Help us put two geeks at the top of Kilimanjaro

Almost two years ago, Jeremy praised Kiva here on Tech IT Easy. I’m also a strong believer in microlending and Kiva. It makes a lot of sense to help build businesses and help entrepreneurship thrive in developing countries.

But, for entrepreneurship and business to work, the would-be entrepreneurs need skills. Here in the western world we might take education as granted, but this isn’t the case in many developing countries. Even if free education is available, the opportunity cost for families to let their kids attend school might be too high. If you’ve ever browsed through Kiva the entrepreneurs’ profiles, you might have noticed that many of them state they’re aiming to get their children good education and that most businesses are relatively low-tech.

Let's put those two at the top of that there.

This all is why I see that projects that aim to teach important skills to people in developing countries as at least as important as making small businesses work. And this is why I’d love if you, dear readers, could pitch in to my girlfriend Satu’s and her colleague Pia’s fundraising effort to raise £4,000 for VSO’s Accenture Kilimanjaro Challenge.

They are taking part in the Accenture Kilimanjaro Challenge, which is a charity project by VSO and Accenture to support VSO’s work in East Africa by climbing the cool Mt. Kilimanjaro. All the money these two geeks raise will go to VSO’s projects in East Africa (they’ll pay for their trip themselves). You can read what VSO does, for example in Mt. Kilimanjaro’s Tanzania. What I learned was that even though basic education is free in Tanzania, only half pass the primary learning exam. In my opinion it isn’t enough to throw OLPCs at these kids, the whole education system needs more resources, from schools to teachers and the students themselves.

So, go show some Tech IT Easy geek-love and help put these girls at top of the summit. You’ll find more information about their project at their sites. You can follow the Satu’s & Pia’s fundraising effort at their fundraising site, their blog or at their Facebook group.

I hope that through VSO’s work, we will be able to see more Tanzanian and other East African entrepreneurs on Kiva in the future. Join me in making this real by donating as little as £2 to the girls’ fundraising effort.

Also, I encourage you to start the habit of lending as little as $25 to an entrepreneur in developing world at Kiva. And, if you feel like it, give an OLPC for a kid at $199 a piece.

The (pre-) entrepreneurial process

As I’m currently applying for jobs, I naturally often get asked what my dream job is. I hate that question, as there’s no simple answer. My dream “job” is to set up companies, which is really a great number of jobs. Following series of steps is the way I visualise this process, seen from a business, investor’s, and somewhat European perspective, and not so much a technologist’s one. As always, my articles are meant to be the start of a discussion and your feedback is appreciated!

My framework is somewhat inspired by the “Strategic Framework” on the right, which I got from an excellent, but fat book, called “Valuation – Maximizing Corporate Value.” Along with explaining valuation very well, including what all the financial inputs mean and where (!) they can be found, it’s really meant to be a tool for building sound business-strategies. A good book for consultants, if you’re interested in a simple book on finance, and a concrete book on strategy (hard to find in that combo)!

Let’s do it!

Step 1 – the idea
This can really be sub-devided into three separate parts: the vision, the mission, and the plan. The vision is like the cloud in the sky which you spot while taking a walk. You don’t know if and how it will work yet. The mission is a long-lasting platform for you to run your company on; it’s a set of parameters, which come from both your values, your strengths, and your objectives, e.g. “I want my business to be fast, honest, and affordable.,” or Google’s: “…to organize the world’s information and make it universally accessible and useful.”

The plan is not the business-plan per se, but the action plan that is something like this post here. It’s meant to be a set of steps that brings you from the idea to the business, and includes developing your business-idea, writing the business-plan, selecting the team, approaching investors & partners, where to locate, what technologies to use, etc.

Good knowledge to have at this stage: technical about your product, development, the industry; creative techniques; planning techniques.

Step 2 – a short market-research
Just to get an overview of the market and to what extent the problem you’re trying to solve is already being solved. I think step 1 needs to be quite far-developed before proceeding to step 2, because being confronted with a market filled with giants isn’t exactly a great motivator to develop your yet vapourous idea. The same applies to talking to other people (step 4), as those can be quite reality-distorting also.

So a short market-research, using mediums relevant to your industry. Google is always a good start, but sometimes you need to do a patent-search or a scholar-search for high-tech; at other times you need to look at Crunchbase for Web X.0; and sometimes a phone-book or the chamber of commerce databases for local stuff. And sometimes there’s no material out there (a very tricky situation!), in which case you need to look at substitutes for your product/service as well as new entrants from related industries. While that’s already substantial in terms of work, it helps with step 3: the pitch.

Good knowledge to have at this stage: marketing, both in terms of what to focus on, where to search for stuff, and how to write it up so that it makes sense.

Step 3: Pitch v. 1 – convincing your peers
The most important quality an entrepreneur must have is the ability to sell. And there’s a phrase in selling, which goes something like: you can’t sell what you don’t believe in… and vice versa. The more your idea is worked out, the more you know about the market, the more confident you can defend your ideas from the many, many sceptics that are out there.

