Why not?  This used to be what we called a portable computer.

I carried one of these things.  It weighed about 26 pounds.  It’s one reason I needed rotator cuff surgery on my shoulder a few years ago.  Or this.

That’s then-Apple CEO John Sculley proudly holding up a Newton 20 years ago.

If we judged the future of laptops on the basis of this Compaq or the future smartphones and tablets on the basis of the Newton, how stupid would we be looking today?  The original Compaq and the Newton could charitably be called “proofs of concept.”  Less charitably, they were devices that appealed to the (very) early adopter.  (Does it surprise you that I had both of these devices, and even the Compaq’s spiritual predecessor, the Osborne 1. I once got out of jury duty because I had one of these with me in the jury box when it was time to be interviewed.)

This is how I view Google Glass, no pun intended.  Note, I have not tried Google Glass and I’ve only talked to one person who has actually used the glasses.  (He was underwhelmed.)  But I don’t need to.  Google Glass is not the present, it’s the future.  That future, more broadly, is something called “augmented reality.”  Broadly speaking, I think of augmented reality as the blurring of the lines between the physical and the digital.  This is already more prevalent than you think.  If you’re a sports fan, you’re probably already familiar with the first down line superimposed on the football field.  You’re smart enough to know that one isn’t real.  But watch a Fox baseball broadcast.  That advertising signage behind home plate?  The people in the stadium don’t see that one.

Already there are smartphone apps that will display on screen images mixed from the camera and sources on the Internet.  For instance, apps I have will point you to the nearest subway stop or will identify restaurants and other points of interest where you’re looking.  Six years before introducing the Newton, Apple produced a video called the Knowledge Navigator.  It’s a 5:46 tour de force of where technology would head, and still is headed.  If you’ve never watched the video, watch it now.  Go ahead.  I’ll wait.

Now let your imagination run wild.  Imagine that kind of software solution with a video projection system that presented relevant information to you in a heads-up display kind of fashion or on your glasses.  Or, if we’re looking 20 years out, integrated into your retina or optic nerve.  I kid you not.  Think of the use cases.  You don’t remember a person’s name?  That’s a thing of the past.  I now have plug-ins for my email that show me the recent tweets or Facebook posts from the mail’s sender.  I’d love to have that displayed when I’m actually talking to you.  How many times have you been talking about something and gone “what’s the name of that movie?” or “when did Apple introduce that Newton?”  Pilots already use heads-up displays so they can get critical information without taking their eyes away from what’s outside.  Already there are games for your smartphone that insert geo-located objects into your phone display. And looking at your cell phone while walking is such a risky behavior that there are a variety of solutions to help you do that more safely, from the serious to the frivolous.

So let’s not judge Google Glass as a serious product.  I’m not saying I wouldn’t try it.  Maybe even like Scoble, I’d never go another day without wearing this.  Keep in mind, I’m the guy who five years ago used to wear “projector glasses” on airplanes so I could watch my own movies.  Unlike Google Glass, these were big, heavy, wrap around glasses that contained VGA screens.  You’d hook it up to your portable media player and watch movies that way.  The glasses were sufficiently heavy that if you wanted to watch anything longer than a YouTube video, you basically had to tilt your head backwards at an angle so the glasses wouldn’t slide down.  By the end of a movie, I’d be reclined around 45 degrees.  Here we are five years after that watching movies on tablets and, very soon, on flexible portable screens.

The use cases for augmented reality are myriad, and compelling.  Google Glass won’t be the product that gets us to realize that potential.  It may even prove to be the product that gets us to laugh at the potential.  But 20 years from now, we’ll laugh at the quaintness of that early effort, 10 years from now we’ll wonder how anyone could ever doubt the category and five years from now, we early adopters will all be embracing various forms of augmented reality.    If Apple had done this (and they will some day), people would be tripping over themselves to laud their vision.  Google’s track record of “the next big thing” is slightly more tarnished (to say the least), so it’s much easier to ridicule them and dismiss Glass.  Don’t.  This is our future, and the future is nearer than you think.

I attended an Augmented Reality meetup in New York last week and the line of the night was that augmented reality makes reality a read/write medium.  Think about that one.

Anyone is welcome to pitch their startup idea and receive feedback from their peers. Teams organically form around the top ideas (as determined by popular vote) and then it’s a 54 hour frenzy of business model creation, coding, designing, and market validation. The weekends culminate with presentations in front of local entrepreneurial leaders with another opportunity for critical feedback.

I’m guessing around 25 people presented Friday night, 10 ideas were selected for work over the weekend and four winners were selected Sunday night.  I’ve now done this a few time and after spending all this time with these entrepreneurs  budding entrepreneurs and entrepreneur wannabes, I walked away from the weekend with a variety of random observations.  I’m not going to so much opine on the idea presented — some were really great, some were pedestrian and some were just strange — but rather hopefully I’ll provide some insights to help the next roster of weekend participants. For me, I know it’s politically correct to talk about giving back to the community and mentoring the next generation but the truth of the matter is that no matter why you’re here, you’ll get more than you give.  I came away with new ideas, new energy and new friends.

If you’re wondering whether this is something you should do, my answer is an unequivocal and enthusiastic YES.  Seeing the progress in 54 hours from loosely formed idea to final presentation to the judges shows just how much you can get done in a short time when you focus.  Where else in a weekend can you get:

• A team of people to help you build your company,
• Test an idea with a diverse set of experts and fellow entrepreneurs,
• Build a prototype or even start coding,
• Iterate, pivot, change, enhance, improve, and improve some more,
• Get a logo (from the wonderful father and son team of Alex and Ryan Virvo of the Gorilla Agency),
• Find your calling (some people came not to present ideas but to find a team to work on), and
• Make new friends.

