The Lack of Tech Industry Diversity – 1 Year Later

The WSJ wrongly takes aim at Mike Arrington on the topic of women in tech. I don’t agree with him that not enough women want to become entrepreneurs (but I’m married to one so I’m biased) however I do agree that the WSJ is flat out wrong to target TechCrunch for an issue that is not of their making nor within their power to solve.

For the most part I’ve sat on the sidelines over the years during the endless debates about how we need to do more to encourage more women to start companies. What I mean by “sat on the sidelines” is this – until today I haven’t really said what I felt. Now I’m going to.

[From Too Few Women In Tech? Stop Blaming The Men.]

I wrote a post almost exactly 1 year ago that I will reprint in entirety because it is just as true today as it was then and will be true this time next year as well. For excellent resources and a network that women entrepreneurs can tap into, check out the Forum for Women Entrepreneurs and Executives.

Every once in a while this issue flares up, usually in relation to conferences not having anything other than a bunch of white guys on the speaker agenda, but I think we should stop fooling ourselves about the technology industry valuing diversity and on there being a system of meritocracy for achieving it.

Women, Hispanics, blacks, and people with disabilities are all conspicuously absent at events and on company payrolls. We have deluded ourselves into a false sense of security about the fact that because tech centers like Silicon Valley, Boulder, and Boston are themselves centers for cultural diversity, that our industry is diversified as a result. Not true.

Why does this matter, especially coming from someone like me who has a gag reflex about the words “affirmative action” and repulsion at the idea that we, as a society, condone hiring or admittance, and promotion based on anything other than merit? It matters because we are not an economy that searches out natural resources like iron ore, timber, coal or natural ports and waterways to determine where we expand; we are an economy that depends upon businesses identifying clusters of talented human resources to solve problems that have economic value. If our solution is that a bunch of white men, young and middle aged predominately, are going to solve the bulk of problems from here on out, then we will neither be very good at it on a global scale nor efficient as a society in lifting earning power and real economic growth across the board.

Before reflexively commenting that every company has Indian and/or Asian engineers, as your proxy for diversity, just think about this for a moment. When was the last time you saw someone in a wheelchair or with a vision disability working in your office, or someone who is black or the last time you met someone at your company event who was there with their gay partner? Can you name more than 10 female executives at big tech companies or the last time you met someone who is older than 55 at a conference?

I’ve been in this business for a long time and can say without fear of hyperbole or generalization that the above are not common experiences, which makes me believe that for all of our enlightenment, those companies that we look down on, like Walmart, are actually much better at courting and sustaining a diversified workforce than the majority of tech companies, large and small.

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Better Google Calendar

I saw these changes yesterday and my immediate reaction was “wow, gcal is finally useful in a group context… getting much closer to Exchange”. The UI and functional changes make a huge difference, but I’m starting to like Tungle for group scheduling.

In the next day or so, you’ll start to see some changes to the event page in Google Calendar which should make scheduling events easier. We’ve made the style more consistent with other Google apps, put information that’s most commonly used at the top of the screen, simplified the layout, and added some functionality.

[From Easier event scheduling in Google Calendar – Official Gmail Blog]

Subscriber growth suddenly stops for cable TV industry

Worst quarterly performance to date… technology plays a minor role, the economy appears to be the main drag on cable tv subscriptions. Maybe it’s time for Comcast et. al. to do something different and actually lower prices… btw, this certainly doesn’t reflect positively on the high carriage fees that cable tv operators have been agreeing to in order to secure retransmission consent agreements from content providers in recent years.

The number of cable subscribers dropped by 711,000, according to SNL Kagan, with six out of eight cable providers reporting their worst quarterly subscriber losses to date. Other parts of the industry were able to add just enough subscribers to make the net loss more like 216,000. Cable’s share of the pay-TV market dropped slightly too, from 63.6 percent to just 61 percent during the quarter.

[From Subscriber growth suddenly stops for cable TV industry]

The Myth of Freemium and Related Pricing Topics

Seth Levine recently wrote a great post on pricing topics for software as a service companies; I agree with what he writes and can relate given a project I have been immersed with that goes to this very topic.

Web startups reflexively over complicate their pricing strategy and/or undervalue what they are offering by making it too cheap on the low end. The 37 Signals pricing scheme that Seth uses an example is a model for many SaaS startups and is both a blessing and a curse, on one hand it provides a compelling presentation model for pricing but on the other it focuses on technical capabilities in the pricing tiers that don’t necessarily translate into user benefits unless the product itself is well understood and largely viewed as fungible where one offering is as good as another.

