Praxis

It's not a bug, it's a feature...

How many times have I heard that? How many more times have I said that to a customer?  Now, here's photographic proof, thanks to dratz...forwarded to me, of course, by Clay, whose features are never bugs...

The "I don't want to pay that much" department at XM

While I was in Europe, my 90 day free trial of XM ended, so I returned to regular service and a letter from XM inviting me to sign up for a year of service for $144.

Everything is negotiable, right? So I call up XM and ask them for the better deal. They assure me that there are no better deals, although I can save 20% if I sign up for a 5 year plan. Since I was stuck in traffic heading home, I decided to perservere.

"No, I want a one year plan but don't want to pay $144. "

"What credit card would you like to use?"

"We're not really communicating. I don't want to use any credit card if it's going to be $144. I want a one-year plan, but I won't pay that much."

"One moment please, let me transfer you to that department"

Apparently, XM has a "I don't want to pay that much" department.

Sure enough, an agent comes on the line (she's in a call center in Jamaica; I asked) to tell me that they have a "one time offer" of $77 for a year of service, 50% off.  She just needed to verify something with me:

"Is it correct that you would be canceling your service if we don't provide a discount?"

"Yes. In fact, the service is already canceled - I never started paying in the first place."

"OK"

And with that, I qualified for the special deal. An investment of about 15 minutes on the phone.

Another way reading blogs can put money in your pocket.

David Cowan with the Contrarian View on Network Neutrality

Congratulations to David Cowan of Bessemer Venture Partners for his willingness to write a thoughtful post taking the "dark side" view of the religious war over Network Neutrality. The first post I ever did on this blog made it clear that I am on isen's side of the debate, and a post I wrote almost a year ago about bad VOIP performance on my Comcast cable modem service continues to attract new comments. 

But that doesn't mean that I'm not willing to listen to the other side, and David makes some compelling arguments that are worth considering. I'm a believer in free markets, and his suggestion that companies should be free to innovate as they see fit is appealing.

But the Internet is different. David makes the point that it is not a public utility, and he is technically correct...but in practice, it has evolved into something that resembles one. All businesses, large and small, rely on the Internet today the way they relied on the telephone in the past...and on the US Postal Service before that. At various points in our history, government regulation has had to step in to ensure universal access to critical services even to those users who can not be served profitably.

David's example of Federal Express is an excellent case in point. For the first several years of FedEx's existence, only the largest cities were served. Then gradually service was rolled out more broadly. It was with great fanfare that FedEx announced after several years that they would deliver to all zip codes, but even today, their express service (10:30 am delivery) is only available to certain areas, while others can't receive packages until mid-afternoon. For certain special regions (big cities), even earlier delivery is available.

FedEx is able to make a profit because they cherry-pick the most lucrative part of the Post Office's business while ignoring the astonishing infrastructure needed to deliver a letter locally overnight, and pretty much anywhere in the US in two or three days, for $.39.  I'm not suggesting that FedEx shouldn't be able to do what they do. I am suggesting that it only works if there is a "utility" in place to assure that the "basic" service is still available.

David mentions Akamai and Netli, two companies (uh, well, now it's just one company) that "accelerate" the internet for "premium" customers who pay them. That seems to work pretty well. In fact, Akamai's caching services actually help us to use the backbone more efficiently, so the existence of this "premium" service has a positive effect on the speed of "basic" traffic.

But premium services can't come at the expense of making sure that everyone's packets can move quickly and efficiently. If Telcos are allowed to become "Fedex" without a "Postal service" in place that provides universal access, they will by definition head toward the lowest hanging fruit, which will be large businesses that can afford to pay for these premium services...just as the CLECs did in the early days of telecom deregulation.

David leaves us with a dire vision of the US losing market share to competitors due to an over-regulated broadband carrier market that leads to "creaky, petrified infrastructure". I submit we're already there, and it's not because of regulation. Other countries with far more regulation routinely offer bandwidth rates to the home that businesses in the US can only dream of. Let's focus on building the fattest pipes in the world, so we don't have to spend time debating the need for a "fast lane". If we can't do that, then I believe regulation will be needed to ensure that there is a slow lane at all. 

Steve tweaks Bill. Intentional?

Gotta love the news today that Apple recommends that Windows users wait on upgrading to Vista if they want their iPods to work.  Apple's iPhone clearly overshadowed the Zune launch, and now Apple is very publicly recommending that Windows users need to weigh whether they want "corrupted" iPods and music from iTMS against whether they rush out and install Vista.  How long should they wait? 

According to a company statement provided by Apple spokesman Derick Mains, "although iTunes 7.0.2 may work with Windows Vista on many typical PCs, Apple is aware of some known compatibility issues and recommends that iTunes customers wait to upgrade to Windows Vista until after the next release of iTunes, which will be available in the next few weeks."

