Vivek Wadhwa is exactly the kind of academic I would expect to be well meaning but disconnected from reality. He’s clearly very very smart, a visiting scholar at UC Berkeley, as well as a Senior Research Associate at Harvard Law School and a Director of Research at Duke University. But the reality is that this guy knows his stuff. His research is insightful, applicable and I really wish more policy makers paid attention to what he said.

While I enjoyed his direct (and very accurate) description of RTP and its shortcomings, the more thought provoking article was a discussion on Techcrunch about entrepreneurial exits. He digs in to whether entrepreneurs should be chasing billion dollar exits or cash out “small” with a paltry $50MM exit or so.

For those of you who are unfamiliar with the world of Venture Capital, the quick summary is that a small exit doesn’t really work for traditional VC investors. They have to push for a big exit to offset losses from the investments that fail.

One part of the article particularly caught my attention:

“If you’re a founder and own 50% of your startup, a $30 million acquisition can be life-changing. With a $15 million payout, you go from poverty to riches. You’re set for life: you can afford to send the kids to the best schools, buy a multi-million dollar house on the hills, live a great lifestyle, and personally fund your next startup (or you can become a “super angel”). The difference to you between $15 million and $150 million (if you go for the billion-dollar exit) is small—the extra millions really won’t change your world that much more.”

I imagine that quite a few people find that absurd. How can $150MM not be dramatically more life changing than $15MM?

The answer stems from the many levels of what is most easily called F**K You Money (FYM).

FYM is shorthand for a lot of things. It implies being able to buy what you want, when you want, living the lifestyle you want and doing as you please. It’s a goal of many entrepreneurs, at least in terms of the perceived freedom it brings. But what qualifies as FYM is very dependent on circumstances, and that is definitely something worth thinking about.

My first brush with FYM was when I was 17 or so and was headhunted to work at Radioshack. Okay, headhunted is a little strong. I had a buddy who worked there who was leaving. His boss had met me a couple of times, asked for an intro and offered me the job on the spot. For a kid in High School, Radioshack was the big time. They paid more than any other nerd-oriented retail outlet for part time staff. As I recall I was making $4 or $5 an hour. Within a few months I had banked a few thousand dollars. I bought a bunch of music gear (including something similar to one of these) and had enough money left over to fund my first year beer tab at University. I had FYM and it was good.

Now of course, when you are 17, your expenses are pretty low (thanks Mum & Dad) and so are your expectations for what constitutes living the proverbial high life. But to this day, I’m not sure I’ve ever felt I had as much disposable income as I seemed to have back then.

My second brush with FYM happened when a company I worked for was sold. I was a senior executive, owned a tiny bit of the company and got a payout. It certainly wasn’t a million dollar payout (not even close), but for a young-ish single guy, it was a good chunk of change. It was also a couple of hundred times more money than my previous FYM experience. I had no debt, a shiny new car and was paying almost no rent. I could eat out any time I liked and there was always a large amount of my paycheck left over at the end of the month. I went to a four star hotel in Hawaii for a couple of weeks just because I could. Life was good.

Now that I have kids, debt and a generally more complicated life (not a complaint – I wouldn’t give up being a husband to my awesome wife or a Dad to my kids for any amount of money), the threshold for FYM is a whole lot higher. I’m guessing it would need to be 20-30 times higher than my previous FYM experience to be sustainable.

And that’s exactly what Vivek was getting at.

If you made $15MM from the sale of your company, you could buy a nice house for cash, get a pretty nice car, pay off all your debts and live comfortably off the interest from fairly low-risk investments.

Compared to life before $15MM, this will be a radically different experience. If your lifestyle is based on a more or less normal salary and more or less normal level of expenses, a whole new world will open up. Sounds like FYM to me.

But what if you went from normal to $150MM? Well, expenses always manage to somehow stay in line with available income. So you’d probably buy an even bigger house, maybe get a splendid but silly car or two and so on. But your life would not be materially different from the $15MM scenario.