A pitch v.1 needs to be a mini-business-plan of one to a few pages and include as much information as possible about the product, about how (you think) you will produce it, who you will (need to) hire, where you will be located, what need you are meeting, how you will market your product, how you will make money, how you will defend yourself from the competition. The more specific, the better!

And then that needs to be summarised into a pitch of ca. 2 mins, summarising all the vital data + a touch of personality & charisma!

Good knowledge to have at this stage: apart from the data from steps 1 & 2 (technical, marketing, your industry, your customers), you need some business-planning skills, which includes some (not much) financial techniques; as well as presentation skills & passion.

Step 4: find your team
There’s different philosophies about idea-generation (step 1), with many, I’m sure, arguing that you should be brainstorming with your friends on the idea from the start, that more heads have more/better ideas than one, etc. etc. I completely agree with this. But my philosophy is that without a clear direction, a team can quickly lose focus and follow political objectives, rather than pragmatic ones. While, I’ve been blessed with a few groups of people, where the chemistry was excellent and everyone was intelligent enough to be willing to listen & learn from others, many other groups have been a complete failure, because politics & brains definitely don’t always come hand in hand. So, I’m of the opinion, that an idea needs to be very well-developed & thought out before presenting it, after which it can be refined and adapted, and even rejected, according to the more specialised knowledge of group-members.

About finding team-members; for myself I have to say, after spending a long-long time on my thesis—a solitary activity—it’s not that easy. Again, networking, LinkedIN/Facebook, blogging, university (very important!), family, highschool-friends, former employers/co-workers, etc. , all good choices. Luckily for me, my thesis also brought me into contact with a large number of incubators, which are also good places to run into smart people; I worked for a venture-capital-tracking firm, ditto on the smart people; and there’s Tech IT Easy, Ditto 3x! So, really, never a shortage of smart people, when you look for them!

Good knowledge to have at this stage: material from steps 1-3; people-skills, in terms of choosing the right group of people; leadership & sales-skills; and the ability to form rational arguments & present your ideas well.

Step 5: write a business-plan
Read Jeremy’s post here.

Step 6: pitch v.2 – approaching early-stage investors
Somewhat different from later-stage investors, these are people you talk to, usually before launching your company (except maybe in web-world), and for which you don’t have that much tangible evidence to convince them with yet. So your pitch needs to be somewhat like pitch v.1 (step 3), but will include more data that you collected for your business-plan, but presented concisely and clearly showing how you will meet a need, how you plan to make your investors their money back + some more, how you will reduce the risk for them (very important!), and what you see their role to be in your business, apart from cash-cow—this only applies to active investors, such as business angels, not banks or subsidies, though not all business angels are able to be active (though they should always be able to help with contacts), and some bankers may surprise you.

Good knowledge to have at this stage: all the material from the previous steps, and similar skills as for pitch v.1. You need to speak a language that early-stage (!) investors understand!

Step 7: approaching early-stage investors
Banks & subsidies are easy to find, though sometimes you still need a little help and/or an intro; generally, banks want a lot of securities, sometimes already having a subsidy agreement and working with other, more experienced investors helps a great deal. Subsidies are a b*tch, as they make you do a lot of paper-work and impose some rules, and they generally work best for innovative, sustainable, or export-related ideas.

Business angels are a little harder. Usually, it helps going through trustworthy (& older) people that have built a network themselves. I can’t say more about that, except that entrepreneurs should avoid acting predatory and avoid predatory investors (both happen way too frequently), and you can mostly control the first (yourself), not so much the latter (though it helps going through someone you know).

Good knowledge to have at this stage: know your business-plan inside out; know how to present it and the financial data concisely; people-skills, in terms of evaluating the people you meet and selling yourself; having a network helps; having a good team in place helps a lot; having collateral helps with banks; having a tolerance for bureaucracy helps with subsidies, as does an association with a public research-institute (e.g. an incubator or your university).

Step 8: preparing an action-plan
Technically, this should’ve been part of your business-plan (step 5), but the point is that you now have money, you’ve made certain agreements based on it, and your objective is to use that money wisely to get your business off the ground. So now you need to decide what spending needs to be done, preferably as little as possible, and how to quickly get to the next stage. If you’re in web/software, you should already have a prototype, and focus on developing it, and build an early customer-base. In which case, you need someone to do the developing and someone to do the marketing/selling; usually technical staff outweighs the marketing staff at this stage, the latter often being the role of the entrepreneur himself. If you’re into high-tech, a prototype still needs to be built, which means technical work. This stage is really too specific to generalise; it depends on the type of product, business, and industry. Something in bio- or meditech, for instance, can take a decade to complete.

You also need to decide on whether your basement/garage will be enough, and on what type of legal protection your product needs, as well as the legal structure of your business. Which includes talking to lawyers, like this one.

Good knowledge to have at this stage: an understanding of what the new stakeholders in your business require; the ability to focus on what matters most for your business; a holistic understanding of a wide variety of business-matters, including hiring-practices, location-choice, development, legal & accounting tasks.

Step 9: spend (wisely)
Hire the people that you need, try to find smart ways to get smart people for cheap, either through internships, summer-programmes, or stock-options. And some smart people obviously need to be paid more or less what they are worth.

