Norman Nie - A Statistically Significant Life

Norman Nie

Norman Nie, co-founder and early CEO of SPSS, died a few days ago. I had the pleasure of working with Norman for several years when I was on the board of Revolution Analytics where he was CEO for several years. Norman was as smart and tenacious a software executive as I'd ever met. Well into his 60s, Norman was gearing up for another bite at the apple. He was a huge believer in the power of Open Source R as a way to build the next generation of statistical software and predictive analytics.

While not a programmer, Norman's impact on the software industry was giant. He created SPSS in 1968 along with Tex Hull and Dale Bent at Stanford University. When Nie moved to University of Chicago, Hull joined him and they continued development for several years, giving the software away free to universities and businesses and publishing a textbook manual. When profits started rolling in, SPSS was incorporated in 1975 with Nie as CEO. 

SPSS is one of the oldest mainstream commercial software packages that is still available today. The original version of SPSS was written in Fortran and ran on mainframe computers. It was ported later to more than 60 operating systems including minicomputer platforms, DOS in 1982, with Mac and Windows versions following in the early '90s. SPSS was the "swiss army knife" of statistics and introduced predictive analytics to a generation of students and computing professionals.

SPSS was eventually acquired by IBM for $1.2 billion in 2007. In a strange turn of events, Norman sued the company to assert his rights in the ownership of the SPSS name and trademark. 

Just last week, with the final board meeting to approve the acquisition of Revolution Analytics by Microsoft, Norman Nie passed away after a long battle with cancer. I'm told he approved the acquisition from his bedside in his last remaining days. Norman was that kind of a guy.

He was a helluva fighter, a smart, passionate son of a gun. Not always easy to work with, but he went out with his boots on and fighting until the very end. He made a mark on the industry that will continue to inspire others for decades on.

Norman, we'll miss you. 


School of Herring

School of Herring

My former boss, Marten Mickos, has created an excellent new resources for early stage founders, managers and execs called www.Schoolofherring.com. Each post has a short write up and often a 2-3 minute video covering a topic such as giving feedback, Peter Drucker's principles of good management, what it takes to build an effective team, hiring for strength etc. Some of these topics are very practical, like how to send good email, others are more thought-provoking, such as the notion that bad news is good news --one of my personal favorites.

Some of these ideas come from legendary management guru Peter Drucker, but they are all shaped with Marten's unique and practical experience.


Steven Sinofsky on Disruption

Sinofsky_wings

There is a good article over at Re-Code by ex-Microsoft VP Steven Sinofsky called "The Four Stages of Disruption".  It describes the evolution of products and markets through disruption, drawing from Sinofsky's own insights and also building on the work of Everett Rogers ("The Diffusion of Innovations") and Clayton Christensen ("The Innovator's Dilemma.")  There are few software industry execs with as much experience in shipping billion dollar software products as Sinofsky.  And he understands how brutal it can be to manage large teams.  In my view, Sinofsky is always worth reading, though he can be a bit, ah, verbose at times.

There are dozens of examples of disruptive technologies and products. And the reactions (or inactions) of incumbents are legendary. One example that illustrates this point would be the introduction of the “PC as a server.” This has all of the hallmarks of disruption. The first customers to begin to use PCs as servers — for application workloads such as file sharing, or early client/server development — ran into incredible challenges relative to the mini/mainframe computing model. While new PCs were far more flexible and less expensive, they lacked the reliability, horsepower and tooling to supplant existing models. Those in the mini/mainframe world could remain comfortable observing the lack of those traits, almost dismissing PC servers as not “real servers,” while they continued on their path further distancing themselves from the capabilities of PC servers, refining their products and businesses for a growing base of customers. PCs as servers were simply toys.

At the same time, PC servers began to evolve and demonstrate richer models for application development (rich client front-ends), lower cost and scalable databases, and better economics for new application development. With the rapidly increasing demand for computing solutions to business problems, this wave of PC servers fit the bill. Soon the number of new applications written in this new way began to dwarf development on “real servers,” and the once-important servers became legacy relative to PC-based servers for those making the bet or shift. PC servers would soon begin to transition from disruption to broad adoption, but first the value proposition needed to be completed.

Sinofsky makes a number of good observations on how markets and products evolve through disruption.  But there is a certain irony to reading about disruption by a Microsoft exec.  Is Microsoft a disruptor or a disruptee?  I'd say Microsoft has been on both sides of the disruption equation.

