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Posts Tagged ‘words’

When I came to the U.S. in 1980, I was young and naïve. I used to think that corruption and ethical lapses were just a third-world ill. Eventually, I became a tech CEO and learned the harsh realities of American business. Yes, standards are much higher, and breaches are punished, but the temptations are just the same here as they are in any other country. Ethical lapses (which are a form of corruption) are quite common.  You watch stories about these on TV every other day and read about them on TechCrunch.  It was the ethical lapses of our financial institutions that threw our economy into a tailspin, and for which we are paying the price, after all.

It is best to be aware of the temptations and to prevent the lapses from occurring. As Enron, Bernie Madoff, and Lehman Brothers have shown, it’s a slippery slope. Once you start compromising your values for short-term gains, there is no turning back. Business ethics are not something you need to start worrying about when your company reaches a certain size; they need to be sewn into the fabric of your startup from the get-go. The lessons are the same for tech businesses as they are for investment banks and for third-world economies.

Harvard Business School professor Michael Beer researched the difference between companies that perform at high levels for extended periods and those that implode when they reach a certain size. When analyzing the spectacular failures in the recent financial meltdown, he found that:

• Of the original Forbes 100 (named in 1917), 61 had ceased to exist by 1987.  Of the remaining 39, only 18 stayed in the top 100, and their return during the period 1917 to 1987 was 20% less than that of the overall market.

• Of companies in the original Standard & Poor’s 500-stock index of 1957, only 74 remained in 1997; of these, only 12 outperformed the S&P 500 in the period 1957 to 1998.

• The average CEO tenure in the U.S. is 4.2 years, less than half the 10.5-year average in 1990.

Beer posited three core reasons for the failure of so many Wall Street firms in the fall of 2008: the firms lacked a higher purpose (in other words, they were focused on short-term gains, profits, and bonuses); they lacked a clear strategy; and they mismanaged their risk. Companies like Charles Schwab and US Bancorp were able to avoid the fallout by having a laser-like focus on customer service and on honesty and transparency. Neither company touched the subprime mortgage securitization market, because they saw it as risky and simply not the kind of business that served the company’s long-term interests.

Even outside Wall Street, companies like Cisco Systems, Southwest Airlines, and Costco Wholesale, with the strongest sense of higher purpose, achieved the greatest success. Take Costco. Wall Street analysts have long chastised Costco’s management for paying high wages and keeping employees around for a long time, because this results in higher benefits costs. But the company’s CEO, Jim Sinegal, lives by his belief that keeping good employees is strategic for Costco’s long-term success and growth. The company’s per-employee sales are considerably higher than those of key rivals such as Target and Wal-Mart; customer service at the stores is phenomenal and fast; and Costco continues to expand, both in number of warehouses and in products and services for business and consumer customers. The culture of the company flows downward from Sinegal and his focus on employees and, by extension, to customers.

One of the problems that Beer found with the failed banks was that their employees lacked the ability to “speak truth to power”. Employees felt intimidated by superiors; the institutions’ internal voice of conscience and purpose was silenced by a maniacal focus on short-term profits and whatever scheme would bring them in. The silencing of employees who sought to challenge strategy and risk-management practices likely also undermined the banks’ moral authority and emboldened those who already felt inclined to do the wrong thing. With a muted internal voice, these organizations lacked a moral compass. As a result, they drove off a cliff with astonishing speed.

The same things happen in Silicon Valley companies.  I asked management guru — and head of the CEO Institute of Yale School of Management — Jeff Sonnenfeld for his advice on how startups can sow the seeds for building a Cisco or Costco. Here is Jeff’s advice:

1)  Create a culture of openness and welcome dissent – Internal constructive critics are your best friends — too often, founders are blinded by their own enthusiasm for their creative vision and then are surrounded by sycophants, kissing up. Founders who fall out of touch rapidly lose their ethical bearings. At Intel, founder Robert Noyce and Gordon Moore did not look for sycophantic followers in selecting the brilliant, contentious, but relentlessly honest Andy Grove as their colleague and successor. Similarly, Craig Barrett and Paul Otellini have consistently fought for different points of view internally — without undermining the enterprise, and always reinforcing Intel’s self-critical core ethic.

2)  Lead by example.  The authenticity of the leader’s character is essential — if colleagues don’t believe you, they will not take needed risks on your behalf — such as training subordinates to be able to do their own jobs.  Startups are often defined by the hip clichés of VC firms, adoring press, and HR consultants — but the startups don’t really practice what they preach.

3)  Learn from immediate peers or distant models. Too often, founders atrophy because they believe that the unique quality of their business or technological mission means that they too are truly unique in leadership values.  Steve Jobs has patterned himself after Polaroid founder Ed Land — and tried to learn from Land’s strengths and weaknesses.  Henry Ford regretfully once claimed “History is bunk” but in reality revered Thomas Edison.  Michael Dell put legendary tech entrepreneur (Teledyne) and educator Dr. George Kozmetsky on his board right from the start to learn from this brilliant then septuagenarian.