While inspired by the Startup Weekend, the insights below are really relevant to everyone, startup to Fortune 10.  Herewith some observations:

• Presentation skills matter.  Back in my Gartner days, we asked attendees to rate presenters on quality of presentation skills vs. quality of content.  With extremely rare exceptions, if you presented well, clients thought your ideas were great.  If you presented poorly, even using the exact same material, clients thought your ideas were poor.  It’s clearly not my issue but presenters throughout the weekend had problems with volume.  If I can’t even hear you, you’re already out of the running.  Don’t read your speech.  Unless you’re Presidential candidate good, reading is devoid of passion, spontaneity and confidence.  If you’re not confident in your message, I’m not going to be.  Almost as bad, don’t read your PowerPoint.  Your audience is capable of reading; complement your PowerPoint slides. But don’t put so many words on your PowerPoint slides that I’m reading the slide and not listening to you.  There are teams that I still don’t know what they do, not because they have complicated ideas but because, even with a microphone, I couldn’t hear their words.
• Tell a story.  Entrepreneurs love talking about features and functions.  To the rest of the world, that’s dreadfully boring. Instead, imagine you’re a story teller.  What are the elements of a good story:  an antagonist, a protagonist, a problem and a solution. The good guy wins. Capture my attention with a problem before you go into a solution.  It’s not good if you’re trying to solve a problem no one has. I always adhere to a simple rule:  no matter how good you are, the audience is only going to take away three things from your presentation.  Make sure you’re always bridging back to those three points.  What’s the problem you’re solving, how big is that problem and what makes someone believe you’re the one who can solve that problem. And when it comes to Q&A, it sounds funny but don’t answer the question.  Understand the questioner’s real objective — to throw you off course — and use each and every question as an opportunity to bridge back to one of your key points.  Imagine that one of  your key points is “we’ve got a seasoned team.” Someone asks you “can’t Google put you out of business tomorrow?”  If you actually answer the question, your two choices are bad.  ”Yes” isn’t actually awe-inspiring and if you believe “no,” you’re kidding yourself (and showing yourself as out of touch to the questioner).  Instead, what if you went “for a lot of people, that would be a real challenge but we’ve got a seasoned management team who has been through this before and we successfully navigated those waters with one IPO and two acquisitions.”  Notice, I never answered the question.  Instead, I bridged back to my talking point.  I spent some amount of teams trying to focus their pitches.  They were down in the weeds - way down in the weeds — and the challenge was to elevate features and functions to a story.
• Listening skills. There’s an old maxim, “no one ever learned anything while their lips were moving.”  There are probably some ideas out there that are so good that they don’t need any further insights.  I’ve never heard any of them.  Instead, once someone understands your idea, stop convincing and start listening.  You want to encourage feedback, not challenge observations.  Sure, if someone has something way wrong, you should figure out how to address that issue (and how it is you led them to this wrong conclusion) but for the most part, there are credible alternative positions and you’ll be better if you intimately understand the objections of your target customers and partners, rather than trying to stifle and silence them.  I was in one three-person conversation and the entrepreneur spoke approximately 18 of the 20 minutes we “talked.” Not surprisingly, his project didn’t make it to the weekend round.  And if it had, you can get his would not have been one of the teams I sought out to help…if indeed he could have maintained the team through the weekend.  (Teams do suffer departures, defections to other teams and even occasionally they spawn other takes on the original business problem.)
• Understand your business. The winning entry, ArtGoGo is not an art marketplace but rather an initiative that is aiming to ease the path to market of starting artists, better democratize the art acquisition process and address some real market inequities.  Do you realize that gallery commissions for many artists are 60% or more of the purchase price of the artwork?  The person in the $2,000 suit gets 60% of the selling price.  The person in the $30 jeans who spent three months actually making the art gets 40%.  Understanding your real business will help inform your business and open up natural extensions to your original idea.  Another winner, Secure Your Own Device, doesn’t offer security software.  Instead, they make it easy for you and your kids to remain safe from real threats. Some of this goes back to the storytelling point.  You’re not just a product or a service. Instead, you’re solving a real customer problem.  That’s the objective of your business.  The product or service is merely a vehicle for accomplishing that objective…and in the future, you may discover you have more ways to do that.  My favorite example of this is Hallmark greeting cards. Over five years ago, I had a meeting with them and they revealed that their market kept shrinking (duh!) and the average age of a card buyer kept going up (then around 62).  Following that trend line, their last customer will die some time in 2023.  I asked a simple question, or so we all thought.  ”What business are you in?” Their (wrong) answer was “greeting cards.” I said “you’re actually in the gift conveyance or milestone celebration event.”  Hallmark’s revenue last year was right around $4 billion.  The total affiliate marketing industry last year was right around $4 billion.  Guess whose number is growing and whose is declining.  And how much bigger might that number have been if Hallmark had gotten behind it instead of leaving it to a series of companies most of you have never heard of. The fourth place winner of the Weekend was a team called CartWheel whose whole idea was to enable companies to collect a portion of the affiliate fees generated by employees who shop via their corporate networks.
• Horse vs. Jockey. It’s an age-old issue:  in a competition like this (or when seeking a funding round), are people betting on the horse (your idea) or the jockey (you and your team).  No idea is so good that a bad team can’t screw it up. Yes, you want your idea to be as compelling as possible but if you’re not thinking about how you convince your audience (here, a judge, sometimes a VC, a potential customer, supplier or partner) that you’re someone I want to do business with/bet on, you haven’t completed the job.
• Make Your Market Sound Big. I actually talked with one guy who said his total market size was $1 million (small) and that $800,000 of the market was already spoken for (saturated). I was waiting for the “here’s how, why and when the market’s going to grow” but it never came.  Needless to say, he didn’t make it to Saturday.  The ArtGoGo people started talking about how 90% of all artists basically sell nothing.  Not helping your case!  Instead, talk about how many people buy art (millions), the size of the high end market ($billions) and now I’m starting to see dollar signs.  Give people confidence you’re addressing a large market and that you understand the parameters of that market.  ”My friend the starving artist thought this was a good idea” is not a market-validating input.
• Competition. All too often people answer that one with “none.” This is not a good answer!  If no one else sees the opportunity you’re seeing, it’s possible that you’ve identified an untapped market.  It’s much more likely, however, that seven people have tried to do what you’re doing and have failed miserably and that there are three others who are doing exactly what you’re doing and you’d better relentlessly out-execute them.  You do have competition.  Even if it’s just inertia behind an existing approach.  Make sure you understand it. Related to this is the notion of the first-mover advantage. I’m still waiting for someone to give me a compelling example of that.  Microsoft was in tablets and smartphones before Apple.  How’s that working out?  More often it’s a first mover disadvantage. The fast follower can learn from your mistakes, better time the market and capitalize on your first move.  Competition is good. Show how you’ve learned from it and how you can win the competition.