In the early days, Microsoft was a pioneering company that created vast new markets where none existed.  If Microsoft products were not initially the best in their categories, their persistence and steady release cycles gave them the features they needed to beat competitors in just about every category in which they competed, whether operating systems, applications, or networking software.  There were some notable exceptions, such as Microsoft's failure to beat Quicken in personal finance software.  But in general, Microsoft was the 800 pound gorilla in the market and few were brave or foolish enough to tackle them head on.  

The most clear example of Microsoft being a disruptor was it's entry into "back office" markets for server software as Sinofsky described.  The "Wintel" combination of Windows server software and Intel X86 architecture had a profound effect on redefining the server market.  It enabled large corporate Enterprise customers to move server workloads off expensive proprietary Unix systems for a fraction of the price.  You could argue that SQL Server was not as good as Oracle or that NT was not as good as Unix, but for many users it was "good enough."  And Microsoft was smart enough to add Enterprise DNA to the company to help them build this new class of software.  I'm sure in some cases the incumbents saw what Microsoft was doing, but dismissed it's solution as mere "toys."  And by the criteria of the incumbents that was exactly so.  

But where did all that disruption mojo go in recent years?  The emergence of smartphones and cloud-based software left Microsoft flat-footed.  New versions of Windows have been acknowledged failures.  It's rebooted it's mobile and cloud offerings several times.  And in the last couple of years there's been a steady stream of departures from the executive suite including Sinofsky, Bob Muglia, Hank VigilCraig MundieRay Ozzie, Robbie Bach, J Allard, and soon Steve Ballmer.

In the mean time, Apple, Google, Amazon, Salesforce, Box and others have been the innovators coming up with new cloud-based offerings and products that have disrupted incumbents including Microsoft, HP, Dell and others.  

So what do you make of Sinofsky's article?  How is it disruptors get disrupted?  Let me know in the comments.


Fake O'Reilly Covers

Fake bigdata

Here are some of the fake O'Reilly book covers I mentioned in a prior post.  These have been optimized for use as black & white Kindle screensaver wallpaper images.  If you haven't done so already, you can install a Kindle screensaver hack with a couple of downloads. 

Update: I've embedded a slideshow from PicasaWeb, but it requires Flash.  If you don't see it you can click on the links below to go directly to PicasaWeb.


Kindle Screensavers

Kindle slaughterhouse
I picked up a Kindle 3 (aka Kindle Keyboard) a while back and have been thoroughly impressed with it.  I love the fact that I can take half a dozen or more books with me when I travel without taking up a lot of weight or space in my luggage.  While I wish the Kindle used an open standard like ePub rather than Mobi file format, given the large variety of books and reasonable prices, I can live with it.  The only thing I don't like is that the Kindle is essentially a closed system and not very customizable.  Nonetheless, there's a healthy community of open source hacks out there.

If you have a Kindle and are tired of the standard screensaver images of authors, you can install a Kindle screensaver hack with a couple of downloads.  Just make sure you install the right version for your particular Kindle device.

I've posted some Kindle screensaver wallpapers on PicasaWeb of various novelsMad Magazine covers and Infocom game covers.  I couldn't find a good source of O'Reilly book covers, so I created some fake ones.  And there are plenty of other Kindle screensaver wallpapers out there to chose from. 

Enjoy!


Q&A with Nicolas Pujol on The Mind Share Market

Mind-share-market-book

Here's an interview with Nicolas Pujol who has written an excellent new book called "The Mind Share Market."  Nicolas and I were colleagues at MySQL for several years and we often discussed the role of our free open source product as a way to gain market share in the commercial sector.  In MySQL's case, our goal was to be the #1 choice for web developers worldwide both in the free and the commercial market.  Over the years, the notion of having a free product has transcended Open Source and now has many more applications in other markets.  It can be quite a challenge to figure out the right way to commercialize a free product.  Nicolas tackles the issue head on in his new book.


Q. What was your role at MySQL?

I joined in 2004 to develop partnerships for the company, which included two main activities. The first was the integration of MySQL (as a product) with third party technologies. The idea is that a piece of enterprise software needs to work with other popular components. This work is usually done by product management teams in each company. You need to be on people’s technical roadmaps and supply them the tools to do the integration. The second goal was Sales channels. We found relevant channels that distributed and resold the company’s commercial offerings. The idea there is to augment the direct sales force while avoiding channel conflicts. After 6 years, we had 1,200 active partners and one third of the company’s bookings coming from channels.