Locate cheaply while developing. For software, I’d suggest Eastern Europe, close to software-universities, but a basement in Paris/Berlin/London/Amsterdam also works of course, though both the location and the people will come at a premium. Important is to consider that many investors prefer you to be geographically accessible, as do customers.

Find viral ways to market, if you’re at that stage already. Thank you, internet, for existing, but free press also helps. Find smart ways to acquire customers, e.g. involve them in product-development, use them for word of mouth and case studies, partner up with good companies, etc. This is again very product-, company-, and industry-specific.

Build synergies between partnerships & investors; again really a step 7 problem, but it helps when your lawyer or your US/Asia-based marketeers are also investors. I’m also a fan of synergies in the HR-department; giving employees stock-options is not only cheaper, but also serves as a motivator. Of course always be careful who you choose to give part of your company to!

Good knowledge to have at this stage: everything from the steps until now; people-, negotiation- & management-skills, guts to market & sell; the dedication to work as many hours as it takes; etc.

Step 10: pitch v.3 – approaching round 2 (series A round) investors
While building your business, you should also build your business-plan and have a much better idea of the inputs for your valuation and the (projected) revenue-potential. And you should have surrounded yourself with a nice set of advisors and “network-nodes” that get your business-plan to be placed on top of a pile somewhere. You’ll still need a pitch of course, but that shouldn’t be a problem anymore at this stage.

Good knowledge to have at this stage: everything from before, especially how to pitch and what to pitch; and a network helps tremendously.

Step 11: round 2 (series A) investors
Bearing in mind that over 80% of businesses don’t make it this far, in theory, a business goes through a number of stages, before ultimately going public or being acquired. Web-businesses have distorted that process somewhat, as has the Enron-aftermath. But many early-stage investors may wish to be bought out at this point, an exit for them, and you may even want to do the same. VCs like replacing entrepreneurs with experienced CEOs, especially if the entrepreneur is a technical person, who will then likely be “promoted” to something like CTO or CIO. Investors do this because they have to account for the money they invest in you, and hence have to show their “bosses” that they do everything possible to mimimise people-risk.

While there are cultural & VC-specific differences, the risks that you need to have already covered here are usually both technology- and market-risk, translating into a workable product and one that preferably already has customers (lined up).

Good knowledge to have at this stage: either the ability to grow with the business; i.e. become more of a manager, less of an entrepreneur; or the ability to step back.

Step 12: launching the rocket-ship
A good VC will take your business far, and that’s where I’ll end it.

Some further reading
If you haven’t read enough already…

• “Valuation – Maximizing Corporate Value.”
• “Crossing the chasm” – on tech-marketing, -sales, and -strategy.
• Venture Hacks’ Term Sheet Hacks – on investors, mostly
• Ask the Wizard – on lot’s of interesting entrepreneurship problems
• TechITEasy.org – on lots of interesting tech & business-subjects, if you dig deep, i.e. use the search.

This may qualify as the longest post on Tech IT Easy, I don’t know. I think I covered the main topics on a global level and obviously there are plenty of feedback loops and some short-cuts, but please let me know if there’s things I missed!

Vincent

P.S. I’m always interested in building great companies, as well as discussing this topic. So if you’re a smart (tech-)person, looking for a biz dev. guy, or you just want to discuss you idea in confidence, feel free to give me a shout.

The Euro vs. Dollar double gambetto for high tech corporations

 In chess, a gambetto – say it with an Italian accent, consists in sacrificing a piece at the beginning of a game to gain a competitive position on the exchequer – for example through the control of the center of the chessboard or one of the long diagonals.

Getting back to business (we’ll get back to the gambetto later), it is very common to say that the state of an economy is reflected by the strength of its currency when the Euro currency is weak – and hence that the economy of the EU are in poor shape. However, when the Euro gets stronger, companies and officials claim that corporations are constrained in their efforts to export goods and services and that the situation should be reversed or the EU will soon enter an economic turmoil.

I think this is all too easy and bullshit.

God Dollar used to be the only viable currency in international trade, until the Euro came out of nowhere in January 2000 (2001 for actual pocket coins and bills). The European Union is the world’s largest consumer market, and a gateway to the Middle East and Africa for American companies. Although the Dollar still dominates international transactions of goods (slightly) and financial transactions (easily), the Euro has emerged as a tangible alternative considering the political stability of the region.

Consequently, the Euro vs. US Dollar exchange rate has kept growing insanely from 1 EUR = USD 0.85 in mid 2000 (1 EUR = 1.19 USD on January 1st 2000) to 1 EURO = USD 1.47 USD today. Althoug I acknowledge the trickiness of the situation for export businesses, high tech or not, I see very few corporations have implemented hedging strategies or make proper use of forward contracts – which is a shame. Still, instead of lamenting, I believe economic decision makers of both the US and the EU should roll up their sleeves and act in such a way (hell yeah I’m even givin’ lessons now, love blogging…):

For US High Tech companies: go for internationalization. Acquiring hardware, software, telco devices, consumer electronics and services labeled in USD has never been cheaper. So why wait? I’m pretty sure any potential buyer would understand this reasoning. A weak USD is a fantastic opportunity for American exporters to thrive abroad, and win strategic, long-term projects. It doesn’t matter whether the profitability of these projects is low: what matters is to build reputation on new markets, or to highlight your competitive advantage against local players. Remember, the gambetto? Be ready to sacrifice a few cents today (anyways, the dollar rates so low that it’s no big loss whatsoever) to be in the real race when that moment comes.