If you’re a budding entrepreneur (of any age), a startup weekend is a great vehicle to take a fledgling idea from concept to concrete in a weekend.  So many of these things languish as “in my spare time” or “maybe next year” projects.  Most I’m sure never go anywhere.  Getting this much value and making this much progress in a single weekend is an incredible experience.  One of these days maybe I’ll propose an idea.  In the interim, being a mentor was a great experience.  I met some really interesting people, helped a few, learned a lot, had some fun and had some beer.  And best of all, when I went up afterwards to congratulate the winner, she asked me “could I hug you?” That’s better than any money I could have gotten over the weekend.  Sort of.

Tom:

According to CNET, “The deal could help Facebook develop its own one-stop shop for advertisers and agencies to buy, sell, optimize, and track ads across the Web. The idea is to help Facebook give marketers tools to target ads based on social habits that it captures, and to better understand how social activity influences consumer purchases. (…)

The expectation (is) that Facebook will create an ad network that lets it sell ads outside of (FB). Facebook is already plugged into tons of Web sites through Facebook Connect, and each time people share or “like” an item on a site, Facebook’s data trove gets a little bigger. Facebook can connect that data with the information from within Facebook — the social graph — to create a social ad network that is potentially more effective than Google’s AdSense.”

Personally I don’t believe social activity influences consumer purchases much at all. It has value, but no more or less than a billboard: it’s drive-by media.

Boy, that last line got my blood boiling.  So I responded:

Tom, you’re absolutely right and you’re completely wrong.  And we’re about to ignite a debate that should get us a keynote at ad-tech or even better.  :)

You’re right that  today’s social activity doesn’t influence much consumer behavior.  Even worse than the drive-by billboard — that has some value — it’s more like somebody giving you the hard commercial pitch during your cocktail party.  Not only do you not want to hear it, it probably produces some negative brand value.  Marketers may be able to gain some deep insights but, channeling my inner Nassim Taleb, I’m not sure that this increased data produces improved selling.  But that’s a discussion for another day.

Tom:

The idea of brand loyalty was largely cooked up by ad agencies and embraced by marketers who want to believe it.In reality, in nearly every product or service category there are two or three “acceptable” brands a consumer might buy. Most customers have a preference, but can easily be swayed by a coupon or other offer.

More than anything, your brand is the product. Apple isn’t cool because of its ads — its ads have been cool because the products have been cool. The iPhone and iPad launch ads were basically product demos. Here’s the product and a hand using it, on a white background. And some cool music.

The closer a brand’s products are to being a commodity, the harder it is for advertising to differentiate them and the lower brand loyalty is.

But I would argue that the real reasons deals are becoming more prevalent are because:
A) that’s what marketers were erroneously taught that this is what “digital best practices” are; and
B) most companies over the past three decades have become much better at taking costs out of products than at putting innovation into them.

Tom again:

More than anything, my argument rests on efficiency — both for the marketer and the consumer.Let’s start with marketers. There is no doubt that word of mouth is effective, and that social media mentions have value (even as drive-by media). The question for marketers: what is the most efficient way to generate this?

I would argue that the two most efficient tools to generate these are:
1) Superior products; and
2) Mass marketing

Consider Apple vs. Dell. Apple has invested zero in social media. ZERO. Dell has been a poster child as an early adopter of social media.

Apple has invested heavily in creating superior products and in mass marketing. Dell has invested heavily in social media.

Which brand has more positive word of mouth and social media mentions?

Now, let’s consider consumers. There is no doubt that there are more ways than ever to research products, and that advertising is generally viewed with skepticism and sometimes derision.

However…

Deeply researching only those products that are in your kitchen would take a large number of hours for scant return. It’s just not efficient. So, how do we choose? We know what the big brands are because they advertise — which also ensures they are the ones we can easily buy at our local store. All of these brands have some sort of reputation, good or bad.

Typically, a quotidian purchase gets very little consideration at all. And this is *good*. The downside risk of choosing the wrong brand is scant, and the upside reward of choosing a better brand at the supermarket is marginal at best.

This flips *entirely* for high-consideration purchases. Trust me when I tell you my wife and I researched our new kitchen appliances to death. Same for our car, same for travel. Why? There was big upside to getting it right and big downside to getting it wrong.

Despite all this, a problem for Facebook — and for all of social media — is that there’s only so much consumers can hear before they stick their fingers in their ears. Personally, the more people I follow on Twitter, the more unusable it gets. The more feeds in my RSS reader, the more unusable it gets.

Attention is scant, and fragmented. On a fundamental level, I get that being “always on” makes it more likely that a customer will randomly bump into my message. But when everyone is “always on” it’s also damned noisy.

The final word

It’s my blog.  I get the last word.  Tom and I perhaps agree more than we disagree.  The current forms of “social advertising” are fundamentally flawed.  The reason why Google is so wildly profitable is that its advertising space is highly contextual.  When I search, the fact that someone will actually pay to put their message in front of me means they think they have something to offer to me.  In a social context, you may have great information about me but the context is wrong.  I’m not on Facebook to be advertised to.  Advertisers are not enhancing my social interactions.  We’re still years away from it but I believe the social revolution will flip the relationship between marketers and customers in profound ways.  But that’s enough for today.