4)  Recognize your own fallibility as a leader, know your limits, and beware of the myth of immortality.  Entrepreneurs often are horrified at the thought of leadership succession. The founders of great firms such as Google, Cisco, Amgen, and Microsoft have known that they would need to prepare for a day when they no longer could be the lone day-to-day internal boss, primary external ambassador, and symbolic cultural icon. The founder of the original (pre-Starbucks) coffee house chain Chock-Full-o-Nuts started his first café on Broadway 43rd Street in 1923 and was a great national success.  Sadly, sixty years later, as a dying man who had been flat on his back for two years at Massachusetts General Hospital in Boston, he still clung to the job of leader of the enterprise, his full-time physician serving as acting president.

5)  Remember that institutional character — like a liquid cupped in your hand — is fragile; easily lost; and hard, if not impossible, to regain. Egomaniacal moves, personal grandiosity, greed, and deception create impressions that are hard to erase.  Whole Foods founder, John Mackey, sabotaged the integrity of his own exalted brand, damaging the company’s internal pride and customer admiration far more badly than any competitor could have, due to his self-inflating and his misleading “anonymous” blogging, hiding his identity through an anagram of his wife’s name, “rehodab.”

I’ll add another very important point: Establish an independent board. Venture firms often demand a majority of board seats as a condition for their investments. Conflicts invariably arise. The board begins to serve the needs of VCs and management, rather than of the company itself, which loses the independent voice to warn it not to do the wrong things. The inconvenient truth is that all board members have a fiduciary duty to act in the interests of the company, and not in their own interests. Board members must not engage in transactions in which they or their partners stand to gain. They are legally required to avoid these conflicts of interest.

Finally, remember that in business, you have to make tough choices at every juncture. Though business decisions usually have clear consequences and outcomes, ethical decisions are always hard. Making the right choice doesn’t always bring success, but ethical lapses almost always lead to failure. No matter what the consequence, doing what’s ethical and right is always the better long-term strategy.

Editor’s note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa.

I’m at the NewsMorphosis Conference in Hawaii today locked in a day of debates about the state of news quality and how the hell we find a business model to keep paying for it. It’s a big issue locally– earlier this year three of Hawaii’s five largest TV news stations merged operations and the Honolulu Star-Bulletin is  merging with the other daily paper the Honolulu Advertiser, resulting in plenty of layoffs and general civic concern.

So it’s fitting that the conference ended with a talk by John Temple, the editor of eBay founder Pierre Omidyar’s new Peer News site, a test case in how the future of local news could work. And thankfully, we finally got a few more details on the site and the approach.

Temple was clear to say “there is no silver bullet” when it comes to fixing the media business, but also sees a great deal of hope in the volatility– this from the guy who was head of the now shuttered Rocky Mountain News, a paper that’s already gone through what so many dailies are dreading.

“We’re not trying to reinvent a local newspaper and put it on the Web,” he said. Indeed, the mission of Peer News doesn’t even contain the words “news” or “media” or “paper.” It’s simply “to create a new civic square.” Core to the development of Peer were three questions:

-What is the role of a free press in a democracy?

-How would you best fulfill that on a local level using all the tools available today?

-How do you do that in a sustainable way?

On content, the most interesting thing Temple talked about was doing away with “articles” as we know them. He criticized the static, episodic nature by which journalists have traditional covered news, challenging readers to hunt through archives for the information they want. Instead, Peer’s “building block” will be a page that’s always updated almost like Wikipedia, or as he put it, “something closer to a living history on a topic that changes as it develops.” There will no longer be a sense of “missing” an article, because the “articles” will be living things. That also addresses the critique that local news swarms around one issue, then moves on. “We’re not going to be hot topic driven,” Temple says. Going back to those questions, Temple says the role of a free press is to inform citizens so they can make intelligent decisions. “Let’s stop making it so difficult,” he said.

The other hallmark of Peer’s approach is what has made blogs popular– a sense of community. But it’s certainly a different approach. For one thing, Peer won’t have “reporters” in the classical sense, it will have “hosts” who help facilitate this civic square answering questions for the community.  “In this era, the fact that newspapers still rewrite press releases is an embarrassment,” Temple said. “We’re not going to be stenographers. I think that’s a downfall of journalism.”

But for a site that intends to be very community oriented, there was one big shocker: Peer will not have comments. “(Comments) descend into racism, hate, ugliness and reflect badly on news organizations that have them,” said Temple. Why? Because people do not have to show their faces when they comment so there’s no sense of responsibility, he argued. “We think anonymity is a huge problem when it comes to comments,” he said.

Temple also emphasized that the coverage would not pull punches: “We’re going to call things like we see them. We think there’s real value in taking a stand.”

So what about that business model? As Temple noted, there aren’t that many business models out there to chose from. Unlike most media sites, this will be a member site that people “value and will pay for.” He added “advertising would not be a key focus for us.”

Peer should be launching early next quarter, so we’ll be able to see more of these ideas in action soon. But it’s clear that the site– or “news service” as it prefers to call itself– is taking a markedly different approach from old and what we consider “new” media right now.

And with the benefit of some of these details, it seems less out of step for Omidyar to be starting this company. EBay, after all, was one of the first sites to powerfully leverage community on the Web, pioneering a lot of the systems of trust and reputation we still use today.

