Dave Concannon

The conference portion of the Chirp twitter developer conference happened yesterday, and among the major announcements was that twitter are essentially developing their own versions of popular applications such as Seesmic and Tweetdeck. Fred Wilson (@fredwilson) called it a few weeks ago in an article that described many of the popular twitter applications that exist as simply ‘filling in holes’ in twitter’s service. Now Twitter are actively planning on filling in these holes themselves.

It’s inexpensive market research to open your API for free to developers, see what applications people want to use and then either buy the apps or build them yourself. It’s a good outcome if you get bought such as the twitter iphone app Tweetie, but perhaps not so great if you’re one of the other hundred applications that will instead be replaced by a version created internally by twitter. There are two prevailing opinions:

From Loic Lemeur (@loic), creator of Seesmic on the “Everything’s going to be fine” side of the fence:

The “You’re all screwed” counterpoint by @1938media’s Loren Feldman, amusingly tagged as “Delusional”:

I think my interest in entrepreneurship is firstly that it’s a nicely contrarian view to the “Go to school, go to college, get a job, retire in 45 years” type of life planning, and secondly that I find different people’s attitude to risk fascinating.

Reward Focused

My reasoning is that you should take every opportunity that you have to do something you’re wildly passionate about. It might not be practical to just jump into this passion straight away, and if so your plans and goals should somehow put you closer to getting there via either an amazing learning experience or some really good reward in exchange for your time. This view is a sort of backwards-reasoning – less focus on the risk, more on how to get to the desired result from where you are. Some people take it to extremes – One Mixergy interviewee quit a job in a very promising startup, figuring that the fractional percentage equity stake he had been given was never going to change his life as much as holding the reigns to a business himself.

My ideal long-term dream situation isn’t overly materialistic – No mortgage, and never look at the right-hand side of a menu again. I’m not even talking about Roman Abramovich-level gastronomic excess, just somewhere straight across the middle of Jason Cohen’s ‘Rich vs King’ matrix. I see myself still working away at something I’m really interested in long after my gray hair has turned white, but I’m happy to take a little risk to get there.

Risk Focused

The opposite view people tend to take is in weighing everything in terms of risk and loss.  What happens if you try to reach for the goal and fail: Will you lose a secure job? Will you have to dip into savings? If you’re a guest in an awesome country, would you be deported or have to frantically find another job? They only press forward when they’re absolutely certain that the opportunity is safe.

Here’s a completely unscientific chart:

For most people the sane strategy is to do anything possible to move towards the “Low risk, high reward” section and do anything to avoid the “High risk, low reward” quadrant.  Things that will help move you towards this “golden quadrant”:

• Learn. Eric Sink’s Career Calculus says it far better than I can. Mark Suster’s “Earn or Learn” lends a fantastic perspective directly related to startups. Learning more reduces the risk in decision making.
• Networking and Mentors - Get to know people who’ve been there and get advice, and people who are trying to get there for support. I’d recommend Keith Ferrazzi’s “Never Eat Alone” as a great primer on effective and authentic networking.
• Goal Setting. Some people have a plan hard-wired into them, and some people need to create one. Either way, setting SMART goals is a great way to make sure you’re heading in the right direction.

The ‘Crazy’ Zone

The top left quadrant (Low reward, High risk) is an interesting place. On one hand you have The Saints – e.g. Aid workers and volunteers in dangerous locations. Next to them, you have desperate people with no other choice – e.g. a Drug Mule,  Then you have the insane or unaware – People who are either deliberately making life hard for themselves, or who don’t even know they’re in a bad place. If you wake up one day suddenly realizing that you fit into that last group, it’s time to bail ASAP.

The ‘Crazy’ Zone and Startups

If you’re running an early-stage startup you might be in the top right quadrant, rightfully hoping for a high reward for putting your money and long hours on the line. While this is true, entrepreneurs should bear in mind that some of your employees may actually be closer to the upper left quadrant (bootstrapped wages, job insecurity) unless they have a meaningful stake in the company or a fantastic opportunity to learn.

According to Seth Godin, the bottom left ‘Low Risk, Low Return’ quadrant may not even exist any more in terms of ’safe’ jobs. This puts what would have formerly been a safe ‘job for life’ closer to the Crazy zone. In my mind, this is clear motivation to start a business.

Blender.com listed the music industry’s attempts to quash Napster as the greatest blunder in the recording industry’s history. The music industry found itself in a shifting business landscape that it did not understand and felt it couldn’t control. The knee-jerk reaction was to try to do everything in its power to stop online music distribution, including directly suing it’s customers. Freely available online music was a disruptive innovation and the existing model was no longer viable within a few years.

Online Video Following the Music Industry’s Mistakes?

Innovations in streaming technologies and increased consumer bandwidth have made high-definition streaming video freely available in a mainstream capacity. Many of the main television networks stream their most popular shows online, yet there’s still a lot missing. Netflix streams movies and TV shows, but doesn’t have recently-aired shows available. Hulu offers shows within days of their network TV appearance, but doesn’t allow it’s site to be viewed on the Playstation 3 and makes repeated attempts to block streaming on PVR platforms such as Boxee. Will we see the same sort of issues playing out in the online video market?