For European high tech ventures: shop for intellectual property and talents in the US since the Euro has never been so strong against the US Dollar – which will make acquiring quality companies cheap, and build production capability in China and India (or go and get cheap but excellent developers in Eastern Europe, before the Euro comes there, or Israel) to reduce the cost of goods sold, enhance their competitiveness and therefore be ready for a shift during harsher economic times or win back market share on their competitors’ behalf. EU corporations, especially the big ones, find it hard to tear the P&L from the balance sheet and should learn to make better investments. Remember when the VCs said that few large European high tech corporations had a real, sound external growth strategy? Even though making the quarter may seem tough because of a strong Euro, acquiring today technologies that will generate tomorrow’s revenues boils down to ’sacrificing’ a small slice of the pie to weaken the competition, and build a better product offer for tomorrow. Gambetto again.

Now waiting for the Chinese Yuan to offer a third way…

‘Grinding it out’ – the franchisee’s manual

This another part in the saga of my thoughts on ‘Grinding it out‘, an account of Mcdonalds, written by Ray Kroc. I’m about 3/4 into the 210-page book. Let me start with a disclaimer: ‘Grinding it out’ is a book written to promote the McDonalds way and aimed at motivating existing staff and operators, as well as attracting new blood of course. I feel like I should tell this to any person thinking about reading the book, because I don’t want to write or promote an informercial on McDonalds. Let me also say that I’m a vegetarian since a few years ago and my opinion of McDonalds is somewhat flavoured – I respect the business but I only eat there once a year.

That said, it’s not a bad book at all. In it, you will learn what made McDonalds great and much of what made Ray Kroc great. I wrote a little about him a few days ago – a blue-collar worker, who excelled in sales and at smelling opportunities. He was an operations-freak, planning out every step from the potato to the french frie or from the cow to the burger, and from the food to customers’ mouths. But it all started with location-location-location, planting a restaurant in the right spot, attracting the talent to run it, and promoting the McDonalds way. This book is a perfect example of that.

McDonalds is a complicated business, wrapped up in a simple package. Many people eating at McDonalds think the restaurant is owned by the company and all the staff works for them too. They may even think that McDonalds has farms growing potatoes and herding milkshake-cows, I’m not sure. But it’s not like that. At the time the book was published (the last edition in 1992), the company owned less than 30% of the restaurants around the world, and I’m sure it’s around the 20% mark or less today. The rest is composed of franchises, owned by independent operators, who, like entrepreneurs, have to turn an empty building and a name into a thriving ecosystem.

But the advantage of being a franchisee, especially a McDonalds-one, is that you are not really alone. Sure, you invest a considerable amount of cash into the venture and you bear most of the risk, but when you sign up for a franchise, you get working experience at a running McDonalds-restaurant, training at McDonalds-university, also for your staff, and the purchasing- and marketing-power that makes McDonalds great.

Something about purchasing-power. The last book I read on McDo was in the form of ‘Fast Food Nation‘, a drastically different view of the company. If ‘Grinding it out’ is a picture of heaven, this book presents it as hell. Some of the criticisms in that book were about the way that food was artificially flavoured to make better smelling food (I forgot how that was bad), and on how the power of McDonalds both lead to lower wages in America and the destruction of the farmer. On that last point, I think that’s probably right, then again, whether there is still space for the traditional farmer is another discussion all together. McDonalds has a lot of purchasing power, it has deep and privileged relationship with its suppliers, which result in cheaper and (hopefully) better food. This translates into an easier experience for the franchisee.

From my reading, I think there are following sub-groups in the McDonalds-umbrella, which make up the ecosystem. These are: the corporation, which runs marketing (think Ronald McDonalds), decides on real-estate locations, and maintains some (not all) of the relationships with suppliers. Then there is McDonalds University, which trains operators and staff to maintain a smooth operation and to always keep smiling. There are the suppliers, which are located all over the world. There are the franchisees. And there are the customers. In one package it a near-perfect picture of the American global capitalist system.

Well what do you know, Jeremy is a Microsoft-head, and I’m turning into Mcdonalds-one. One of several keys to franchising, I learned in a course I did with Jeremy, is to make every step so explicit, that you can write a manual about it an other people can follow it. This book is an example of evangelising a business-idea. And it’s great at that. Perhaps more to follow as I read the last pages of the book. All opinions on McDonalds aside, franchising is a great and easy way to get into running your own business, and a great way for your business to grow big.

Vincent is a co-author on Tech IT Easy. You can find out more about him on this blog’s initial announcement or on his blog. He enjoys a (fish-)burger and a milkshake about once a year. Ps. I’ll be leaving for a holiday in a few hours, so any responses to comments will be delayed by a few days.

Today is our Independence Day

Tech IT Easy is dead, long live Tech IT Easy!