In other words, once the excitement has died down...and, depending on which rumors you believe, about the time that Apple announces the release date for the new Leopard operating system.

Meanwhile, Apple has released a patch for iTunes, but it's unclear if that patch fixes all the problems that they say Vista users should fear.

Steve is not only the master of the product launch...he's equally good at interfering with the launches of his competitors. Or do you  really believe that this was a random, unintentional occurrence?  Unlikely.

DEMO wrapup

DEMO was an intense couple days, starting with the pre-show dinner and winding up with the banquet and presentation of demo gods.  Rob Hayes and I ended up sharing a cab and our plane ride with Kathryn Shantz of Krause Taylor Associates and GigaOm's Liz Gannes (at left, waiting at the airport).

While we waited for our flight, Liz began writing her wrapup. She had already seen much of the coverage, and was determined to add something new to the conversation rather than rehash a lot of what was already said. Liz's resulting article - written while Kathryn and I debated free vs. paid wi-fi and Rob read the Wall Street Journal - does just that, capturing a lot of what I felt at DEMO (particularly the loud, repetitive music...and some of the less-than-groudbreaking companies). In listening to one VC's concerns about the show, his point of was view that, essentially, the vast majority of companies fell into one of two categories: already funded, or unfundable. The handful of companies in between - fundable, real companies whose funding actively looking for money - got a great deal of attention.

An excerpt of Liz's excellent coverage:

The companies that stand out at DEMO are the emotive bunnies¹, the USB-charged AA batteries², and other things you can touch and feel. Of course, there are consumer web apps galore, and it’s my job to cover them. But a day later, it’s hard to remember which is which, and harder still to imagine any of them becoming a hit.

DEMO has a thing about blasting loud rock in between presentations that’s incongruous with the geeky, nervous presenters. After a while, you get used to it, but at one point they tried to tie together a segment on user-generated content with the song “Monster Mash.” There were seven companies in the section, and their redundancy combined with the blaring “It was a graveyard smash!” just says it all...

Time to get out of the graveyard and into the living.

As always, Liz is worth paying attention to.  I found a half dozen great things I didn't know about before, and  had my positive opinions reinforced on a few products I had already seen.

But as an entrepreneur who was not, this year, on the DEMO stage, I found the conference exceeded my expectations in terms of the opportunity to spend time talking to key investors, journalists and potential partners (mostly, the demonstrating companies). I was surprised at how few other non-demonstrating entrepreneurs showed up; the format is actually very cconducive to meeting a lot of great people.

Pictures of Kathryn, Liz and Rob shot with my Treo 650.

Amazon changes the game

When I heard about EC2, the new Amazon "Elastic Compute Cloud", last week, it was immediately clear that this will completely change the way startups operate. $.10/hr/CPU is cheap even if you can't add and delete servers in minutes - at under $75/month, it is still cheaper than dedicated servers. $.20/Gb of outbound traffic can be expensive for certain applications, but bandwidth-intensive apps can avail themselves of caching (who wants to bet that Amazon adds caching in the not-too-distant future).

Coming on the heels of Amazon's launch of SC3, the flexible, on-demand storage solution that pretty much ended startup companies' demand for large-scale SAN storage, Amazon has for all intents and purposes removed the "CapEx" slide from web startup "use of funds" section.  Aside from employee laptops and a few desks from IKEA (or, more likely, IKEA desks recycled from a previous startup and half the team showing up with their own computers anyway), we're OpEx only, certainly through Series A.

One of the concerns about SC3 was that storage traffic had to go over the web to get from your server to Amazon's storage. But with EC2 and SC3 colocated in the same cage, that problem is gone. As is the cost of SC2 bandwidth for traffic between server and storage - now you only pay for traffic that leaves the cage. (I wonder if you pay for traffic that comes into the cage - hmmm, for a business like Feedster that crawls massive amounts of content but only has to re-serve the small fraction that people find interesting, this could be an even better deal...).

And you get root access to the server, so this is a much, much different beast than ordinary hosting opportunities.  Dedicated server companies like Servepath and ServerBeach should be concerned, as should hardware providers not selling to Amazon or their inevitable competitors. Amazon appears to have thought this one through very well. I look forward to seeing where this takes us.

Unfortunately, the "limited beta" of EC2 is currently full (that didn't take long!), but I expect we'll see more room soon.

Startups Returning to Sun?