Now consider a third case. Imagine you’re already in the $15MM lifestyle bracket. Does a $15MM exit make a material difference in your life? Probably not. If your expenses have expanded to fill the $15MM lifestyle, you’ll need a 10x bump to see a significant difference.

At the end of the day, I suppose it is really very similar to company revenue versus size. If you are a startup with revenues of $2-3MM, a $15MM deal is huge. If you’re a $150MM company, $15MM is nice, but not world changing. If you’re a $1B company, $15MM is almost irrelevant. It’s all about moving that corporate needle.

So when you’re daydreaming of your fantastic entrepreneurial exit and joining the cult of FYM, remember that just enough is often more than enough. And enjoy it when you get there…

Categories: General
351No Comments »http://blog.nicholasnapp.com/2010/10/05/can-you-make-fk-you-money-at-radioshack/Can+you+make+F%2A%2Ak+You+Money+at+Radioshack%3F2010-10-05+11%3A02%3A38NickN

Okay, I get it. There’s a smidgen of rivalry between the Android and iPhone camps.. Just a teensy bit… but occasionally that leads to the kind of mind-numbingly stupid analysis that I can’t help but comment on.

Case in point, this past week saw a slew of reports and commentary on Android accounting for one quarter of all mobile web traffic (see this search for some of the results). This follows some rather silly back and forth between Apple and Google on the actual number of handset activations (see this Computerworld article for a good example). Jobs felt it necessary to belittle Android’s numbers, Google responded and the whole thing became something of a lesson int the Streisand Effect. I would imagine Mr. Jobs wasn’t looking to provide additional publicity on Android’s growth.

But for once, I have a little bit of sympathy for Apple. Following the aforementioned web traffic reports, there have been a variety of headlines about Android trouncing Apple’s numbers… Android web share is up. Apple web share is down… Android wins… Apple loses… Road to death… Lost their edge… Blah blah blah.

I, for one, am a little tired of sensationalistic journalism based on flimsy (or non-existent) facts.

So is Apple really on the down and out? No. The numbers we are talking about are the share of web browsing done from a mobile device i.e. a single, static pie. Anyone that made it through 8th grade maths probably remembers that all the pieces of the pie have to add up to 100%. If Android is growing (which it clearly is), its percentage of the whole pie will grow, unless everyone else grows at exactly the same rate. And if everything has to add up to 100%, that means some other folks will see a corresponding decrease in their overall traffic share.

Duh.

So what this really says is that the number of Android devices is increasing faster than the number of iPhones. And that gets right back to sloppy journalism, failing to compare apples to oranges (no pun intended).

To get an idea of how misleading the comparison can be, look at desktop/laptop web browsing. Nine out of ten machines browsing the web are PC’s, not Macs. Aww. Poor Mac. Poor Apple. Will they live?

But wait, let’s look at sales volume by manufacturer rather than by OS… #1 is Dell, #2 is HP and #3? Why, it’s poor little Apple.

Apple’s iPhone product line is essentially a single device from a single manufacturer. Android is an OS with devices from many manufacturers. If Android wasn’t getting to market on many more devices, Google would be doing something wrong.

Furthermore, at this point in time, I don’t think there is a single Android handset manufacturer shipping more units than Apple.

And just in case you were still feeling sorry for Apple, there’s always this little nugget…

In Q2, 2010, Apple had about 3% of the worldwide market for mobile phones. They also had 48% of the profit. No, that’s not a typo. A company with just 3% of the market (by volume of devices sold) captured nearly half the worldwide profit. They made more than twice the profit made by Nokia, and Nokia has 38% of the market. See the full report here.

So Nokia manufactures and sells 12 phones for every iPhone Apple sells. They support 12 customers for every Apple customer. On a day to day basis they do twelve times as much work, and they do it for less than half the money Apple makes.