Today is our Independence Day: this blog is now fully accessible through www.techiteasy.org. All existing jeremyfain.wordpress.com/something trackbacks are automatically redirected to www.techiteasy.org/something. Our search engine referencing might suffer for a couple weeks, but since I noticed we have quite a captive audience (people coming back every single day are very, very numerous – like 600 / 900), it’s not going to get too bad.

Step by step, you will see my personal references (Flickr feed, CartoReso maybe, Developer Pages, Del.icio.us, blogroll) vanish to leave the Tech IT Easy community do what it has to do with this very blog.

When I find some time (most probably in July or August), the template will evolve and integrate external widgets.

Back to the Tech IT Easy vision:

A community blog where professionals passionate about technology (software, web, consumer electronics, eCommerce, media, hardware, robotics, telecommunications, computer networking – from both market & technology view points) share their thoughts and analyses with the world. The only rule that applies to all contributors is that there should be no rule whatsoever: no control, no hassle, no constraint. Once you’re in the community, you’re there forever unless you decide to leave it. The idea is not to go after TechCrunch, TechMeme, GigaOM, VentureBeat, Read/Write Web and their likes: rather than information, we deliver original content deeply rooted in the background of the authors. To say the least, we should complement existing tech information blogs rather than compete with them. On top of that, we are all amateurs and none of us blogging full-time, this should position us in quite a different way. Last but not least, we enjoy answering valuable comments and emails: one thing we all share is our willingness to stay close to our readers.

PS: just opened my personal blog in French, named Jeremy Fain in French. Accessible right here. I’ll be testing a new open source platform, after WordPress for Tech IT Easy: DotClear2.

How Tech IT Easy will go the extra mile

You tell me!

In a few days, we will celebrate the first anniversary of Tech IT Easy. Although the growth of Tech IT Easy has overall been pretty amazing (+25% / month on average), it’s been slowing down a bit in May and beginning of June.

For next year (24th June 2007 –> 24th June 2008), I would like us (we’re a big and growing team now, a happy crowd) to multiply by 5 and move from 800 – 900 single visitors waters to 4000 – 5000 single visitors territories. Looks ambitious but since we’ve proofed our concept, I believe Tech IT Easy has what it takes to reach that milestone within 12 months.

I’m planning to take different steps to increase traffic:

• Host this blog ourselves to be able to incorporate the widgets we want in our sidebar and slightly change our layout (to make it look less sort of serious);
• Move to a proper techiteasy.org/blablabla address, keep jeremyfain.wordpress.com for myself only; my issue being that I’m not moving an inch until we find a solution not to loose our trackbacks. Any expert in the room?
• Hire more bloggers (goal: 35 tech-passionate bloggers in 18 months; how: no constraint whatsoever, publish whenever you want on the topic you want)
• Hiring direction: topic diversity matters (web experts, software buddies, develops, usability consultants, consultants, VC, entrepreneurs, sales, marketers, acad, etc.) as well as geographical diversity (still weak on Oceania, Asia, Mideast, Africa & Americas analysis coverage – very strong on Europe & South Pole innovation clusters)
• Bring in prominent bloggers publishing in their native language only (eg German, French, Italian, Spanish) or entrepreneurs who don’t have time to run a blog full-time to discuss their business with you contributors
• Organize a physical reunion of co-bloggers to strengthen links within our geeky community
• Evangelize shorter posts, alternating rogue news and in-depth analyses, and push towards embedding more videos?

In your opinion, what action should we take to go the extra mile? I’m not asking for praise, but for criticism: what’s wrong about Tech IT Easy? How would you improve things if you were on board (or if you are a Tech IT Easy blogger already)? Thank you in advance for your feedback. We’ll make sure we implement all relevant advice in reasonable time frames.

PACA Mobile Center boosts Marseilles’ mobility cluster

Marseilles, Southern France, is a hot place for mobility start ups. The city has been investing heavily in promoting not only the warm climate but also the tremendous human capital & software capabilities in the region. So far, nothing so original, except this feeling of sincere and deep commitment from all the authorities there: the PACA (Provence Alpes Côtes d’Azur) region’s huge entrepreneurial potential cannot whatsoever be denied. I believe Marseilles will soon be a major player in the European software landscape.

One of the initiatives that struck me most when I visited Marseille’s innovation ecosystem a couple weeks ago was PACA Mobile Center, that I would definitely qualify as a regional best practice.

PACA Mobile Center stands on the highest floor of the incubator “Belle de Mai“, located a few hundred meters away from the central railway station from which Paris is 3 hours away only by TGV (French high speed train).

The purpose of PACA Mobile Center is to allow mobile start ups (undergoing, by definition, severe resource constraints) to test their solutions on all sorts of mobile devices available on the market (see picture).

The fee is symbolic as PACA Mobile Center is nothing else than a non-for-profit organization. The team (Alexandre & François Joseph) that manages the center seems really well organized and definitely is talented & cool.

Successful companies based in Marseille (Miyowa, an IDEAS program start up; Mobile Distillery) use the resources of the center, but not exclusively. Mobile companies travel from far away to make use of the PACA Mobile Center infrastructure – Paris-based & recent Microsoft acquisition ScreenTonic for instance.

