other big-ticket items include: World Cup Soccer tickets; AT&T Pebble Beach Pro Am tickets; autographed jerseys from Joe Montana, Jerry Rice, Roger Craig and Brent Jones; a customized racing bike from Specialized; and pre-show tickets to Saturday Night Live.

About The Leukemia & Lymphoma Society

The Leukemia & Lymphoma Society®, headquartered in White Plains, NY, with 66 chapters in the United States and Canada, is the world’s largest voluntary health organization dedicated to funding blood cancer research and providing education and patient services. The Society’s mission: to cure leukemia, lymphoma, Hodgkin’s disease and myeloma, and improve the quality of life of patients and their families. Since its founding in 1949, the Society has invested more than $424 million in research specifically targeting leukemia, lymphoma and myeloma. Last year alone, the Society made over 2.4 million contacts with patients, caregivers and healthcare professionals.

The rise of the bad competitor . . . Craigslist et al

By Tom Foremski for Silicon Valley Watcher

I've been thinking about "bad competitors" after coming across this excellent speech on the future of newspapers by Phil Meyer, Knight Chair in Journalism, University of North Carolina at Chapel Hill at a conference in August 2005. [Craig Newmark is founder of Craigslist, the classified advertising company.]

...they [newspapers] don’t have a monopoly. As sure as Craig Newmark is sitting in this room, they don’t have a monopoly on classified advertising, and there’s lots of other stuff they no longer have a monopoly on. They have a monopoly on being newspapers. But that’s not the point. The point is that the services they provide are being provided cheaper and more efficiently...by somebody else. I first met Craig at this meeting and I shook his hand and I said, “Craig, you are what the Harvard Business School calls a bad competitor.” A bad competitor is somebody who will provide a better service at a lower profit margin. Since Craig isn’t interested in any profit margin at all, he’s about as bad a competitor as you can get. And this is going to continue.

Check out the The Sunday Times (of London) recent feature on Craigslist quoting Craig Newmark and Craigslist CEO Jim Buckmaster:

From Sunday Times May 7 magazine: Falling for super-geek

. . .Newmark drives a Prius, a petrol-saving hybrid car. Buckmaster has never owned a car. They both take the bus to work in the morning. “I don’t really want a Rolls-Royce or a huge, fancy house,” says Buckmaster. “Money is important until you have enough of it to be comfortable with. Beyond that, I think it’s a very mixed bag.”

. . . For Newmark and Buckmaster, the internet has a higher calling than money-making. It’s a view many shared at the start of the dotcom revolution. But one by one, Craigslist’s contemporaries at firms like eBay and Google have joined the rat race and made billions. The Craigslist duo could easily join the dotcom rich list if they chose to sell the company. The idea is anathema to them.

. . .Classified Intelligence Report, an industry newsletter, found that in San Francisco the main newspapers lost over $50m in classified revenues in 2004 because of the Craigslist effect.

[Please note: I am friends with the Craigslist team, and have eaten many a meal at the generous table of Jim Buckmaster and Susan Best, and Craig is often there too...]

There are bad competitors in the enterprise IT arena, especially if you look at the way enterprise software competitors are trying to turn their competitor's core markets into commodities.

Nicholas Carr over at Rough Type says it well (in reference to one of my posts about SAPs strategy.)

From Stack War:

SAP's trying to commoditize the database, by promoting, for instance, the open-source MySQL; Oracle's trying to commoditize middleware, also by promoting open-source options; and IBM's happy to commoditize the applications (while maintaining an escape hatch to "business process automation" up above the stack).
It's an interesting dynamic that, in total, would seem to simply accelerate the commoditization of everything.

-And you can see it in the music industry too. Take a look at Yahoo Music, one of my favorite web services. For just $5 per month I get access to an amazing catalog of music, any time, any place, even from a friend's computer-- you'll never use iTunes again. You'll certainly never buy another $20 CD.

-Take a look at the dozens of me-too companies in each category funded by Silicon Valley venture capitalists. There are more than a 120 news aggregators for example, and more coming. How many "wiki" companies are there? Every new idea in what they call "Web 2.0" is copied and commoditized within weeks.

-The outsourcing business is driven by bad competitors. Overseas IT services companies that do it for far less than local companies. They could get more money for their services but choose not to so that they can win more business.

-Somehow, in the 1980s, the US chip industry managed to persuade the US government to punish its bad competitors. In those days it was the Japanese memory chip makers and Intel (INTC) was leading the push for tariffs against Japanese competitors for "dumping" on the US market. Dumping meant producing chips for less than the cost of their production, to win market share. That became illegal.