So don’t believe the bullshit. Apple are doing fine, thank you very much. And so is Android. There’s a lot of fight left in both camps, and deciding the “winner” isn’t just about a simplistic pie chart based on traffic, which is relatively meaningless at the best of times. Certainly not worth going to war over…

Categories: All Business
3502 Comments »http://blog.nicholasnapp.com/2010/09/08/lies-damned-lies-and-mobile-statistics/Lies%2C+Damned+Lies+and+Mobile+Statistics2010-09-09+02%3A35%3A57NickN

Episode II. Attack of the Moaners.

Like I said at the start of my Episode I post, as an entrepreneur, you are naturally very optimistic. One of the interesting results of this is that you spend 99.9999% of your efforts focused on everything related to when things go right. You’ll sweat scaling, customer development, feature sets, bug testing, social media, adequate coffee and pizza… The list is endless.

But the one thing you probably won’t sweat over is optimizing processes for when things go wrong.

And yes, here lies an oft-trod path to madness. Welcome to Episode II of Clusterfrak to the Darkside…

Here’s an example that happens to be a huge pet peeve of mine. I want to cancel your service. How hard are you going to make it for me to do so?

I have seen smart people that I respect actively defend the “hide it and they won’t come” version of service cancellation. You know exactly what I mean. You can upgrade, sidegrade, recommend or otherwise engage with the fine minutiae of any aspect of a product except one.

“To cancel your account, please call…”

This is bullshit.

It is built on the premise that if you make it hard to cancel, a customer won’t cancel. That’s the underlying assumption. If you can make them call, you can talk them out of it and avoid losing a customer.

NEWSFLASH: if a customer wants to cancel, it’s because the DON’T WANT YOUR PRODUCT. It may be for a dumb reason. It may be for a good reason. It doesn’t matter. If they want to cancel and you get in their way, you’ll make them angrier than they were already.

“But what if they don’t understand and we actually do what they want, they’re just using it wrong?” I hear you cry.

Well, I never said you shouldn’t find out why someone wants to cancel. I just saying don’t put roadblocks between you and them if they want to cancel.

Put yourself in your customer’s shoes. Think of the last product you paid money for that pissed you off. Did you cancel the service and/or get your money back? I bet yes. Did you have to fight to cancel it? If yes, did that make you happier about the company you were dealing with? I’m guessing no.

Exhibit A: Shortly after I moved to the US, I recall trying to buy my first car and stopping in at a Mitsubishi dealership. The sales guy asked if I wanted to talk numbers and I said I wasn’t ready to buy but would like to know what the numbers would look like. I was then ushered in to a room in the back while they did their thing. He brought the numbers, and his manager, and asked if I was ready to buy. I said no. Lots of paper shuffling, big markers circling all the key points of the ever-so-amazing deal I was getting and increasing rhetoric about wasting his time. And then, (and I’m not kidding) two other guys turned up and stood in front of the door blocking my exit while the manager proceeded to rant about what a great deal he was giving me. Needless to say, I left. I have never visited a Mitsubishi dealership since.

Exhibit B: I signed up for a VisualLink “Learn Spanish” CD-ROM a number of years ago (please note: the company may have changed its policies since then). It was a standard subscription deal with some kind of intro period. The discs were arriving way faster than I was able to get through them, so I tried to cancel. The only option was to call, and when I called the wait times were enormous and then the operative put me on hold. It took multiple calls before everything was taken care of. In this case I actually liked the product, it just wasn’t right for me at that point in time. But I’ll never spend money with them again.

Exhibit C: I recently canceled my AT&T service. Even though I had already ported my number, it still took three calls. On the first call, the guy refused to let me cancel. He pointed out that we were in a “good” coverage area, based on AT&T’s map. He suggested I ditch the iPhone on the account for a different phone with better reception (yes, I swear he did). He refused to put a supervisor on the phone. I hung up. The second call, we got repeatedly cut off due to AT&T’s shitty service. Oh, the irony. Then the battery in the phone died, so I had to call again. On the third call, I explained that I did not want to talk to a “Retention Specialist” (that’s what they actually call their cancellation department — a big clue, no less) and that nothing would prevent me from canceling the account. The CS person I spoke with was one of the few humans at AT&T. She politely informed me that the hold times were currently very long for the cancelation department and proceeded to take care of the cancelation. She was professional and apologetic, and I was done in about 5 minutes. While that didn’t go terribly far in offsetting the general abuse I experienced at the hands of AT&T, it’s definitely the best ending of the three examples I’ve talked about here.