The other problem this presents is that the elasticity between pricing tiers is narrow which becomes a huge problem when you are also selling enterprise deals at price point 100x or more the price of self-service pricing. The bottom line is that when you move up to enterprise you are not selling more features exclusively; the negotiated legal agreements and the SLA that you are adding to the feature set (which determine support response times and financial penalties for downtime) have real value in the enterprise context however it’s a tough rock to push when you are selling a $149 a month service for $15k-20k at the enterprise level and only offering tactical differentiation.

Seth goes on to highlight the risk that putting a tariff on the wrong aspect of your product or service presents when the “metered component” actually discourages consumption of the product. Basically the key question to answer is how obvious is the arbitrage between what your customer is paying for when the meter ticks and the value they are getting.

I see this metering problem a lot with collaboration applications that scale to value with more users taking advantage of the service, yet companies often want to charge by the user… basically if your app creates more value as a function of usage, then put the subscription tariff on something other than users because in doing so you are creating an obstacle to value for early customers.

Seth also points out the value of charging for add-ons and I am always surprised when I see companies giving away add-ons for free or trying to create new products out of components that only have value in the context of a core service. I think the problem is that presenting add-on pricing is a challenge for many companies, and billing systems often create complexity here because in a self-service web environment the billing system acts as a front end to the service provisioning system as well and a lot of dependencies exist. Heroku has one the cleanest presentations of pricing configuration that includes add-ons that I have seen.

Beware of setting the wrong price early, or giving away valuable services for free. Conventional wisdom is that raising prices is hard, lowering them is easy but this is simply not true. When you go to your customer base and they have been paying you, for example, $200 a month and you tell them that you are lowering the price to $50 a month you would think they would be happy but in reality what you have done is laid the foundation for them to feel like you have been overcharging them. You can manipulate bundling and promotional pricing but changing core product pricing with any frequency is fraught with peril and can create a self-inflicted customer satisfaction issue.

Lastly, Seth brings up the myth of freemium models and it’s my experience that there is no quicker way to start a bar fight in Silicon Valley than to question the validity of freemium models. We can argue about the merits of freemium as a customer acquisition tool but to me that is the wrong argument when what we should be talking about is the shaping of demand to acquire “the right kind of customer” who contributes to improving your total lifetime value metric and reducing attrition rates for monthly subscription businesses. In the majority of freemium upsell models I see the lower price points, right above free, have way too much attrition that has the effect of negating any advantage the business may be enjoying in the form of lower customer acquisition costs.

All things considered, pricing is one of the most interesting topics in the on demand business and done right merges unique disciplines in pricing science, promotion and bundling, and demand shaping.

Cash Rich Companies

It is estimated that there is as much as $2 trillion in cash on the balance sheets of public companies in the U.S. alone. The conventional wisdom of Keynesians has been that the unprecedented level of spending that the Federal government has undertaken would prime the economic pump which would create demand that would spur companies to use their strong balance sheets to accelerate job creation.

This clearly hasn’t happened.

Instead what appears to be happening is that companies are using their strong cash positions to embark on a new age of M&A, pay down debt, and buy back stocks… none of which will lead to job creation.

Location, Location, Location

A few days ago I was walking down an otherwise uninteresting street and I see this sign soliciting investment. Nothing out of the ordinary but the “don’t ask me…” warning was a little odd, as well as the NDA before the person will tell you anything about it… but no, the most interesting aspect of this solicitation was where it was displayed.

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The Web is Dead, Long Live the Web!

There is so much to like in this well written rebuttal to the much talked about Wired cover piece titled “The Web is Dead” (maybe they should have titled it “Wired is Relevant Again!”) that I will leave you with the opening graph and trust you to click the link and read it in entirety.

This is the basic problem with the Chris Anderson-anchored Wired cover story, “The Web is Dead.” If you think about technology as a series of waves, each displacing the last, perhaps the rise of mobile apps would lead you to conclude that the browser-based web is a goner.

But the browser-based web is not a goner. It’s still experiencing substantial growth — as BoingBoing’s Rob Beschizza showed with his excellent recasting of Wired’s data — and that should be one big clue that the technological worldview that says, “The new inevitably destroys the old,” is fundamentally flawed.

[From What’s Wrong With ‘X Is Dead’ – Science and Tech – The Atlantic]

Universal Laws

I think we can all related to at least a few of these:

UNIVERSAL LAWS

1. Law of Mechanical Repair – After your hands become coated with grease, your nose will begin to itch and you’ll have to pee.