-Robert Scoble, Microsoft's top blogger creates millions of dollars in good PR for his employer for the cost of an engineer's salary, about $100k. Microsoft's PR agency Waggoner Edstrom cannot compete with the ROI on Mr Scoble. It's something PR companies everywhere will have to face.

And there are many other examples of competitors either behaving stupidly and ruining the market for everyone. Or, competitors that don't monetize the markets to their fullest opportunity and thus are not creating wealth for themselves, their investors, or their employees.

So where does this trend lead?

Should it be illegal to make a loss in order to gain market share?

Should it be illegal for companies to make bad decisions that ruin the market for everyone?

Does a company have a moral or ethical obligation to increase the monetization of a market so that it can employ more people and provide additional services for its communities?

Are companies that use very profitable business groups to prop up less profitable businesses groups acting as bad competitors? For example, Hewlett-Packard's printer group has subsidized the IT group in the past.

Are the telcos and cable TV companies "good competitors" because they seek to block any Internet threat that would commoditize their services and thus force massive layoffs??

This bad competitor trend will only intensify because it can't be stopped.

What happens next?

May 4, 2006

Exclusive interview: Terry Garnett explains his firm's VC buyout strategy...

. . . and the launch of Ingres and Wyse Technology--two well established companies with large market potential

By Tom Foremski for Silicon Valley Watcher

I recently met with Terry Garnett of Garnett & Helfrich Capital--the venture buyout firm behind behind Ingres and Wyse Technology. These are two very interesting companies that had caught my eye and I didn't realize the same investment team was behind both ventures.

I have been writing a lot abut Ingres because it is a small open source software company that has been assembling a dream team of top executives more suited to running multi-billion dollar business groups. So you can bet that Ingres won't be sitting on its hands. (Please see SVW: The ambitions of Ingres: A small company with the executive team of a giant )

And Wyse Technology is another interesting company, essentially reinventing the whole thin computer concept and renaming it Thin Computing. It takes a systems approach to driving down the cost of installing and operating large numbers of PC systems which can be replaced with Thin Computing systems and the users don't even know it. (Please see SVW: Wyse says in talks with Google and Yahoo on thin computing)

Garnett & Helfrich Capital has a modest buyout fund by the standards of Silver Lake Partners and others that have raised multi-billion dollar funds. But, it's not the amount of money you have, its the operational abilities, and long experience in the industry to be able to read the evolving trends--that Mr Garnett and his partner David Helfrich bring to the table.

Their current fund of $350m has done some very interesting deals and there are more to come plus plans to raise yet another fund around the end of the year.

I popped in on Mr Garnett last week, in the "VC Gulag" a raggle taggle sprawl of small office buildings on Sandhill Road (they are moving to larger quarters in Hillsdale). We covered a lot of ground, here is part of our conversation:

Mr Garnett said he used to be a venture capitalist at Venrock but he also has a long career in the software industry at many different companies. Here is his bio:

From 1990 to 1994, he worked with Oracle Corporation reporting to Larry Ellison, as Senior Vice President, Worldwide Marketing and Business Development and other positions. He has helped establish and build CrossWorlds, Lightyear, he has worked at McKinsey & Company; and held management positions with Tandem Computers. From 1995 to 2003, he was at Venrock where he led early stage financing and served on the boards of: New Era of Networks acquired by Sybase, Niku, CrossWorlds Software acquired by IBM, Neoforma, Netobjects; he was an early stage personal investor in Siebel Systems and Checkpoint Software.

It's clear that he understands the enterprise software market and his partner David Helfrich has led what he calls, a "parallel career." The two met at a horse riding school for their kids, and they spent two years "at the rail" getting to know each other before they decided to pool their skills and created Garnett & Helfrich Capital in March 2004, with an initial fund of over $250m, soon expanded to $350m.

"I sometimes explain what we do as 'there is a little bit of chocolate in my peanut butter' by which I mean it is a little bit of venture capital investing combined with venture buyout."

The investment firm was founded on the belief that there were decent sized business groups within larger tech companies that were good businesses but were not getting the attention or the funds from their parent organisations.

The firm analyzed hundreds of IPOs and acquisitions over the past few years and started to identify business groups of at least $50m in revenues, that could survive a buyout, and the temporary disruption that such events create for a business.

Ingres was one of those businesses, a database software group spun out of Computer Associates, a business with great revenues, large numbers of customers and a solid reputation within enterprise software markets.

"It was important that Ingres had a long history, it wasn't a new startup with an uncertain product and an uncertain future. Enterprises want to buy from companies that are stable and will be around for a long time" Mr Garnett said.

But spinning out from CA was not easy because of the huge management shakeup that was going on in the wake of a scandal that is currently in the courts (Please see: Former CA chief Kumar pleads guilty to fraud.)