 

Q. What prompted you to write a book?

It is the concept of standalone value: being able to create value before a commercial transaction happens. It’s a fundamental shift in society and in business. Most entrepreneurs are capitalist at heart and believe in meritocracy. But unfortunately, the system generates inequalities that end up as a burden for governments and non-profits to deal with. The fascinating aspect of open source (and generally speaking, “free vs. paid” business models) is that they are both hyper competitive and generate social value. They make businesses stronger and generate incremental value to customers through productive marketing. Michael Porter has a related (but different) concept of Shared Value. If you look at existing literature, authors who tackled the subject of Free and scarcity are those who researched barter exchange, and recently, Chris Anderson. There are also scholars: Marshall Van Alstyne, Geoffrey Parker, Andrei Hagiu, Jean Charles Rochet in the field of economics. I wanted to tell the stories of these game changing businesses to a general audience and from the viewpoint of a practitioner. 

 

Q. Open source has a notion of "free" (gratis) and also "freedom" (liberty).  What elements of open source are applicable to other business models and what elements are not?

“Gratis” easily transfers outside of open source: a company can simply set a zero price. It can be done with a commercial license, a freemium upgrade path, a two-sided platform or more humoristic methods called tying (“it’s free if you pay”).  Freedom is more nuanced, because it relies on the contract between parties on what intellectual property can be shared. There are over 60 open source licenses, and other ways to grant rights to users under commercial rights. But if you want the freedom of open source, by necessity you’ll want to pick one of these licenses.    

 

Q. Is free really a viable business model?  It sounds so 1999.  Today there are companies trying to give away so much stuff for free just to get traction.  At what point does it just become a race to the bottom?

If you look at Free from a broad perspective, it’s a model that has been practiced for thousands of years as barter and non-monetary transactions. The expression “the free lunch” dates back from 1891, and was first documented by Rudyard Kipling one day he stopped at a bar in San Francisco. It’s in the late 1800s that newspapers pioneered ad-funded models and blazed the trail for the radio, the television, and 1999. Generally, when customers receive something at no cost, they give their mind share to the provider in exchange for value. Mind share is the currency used (hence the name of the book).  This initial transaction plants the seed for commercial ones. Races to the bottom happen when companies no longer have something unique to offer. Software has no marginal cost, so giving it away doesn’t hurt you as long as you have something complementary to sell. When you build with Free from the ground up, there is little risk of margin compression. The main risk is to not get traction. It’s trickier when an established business has to introduce an entry level product as a defensive move.  But it can be done. Your question raises a broad topic. To stop at a short answer, consider that the largest company by market value today is Exxon, which ironically, sells a commodity. 

 

Q. What are the top things a company should keep in mind as they try to build a high-volume business?

One is finding out a problem that many people will face in the future, and coming up with a solution that everyone can afford. People say that one should skate where the puck is going to be. There is some truth to that. The other consideration is that before high volume, there is a first step in acquiring low volume. It takes a lot of hard work but it’s critical to get initial traction. In my experience, high volume happens when customers tell their friends a product is great and word of mouth kicks in. Customer experience and service is very important as a result. But for this to happen, the product must fit the needs of the customer’s friends. That’s the crux of the matter. 

 

Q. With so much content available free on the web, shouldn't your book be free?

The idea of “free vs. paid” is to have two versions of your work that are not equivalent. Many authors make their works available to everyone through a personal site, through conversations with journalists, and sometimes through academic and technical research documents. When looking at how others shared their work, it seemed like the way to go. I’m in the process of getting these resources out at the moment. There are currently 2 SSRN scholarly papers and a few interviews with experts like you. The book illustrates the concepts with experiments, philosophies, case studies and a short story. 

 

While I don't agree with all of Nicolas conclusions, it's an interesting take on how free products can help drive mindshare. If this is an area you're exploring in your company, whether via Open Source, Freemium or some other model, I encourage you to take a look at The Mind Share Market.


Zack Urlocker is Chief Operating Officer at Zendesk, a cloud-based help desk provider.  He was previously the Executive Vice President of Products at MySQL where he was responsible for Engineering and Marketing and helped grow the company to $100 million in revenue.  Urlocker is an investor, advisor and board member to several software companies. 


Q&A with Stephen Baker of "Final Jeopardy"

Final jeopardy

IBM's Watson natural language Question & Answer system made headlines recently with its primetime debut on Jeopardy.  Despite a few embarassing answers, Watson trounced top Jeopardy players Brad Rutter and Ken Jennings.  Watson is built from 90 IBM Power 750 IBM Linux servers with 16 terabytes of memory providing 80 Teraflops of processing power.  Watson is perhaps the most famous "Big Data" systems out there.  Watson's knowledge base consists of 200 million pages of text data that is pre-processed using Hadoop and uses 4 terabytes of on-disk storage.  What makes Watson unique is its ability to process questions in realtime assigning confidence levels to its answers.  While Watson's not necessarily true machine intelligence, Watson does a good job of demonstrating how computers can complement human intelligence.  