For those of you who want to watch the full video (an hour), you can find it here.  This month, we talked about:

• Yahoo and Marissa Mayer’s work-from-the-office edict
• Groupon’s CEO resignation
• The new Facebook feed
• Microsoft’s EU fine
• iWatch (we didn’t really talk about this in the video here but I’ve got a few observations)

Yahoo and Working from Home

This is odd, coming from someone who has spent large portions of the last 20 years working from home and who is such a big believer in collaborative technologies, but I totally understand and support Marissa Mayer’s decision to require Yahoo employees to work from the office.  Fundamentally, she inherited a broken company.  I’m a member of a group called the Internet Oldtimers and one of the group’s members described the scenario perfectly.  He said that good people in a bad system become bad people whereas bad people in a good system become immediately evident.  Yahoo had a bad system which encouraged even the best of people to perform at substandard levels.  How do we know Yahoo had a bad system?  Mayer came from Google, as data-driven an organization as I’ve ever encountered, and simply, she went to the data.  It would be one thing if people were working diligently from home but the data just showed another story.  Mayer looked at the VPN logins and quickly discovered that people weren’t connecting to the company’s internal network.  It’s one thing to say collaborative tools enable remote working.  It’s a whole other scenario when your workers aren’t using the collaborative tools!  They didn’t even bother to fake working very well.  Yes, the system was broken.  You could argue that this is a draconian step and that it will cost Yahoo in terms of current employees and ability to recruit new staff.  That may be true but the bigger challenge is reorienting the organization and bold, decisive moves are required.  I don’t expect this to be a permanent work condition but until and unless Mayer showed her commitment to a new Yahoo, she would have been merely rearranging deck chairs on the old Yahoo.  I applaud and support the move.

Groupon’s CEO Resigns

Too much of this story has been about Groupon’s ex-CEO Andrew Mason and his polarizing style, his company accounting challenges and his flamboyant resignation (refreshing in its candor). I actually wrote about Groupon over two years ago, questioning their business, and in the intervening time, I think their challenges have only grown larger.  Here are the fundamental problems for their business (and not just theirs, but LivingSocial and many other daily deals purveyors):

• The deals are not great for merchants.  They’re indiscriminate, send a bad message, encourage “bad” business, don’t help the merchant’s information-gathering and give the merchant almost no control.  Other than that, they’re great. LOL
• The wrong party is in control.  Deals should be structured, offered and managed by the merchant itself.  You should be able to offer deals whenever you want to whomever you want.  My favorite talking point here is to use the example of a donut shop.  Let’s say you’ve had a slow day and it’s looking like you’re going to have to throw out a bunch of donuts.  Wouldn’t you want to run a deal at the last minute, just in time for the evening rush hour, offering a special? You could make this look like a customer incentive for your best customers instead of the existing model where you’re discounting products/services that your loyal customers have been paying full price for.  You could make this decision at 4 p.m., instead of weeks or months in advance.  You could do this every time your inventory is high instead of once every few months.  This is a fundamental problem of approach for Groupon and its ilk, and not one a new CEO is going to solve.
• To feed the public market appetite for growth, Groupon moved from daily deals into an adjacent market, Groupon Goods.  I’ll never understand why companies move into businesses that jettison much of what’s attractive in their legacy business.  The great thing about the daily deal business is that you have no inventory.  Your only three cost buckets are technology, marketing, and your sales commissions.  This is a business with minimal risk as you can align costs relatively easily to revenues.  With Groupon Goods, you’re now taking possession of inventory.  If you don’t sell it, you’re stuck with it…or you have to lower prices, cutting your margins.  Before this, Groupon could have been run out of a phone booth.  Your servers were in the cloud, your salespeople were on the phone or on the road, your inventory was totally digital.  Instead of pushing, and fixing, the core business, Groupon went broader.  Big mistake in my mind.

The New Facebook Feed

Facebook is rolling out a new look and feel.  Again.  I wrote about this challenge even longer ago, almost four years back now.  Back then, the challenge was competing with Twitter and its real-time impact.  That challenge remains to this day and we’re now hearing of Facebook’s plans to incorporate hashtags, mimicking yet another Twitter feature.  Facebook is now fighting battles on multiple fronts.  In addition to Twitter, there’s now a battle for approach and design with Pinterest and Instagram.  Yes, I know Facebook now owns Instagram but if you look at Instagram, Pinterest and even Microsoft’s new platforms, you’ll see a more richly graphical approach.  I won’t get into this approach…well, maybe I will, briefly.  I think much of this is eye candy at the cost of value, information and time.  A picture may be worth a thousand words in some contexts, but in a lot of these instances, I’d rather see the thousand words or at least something that conveys greater value than just an image and a text headline.  I think a lot of the motivation behind this approach is to get people to actually click through on something.  More clicks = more opportunities to display ads or at least pump up your metrics.  For the user — at least for me — more clicks = more time to get to value.  I really don’t like the approach.  But Facebook seems to be embracing the approach, whether it’s to increase its advertising footprint or contain Pinterest.  There are laudable goals in the redesign — more easily connect users with the information they want to connect with — but I’m not convinced this is the real motivation or, if it is, that this redesign accomplishes that goal.  But as always, we’re stuck with it.  Expect to see tons of posts from your friends decrying the new approach…until we accept that this is the way it’s going to be.  Oh well.  At least maybe they’ll fix the multi-columnar approach, the logic of which I still can’t figure out.

Microsoft’s EU Fine

Microsoft was fined $731 million by the European Union.  Why? Because it didn’t fully implement its deal to open up the browser market to competition, a deal struck in 2009.  At that time, Microsoft had a near-dominant share of almost 80% of the desktop market.  We all know what’s happened since then. Despite not keeping up its bargain, Microsoft’s share has steadily decreased and it now represents only about half of the desktop market and, if you factor in mobile, considerably less than half.  In fast-moving markets like technology, somehow markets do a better job of adapting to competitive situations than governmental remedies.  I’m not saying that the EU’s fine was misguided — they have to enforce their agreements — I’m just saying that the EU sanctions were, and continue to be, largely ineffective.  Fining someone for four year old behavior (several generations in Internet time) while failing to act on current issues is, unfortunately, what we’ve come to expect from governmental bodies.  I’m not advocating that they go sue Google but if they’re genuinely concerned with fostering real competition, going against emerging and existing monopolists with sanctions with real teeth would be much more impressive than what amounts to a (soft) slap on the wrist to a former monopolist.  If anything, this action would encourage me if I were considering a current offense.  If this is the timeframe and scale over which remedies will be extracted, it’s no deterrent at all.

iWatch

Somehow I can’t get excited about this one.  Perhaps Apple’s going to surprise me.  Again.  But I just don’t see an iWatch as the product which is going to reinvigorate Apple’s prospects.  Back at the beginning of the year, I said their big opportunity is the digital home, and I stand by that belief.  Yeah, yeah, the watch market is a $60 billion market.  But if you’re under about 28, you probably don’t wear a watch.  Can Apple make it cool?  Probably.  But the trend is to bigger screens, not smaller, and I’m just not convinced that anyone can make a watch a compelling companion to my smartphone, and make no mistake about it, this will be a companion product.  I feel bad enough when I have to shell out $100 with every new phone for screen protectors, batteries and the like.  Is it that much more powerful to have reminders on my wrist instead of in my pocket?  Perhaps it could be a little more interesting if it incorporates the emerging niche category of activity monitors like Jawbone’s Up.  We’ll just have to wait and see.