The deal was further complicated in that Mr Garnett had to recreate three offices from scratch, set up the telephone systems, the billing systems etc. He had to create the entire infrastructure for a 100 plus employee company from nothing, and hire the executive team, and act as the CEO.

He says he would love to give up the CEO position and get back to his regular work but that, "Finding a CEO is more difficult because of the A-list caliber of the current executive team, they are going to demand an A-list CEO." Mr Garnett said he loves to recruit and his philosophy is to recruit 10 A-list executives because they will bring in another 40 top people.

Buyouts are very popular these days, and Silver Lake is one of the top firms in this area. But Mr Garnett points out that its much easier for Silver Lake to write a check to take, for example, Serena Software private--there is no infrastructure building that had to be done, as in the case of Ingres. That's why Silver Lake might find it difficult to compete against Mr Garnett's team, if it wants to target this middle sector of the buyout market.

Mr Garnett hopes to do about five or six deals with the first fund, and he sees lots of opportunities to buy out healthy business groups from within tech giants such as Siemens for example. "In a lot of cases the seller is not getting any credit from Wall Street for owning those business groups," he said. So the deals can be very compelling for these large tech businesses. Usually, the seller will retain about a 20 per cent stake in the new company, which helps with customer continuity.

A good example is the blade server switch business bought out from Nortel. Here is a list of deals.

Mr Garnett's many years in the enterprise software business have given him an understanding and an appreciation for brands, and the realization that brand building is long and difficult. Therefore if he can acquire products such as Ingres and Wyse, that have long established brands, that brings with it a significant amount of credibility among customers that is very valuable.

I think this is an important understanding of how markets and customers buy products. During Internet 1.0 and the dotcom boom, there was a lot brand building attempted, but throwing money, billboards, and cute sock puppets at the challenge of establishing lasting brands didn't work. Brands are built slowly, over time, they are trust-built relationships just like human relationships.

What's the exit strategy? The same as for other ventures: IPO or sell to larger players. But building a $50m to $100m dollar revenue businesses to the next stage, is a lot less riskier than trying to build a startup and take it beyond several millions dollars in revenue. It's smart investing and there are still plenty of deals to be done. It'll be interesting to see which other players emerge in this field.

Genius launches at SF MOMA - local TV crews look for mania

By Tom Foremski for Silicon Valley Watcher

I popped into the Museum of Modern Art Wednesday evening for the launch party for Genius, a startup that is grabbing buzz by the armful. So much buzz that a TV crew from one of the local stations was at the party, wondering if it was an example of dotcom mania making a come back.

No, it was not, but Genius has a savvy team, led by CEO and founder David Thompson, former chief marketing officer at WebEx. Mr Thompson knows his business very well, he's one of the most astute marketing executives (and I hate that term normally...) that I've met in a long long time.

The Genius product is also very clever, the way that it bypasses the the IT department and encourages users not to tell the geeks in the glass room about using the SalesGenius web service--the first in a planned suite of enterprise apps.

Smart use of proxy servers allows SalesGenius to monitor a company's best sales leads. They can view behavioral data on who visits their web sites, and help determine which sales prospects are hot. Hot leads get bumped up to the top of phone list.

I met with Mr Thompson and Heather Mosley from PerkettPR more than a week before the launch, and the more I think about the product and the business strategy I'm more impressed. It looks like a useful product and a very very smart business strategy.

And it was during a discussion with David Thompson that I had an interesting and blindingly obvious realization. I had asked why he had chosen to develop SalesGenius, as the first in a suite of enterprise apps?

He said the focus on sales is the most important part of any company and that's where the most benefit occurs from investment in the automation of the sales process.

A simple answer and it made me realise how often organisations forget this blindingly obvious fact. And I realized why CRM is probably the only enterprise software application that could ever justify its ROI and that's why CRM companies have been very successful.

But new web services threaten the old CRM stack because users can start using them instantly. And users can customize these apps without requiring IT departments and consultants.

Mr Thompson said that his experience at WebEx showed him how salespeople were using online meetings to sell products and services. Using the WebEx technology they could make 10 times as many pitches, and sell much more than before.

Since the interview, I've realized that the SalesGenius product is a crafty way to bring sophisticated web analytics into an organization, through grassroots users. And then once you get viral recognition within the company you get a shot at corporate license revenues, and sales of other online modules for other departments--all tied together for a one-view business console for the CEO.