PACA Mobile Center is a very unique initiative in Europe that I hope will be replicated to help mobility software entrepreneurs optimize the experience of their users.

Tell Youssef he must post on Software Architecture

I’m about to organize a demonstration in the streets of Paris to protest about a software architect not blogging about software architecture.

My friend Youssef el Alaoui, aka Joseph Cargo when online, is a software architecture specialist in a Paris-based consultancy. And you know what? Youssef has blogged about everything (politics, books, TV shows, education, EVERYTHING!!) but software architecture. I’ve blackmailed him, and I even removed him from my blogroll. And he still doesn’t blog about software architecture.

Youssef, listen to me if you don’t start writing about software architecture in English, I am to organize the biggest online wildcat strike action ever.

People, readers, dear friends and enemies, let’s all post the following comment, “Youssef, I love you”, on his blog until he starts writing about software architecture.

I badly want to read the interesting things he’s got to say about it.

Come on Youss, do it!

Client software vs. SaaS = Car vs. Subway

It’s not the ‘what’ or the ‘which’, it is the ‘how’. Desktop applications haven’t killed server applications: the former has taken the lead over the latter but server apps have in no way disappeared. Both technologies cooperate, collaborate & co-exist.

The same will go for web applications: Software as a Service won’t kill desktop applications, although the desktop apps business is necessarily to suffer from the rise of web apps. Just like server software suffered from the introduction of client software.

People are starting to have the choice to either use client software (desktop applications), or service software (SaaS, web apps), or both. The decision could be compared to purchasing and using a car vs. taking the subway – or both.

Using client software is like purchasing and driving a car: it is a true investment that is either pleasure-driven or efficiency-driven. The sales cycle may result pretty long, but you’re likely to get a discount. Maintainability (upgrades, support, administration) and energy supply (gas = electricity supply to host servers) can be costly , but in the long run, the availability rate should be pretty high (no need for Internet access to use it). The main hassle of using a car is probably the time it takes to find a parking space (hard drive space). A car can be pretty comfortable, customized (parameterized), and is a consistent choice when making a long trip. Furthermore, there’s no pickpocket in a car (better data security: hosted on site) but it is likely that you’re not going to meet many people (not so collaborative after all).

Using service software is like taking the Subway: you pay as you go (ticket) if you don’t travel so often, or you pay a subscription (monthly or yearly metro card); it’s pretty cheap and one may not negotiate prices. It might be quite unsafe sometimes (unless there are many security agents and then you feel like watched). However, it’s pretty handy, certainly more democratic, but available only in certain areas (big cities). Subways sometimes may not be so reliable (strikes), or comfortable (lots of traffic), but with the right state of mind, you’re certain to meet people. Last thing: the subway runs all the time and not only when you’re in the process of using it.

From this parallelism, I would like to draw 2 sorts of conclusions:

1. the generalization of subways in all metropolis hasn’t constrained the democratization of the use of cars. A growing and everyday more globalized world is no zero-sum game: both Software as a Service and client applications markets will keep on growing.
2. people living in cities (in our parallelism, people who have the choice ie well-off enough to be able to access the Internet) tend to be huge fans of cars, if they have a car at all. But pay well attention to car owners consuming habits and you’ll notice that in many, but very specific, occasions they choose to take the subway rather than driving. In other words, car drivers use a mix of both worlds to go from one point to another.

Risk Sharing Partnerships, solutioning offshore quality issues?

Unlike in the software industry, 0-default in terms of integration is the quality standard of aeronautic giants Airbus, Boeing, Dassault, Cessna and Embraer.

It takes thousands of suppliers to manufacture a plane. And guess what? Suppliers don’t immediately get paid for their work. Airbus, for instance, has built risk sharing partnerships with all its suppliers to reduce its working capital and enhance interest alignment.

But what is a risk sharing partnership? Basically, for each plane sold to an airline company, the supplier gets a percentage of the revenues corresponding to the relative value in complexity and workload it has put into the project. As an example, Messier Bugatti wouldn’t get paid when it ships carbon brakes, but would receive x% of all revenues derived from Airbus using Messier Bugatti’s aeronautical braking systems – x most probably being the result of both a negotiation and a cost breakdown analysis.

When it comes to hacking code, it seems so many complains about offshore development quality that it’s the responsibility of both software module suppliers and their clients (quality’s usually good when the client know what it takes to manage a project) to define new business models to align interests of all parties involved in information system projects. For instance: fee per SQL request, percentage of each transaction, percentage of each sale in B-to-B markets, etc. I don’t abide anymore by the paid-per-man/day dogma: it lacks the handcuffs to help invisible contractors turn into business partners.

In my opinion, risk sharing partnerships represent an elegant solution to the drawbacks of offshore development.

The case against software piracy

You don’t steal what you bash!

On the one hand, I see many people using cracked versions of (amongst others and for instance) Microsoft Vista and Microsoft Office 2007. These people often pride themselves by saying they never bought a software from Microsoft apart from OEM versions. And on the other hand, the very same people spend a lot of energy, saliva and time knocking to (for instance) Microsoft software.