What’s perhaps most problematic for Apple is that their time to market advantage may be non-existent.  Apple has had huge market advantages when it has launched its category-defining products, with competitive responses often lagging by a year or more.  Not so with the watch.  In fact, while the Apple iWatch remains merely a rumor, Samsung has come public with its intention to do one, and its indication that it has been working on it for a long time.  While I question how genuine that effort was prior to the Apple rumors, it’s clearly a different world when a rumored Apple product introduction is met by immediate competitive responses, not stunned gasps of “they did it again.”

What’s Next

In addition to these timely news items, we talked about a couple of larger thematic subjects:

• The “IT-ization of consumers”
• What’s next, after social, mobile and cloud

I’m not going to get into these here and now — this blog post is already long enough — but i’m going to write at greater length about these topics in the coming weeks.  I identified social, mobile and cloud as my three disruptive trends, over five years ago.  As they begin to coalesce as I predicted, people started to ask me “so what’s next?”  For a long time, I answered that with “more commercialization and better integration of those pillars.”  We still have a long way to go there. But I already see the seeds of the next big transformation which will, once again, change the face of technology and business.  I just love that about this business; it’s never static…even while we all struggle to keep up with the pace of change and have to fight to incorporate new technologies and approaches.  But the next change is coming and I’ll start surfacing that soon.  (If you want a head start on your competition, you know where to find me.)

We’ve seen this loss of innocence before.  The early Internet was a people’s playground.  Remember a world before there were banner ads, where search engines, well, helped you search instead of were vehicles to compile a huge dossier on your preferences, locations and intentions.  I’m not here to suggest that the way the Internet has evolved is a bad thing.  Quite the contrary.  It’s a rather amazing place and it’s hard to remember how we lived without it.  Clearly this is in large measure because of the economic potential that was realized through marketers.  Their economic windfall has enabled us to continue to have this open playground.

Thus, my fault is not with the marketers, not even with the Social Media Week organizers who are actually sincere and profoundly well-motivated.  Rather, I see this as a call to arms.  A time to declare the emperor has no clothes.  Social media is not just about looking for selling cues and divining that next insightful piece of information about a customer or a series of customers.  In many ways, I actually view that as a fool’s chase.  It’s the old story about people in a dark room trying to figure out what’s there by touching it.

Sometimes the best approach is the simplest one:  why don’t you just ask it?  That doesn’t work so well when it comes to elephants but it works much better when it comes to humans.  You perhaps know that I’ve been enamored for a long time of VRM, Vendor Relationship Management, the concept  that we’ll flip CRM on its head and put users at the center of the marketing relationship.  It’s perhaps no coincidence that VRM was first espoused by Doc Searls, the creator of the Cluetrain Mainfesto, that first generation Internet call to arms that was so powerful…before the marketers moved in.  So I think this focus by Social Media Week, and social media in general, on selling is just a short-term perversion of the concept by marketers.  They’ll derive value, sure, but the real impact will be much more transformational than helping them sell and the monetization of social media.

More than this, too.  Social media isn’t just about commerce, whether buying or selling.  It is, and will only be more so, transformational in the way we work and play.  The way we connect with each other as people, not as commercial entities.  The way we create, find and share information.

Yes, this was all there at Social Media Week if you looked. There was a discussion with Rachel Haot, the passionate Chief Digital Officer of New York City, who has the support of a visionary Mayor and herself has the passion to enhance and maybe even change the relationship a city has with its citizens.  There was a discussion with Dale Dougherty, the founder of Make Magazine and, one could argue, the champion of a “maker revolution” that threatens to change the way we, well, make things.

I would, if I could, eliminate all those marketing sessions from Social Media Week.  There are plenty of venues for that kind of information. The marketers will always find their outlet.  Let us not forget that social media is not (just) about selling or buying.  It’s not just about measuring and monetizing.  It’s not just about more big data. (You know how I feel about that one.) At one point during the week, I observed on Twitter how almost ironically Social Media Week had become very unsocial. I was in a room full of people and they were all heads down, staring at their small screens and tweeting.

Is this what social media has become??  I don’t think so.  As has always been the case with technological advances, we go through some ebbs and flows when it comes to adoption and disruption.  We often first enhance existing processes and approaches with the new capabilities.  Only then do we realize there are new and better and different, and disruptive, approaches to what we’re trying to do.  We’ll get there.  There is not a shred of doubt in my mind.  But the state of social media today, as demonstrated by this Social Media Week, isn’t there yet. I appreciate what you marketers are trying to do.  I really do. But I hope this is the beginning of the end for your perversion of Social Media Week, and social media.  Social media is so much more than selling and buying.  Change is coming.  And your time of defining the landscape is coming to an end.

I have been working with the Stamford Innovation Center to produce a monthly show I call “Pardon My Disruption.” I am a big fan of the ESPN show “Pardon the Interruption” in which two literate sportscasters (no, not an oxymoron but clearly a small universe) banter about and debate the news issues of the day.  If you’ve never seen an episode of PTI, you can watch it here.  It’s a great format and if you’re interested in sponsoring this for technology in a big way, get in touch with me.  I’m really going to see if I can get this done.  Until then, I’m taking this tentative first step with the Center’s Marketing Director, Peter Propp.  We generally do this live the second Friday of every month at the Innovation Center but with Nemo hitting the region last Friday, we did the session remotely (using Google+ Hangouts).  You can enjoy the show at the link which opens this post.