Internet commerce is going to grow in importance, therefore strong web analytics is going to be the foundation of every company. Because web analytics determines how you sell your products, how you reach your best prospects, and the many other gazillion online interactions that future corporations will have to monitor. Web analytics is a way to get into the core of future businesses, that's the sweet spot because without strong web analytics you will not be able to run your business effectively. I have to hand it to the company, its name might turn out to be accurately descriptive rather than just hopeful ... :-)

I wouldn't be surprised if within a year WebEx or Salesforce acquires Genius. In fact, they should all join together, and they probably will at some point.

May 3, 2006

Net Neutrality: The shareholders of the IT tech giants are losing out to the "valued customers"

By Tom Foremski for Silicon Valley Watcher

I recently wrote a post arguing that Google, Yahoo and all the other online giants have put up a half-hearted defense of Internet neutrality because they have a lot to gain from the absence of neutrality.

The tech giants that have the most to gain from net neutrality are not the web services companies but the infrastructure providers such as Cisco Systems, Intel, Sun Microsystems, IBM, EMC, Dell and Hewlett-Packard. And it is puzzling why they are so quiet on this issue.

If the Telcos and cable TV companies are allowed control the choke point--the last mile connection into the digital home then that cuts out competition. Without competition you have far fewer infrastructure builders.

This means that to get to the next stage of high speed broadband is going to take a lot longer because the Telcos and cable TV companies operate a duopoly in most markets. They'll get around to upgrading their networks when they get around to it.

There is no competitive pushing and shoving to get them moving faster. And there is no competitive infrastructure building which is bad for the big IT vendors.

Plus, it is a bad situation for thousands of Silicon Valley startups (and their VCs) that are banking on ubiquitous high speed broadband connections at low prices. We've been here before: During Internet 1.0 a lot of startups were way too early in their expectation that millions would soon have (low speed) broadband connections and they went out of business.

Now, we have millions with low-speed broadband but it is the rate of adoption of higher speed broadband that will determine the fortunes of the next generations of Silicon Valley startups.

Yet the startups are too tied up with their ventures and blinkered from seeing what is going on in the political realm, where the Telcos have huge sway thanks to institutional connections that span generations. They are very good at lobbying against any legislation that mandates net neutrality.

The leading Silicon Valley companies such as CSCO, INTC, and HPQ, all have much better political connections than the newbies such as GOOG and YHOO. However, the executives at the big IT vendors are extremely shy in speaking out on this issue when in private, some of them will agree with me that the actions of the telcos are harming their markets.

They won't speak up on network neutrality because they don't want to upset their "valued customers." But those valued customers are costing them the loss of a much bigger market.

In my humble opinion they should be taking care of their valued shareholders. They could sell far more infrastructure equipment if the Internet is open, neutral and there is unfettered access to the digital consumer.

- - -
Please see:

Check out this Washington Post interview with Scott McNealy and how this former fearless iconoclast sidesteps the net neutrality issue.

Here is a summary of news coverage on net neutrality from News.com.

Here is Wikipedia on Net Neutrality as law.

Save the date: First Friday with Foremski at the new de Young museum

By Tom Foremski for Silicon Valley Watcher

I've been wanting to do some offline events and get to meet some of my readers in an informal setting, and not make it abut tech or business but about community and society (culture).

This week I'm launching First Friday an extremely informal get together on the first Friday of every month 5pm to 7pm at the stunning new de Young museum in Golden Gate park.

That's where I generally start out my Friday evenings, the museum is open until 8.45pm and you can come by, say hi, hang out, and check out the exhibits. There is usually an excellent string quartet or jazz ensemble playing, and also very excellent cocktails (you have to order the Green Fairy!). The museum attracts a small eclectic crowd on Fridays, just like my readers :-)

First Friday with Foremski is also linked to my new spot at the San Francisco Chronicle and my weekly online column titled "Fridays with Foremski." But it is not sponsored by anybody, there won't be any free drinks or food, just me and maybe one or two others...

So come on by this Friday, May 5th, it'll be worth it just to catch the San Francisco Conservatory of Music performing Dvorak from 6pm to 8.30pm.

I'll be in the public areas either in the gardens or inside listening to the music. Buzz me on my cell 415 336 7547 or text me if you can't find me. I hope to see you at First Friday!

- - -

Here is some info on the new de Young:

Coming up on Thoughtleader Thursday: Interview with Terry Garnett of Garnett & Helfrich Capital--the venture buyout firm behind behind Ingres and Wyse Technology

By Tom Foremski for Silicon Valley Watcher

Last week I met with Terry Garnett, one-half of one of the most dynamic duos in the Silicon Valley investment community, Garnett & Helfrich Capital. Mr Garnett and his partner David Helfrich have crafted some very interesting buy outs and are already making plans to raise a second fund.

Their current fund of $350m has done some very interesting deals but this form of investing is not for the feint of heart, it requires an astute understanding of markets and a very sharp eye for details of financing and spinning out buy outs from some of the largest tech companies in the world.