So when you launch your Next Big Thing, spare a moment’s thought for the unhappy customer. If they’re not happy, make it easy to cancel. Ask for feedback when they do. Follow up with them gently, and respect when they ask to be left alone.

Don’t fall in to the classic sales trap of a NO being a YES waiting to happen. It’s BS. And it’s a swift road to the darkside…

I’ll perhaps talk about ways to optimize customer service in another post…

Categories: All Business
349No Comments »http://blog.nicholasnapp.com/2010/08/22/clusterfrak-to-the-darkside-episode-ii/ClusterFrak+to+the+Darkside+%2F+Episode+II2010-08-23+02%3A36%3A11NickN

        “Is the dark side stronger?”

                …”No…no…no. Quicker, easier, more seductive.”

Hmm. Should perhaps have started on Episode IV, because we all know how Episode I turned out… Moving swiftly along. Welcome to what may be a series of posts. Only time will tell.

I had several product experiences in the past week that coalesced into the theme of this post.

As an entrepreneur, you are naturally very optimistic. If you weren’t, you’d pack up and go home, because as we all know, more than half of all new businesses fail within five years.

But to even have a chance at success, your shiny new business needs to be built on an honest promise… something better, cooler, faster, cheaper… Take your pick, but it has to genuinely do something and do it well.

Otherwise, you’re on the path of ClusterFrak to the darkside [insert dramatic music]…

It can start innocently enough, with what seems to be a good idea. Let me start with Exhibit A — a wire closet shelf remarkably similar to this one. It’s a shelf. For a closet. Passes the sniff test as your basic good idea. It’s affordable, shelf shaped and, according to the package, it doesn’t need many tools to install.

But wait until you get to the final stages of installing the darn thing. It has 3 brackets that go from the front of the shelf to the wall. They clip on at the front and attach to the wall using a funky little nail and plastic clip combo device. Except that the hole in the bracket is larger than the nail head, so the brackets won’t stay in place.

Doh.

So a few sloppy/easy decisions in the design process led to a product that is basically unusable without some customer intervention (in the form of washers and drywall-friendly screws). Given the price of the shelf, I would guess most customers suck it up rather than return it, but it’s a shittily executed product.

Exhibit B – a book I’ve been trying to read on the history of Samsung and Sony. Again, it’s a nice idea: Korean electronics upstart slays mighty Japanese empire. Should be a good read, and before I got in to it, I was expecting a good discussion of how Sony was the cause of their own demise by (a) being utterly unresponsive to market changes and (b) insisting on creating proprietary systems rather than participating in open standards (which is really just another face of point (a) in the big scheme of things). And how conversely, Samsung was pretty nimble, watched consumer trends (like Plasma TV) and focused on customer value.

I think it’s pretty clear that Sony lost ground starting with Betamax. Why did VHS win? Because it was cheap and easy to license. Did Sony learn their lesson? No. They followed it with Minidisc, Memory Stick and many other proprietary products. They charged premium prices for reasonable quality products (mostly) that locked you in to the Sony way of doing things. And unlike Apple, it wasn’t a seamless experience and it wasn’t usually on the cutting edge of design or functionality.

In contrast, Samsung kept it simple. They focused on products that the market wanted at prices people wanted to pay. I still remember the first time I bought a Samsung TV instead of a Sony Trinitron. I got a bigger TV for less money and the picture was almost as good. I had a brief pang of regret for abandoning my lovely 21” trinitron TV, but instantly felt good about the 26” Samsung that replaced it for about half the price.