Our subjects this time included:

• Meetup.com
• Dell goes private
• IBM Connect trip report
• The New York Times gets hacked: Cybersecurity

Meetup.com

Meetup is one of the best kept secrets of social media.  Some of you may remember the blockbuster 1988 business book Megatrends by John Naisbitt.  That was one of the very first business books that captivated me and to this day, I remember Naisbitt promulgating a “high tech/high touch” philosophy.  (This wasn’t the dominant theme of the book but is one of the points that sticks with me to this day.) Remember, at this time, technology was nowhere as prevalent in our lives as it is today.  At this point, Windows was still a new product, the Mac was still in its infancy and the leading PC manufacturers were Compaq and IBM.  Anyhow, Naisbitt’s point was that the more technology invaded our human lives, the more we would have need for a human touch to counter the impersonal nature of computer interactions.  Even as we move more interactions to social platforms, email and other technology-based platforms, it would be folly to forget Naisbitt’s forecast.  Tweetups — where Twitter users actually get together in a physical location — and Meetup are two of the more obvious manifestations of this phenomenon and bring with them a power that’s not present in virtual-only communities. We’ve seen this with getting Pardon My Disruption off the ground.  We tweet about, we Facebook and LinkedIn it, but the largest driver of traffic to the physical event is Meetup.  If you haven’t looked at Meetup, you should.  Some of my best meetings of a month are Meetup groups (New York Tech Meetup, New York Enterprise Tech Meetup) and I find a fair number of social activities there as well (e.g., the Bucket List Bunch).  The New York Tech Meetup is a powerful force in the New York tech community and gathers over 700 people to an NYU auditorium every month.  Getting tickets to it is akin to getting tickets to a Springsteen concert on Ticketmaster; you have to keep clicking refresh on your browser and get tickets in the first 10 minutes they’re available or basically they’re sold out.  A powerful platform to bring people together physically.  How quaint in this virtual world.

Dell

I’ve often chided Google for being a one-trick pony…but it’s a damn good trick.  Dell (nee PCs Limited) came up with a great trick 30 years ago — build PCs to order.  In the intervening years, even slow-moving behemoths like HP have caught up with that trick and it’s now an industry standard.  Meanwhile, Dell has tried to change the story, moving upstream into servers, networking and services.  But it has been a slow slog. In today’s next quarter obsessed world, it’s hard to make radical surgery on a company.  And make no mistake about it, Dell needs radical surgery.  Going private doesn’t solve their problems, by a long stretch.  Even as a public company, Dell has, charitably, underperformed in its efforts to remake itself.  You just have to scratch your head and wonder how so many tech stalwarts managed to miss the mobile and cloud revolutions. And Microsoft’s involvement in the Dell financing only complicates matters or, more troublingly, sends the message that Dell’s “reinvention” won’t be so different from today’s Dell. And this deal leaves Michael Dell firmly in charge and one has to wonder if he’s the man to lead the reinvention.  Dell has largely been off my radar screen for a decade.  We’ll see if this move leads to a more disruptive Dell or just incremental, and insufficient, changes.

IBM Connect

I’ve posted recently about IBM Connect and the remake of IBM so I won’t say much here.  The only thing I’ll add here is a few thoughts about the impact of its Smarter initiatives internally.  While suggesting that the external market may not be precisely aligned with the way IBM is selling its collaborative solutions, there’s no ignoring the fact that the Smarter message has served to focus and align the company internally.  It’s almost nauseating  how universal IBM people talk about Smarter this or that.  It permeates all levels and functions of the organization.  One of the challenges of large companies in a fast-moving world is getting all facets of an organization focused on a consistent and aggregated message.  IBM’s ability to get the disparate business units aligned around consistent messaging and even more, deep product integration is a truly remarkable accomplishment.  If customers start to align with IBM’s messaging, IBM is unassailable. No one can deliver what IBM is delivering.  It’s a big if, but as a long-time IBM watcher, a fascinating story to watch unfold.

Security

As much of a technology lover as I am, in my rare dark moments, I have grave concerns about the fragility of the systems we’re building.  Quite simply, no one really understands how they all work and so that leaves us vulnerable in some deeply troubling ways. From what can only be called state-sponsored cyberwarfare down to more mundane financial theft, we live in fragile and troubling times.  The solution is not simple, complicated by the disgusting politicization of this issue in Washington. I won’t turn this into a political screed but instead in the webcast, we focused on what we as individuals can do.  Bottom line:  you need better password practices.  It used to be that we didn’t want to write our passwords down because the biggest risk was someone sitting down at our computer and stealing things.  Now the biggest risk comes from someone who steals your password over the Internet.  For those of us who can’t be bothered to have different passwords for different sites, once they’ve got your password, they can harvest it in myriad ways.  So, do what I’ve done.  Get a password manager — I use Dashlane – and make sure you have strong passwords and different ones for every site.  And if you’re concerned about the security of the password vault, and it’s a legitimate concern, write your passwords down…or get used to the “reset password” function of your web sites.

—–

See you March 8 at the Innovation Center.

I find the agenda this year to actually be fascinating.  Loutsphere used to really be a geek-fest.  All of the sessions were deeply technical and dressed up attendees wore t-shirts without holes in them.  Now, those people are still here but there’s a significant presence of people in business functions, often wearing blazers and even ties.  This clearly reflects the evolution of technology from something for geeks to something that solves business problems.  IBM has obviously embraced this with their Smarter Everything mantra.  This speaks directly to the CxO level and very little if at all to the deep technology person.

So, have they been able to pull this “social biz” thing off?  Well, first, let’s just say they’re no Salesforce.  Dreamforce was part technology conference, part evangelical fervor (http://www.hfsresearch.com/Social-Business-Goes-Mainstream).  IBM Connect is, well, IBM.   IBM’s actually in a fascinating position.  On the one hand, I love the vision.  IBM is promising and, to a large extent, delivering a solution that only IBM could deliver.  Their product portfolio is comprehensive, second to none, and surrounded by a complete set of services.  On the other hand, this is a market that’s still building bottoms up, where IBM is very, very weak.  They talk about how they have no problems getting into to talk to the C-suite but I’m not sure that that’s delivering commensurate business results.  This Smarter Everything approach requires buy-in at very high levels and that surely lengthens their deal time.  There are others who raise legitimate questions about whether IBM’s getting the return on its software investments so far. http://www.businessweek.com/articles/2013-01-22/ibm-makes-more-money-selling-less-of-what-people-want  Basically, IBM is making a big bet that the future of technology is a huge, high level business solution, which clearly moves it far afield from its traditional Lotus customer, and brand.