Tomorrow on Thoughtleader Thursday, you'll hear about Mr Garnett's philosophy on investing, and you'll find out why his firm is expanding and moving out of the VC gulag of Sandhill Road, to the spacious terrain of Hillsdale on the Peninsula, and closer to San Francisco.

TiEcon 2006 speaker list: Shashi Tharoor, Howard Dean, David Lynch, John Doerr and Judy Estrin . . .

The annual TiE conference (May 12-13) is one of the best Silicon Valley conferences for startups and this year it features one of the best speaker line ups I've seen:

Shashi Tharoor, United Nations Under Secretary General for Communications and Public Information, will provide a geopolitical perspective on the conference theme of Disruption and Convergence followed by John Doerr.

Also on the speaker list is David Lynch, Howard Dean, and serial entrepreneur Judy Estrin. Here are all the details:

Santa Clara, CA - May 2, 2006 -TiE (The Indus Entrepreneurs) Silicon Valley today announced the speakers for TiEcon 2006, held in Santa Clara, CA on May 12 and 13. Opening speaker, , United Nations Under Secretary General for Communications and Public Information, will provide a geopolitical perspective on the conference theme of Disruption and Convergence followed by John Doerr, a pioneering, world renowned leader in the Venture Capital community. The title of Mr. Doerr's speech will be "Entrepreneurship Unlimited." TiEcon brings together the talent, ideas, enterprise and people who are shaping the future of our business world.

"We are very proud of the world-class speakers we were able to attract for the TiEcon 2006. TiEcon is an ideal event for helping Entrepreneurs and VCs build relationships and acquire the tools necessary to create successful and profitable businesses," says Vani Kola, Chairperson of TiEcon 2006. "TiEcon 2006 will be a platform through which industry experts and world-renowned market leaders will unravel the countless opportunities and boundless optimism that lie ahead."

Other Keynote Speakers also scheduled are: Howard Dean, Chairman, Democratic National Committee; Judy Estrin, Chairman, Packet Design Inc; Vyomesh Joshi, EVP,
"Hewlett Packard"; David Lynch, Hollywood Producer; T J Rodgers, Founder and CEO, Cypress Semiconductor; and Jane Wales, President & CEO, World Affairs Council of North California.

The Distinguished speakers include: Tom Berquist, CFO, Ingres Corporation; Dr. Tom Fogarty, Professor of Surgery, Stanford University; Sanjay Jha, EVP, Qualcomm; Guy Kawasaki, Managing Director, Garage Technology Ventures; Marissa Mayer, Vice President, Search Products & User Experience, Google; Rahul Merchant, CTO, Merrill Lynch Global Markets; Byung Moo Kim, Global CTO, SK Telecom; Nobuharu Ono, President & CEO, NTT DoCoMo USA, Inc.; Rick Page, Founder and CEO, The Complex Sale, Inc; Aliza Peleg, Managing Director, SAP Labs U.S.; David Seibel, President, Insight Partners; and Linda Simensky, Senior Director of Children's Programming, PBS. For a complete agenda please visit www.tiecon.org.

Meet the Movers and Shakers
A special highlight at TiEcon this year is the "Entrepreneurs' Bazaar." The Bazaar provides unique opportunities for entrepreneurs to schedule quality one-on-one time with industry experts from the venture capital, legal, finance and other professions. The Entrepreneurs' Bazaar will be a platform to discuss and solve the Entrepreneurs' ideas and challenges and seek an expert opinion, or simply connect with the right people for business ideas.

TiEcon 2006 will take place Friday and Saturday, May 12 and 13 in the Santa Clara Convention Center, 5001 Great America Pkwy, Santa Clara, CA. On line registration ends by midnight May 8th. Interested attendees can register online at www.tiecon.org

Google, Yahoo and Microsoft have little to gain from Internet neutrality

By Tom Foremski for Silicon Valley Watcher

Network neutrality is a concept that there should not be any favoritism on the Internet, that a packet of data is a packet of data and thou shalt not discriminate between packets of data.

Yet not all packets of data are equal because they all do different things however, they all travel along the same pipe. Some data packets clearly need priority, or could greatly benefit if they had priority and could reach their destination faster.

If part of an email is slightly delayed, that's okay because a microsecond later it is complete and readable. Packets of time-related data such as phone calls, video data, sound data--all have to be assembled in the right order and at the right time.

Business data also benefits from being given a high priority within a network, especially if it is fueling a real-time business process management system.

That's why Quality of Service (QoS) was invented and is widely available on network equipment from any vendor. With QoS you get to peek into the data packet and determine if it requires a fast path through the pipe.