I ran into Jonathan Schwartz this morning, and he asked how Mashery was coming along. Jonathan and I first met over dinner late last year, when I was still working at Feedster. He had reached out to me through a mutual friend to learn what it would take to convince startups to take a look at Sun again, so we got together for a wonderful dinner and some great wine (our friend mentioned that Jonathan likes wine, so I used it as an excuse to pull something nice from the cellar), and we talked for hours about Sun, startups, kitchen renovation, and our families.

Jonathan was very open about how Sun had made mistakes and lost traction in the startup market, but he was confident that their upcoming products, like Niagra-based servers, would tilt the balance back in Sun's favor. I was able to confirm that for us, data center power was the second largest expense, after payroll - just as it was for Sun's biggest customers.

So when I started Mashery, I reached out to Jonathan. Even though there was a lot of Sun news that week, I had an email response within minutes, wishing us success, and offering Sun's help.

So we're considering launching Mashery on Niagra-based hardware. If the performance is as good as Sun says, we will be able to limit our data center to a fraction of a rack for some time, saving a ton of money on hardware, power, and data center costs. Either way, we'll let you know how it goes, so that other startups can have more data to make this decision.

After all, Mashery is in the business to make new applications easier to build and deploy. If Jonathan's right, Sun may well be a key component of making that happen.

Stay tuned.

Trusted Ticket Transactions

I had what was probably a once-in-a-lifetime experience over the weekend - I managed to score tickets to the sold-out "Gary Burton Quartet Revisited" show at Yoshi's. Burton is considered one of the top vibes players in the world, but as impressive as he is as a performer, it is as an educator nad mentor for young talent that he may make is biggest mark.

One of his best-known "discoveries" was a young Pat Metheny, who joined Burton's quartet in 1974 and went on to a spectacular career. Others include Japanese pianist Makoto Ozone and, more recently, teenage guitar phenom Julian Lage.

I've been a fan of Gary Burton's and Pat Metheny's for twenty-five years - when I was at MIT, I used to go hear Metheny perform at some of the smaller clubs in Inman Square on nights where they would advertise "special guest" (always good to look for those nights...). So the opportunity to see them reunite at Yoshi's, a great club with awesome acoustics and, literally, not a bad seat in the house (Metheny himself has said  "I thought clubs like this only existed in the movies"), I had to go. But tickets were sold out. So off to craigslist I went...

Only to find that the tickets for the night I wanted to attend were being sold by a guy in Santa Cruz. No way for a "trusted" transaction; no opportunity to meet up and exchange tickets for cash. So I paypal'd him the money, and believed that he would have the tickets waiting for me at will call. Which, of course, he did. Complete trust. Why?

Well, I figured that your average scammer would not choose to sell tickets for a small sold-out concert at face value as his scam, though I don't really know why I figured that. I guess that the emails we sent back and forth and our brief phone conversation was enough to establish trust.

So what sort of transactions inspire this sort of trust? Hard to say - I know it when I see it. I also bought my Springsteen tickets on Craigslist, but I did it the old fashioned way, exchanging cash for tickets at a mutually convenient meeting spot. Will my friend Auren's new startup solve the trusted transaction issue once and for all?  It bears consideration. I know we need more than friend-of-a-friend social networking based transactions - if my friends had extra tickkets for a concert I wanted to see, I'd expect them to ask me :) - and services like StubHub are great, but I'd rather not pay a huge premium for seats (craigslist listings tend to be at face value plus applicable ticketmaster fees, regardless of how good the seats are). Jury's still out, but if you have extra tickets to something I want to see, by all means let me know!

Loving the new MacBooks

The new Intel-based MacBook is now here - there are two on the floor at the SF Apple store. I'm typing this on the black one...which are currently in short supply. Judging by the horde of people who were here waiting to pick one up, virtually all the interest is in the black one...and for good reason. The matte black is gorgeous.

When people arrived early this morning, they originally said there were no black ones to be had, but then they announced that there are "a very small number" of black MacBooks here in the SF store...but plenty of white ones. I picked up a black one for Jacquie (I've been waiting for these to come out for months to replace her very slow first generation G4 iMac); I imagine that by the time I click "publish" all the black ones in the SF store will have been spoken for.

Second Life Cache and iPod Updaters - wow

Spring cleaning on the hard drive - looking for massive files I can shoot. Found a new tool to help find 'em - will post on that later - but I discovered that after a few brief visits to second life a year ago, I had amassed a second life cache 500Mb in size. That seems awfully big...I'm sure there are settings you can change to make it smaller, but since I never really got into Second Life, I'm just going to shoot the cache and move on...

Another biggie - over 600MB of iPod updaters. Apple is kind enough to automatically download the updaters, but for some reason they don't see a need to delete the old ones when a new one is available.  MacOSXhints covered this issue in this post - just shoot the old ones.

I'm up to 17 Gb free now, from less than 5. Enough cleaning; back to work.