Stephen Baker, former writer at BusinessWeek, was on hand observing the team and has written Final Jeopardy to chronicle IBM's efforts.  The book was published before Watson's appearance on Jeopardy and then finished in the days that followed on.  I did a short Q&A interview with author Stephen Baker to get his take on this project.

Q. How did you get involved in Final Jeopardy

I had finished The Numerati and was back at BusinessWeek, looking for the next book project. BusinessWeek was in the process of dying,  (Bloomberg bought the remains) and I had requested to be let go in the transition. A few weeks before that came, I was having lunch at IBM and heard about the Watson project. It seemed like a dream for me: a story to tell with a championship match at the end, and really interesting computer issues to boot. My only fear was that some other writer must already be writing the book. I was enormously relieved when I found this wasn't true. 

Q. What was the biggest surprise in covering this story?  

That computer scientists can be so utterly captivated by language. You know, a lot of us divide the world into halves, the number people and the word people. I sometimes fall into this. But when you spend time with a team that's trying to train a machine to make sense of English, you see computer scientists dissecting the language with a precision that probably surpasses the most dedicated (and neurotic) English Phds at Ivy League schools. And what's especially interesting is that they cannot afford to focus on theory. They have to study the statistics of how we actually communicate--and then use them to program the computer.

Q. Given IBM's involvement were you able to tell the story you wanted to tell, or was there an approval process on what you wrote?  

I could write whatever I wanted. They didn't demand any pre-approval. (Jeopardy actually appeared more concerned about these issues, and I had to send them a long list of "facts" about Jeopardy that appeared in the book. No such issues with IBM. I think they had confidence in the machine, and even if it lost in the final match, which was always a concern, readers would see a team at IBM taking computing to a new level.

Q. Cynics might argue that Watson's ability to deal with Jeopardy questions is really little more than a parlor trick, akin to old school interactive fiction games like Infocom's Zork or Hitchhiker's Guide to the Galaxy and not a true measure of intelligence or perhaps not even useful.  What's your perspective on this?  

Look, the Jeopardy game was a contrivance, and IBM chose the game in part because it came with a national audience with millions of viewers. That much is given. What's more, you could argue that it is not a test of intelligence, since the machine doesn't really understand the answers it's bringing back, and cannot draw conclusions from them. But I'd say to look at the results. IBM's computers struggled four years ago to answer much more ordinary natural-language questions in annual competitions. Their machine got about one of three right, and they were among the top performers. Building a Jeopardy machine was a huge advance in the domain of question-answering. As far as the usefulness, having machines "read" millions of documents and bring back answers, each one scored for its level of confidence, will be extremely useful--and even disruptive--in a number of industries. Whether or not the technology comes from IBM or its competitors, or whether the Watson platform itself will play a role, is still open to question.

Q. As I read "Final Jeopardy" I'm reminded occasionally of Tracy Kidder's 1981 book "Soul of a new machine."  Of course that's quite a long time ago now and the computer they build has less power to it than my iPhone 4.  But Data General was an underdog at that time and the Eagle project was essential for the company to survive.  In the case of "Final Jeopardy" how do you create drama around a company as established and successful as IBM? 

Most of the drama centered around whether the IBM team could take a dumb machine that played Jeoaprdy at the level of a fifth grader and turn it into a champion--and then whether or not it could actually win. So while Soul of a New Machine was a corporate drama, this was a little closer to sports. There was also some drama in the conflicts between IBM and Jeopardy, which was basically a tug of war between science and Hollywood.

Q. What was your schedule like to finish the book?

I got contract for the book on January 26, 2010. I agreed to deliver the first third to my editor by the end of June, the second third by the end of September, and the rest--minus the final chapter--by Nov. 7. During much of the time I was rewriting the beginning and reporting the end at the same time. All of those chapters went into production in early December. I reported on the final match on Jan. 14 and wrote the final chapter over the following weekend. The partial ebook came out on Jan 26, 2011, one year to the day after receiving the contract. So it was a quick turnaround. I would expect that schedules like that will become the norm. The book industry has to speed up. 