It has been interesting to note this week that IBM is making a big play with its Kenexa acquisition.  Kenexa and Smarter Workforce mentions have been ubiquitous.  It was so over the top that I asked a senior IBM person if this was part of the corporate-mandated talking points for everyone.  He actually found it an interesting observation, noting that while it was not a corporate mandate, Kenexa was the “new shiny thing” and that therefore, it naturally got a lot of attention, especially at that billion dollar price point.  Kenexa is certainly a noteworthy acquisition for IBM but the attention it got this week was overstated.  We can expect to find more normal positioning for Kenexa as the bloom comes off the flower…or when IBM makes its next big acquisition.

We analysts love situations where what vendors are saying drifts very far from what they’re really selling, and what the customer is buying.  IBM is dangerously close to that situation.  But I understand, and support, what they’re trying to do.  This market is undergoing a long-term evolution and it’s hard to turn battleships, both IBM’s and its customers’.  IBM is going to have to keep telling this story over and over until it sticks.  It will lead in the short term to situations like this conference, where there’s an uneasy connection between the past and the future, between the legacy technologists and the new business approach.  Each year, though, it will get a little easier and a little more cohesive.

I’ve been following IBM and Microsoft professionally for 25-1/2 years now. It dawned on me during this conversation that IBM had undergone an almost complete transformation while Microsoft has done none. Microsoft, then and now, is a Windows and Office company. They’ve increasingly become a provider of enterprise solutions, but still, it’s Windows and Office. Ironic, isn’t it, that the historic champion of the user, has become slow moving and enterprise-focused even while the market has embraced the consumerization of IT.

Meanwhile, the IBM I first knew was… well, at least the mainstream is a constant. But they’ve moved from hardware to services and software. From big enterprise systems (e.g., DB2) to a vast array of tools, middleware and platforms. (As an aside, it delights me that my spell checker accepts “middleware,” as I was in the room at Gartner when that term was coined.) And even the things they’ve always done have been refreshed and repositioned, although they might argue that the more things change, the more they remain the same.

Anyhow, it’s interesting to think that the company we think of as the innovative upstart — Microsoft — is actually the stagnant one, while the one we think of as the stodgy old company –IBM — it’s probably the best example of a big company transforming and continually reinventing itself. Master narratives are slow to change. Maybe it’s time to rewrite this one.

So, what do I think is interesting here?

• Apple has always been a new hit kind of company.  Back in the late 80′s, my then-boss Doug Cayne, when talking about Apple, would talk about how much of their revenue was generated by products introduced in the last year.  (How quaint it seems that vendors actually generated considerable revenue from products that were over a year old.  Not in today’s world.) Thinking of it this way shows the problem starkly.  The iPhone was introduced in 2007, the iPad was introduced in 2010.  That’s an easy sequence to figure out.  Is there a new product coming in 2013 to reinvigorate growth.  (More on this in a bit.) In the absence of this new product, it’s somehow not surprising that slowing momentum in older products is impacting Apple’s results.
• Older products + greater competition = lower margins.  Even a “success” like the iPad Mini came at a hit to margins as at least some of those sales cannibalized higher margin big iPad sales.  This is not yet an Apple strategy but rather just a result of aging product mix.  If Apple introduces lower-priced iPhones, then we’ll know they’re pursuing a lower margin strategy.  Until then, I view this as just a product mix and age issue.
• Those who are against a lower margin strategy miss an important point.  Apple’s revenues and margins are not exclusively from their hardware sales.  Not remotely.  Via the iPhone Store, Apple gains considerable, and highly profitable, follow-on revenue for every device sold.  The whole ecosystem produces one of those virtuous cycles for which this industry is legendary.  If I have one regret, as an Android user, it’s that application developers for the most part favor the Apple platform first with Android typically a second, and sometimes distant second, platform.  Given the fact that Android unit volumes are greater than iOS, why is this?  It’s because iPhone users are much more likely to buy applications and services than Android users, who are overall at the lower end of the economic spectrum.  If Apple doesn’t play at lower ends, at some point Android’s growing market share will result in a shift in application developer priorities and thus it’s prudent for Apple to move downmarket.
• An interesting way for Apple to play in this space would be for it to start supporting non-Apple devices.  Apple today offers certain software products for Windows (e.g., iTunes).  At what point to they consider it lucrative and important to support Android? Increasing the urgency for this are the inroads Google’s making onto the iOS platform.  I don’t need to point out the whole maps disaster and YouTube on iOS is a major player.  (Psy’s Gangnam Style video alone generated $8 million in revenue for Google.)  Thus, from a defensive and offensive position, I think we’ll see Apple begin to embrace Android to bound the competitive threat.
• More importantly, the telecom industry has talked for some years now about “the next billion.”  Growth in this industry is going to come from emerging markets which have two important characteristics:  with lower GDPs, they’re much more price-sensitive and they’re often going to be users whose only computing device is their phone, unlike the Western world, where we typically have at least one computer to go along with our phone (and MP3 player and camera).  Despite my recent note about the single converged device, this new market may not have the money for multiple devices and thus the phone is it.  Growth is coming in this market.  It’s prudent for Apple to play in it to cement leadership in a post-PC world.
• Overlooked in Apple’s financials is the fact that they as much as anyone are being impacted by this post-PC world.  Mac sales were down over 20%.  That Innovator’s Dilemma is a tough mistress.
• Back to the new product question, this is a fascinating topic on which to ruminate.  It’s also difficult. Who before the iPhone and iPad predicted that Apple was going to revolutionize those categories?  So what’s next?  Conventional wisdom for some time has said an Apple TV is next.  Not the existing Apple TV small box.  I have a Samsung SmartTV, a Tivo and a Roku and all of those demonstrate both the opportunity and challenge for Apple.  The existing Apple TV box is not materially different than any of those, not enough to be the ground-breaker that saves the company.  And merely building those into the TV box itself is not the answer either.  Here’s actually where Apple may miss Steve Jobs.    Jobs had a great record in beating industry executives into submission around the iPod (music labels), iPhone (carriers, starting with AT&T) and, to a lesser extent, iPad (content providers).  The video (TV and movie) industry saw what happened to those others and was ready, willing and, so far, able to resist Apple.  To redefine the viewing experience, Apple needs their cooperation and so far that hasn’t been forthcoming.  Could Jobs have convinced some operator, network and/or studio to capitulate?  I guess we’ll never know.
• So, if Apple TV isn’t the 2013 savior for growth and increased power, what’s left?  If Apple’s going to surprise us, I would expect it would relate to something around the living room.  The TV is just one part of a broader home ecosystem that includes entertainment, environmentals, games and more.  Existing systems right now are insanely expensive and massively compromised.  Apple alumni are already showing what’s possible in the space — the NEST thermostat, which Apple is already selling.  Apple has the vision, the human factors, the gadgets and the resources to nail this one.  If I were advising Apple, I’d say own the home before you go about redefining the TV.  It’s the classic market for Apple.  Lots of people have been dabbling in it for years, with terrible implementations.  Apple can swoop in and everyone will laud them for inventing yet another market. </end sarcasm>  But seriously, doesn’t this scream Apple?  No more talk of the Xbox being Microsoft’s trojan horse in the home.  It’s Apple’s market to own.