QoS is vital for Service Level Agreements (SLAs) these are contracts that mandate and guarantee specific levels of communications and IT services. SLAs are used by in-house IT departments providing services to their company's business groups, and by outsourced IT services providers. And QoS provides a way to charge premium prices for premium communications services--which is what the Telcos want to do.

But the phone and cable companies have a hold on the last mile--the link into the consumer home. And as consumers consume more products digitally, the telcos and cable companies have a key strategic position as the gatekeepers, and the toll collectors.

You can see the effectiveness of this market position in your bills. My cable TV bill has been going up steadily and so has my telecommunications bill--yet I don't recall that I watch more TV, and I certainly didn't find a few extra hours in the day to talk more on the phone. Yet I'm paying a lot more now than a couple or three years ago--and I don't have much choice in the matter.

Competition with the gatekeepers of the last mile connection into the home is non existent, and it will remain that way until maybe WiMAX, wireless broadband with a reach of many miles, can vault over the walls of the Telcos.

The Telcos and the cable companies have another advantage: these are federally regulated companies. This means any competitors have to be federally regulated and that is a huge and expensive barrier to competition. And these companies know the ins-and-outs of the federal regulatory system, and they have political connections crafted over many decades.

Google, Yahoo, Microsoft and others, have grown concerned that their services could get shut out of easy access to consumers. The Telco and cable companies are going to be offering similar web services as those found anywhere else, after all, in this mashup world web services are going to be commodities--it's who owns the first screen on your PC or phone or TV that counts. And it is the providers of the pipe that can put themselves on the first screen that you see quite easily.

You'll still be able to get to Google, or Yahoo, or Microsoft, or Ebay, or Amazon--but it'll be a click or two away, and the web pages might not load as fast as those of Telco partner sites. Eventually, you'll stick to the first screen to get your maps, or search, because it's a few clicks easier, and a few seconds faster.

GOOG and others have seen this coming. In September 2005 GOOG hired Vint Cerf, considered one of the Fathers of the Internet, away from MCI and made him Chief Internet Evangelist.

Any Internet services company has to be concerned about the gatekeepers. But the big guns, GOOG, YHOO, MSFT, EBay, AMZN etc have the least to be worried about. In fact, they have a tremendous amount to gain because it is much easier for them to do sweetheart deals with the telcos and cable companies. Such partnerships between them would represent a huge competitive barrier--and it is the small companies that have the most to lose.

The startups and the smaller companies won't be able to get the deals on bandwidth that GOOG et al can get, because they can buy bandwidth in enormous quantities across many regions. That's why GOOG et al haven't put much into their fight for laws that would mandate Internet neutrality.

Jeff Chester at the blog "Digital Destiny" believes that the half-hearted political fight is due to existing business relationships with the Telcos. He could be right. I think it is more likely that GOOG et al have figured out that Internet neutrality is not a good thing.

Why risk an open and neutral Internet and become vulnerable to smaller, swifter competitors? Yes, right now GOOG, YHOO and some of the others move reasonably fast in some markets, but as they grow larger they won't be as nimble.

If you are a well established Internet services company such as GOOG, it doesn't pay to expose yourself to any disruptive, innovative startups. Why make it easy for your future competitors by fighting for their right to a neutral Internet?

That is why you should not look to GOOG et al, to save the Internet from the gatekeeper telcos and cable companies. I"ll tell you who should be fighting in the front lines . . . in the next post.
- - -
Please see Jeff Chester's Digital Destiny blog.

And http://savetheinternet.com/

And GigaOM on net neutrality.

May 1, 2006

Tossing midgets is not funny unless...

By Tom Foremski for Silicon Valley Watcher

Midget tossing in the PR BlogoSphere (BS) is Strumpette's latest button pushing post. It's hilarious, especially when you know the (alleged) midgets. [Phil Gomes is a good sport.]

It's a shame Strumpette is a composite character, I'm told "she" is made up of several people. In fact, various people have been approached to write "Strumpette" occasionally. And some even suspected that I was writing Strumpette in between writing here on SVW, at ZDNet, AlwaysOn, and on San Francisco Chronicle's Tech Chronicles; and in between running around Silicon Valley getting exclusive interviews and the occasional scoop.

I really admire the elegant social design of Strumpette, the button pushing is expertly done, displaying an innate understanding of the PR industry and its characters. It is definitely an "inside job."

My younger alter-ego used to dream of meeting someone like her. We could have run off together and taken on the world; with one well-aimed-between-the-eyes-blog-post-at-a-time. No one would be safe.

Obviously, we'd offer protection to our friends and allies... ;-)

Chinese blogosphere has peaked--is censorship to blame?