After watching this type of behavior for several years and giving it some thought, I now systematically step against these people and engage discussions based on the following rationale. you can’t steal products from a company and criticize it at the same time. If you criticize these products so harshly, it may well mean you don’t need these products. So why download and crack these?

By stealing a product from a company (be it software or cheese), you actually disfranchise this company to a revenue equaling the price of the product. This revenue would have been partially reinvested in building a better version of the very same product. Those who pay have the right to criticize because they contribute to improving the product. Those who steal have in my opinion no right to criticize the product as having these pirates saying “this product sucks and is getting worse” is a self fulfilling prophecy. Indeed, how do these guys want this product to get any better if the company that manufactures it doesn’t have the revenues to reinvest in building a better product? Where do product teams find the motivation to give their best, take their work the extra mile?

Things get even worse in the very case of software applications. Quite understandably, Pirates hardly register to the software vendor. So, the software vendor don’t get user feedback from these users – meaning not only do software pirates prevent software vendors from cash they would need to reinvest in building a better version fast, but crackers also harm the capability of software vendors to collect accurate market data and work in the right direction. Hence the fact that pirates also harm the user experience of people who actually purchase software in the mid run. Isn’t that sort of behavior called killing 3 birds with 1 shot?

Let’s briefly examine the case of Microsoft now: I don’t know the exact software license piracy rate figures, but I know the French ones (40%) and the Chinese ones (70%). Let’s be optimistic and assume the global license cracking rate to approach the 1/3 waters (and I’m being very optimistic). So, Microsoft making US$44 billion in revenues from selling software licenses representing 2/3 of the revenues it should have generated means true Microsoft’s sales (net of piracy) should reach 66 billion US dollars.

As structural costs are already taken into account and the marginal software distribution cost is negligible, and providing that the utopia of seeing piracy suddenly stop came true, Microsoft would have JUST THIS YEAR 22 billion US dollars of additional free cash flows to work on improving its applications (recruiting more developers, investing in better CRM, support and feedback collection system, etc.) and working on building better communication channels with its software users. 22 billion USD in one single year, that’s a massive amount you crackers steal from we users who actually pay for the software we use (and not necessarily always like, I acknowledge). Because it’s 3:30am (still with a pile of stuff to do for tomorrow) and I don’t have accurate numbers to crunch, I’m not delving into the all times cost-of-piracy-at-Microsoft calculation, but I guess it easily tops 100 billion USD. This sum of money could also be used to offer software rental services in Africa for instance, to help democratize the use of computers. But there’s no way you would spend the slightest penny on a product, like a software app, that is not material – am I right?

I hope I’m making my point: if you do crack software (like something like one third of the world computer literate population does), then criticizing the software itself and its vendor is, in the eyes of many and hopefully yours now, at an ethical border line.

And yet, the law hasn’t been mentioned in any way in this demonstration…

Can you believe this???

Many thanks to Chadi for the fish. I apologize to all my visitors, this blog has been related to everything but IT recently. But I’m to strike back with interesting stuff very soon.

2G, 3G, 3.5G, 4G, 5G, 6G…cleaning the mobile telco standards mess

Following my post on WiMax, John from Toronto, Canada, asked me to write a little something about the different telecommunication standards available on cell phones as his son is about to open his own cellular phones shop in Toronto.

Well, John, we don’t know each other yet, but your e-mail was so nice and sweet that I don’t know how I could say no. On top of this, I’m always glad to make my readers happy, so if you’ve got any topic you’d like me to launch a discussion about here (provided it’s tech-related, …or not), feel free to email me.

So here’s the thing. I’m not going to delve into the technical details since you asked me not to (and I would’ve had to do some extra homework, so good for me), but rather examine concisely the point of each standard, starting with 1G.

• 0G phones, standing for the 1st generation of mobile phones, were satellite phones developed for boats mainly – but anyone could get one in one’s car in the beginning of the 90s for several thousand dollars. Networks such as Iridium, Global Star and Eutelsat were truly worldwide (although for physical reasons, think of a satellite as a fixed point above the equator, some Northern parts of Scandinavia aren’t reachable), and everybody thought at that time that satellite phones would become mainstream products as soon as devices got smaller and cheaper. This vision proved wrong when the GSM concretely came to life in 1990/1991 in Finland.

• 1G: Firstly, there were analog GSM systems, that existed for a few years. And then came the digital systems.

• 2G: the second generation of mobile telecommunications still is the most widespread technology in the world; you’ve basically all heard of the GSM norm (GSM stands for Groupe Spécial Mobile in French, renamed in Global System for Mobility). The GSM operates in the 850Mhz. and 1900Mhz. bands in the US, & 900Mhz. and 1.8Mhz. bands in the rest of the world (eg did you know Bluetooth stands in the 2.4Ghz. area, just like your…microwave!? But that’s another story, not related to this article) and delivers data at the slow rate of 9.6 Kbytes/sec.

• 2.5G: For that last reason (9.6 Kbytes/sec doesn’t allow you to browse the Net or up/download an image), telco operators came up with the GPRS (remember all the hype around the Wap) which could enable much faster communications (115Kbytes.sec). But the market decided it was still not enough compared to what they had at home.