There you have it.  Ignore the stock market reaction.  Apple had an amazing quarter by the standards of anything other than Apple’s previous quarters.  But there are big questions for Apple going forward.

• What’s its “next billion” strategy?  Apple on Android?
• What’s its next big idea? Not the TV. The home.

She Done Him Wrong (Photo credit: Wikipedia)

Let me state my biases up front.  I think the world is divided into two fundamentally different kinds of people, the quals and the quants.  The qualitative types would rely on judgment, analysis and experience.  The quants believe there’s truth in the numbers.  Despite being the son of a CPA, I lean strongly towards the qualitative side.  I look for data to inform my judgments and support my positions but I begin with a hypothesis and then look for supporting (or contradictory) data rather than beginning with the data.

So where does the problem lie?  Or, rather, where do the problems, plural, lie?

• I have an immediate and strong negative visceral reaction to use of the term “data.”  In about 1971, I had a summer job at IBM’s Data Processing Division headquarters at 1133 Westchester Avenue in White Plains, NY.  Back then, it was fair to characterize what we did with computers as data processing.  We have spent the last 40+ years trying to move up the information hierarchy from data to information to knowledge to wisdom.

So how is it that after 40 years of progress, we blow everything up and talk about the lowest level, the lowest value, the largest in volume?  The focus is wrong.

• More data is rarely the solution to a problem.  In general, we find that we’ve got all the data we need, and then some.  To use a politically incorrect example, on 9/12/01, we were able to trace the history of all of the terrorists back for years.  We knew where they came from, what flight schools they went to, how they moved around and so on.  We actually had all of that data on 9/10, and before.  The problem wasn’t the data, the problem was drawing predictive insights from it.  Nassim Taleb, author of the Black Swan, actually makes the provocative argument that data is toxic in large volumes, that it increases the noise in our signal-to-noise ratio.
• Vendors have co-opted the term to sell everything from in-memory databases to massive storage systems to faster networks to more sensors.  All of these may have a role in your organization but chasing technology in the name of “big data” is just a license to spend money.  Badly.

So, if more data isn’t the right focus nor the solution, what is?  Actually, this isn’t a new problem/solution.  Back in the early 90′s, I’d talk frequently about how Benetton transformed the fashion industry.  It’s quaint to think of now but back then, retailers typically planned and deployed their fashions long in advance of the season.  Some time in the spring, a retailer would order and a manufacturer make all of the items they were going to carry in their store in the fall or even the following spring.  If they bet wrong, they had massive excess inventory.  If they bet wrong the other direction, and something became much bigger than they had forecast, they just had to hope that trend continued into the next buying cycle, a year hence.  Benetton had the radical, for the time, notion of not ordering everything in advance but instead would change orders in season.  If something was hot, they’d deploy more.  If something was cold, they’d just shut it down.  (It’s ironic that Benetton was done in by competitors who proved even more nimble than they, further shortening time to market.)

Using timely data to inform critical business decisions and transforming supply chain decisions based on that.  That’s what we were talking about then and what’s what we should be talking about today.  The change isn’t so much in the volume of data, though that’s readily apparent, but rather the velocity and shelf-life of data.  We used to receive data daily, monthly or even quarterly.  Now we receive it instantaneously.  And data used to have a long shelf life.  Now, much of the data we can receive (e.g., location data) has value that’s measured sometimes in seconds.  Use it or lose it(s value).

So, what do we need to do differently?

1. Focus on velocity, not volume.  You need to shorten time-to-decision.  And having reached a decision, you need to shorten time-to-evaluation.  Is your strategy working?  If not, change it.  Quickly.
2. Test hypotheses. The volume of data is so large that the ability to “find truth” in the data is much akin to finding a needle in a haystack.  If one of the famous lines from The Graduate was “plastics,” the secret today is “mathematics.”  Hal Varian, chief economist at Google and Cal Berkely academician, has said for over five years now that mathematics will be the growth profession of the century as those skills will be necessary to build the models that will make sense of, or at least test, the volumes of data that we’re generating.
3. Business 101.  Make sure you understand your business rationale for chasing an information solution.  Can you act meaningfully on the information and will it drive better business outcomes.  I’ve talked to too many people where, when I ask “what will you do differently if you could answer that question,” their answer basically is “well, nothing.”

I’m not saying that we can’t improve business processes or outcomes.  I’m a strong believer in our ability to take data and transform it into real business value, and tend to reject Taleb’s position, even while it delivers a cautionary note.  But if we continue this fool’s chase for Big Data and don’t transform it into better and faster actionable insight, we will have wasted money and competitive opportunity.  The focus must be on action and velocity, not volume.