2. Law of Gravity – Any tool, nut, bolt, screw, when dropped, will roll to the least accessible corner.

3. Law of Probability -The probability of being watched is directly proportional to the stupidity of your act

4. Law of Random Numbers – If you dial a wrong number, you never get a busy signal and someone always answers.

5. Law of the Alibi – If you tell the boss you were late for work because you had a flat tire, the very next morning you will have a flat tire.

6. Variation Law – If you change lines (or traffic lanes), the one you were in will always move faster than the one you are in now (works every time).

7. Law of the Bath – When the body is fully immersed in water, the telephone rings.

8. Law of Close Encounters -The probability of meeting someone you know increases dramatically when you are with someone you don’t want to be seen with.

9. Law of the Result – When you try to prove to someone that a machine won’t work, it will.

10. Law of bio mechanics – The severity of the itch is inversely proportional to the reach.

11.. Law of the Theater and Hockey Arena – At any event, the people whose seats are furthest from the aisle, always arrive last. They are the ones who will leave their seats several times to go for food, beer, or the toilet and who leave early before the end of the performance or the game is over. The folks in the aisle seats come early, never move once, have long gangly legs or big bellies, and stay to the bitter end of the performance. The aisle people also are very surly folk.

12. The Coffee Law – As soon as you sit down to a cup of hot coffee, your boss will ask you to do something which will last until the coffee is cold.

13. Murphy’s Law of Lockers – If there are only two people in a locker room, they will have adjacent lockers.

14. Law of Physical Surfaces – The chances of an open-faced jelly sandwich landing face down on a floor, are directly correlated to the newness and cost of the carpet or rug.

15. Law of Logical Argument – Anything is possible if you don’t know what you are talking about.

16. Brown’s Law of Physical Appearance – If the clothes fit, they’re ugly.

17. Oliver’s Law of Public Speaking – A closed mouth gathers no feet.

18. Wilson’s Law of Commercial Marketing Strategy – As soon as you find a product that you really like, they will stop making it.

19. Doctors’ Law – If you don’t feel well, make an appointment to go to the doctor, by the time you get there you’ll feel better. But don’t make an appointment, and you’ll stay sick.

Ten tech-enabled business trends to watch

McKinsey Quarterly published a really insightful list of tech-enabled business trends that are shaping business today. The first one maps to something I have been spending a lot of time in lately, companies using communities to drive support costs down while improving the experience of support, build better products, and capture the marketing potential that brand loyalists bring when amplified with social networks – a force multiplier.

Yet for every success in tapping communities to create value, there are still many failures. Some companies neglect the up-front research needed to identify potential participants who have the right skill sets and will be motivated to participate over the longer term. Since cocreation is a two-way process, companies must also provide feedback to stimulate continuing participation and commitment. Getting incentives right is important as well: cocreators often value reputation more than money. Finally, an organization must gain a high level of trust within a Web community to earn the engagement of top participants.

[From Ten tech-enabled business trends to watch – McKinsey Quarterly – High Tech – Strategy & Analysis]

The other trend that McKinsey identified that I find particularly fascinating is #5, Experimentation and Big Data, is unfortunately named but otherwise a blockbuster of a trend. Essentially what this is identifying is how leading companies have been able to move beyond data sampling and are now tracking and benchmarking massive data sets of actual customer transaction and behavioral data. The ability to test, measure and iterate at this scale simply wasn’t possible before networks and the “internet of things” that McKinsey also identifies as a top trend.

Bookmark this McKinsey piece, it’s a keeper.

Arbitrage

I just read Paul Graham’s excellent post on what happened to Yahoo and this one paragraph jumped out at me:

I didn’t realize the answer till later, after I went to work at Yahoo. It was neither of my guesses. The reason Yahoo didn’t care about a technique that extracted the full value of traffic was that advertisers were already overpaying for it. If they merely extracted the actual value, they’d have made less.

[From What Happened to Yahoo]

There are two very important lessons here that companies of all sizes should take away and the first is that much of the web economy is built on arbitrage, the selling of something for more than you buy it for. When you are in an arbitrage business and the market forces do not demand efficiency and economy then it’s unlikely that efficiency will become a priority until a competitive force decimates you.

This is probably one of the most difficult challenges that technology companies face, high margins create a cultural dynamic that is very difficult to overcome and it ignores development of new businesses that are built on delivering efficiency to the marketplace, which then makes the company ill-prepared to deal with critical shifts in the market.

The second lesson is that even exceptionally smart people have limited ability to forecast what will be important shifts in the market beyond the immediate future; history proves conclusively that the conventional wisdom at any time on any subject is often wrong. Yahoo has become less relevant because they could not see the shift in search, which is ironic given that their business was founded on the notion of search.