• 2.75G: EDGE (I just called it 2.75G, 2.5’s not the official or unofficial number at all), which is a pretty recent standard, allows for downloading faster. Since mobile devices have become both a TV and a ‘walkman’ or music player, people needed to be able to watch streaming video and download mp3 files faster – that’s precisely what EDGE allows for and that’s for the good news. The bad news is that if EDGE rocks at downloading, it’s protocol is asymmetrical hence making EDGE suck at uploading ie broadcasting videos of yours for instance. Still an interesting achievement thanks to which data packets can effectively reach 180kbytes/sec. EDGE is now widely being used.

• 3G: also called UMTS (Universal Mobile Telecommunications Standard). Aimed at enabling long expected videoconferencing, although nobody seems to actually use it (do you know any?). Its other name is 3GSM, which says literally that UMTS is 3 times better than GSM. One issue though: depending on the deployment level of the area you are in and your device, your phone will (have to be) handle(d) from the GSM network to the UMTS network, and conversely – making billing more complex to understand for the consumers. One of the major positive points of UMTS is its global roaming capabilities (roaming is the process that allows you, at a cost, to borrow bandwidth from a telco provider that’s not yours; you usually use roaming when calling from abroad).

• 3.5G or 3G+: HSDPA is theoretically 6 times faster than UMTS (up to 3.6 Mbytes/sec)! Practically speaking, this would mean downloading an mp3 file would take about 30 secs instead of something like 2 minutes. Not bad, uh?

• 4G: still a research lab standard, at least to my knowledge, that should combine the best of cellphone network technologies with WiMax, wireless Internet, voice over IP and IPv6 (a post about the latter soon). Data rates are expected to reach 100 Mbytes/sec.

So John, I hope this helps. I know it’s not detailed at all, but it should be enough at first to make your son’s cellphones shop potential customers understand what lies behind the different technologies. Even though you’re not an industrialist (ie working at a telco operator or a consumer electronic company building cellphones), I strongly recommend you watch what goes on in Asia in general (Japan, Singapore, Mauritius even though it’s in Africa, the Philippines, South Korea) and Finland on top of the US to get updates about what’s actually going onwhere it all happens in the mobile telecommunications industry.

800 more reasons for Africa’s slow IT takeoff

Even though one may find it quite hard, let’s put aside economic factors for a moment when trying to understand Africa’s low degree of IT equipment and infrastructure to focus on another major factor: the dramatic number of languages in use on the African continent.

Over dinner yesterday with my fellow classmate and friend Booba, I had a chance to learn that 800 hundred languages were currently in use on the continent of Africa. 800 hundred languages! I guess people from Africa were very involved in the building of the Tower of Babel to be punished as such – as if their political, ethnical, religious, economic, social, institutional issues weren’t enough already. Unfortunately, it looks like the problem of the hen and the egg…

Anyways, although I generally tend to believe that cultural differences are a major asset in organizations, I think such a diversity represents a constraint to economic development in general (markets not unified by a least common denominator), and to information technology in particular.

As a matter of fact, in both software and hardware, localization of products is key to a fast development. IT is such a competitive market that companies either go global fast or die. What I mean by localization is: translation of a software, documentation, marketing packages, websites, support, contracts, etc. Localization is extremely resource-consuming in both time and money. When facing the decision of going to Africa or not, I pretty much understand fragile gazelles not to attack such a fragmented market. Only leading companies, like Microsoft (precedent link: a post on Microsoftie Lee Mungai’s blog) for instance, manage to make a real effort and translate their products in little spoken idioms.

Indeed, if Africa may be compared to India in terms of headcount and number of dialects spoken by the population, any company would pretty much manage with Hindi and English when starting to market its products in India whilst making a decision as far as the continent of Africa is concerned would be impossible. To consider one only of Africa’s 61 territories: Senegal accounts 10 million inhabitants who spoke in total about 35 languages. Although mass media advertising is broadcast or published in Wolof and French, it doesn’t reach the entire population for mutual understanding, language reasons. So, IT companies tend to procrastinate when the time to invest comes – hence slowing down Africa’s economic development and increasing the digital gap between OECD countries and the rest of the world. But who is to blame? Certainly not IT companies who struggle for life in their early days and watch for disruptive newcomers when slowing down the pace. And definitely not any authority anywhere either…

As a conclusion, I’d like to draw a parallelism between Africa vs. India and the EU vs. the USA. Okay, an IT start up is likely to grow much faster in the beginning if developed from North America where 2 languages result to be understood and spoken by roughly 100% of the population: English and Spanish. But when a US company feels like going to continental Europe, it usually is a pretty tough quest. The contrary is less of a true assertion: of course it’s hard for a European company to go to the US, but probably less complex, culturally speaking, than the reciprocal. In this respect, diversity constitutes a fierce and efficient entry barrier – as well as an exit barrier as it takes more time to invest in all cultural areas. The same logic applies to Africa: say a leading company emerges some day from Africa in the business of information technology, I would bet that this very company becomes a big, global success in a wink as investing new markets would turn out to be much simpler than having to cope with the initial diversity the company had to face.

Now is the time to cross fingers.