But not twenty pages in to the book, the author utterly blows it. His conclusion: Sony lost because management didn’t execute on strategy. What?! So who sets the strategy? Do they have some kind of Burning Bush spitting out Stone Tablets that Management blindly followed for 30 years? It’s a cheap get out that destroys what should have been a good piece of analysis. It could have been doubly relevant given that Sony appears to be turning a corner both in profitability and its adoption of more open standards.

So again, sloppy/easy decisions led to a product that is useless. And unlike the shelf, there’s no easy fix for the book.

So Rule One in avoiding the ClusterFrak to the Dark Side is:

        Don’t be lazy. Don’t take shortcuts. Keep your product honest and do the work you need to do to get it built*.

* No, that doesn’t invalidate minimum viable product and agile development, just laziness and poor judgement.

p.s. Zero points for guessing the source of the quote.

Categories: All Business
3482 Comments »http://blog.nicholasnapp.com/2010/08/15/clusterfrak-to-the-darkside-episode-i/ClusterFrak+to+the+Darkside+%2F+Episode+I2010-08-16+01%3A23%3A17NickN

I’m temporarily very very technologically happy… And it’s mostly because I can put AT&T behind me. Adios AT&T aka Awful Telephone & Technology co. Hello T-Mobile.

I’ve been itching to make the switch for a while, but my better half uses an iPhone and the jailbreaking thing has always seemed rather convoluted.

First things first, for those that don’t know…

Jailbreaking is the process of eliminating Apple’s almighty control over your iPhone. Once jailbroken, you can make all kinds of changes that Apple won’t allow and install all kinds of applications Apple won’t approve.

Carrier Unlock is the process of eliminating AT&T’s unholy grip on your iPhone. Once unlocked, it will run on any GSM-based network. In the US, that means T-Mobile. If you ever travel abroad, it means more or less any carrier in the world except parts of China.

Simply put, you cannot do a Carrier Unlock unless the iPhone has been jailbroken.

Fair enough. Oh, and I’m going to say upfront:

a) Back up your iPhone before you try this
b) Be afraid as things can go wrong
c) Be patient for the same reason
d) If you’re not up for google-whacking to get answers, don’t try this at home

and last but not least:

no, I can’t help you if you get stuck!

Anyway, on with the fun. The model I’m working with is a late model iPhone 3GS. The phrase “late model” is key. When you look at the Serial Number (listed under Settings -> General -> About) you’ll see it starts with 5 digits followed by a letter. The last two digits before the letter are the week of manufacture. If it is a number bigger than about 40 (opinion varies slightly) it is a late model device. The bad news is that jailbreaking a late model device can be messy as Apple changed the device’s firmware in an attempt to thwart the hackers.

My first successful jailbreak was using blackra1n (ooh, sounds very Hackers, doesn’t it). This is a simple enough app — you download it to your Mac/PC, plug in your iPhone and run the app. The phone reboots to a rather un-Appley boot screen and seconds later you’re jailbroken.

There is however, a caveat. If you have a late model device, you end up with what is called a “tethered jailbreak”. This is cunning hacker-eze for “not the dream you were looking for”. If you ever have to reboot your iPhone, it has to be connected to a computer with Blackra!n in order to boot. If your battery dies, or the phone crashes, and you don’t have a laptop/desktop handy, you’re stuck without a phone.

However, Blackra1n does install Cydia, which is rather handy. Imagine Steve Jobs has a stoner/hacker/anti-the-man brother (or sister) that creates their own version of the iTunes app store, and you have a good idea of what Cydia is. It contains all kinds of useful goodies that can be installed, from settings to carrier unlocks to applications Apple won’t approve.

So after a tethered boot, I fired up Cydia and installed Ultrasn0w, which is a carrier unlock from the infamous DEV-TEAM (the folks behind much of the iPhone hackery that goes on).

Once you’ve done that, you’re free as a bird. Grab a paper clip and stick it in the tiny hole next to the headphone jack to pop out your old SIM card (a tiny card with a chip about half the size of a stamp that tells the network what your number is) and drop in the new one. You’re now free from AT&T!

Well, almost.