It is understandable that viewing the latest TV shows will require some sort of fee. I’m happy to watch the advertisements on Hulu or fox.com if I can watch the latest shows – In fact, it’s preferable to watching on the TV as there’s a countdown to tell you how much time is left in the advertisement. The quality is occasionally crappy, but I also don’t want the hassle of dealing with torrents to download shows or movies. So what’s the answer?

Netflix

Netflix dominates DVD rental, obliterating the bricks-and-mortar rental stores which are increasingly turning into tanning salons. They also make their streaming movies available on XBox, PS3, and Nintendo Wii. One thing they’re missing is the real-time angle. They have streaming trailers for existing movies on the website, but not on the gaming platforms and not for forthcoming movies. They don’t have the latest TV shows as soon as they air, even though they’re available on the TV network’s own site. Why is this? My guess is iTunes. In-show advertising revenue just can’t compete with thousands of users paying directly for the content, so it’s not in the network’s interest to offer it via Netflix. I would also think that profit margins on new TV shows are far healthier than those on music content.

To remedy this, the networks could demand an extra fee from Netflix. I’d pay more for their service if I could get access to certain shows, but I’m certainly not willing to pay a three dollar per-episode price or anything close to it. I’d love to see figures on the overlap of people who regularly buy TV shows from iTunes who also have a monthly Netflix subscription. What percentage of purchasers pay more for individual shows than they do in Netflix subscription fees?

I can’t imagine Apple wanting to change the situation either, in fact judging by their recent behavior I’d be surprised if they didn’t get more aggressive in the video market.  Recently there are allegations that they’re pressuring music labels to ditch Amazon. They’re lawsuit happy this year, also suing HTC for alleged patent infringement on the iPhone.

Following on from my previous post about Salesforce Chatter pushing Social Media across the chasm, here’s a very insightful opinion piece on why ExactTarget’s acquisition of CoTweet will legitimize social media as a mainstream marketing technology. More and more enterprise software companies are accepting social software as a business tool – it’s no longer just an experimental playground for web developers.

Link: Objective Marketer on Integrated Social Media

Access to technology has become easier than ever. Technology concepts that once had a high barrier to entry to the uninitiated have converged into frameworks, APIs, and libraries which give even relatively unskilled programmers the ability to create web software easily. Cloud infrastructures can alleviate a large part of the cost and complexity of scaling and availability under high traffic demands.

The abstraction doesn’t even stop at the basic technology; at one level above this, some of the fundamental use cases in web software can be delegated to high availability services e.g. Twitter or Facebook Connect for primary user login and profile management or Yahoo Pipes to translate and combine different data sources into a format you require without having to write a line of code. Reusing the essential use cases of software was an original vision in a startup I worked for nearly ten years go, and at the time it seemed a distant and indistinct goal. Today, loosely-coupled Service-Oriented Architectures allows business the freedom to focus on the core business problems.

Dot Com Lessons

The dot com bubble exploded around the concept of the “first mover advantage” whereby companies had to be the first brand in the consumer’s mind regardless of the cost to get there or the value of the underlying business proposition. Huge amounts of capital were burned trying to build the sort of basic infrastructure that is now available for free or at a fraction of the cost. The web 2.0 era has been both caused and inspired by a massive innovation in technology used on the web; at first revolutionary but now almost fundamental to how some users experience the web. The battles between innovative frameworks and libraries that do similar things eventually leads to a de facto standard. In some languages and problem domains, more and more developer time is spent simply connecting different technologies together (slide #93).

I’m not claiming that technology has hit a dead end – that is clearly not the case. Engineering innovation will always be a core requirement for certain types of business, the point is that the barriers to technology implementation that a business faced even five years ago made it a very difficult and costly problem. This is no longer the case.

This Decade’s Focus

So where is value added? I believe that this decade will fundamentally be based around a businesses attitude to design. When all product or software businesses can assemble the same basic set of underlying features that solve a customer’s problem for little to no cost, remarkable design and marketing is the differentiation. You cannot outsource creativity.

Design

Graphic work can be turned into a commodity on crowd-sourced forums such as 99designs, but as Eoghan McCabe points out design is something very different. Apple excel at distilling consumer trends into a product vision that they conjure remarkable designs around and whip up a frenzy of demand for. Mint took the basic problem of not knowing the best prices on essential banking and utility services and wrapped it into a clean interface that requires next to no user interaction to save money. In both these cases the value add is from a beautiful design that wraps pretty basic features in a creative way.

Flexible Business Models

Innovation will also come from business model design – using concepts from Lean Startups and Business Design Innovation to rapidly react to market forces and pivot. As technology can be built with less inertia, and more about your user’s interaction with your product can be measured and analyzed than ever before, changing direction is arguably less painful now then it has been at any point in history.

So, what do you think? Has technology been commoditized to the point at which it’s almost no longer a concern for a lot of businesses? Is design (of product and business model) the new king?  What is the must-have skillset for a programmer in an era where technology is no longer the be-all and end-all?