By Tom Foremski for Silicon Valley Watcher

Technorati, the web services company that tracks the blogosphere, has also been tracking which languages are being used. And the findings are very interesting, and there are lots of them.

Can you guess which is the most popular language? Here is a post from Dave Sifry, CEO of Technorati, on the the analysis of the languages of the global blogosphere.
From: State of the Blogosphere, April 2006 Part 2: On Language and Tagging

Something that may come as a surprise (at least to the English-speaking world) is that English isn't the biggest language of the blogosphere. In fact, English isn't even the primary language of one third of all posts that Technorati tracks anymore.
Another interesting finding is that the Chinese blogosphere, which grew significantly in 2004 and 2005 (launches of MSN Spaces in Chinese, Bokee.com saw a peak of 25% of all posts in Chinese in November 2005) seems to be slowing down somewhat this year.

I wonder if the Chinese slowdown is because of the increasingly overt censorship of Chinese internet users? Blogging celebrates a rawness, a passion, a shoot-from-hip directness.

This isn't going to happen if you have to second-guess yourself when writing, and then think thrice about pushing the "publish" button when you know someone is looking over your shoulder.

Limiting self-expression is never good for a society and those energies generally find a way of alternate expression--sometimes covert, sometimes you have to hide opinion and read "between the lines" as in former Soviet-dominated countries, and other times self-expression bursts out onto the streets with an uncertain velocity and outcome.

The recent Frontline documentary on the "The Tank Man" was fascinating . It really puts into perspective the cowardly attitudes of some of Silicon Valley's most respected tech giants, towards standing up for what's right. You only have to stand up and do the right thing--you are not standing up to a tank column. [Frontline continues to produce and practice3 some of the very best journalism anywhere, imho]

Bush Calls For World to Stand With Young Man Who Braved Tanks The Associated Press, June 5, 1989 (read excerpt »)

What interests me: Does Internet censorship harm an economy? If we say that blogging and all this free expression is so wonderful, and game changing, and vital to communities--then those places that don't have it will be clearly disadvantaged. At some point... Maybe?

- - -

BTW, I'd like to commend Technorati on an excellent job in brand building and awareness. Its revamp of its service, and the way it has managed to skillfully use its knowledge of the culture of the blogosphere to promote itself is masterful.

And Technorati is in an excellent position to replace one of the core technologies of the blogosphere, the trackback. For some reason (spam related) trackbacks rarely work.

The idea with trackback is that every online post can automatically discover if it has been linked to by another post, and automatically publish an extract. This solves the problem of do I comment on your site or mine.

But trackback is hurt by swarms of spam trying to build online links on blog sites so that Google will rank some sites higher than others.

Technorati offers an alternative trackback solution, here it is, search results that show who is linking to Silicon Valley Watcher.

But Technorati is showing strains as the blogosphere expands to 37.3m blogs, doubling every six months. Lately, the Technorati search has often been unavailable because of high volumes of requests. Clearly its infrastructure needs a boost, I just hope it's a scalable design.

Leader Sponsors: Publish your thought leadership

Help publish Silicon Valley Watcher and Silicon Valley Watcher (SVW) will help your company publish! We are offering six Leader Sponsor positions at the top of every page served up by Silicon Valley Watcher.

Our readers are mostly local Silicon Valley people and you will be reaching some of the world's most important decision makers. These are decision makers that decide the next stages of the Internet economy, and on the design and development of key technologies and products. These are the creators of the future.

And there is huge interest in the innovation of Silicon Valley from around the world with about one-quarter of our readers in other countries.

By becoming a Leader Sponsor of SVW you will have a window on this unrivalled community of leaders and influencers.

And your sponsorship of SVW will help expand it further. We are building an editorial team of top journalists. And we are creating the world's best resource for news, trends, analysis, and opinion--about and from--the planet's most innovative region bar none.

As SVW expands, your window at the top of every page will expand its reach. And in that window you can display your thought leadership. You can point readers to your blogs and other publications that establish your company as a vibrant and vital part of Silicon Valley's mediasphere.

To be known by your community--you have to publish and become visible to your community.

The annual sponsorship package also comes with consulting services. You get first access to media consulting services from SVW and its affiliates. And you get first access to offline events organized by SVW.

It's important to build and be involved in online communities but it is just as important to be involved in offline communities such as conferences, salons, and debate forums.

These are fast changing times, and in these times, every company is a media company to some degree; because every company tells stories to itself, to its customers, to its communities, to its future hires. Those stories had better be compelling stories, and the best stories are honest and truthful. And they should employ the powerful two-way media technologies that are emerging from Silicon Valley.

Help us publish and we'll help you publish.