You need to set up some network settings for data access, switch on data roaming and then set up your MMS settings if you want to send photos with texts. T-Mobile are pretty helpful over the phone, but the MMS stuff is a bit tricky. More on that in a minute.

So everything more or less worked, but the jailbreak was tethered. And sure enough a couple of times the phone ran out of battery and had to be re-connected to my laptop.

So ever the adventurer with a fondness for technological screwups, I decided to try something new. I restored the iPhone 3GS to its original state and then updated to the shiny new OS 4.0.1 from Apple.

Since I had backed everything up first (you did do that, right?), restoring all of my apps and photos was easy. Just hit the Sync button in iTunes and leave the phone alone for a while.

Minor bump in the road: when you do a full restore, the phone needs to be activated. This REQUIRES an AT&T SIM card and AT&T service. Fortunately I haven’t shut mine off yet, so a quick SIM swap and a reboot and all was well.

Probably best to switch on wi-fi and connect to a network at this point.

The next step relies on a rather nasty security bug discovered in Adobe’s PDF file format. I won’t bore you with the details, but by simply visiting a website you can Jailbreak your iPhone running iOS 4. Again, the website is http://www.jailbreakme.com.

Just fire up Safari on your iPhone and go to the Jailbreakme.com site. Slide the button and it will start the process. It was all very easy and only took a few minutes to complete.

Better still, it is an untethered jailbreak. No more rushing for the laptop after a reboot.

The jailbreak installed Cydia, so once it had completed, I simply downloaded the Ultrasn0w package again and swapped SIM cards. Happily unlocked and running on T-Mobile.

But you’re not done yet. Two things left to do.

1. Fix data access to T-Mobile’s network
2. Set up MMS

The data access stuff is easy. Go to Settings -> General -> Network and switch on Data Roaming. Then select Cellular Data Network and next to where it says APN type in epc.tmobile.com. That’s all you need to do.

Bear in mind that you will not be able to get 3G speeds on T-Mobile. They use a different frequency to AT&T so it simply won’t work.

Now MMS is a bit tricky and I had to try a bunch of things to make it work. I’m not sure if all of these steps are necessary or not… I was able to pretty quickly get the iPhone to send MMS messages, but every time it tried to receive a message, it produced an error stating that the media content wasn’t included and implying that the incoming file was too big.

The combination that seemed to work for me was as follows.

Go here:

http://modmyi.com/forums/t-mobile/656651-t-mobile-usa-carrier-bundles-bluetooth-internet-mms-tethering-2g-3g-3gs-4-a.html

Scroll down until you see the following link:

DOWNLOAD T-Mobile US iOS4 1.1.1 IPCC

Click the link, download the zip file and unzip it. In the list of unzipped files, you’ll see a README.txt file. Read this carefully. I installed the ipcc file for T-Mobile Prepaid.

After doing everything the README says and rebooting, I could send MMS without a problem, but receiving was still broken.

The last step is to go here:

http://modmyi.com/forums/general/719997-media-content-not-included-help.html#post5353764

and read post #3.

Fire up Cydia on your iPhone, select Manage -> Sources -> Edit -> Add and type in:

htttp://beta.leimobile.com/repo

Then hit Done and select the LEIMobile Repo from the list. Scroll down until you see T-Mobile 4.0 MMS Fix, select it and install it.

One more reboot and you are done.

It’s not for the faint-hearted, but freedom from AT&T is a beautiful thing…

P.s. Please note that the security hole that Jailbreakme.com uses is a doozy. I cannot imagine it will be very long before Apple updates iOS to block it as it is a very real security risk. But I’m equally sure that the crafty hackers will figure out a way to break whatever they come up with.

Categories: General
3471 Comment »http://blog.nicholasnapp.com/2010/08/07/adios-att-adventures-in-jailbreaking-an-iphone-3gs/Adios+AT%26amp%3BT+-+Adventures+in+jailbreaking+an+iPhone+3GS2010-08-07+04%3A49%3A49NickN