Q. How did you feel about releasing the eBook version on Amazon before the final chapter was finished?  

I was happy to release the ebook early. It was new, and it wasn't seamless. Some of the people who bought the partial ebook didn't get the final chapter until a few days after the match. But I would imagine that those who read through Chapter 10 before the match might have enjoyed the show more, since they knew the cast of characters--including the computer. What's more, I think more books are going to be published this way, in dribs and drabs. So it was nice to be the first.  

Zack Urlocker is Chief Operating Officer at Zendesk, a cloud-based help desk provider.  He was previously the Executive Vice President of Products at MySQL where he was responsible for Engineering and Marketing and helped grow the company to $100 million in revenue.  Urlocker is an investor, advisor and board member to several software companies. 


Guy Kawasaki's "Reality Check"

Realitycheck

In case you haven't figured it out, I'm a fan of Guy Kawasaki and his "How to Change the World " blog.  If you like his blog, you should check out his book "Reality Check."  Yes, you can read most of the content for free on the web, but sometimes a printed copy is more convenient.   Like if you're on an airplane.  Or on the toilet.  Or if you want to underline it.  Or if you want to underline it while you're on the toilet on an airplane.  Ok, you get the idea. 

The book covers some of the best items from his blog, categorized into themes like starting a company, raising money, business planning, innovation, marketing, schmoozing, management, hiring and firing and more. It's not a bunch of high-falutin' theories either. It's hard lessons learned by working with hundreds of entrepreneurs. Guy is also a player coach, having built four startup companies and served on the boards of ten companies. So it's practical advice rather than academic theory. And even though it's practical, it's still entertaining. You won't find the top 10 lies of VCs or the top 11 lies of entrepreneurs in any other book. And I doubt you'll read either of those pieces and not learn something either about yourself or about how you conduct your business. With more than 90 essays (including some great Q&A pieces) if you heed just a fraction of the advice in this book, it will pay for itself tens if not hundreds of times over. How's that for a compelling ROI?

While a lot of his advice is oriented towards startups, in my experience, it's equally applicable to large companies.  It's all about focus and execution.  Guy was one of the top rated speakers we ever had at the MySQL Users Conference, and he's well worth whatever he charges for these events. 


Tony Hsieh on Delivering Happiness

Delivering_happiness
 

Back at the South by Southwest conference in the spring, I happened to meet Tony Hsieh, CEO of the online retailer Zappos. He and a crew were driving around Austin in a purple school bus giving away copies of his book "Delivering Happiness."  They were also giving away pizza and beer, which is another good way to deliver happiness. 

If you're not familiar with Zappos, it's an interesting story.  At first, Hsieh was just an angel investor in the company, but as the company struggled to raise additional funds from larger VCs, Hsieh ended up committing more capital and eventually became CEO.  There were still many ups and downs in building the company, but eventually they found their stride and became a billion dollar online retailer of shoes.  Their claim to fame was the focus on customer service, making it easy for customers to buy their shoes --or return them --all with free shipping.  In 2009, Amazon acquired the company for approximately $1 billion.

The story of Zappos is an interesting one, and I wish the book provided more details on how the company grew, challenges they faced scaling the business, etc.  "Delivering Happiness," like a lot of books by CEOs, is somewhat uneven.  There are some good lessons on building the culture of a company, but some areas are glossed over.  You never really get a clear understanding as to what went wrong culturally at Hsieh's earlier company LinkExchange.  There's a lot on Hsieh's early years as a high school and college student coming up with ways to make money, which may or may not be of interest. Most of the sidebars on culture by Zappos employees are more illustrative of the energy and enthusiasm at Zappos than they are instructive to outsiders.  

There are some good ideas in the book and things to keep in mind in building a company and a culture.  But it falls short of what it could have been in providing more take away lessons for managers and entrepreneurs. 


How Companies are Using Inhound Marketing

Here's another interesting session from the South by Southwest Interactive conference a few weeks ago... Dharmesh Shah, co-author of the Inbound Marketing book, gave a concise, high-speed presentation on some of the best practices in social media marketing.  Here are a couple of video clips from his session:

A lot of the startups I work with, both open source companies and SaaS, are now taking Inbound Marketing more seriously as a way to grow their business, whether it's an open source business, cloud, SaaS or some combination.  The reality is it's just not good enough to have a killer product.  You need to have a dialog with prospects and make sure that they can find you.  The good news, is with products from companies like HubSpot and Marketo, it's much easier to implement these techniques than ever before.

Of course, these techniques are good for larger companies as well as startups. I wrote a guest posting for HubSpot's Inbound Marketing blog on that topic.