Call Tom Foremski, publisher and founder of SVW on 415 336 7547. Or email Tom (at) Siliconvalleywatcher.com with "Leader Sponsor" in the subject.

Don't delay-- do it today: the Leader Sponsor positions are limited to just six slots and will be offered only once a year.

- - -

Here is a snapshot of our AwStats for 2005: (Call or message for the most recent numbers.)

The new media won't be like the old: Tell that to NYT and MSFT

By Tom Foremski for SiliconValleyWatcher

An electronic "Times Reader" was announced by the New York Times and Microsoft (MSFT). And, it is designed to look very similar to the newspaper. Why?

A little while ago I wrote that you will know the new media because it will not be like the old media. What's the point of making an electronic NYT look like a newspaper NYT?

This shows that these two venerable old organizations don't get it.

I can think of several different ways you could craft a new type of media entity/product, and you'll see some of them in upcoming projects. And they won't look anything like a newspaper...

It continues to amaze me that NYT and other media companies identify with their distribution channel rather than what they are: these are news organizations!

A newspaper is just one way to distribute news, online is yet another. TV and radio are also excellent distribution channels. If you identify as a news organization then you can take advantage of ALL these channels. Why limit yourself?

I'd be happy to give NYT a bit of consulting advice, clearly needed.

From: A (distributed) new media column: It's a New Year and a new media. . .will it be richer or poorer?

A blog post is one very good example of one form of the new media. A blog post is a page of content that is separated from its format (thanks to cascading style sheets) and, very importantly, it carries its own communications (!)
It is a read-and-write document, a totally unique media entity. We have finally connected up the other end of the internet--it's a two-way medium now, with a host of easy, (nearly) one-click publishing tools and very easy media application development tools.

BTW, that post (January 3rd 2006) itself was an example of something that couldn't be done with the old media: it is a column that I published across three different web sites. When you click on "continue reading" it takes you to the next part of the article on a different web site.

It's an example of thinking "outside the page." :-)

May 2006 Archives

May 30, 2006

Coming up: Vivisimo CEO, a chat with the dark horse search engine company; John Kish CEO of Wyse Technology spells out the end of the desktop; Dan Berg CTO of Sun Services tells of adventures in Central Europe; plus, SVW Leader Sponsor news!

O'Reilly/CMP lawyers warn"Web 2.0" phrase users...

Edelman grabs top slot in Silicon Valley PR

May 24, 2006

Edelman's Technorati deal and the blogosphere...

May 22, 2006

This&That: Beyond Blogging; Take the man out of Manhattan; Beet TV; OutCast dinner; Blake leaves WetFeet and PR; Personal APIs; The Net DVD release

May 18, 2006

RightNow: The Microsoft of Montanna and the philanthropy of success

May 17, 2006

Next week: I'm speaking at PRSA Counselors Academy in Savannah

Cherry picking advertising and not paying for the journalism

Bad Competitors and Cherry Pickers - a lethal combination

May 15, 2006

Could nationalism limit Google's ambitions?

The limits of Google's limitless business model

May 12, 2006

Google's garden lunch press party...

May 11, 2006

Howard High: Join in this live tribute to Intel's retriring chief spokesman

May 10, 2006

Mass media masses at the Googleplex

Google Media Day: What questions would you ask?

May 9, 2006

More chatter about Bad Competitors ... and the New Media Age

Soonr: How to make (almost) free cell phone calls to anywhere...

Open copyright - use as much as you want of my work

Part 2: More on Bad Competitors...Silicon Valley is full of them

May 8, 2006

Top Silicon Valley execs are Out for Blood! Charity fundraiser starts online May 8

The rise of the bad competitor . . . Craigslist et al

May 4, 2006

Exclusive interview: Terry Garnett explains his firm's VC buyout strategy...

Genius launches at SF MOMA - local TV crews look for mania

May 3, 2006

Net Neutrality: The shareholders of the IT tech giants are losing out to the "valued customers"

Save the date: First Friday with Foremski at the new de Young museum

Coming up on Thoughtleader Thursday: Interview with Terry Garnett of Garnett & Helfrich Capital--the venture buyout firm behind behind Ingres and Wyse Technology

TiEcon 2006 speaker list: Shashi Tharoor, Howard Dean, David Lynch, John Doerr and Judy Estrin . . .

Google, Yahoo and Microsoft have little to gain from Internet neutrality

May 1, 2006

Tossing midgets is not funny unless...

Chinese blogosphere has peaked--is censorship to blame?

Leader Sponsors: Publish your thought leadership

The new media won't be like the old: Tell that to NYT and MSFT

- The Less talked about feature in New Xeons.

Comments

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