(More on Temple’s blog here.)

You can learn all sorts of interesting tidbits from legal documents. For instance, in one of the legal briefs unsealed today in the YouTube-Viacom dispute, such as the amount of money YouTube co-founder Chad Hurley made from the $1.65 billion sale of the company to Google in 2006. His take: $334 million (based on the November, 13, 2006 closing price of Google’s stock). In other words, the young CEO owned about 20 percent of YouTube at the time of the sale.

YouTube’s other co-founder Steve Chen’s stake was worth $301 million at the time of the sale, and the third co-founder Jawed Karim walked away with $66 million. Even YouTube interface designer Christina Brodbeck “received Google shares worth $9.09 million.”

The VCs did even better. Sequoia Capital, YouTube’s venture backer, turned a $9 million investment into $516 million (or about 31 percent of the total). And Artis Capital turned a $3 million investment into $85 million.

Another notable stat from the legal docs: in the past five years, more than 500 million videos have been uploaded to YouTube overall.

December 1, 2008. That was the last day I got a Qwitter notification. I don’t recall qwitting Qwitter, it simply stopped working for me. Until today. When it just puked in my email inbox.

For those unaware, Qwitter is a service that emails you every time someone unfollows you on Twitter. It tells you their name, and the last tweet you sent that may have caused the unfollow. Naturally, when I saw the huge influx of emails today, I decided to visit the site again — and guess what, it does appear that they’re back. As they note, “We’re Back! How could we possibly quit catching QWITTERS?!? Fear not… notification emails have returned, giving us all something to look forward to during the day!“

Not only that, the service promises that “premium services” are coming soon. Agora Technology, the group behind the app, promises faster email notifications without ads, and the ability to become a featured Qwitter user if you sign up (more details are coming soon).

There’s just a few problems with the new Qwitter. First, they’re sending all of these emails with a completely broken link. The “Visit Qwitter Therapy” link takes you to the following URL: http://root_url/therapy. Clearly, that’s the result of some bad coding. And I have about 60 emails today all with the same broken link. More importantly, I’m not sure the all-important unsubscribe button is working. I clicked on it to unsubscribe earlier, and I’m still getting the notifications. Others are noting that they qwit Qwitter a long time ago, and have started getting the notifications today.

These Qwitter emails are also now promoting TweepML, a Twitter grouping service, which we’ve covered in the past. And interestingly, it appears that Qwitter may be under new management. Previously it was a group called Contrast that ran the service (here’s an interview we did with them), now it’s listed as being run by this Agora Technology group — which is the same group behind TweepML (which just sold).

I’ve never been thrilled by the idea of Qwitter because it adds social pressure to Twitter. Without it, if you unfollow someone, they’re unlikely to notice (as Twitter won’t notify them). But with it, they’ll get an email and things may get, well, awkward. Likewise, getting an email letting you know that you’ve been unfollowed probably makes you feel a bit uneasy inside. Well, okay, unless it’s one of the thousands of spammy accounts on Twitter. Still, at one point they cared, and now they don’t.

[photo: Paramount Pictures]

Earlier today, several previously sealed legal documents in the longstanding copyright infringement lawsuit against YouTube by Viacom were made public. In conjunction with the public release of those documents, YouTube’s chief counsel Zahavah Levine wrote a blog post which reads more like a summary of a legal brief.

In it, Levine outlines YouTube’s main defense against Viacom’s allegations, including the fact that Viacom “secretly uploaded its content to YouTube, even while publicly complaining about its presence there.” Levine also notes that “Viacom tried repeatedly to buy YouTube,” suggesting that the current $1 billion lawsuit is its attempt to cash in on YouTube years after the fact.

Here is the key passage from the blog post:

For years, Viacom continuously and secretly uploaded its content to YouTube, even while publicly complaining about its presence there. It hired no fewer than 18 different marketing agencies to upload its content to the site. It deliberately “roughed up” the videos to make them look stolen or leaked. It opened YouTube accounts using phony email addresses. It even sent employees to Kinko’s to upload clips from computers that couldn’t be traced to Viacom. And in an effort to promote its own shows, as a matter of company policy Viacom routinely left up clips from shows that had been uploaded to YouTube by ordinary users. Executives as high up as the president of Comedy Central and the head of MTV Networks felt “very strongly” that clips from shows like The Daily Show and The Colbert Report should remain on YouTube.

Viacom’s efforts to disguise its promotional use of YouTube worked so well that even its own employees could not keep track of everything it was posting or leaving up on the site. As a result, on countless occasions Viacom demanded the removal of clips that it had uploaded to YouTube, only to return later to sheepishly ask for their reinstatement. In fact, some of the very clips that Viacom is suing us over were actually uploaded by Viacom itself.

In other words, while Viacom’s lawyers were issuing takedown notices, its marketers were putting clips up on YouTube to promote Viacom movies and TV shows. You’ve got to wonder what the judge will make of that evidence.

Nobody is safe in the House of Murdoch, especially on the Internet side of the house. Yesterday, News Corp’s online games business, IGN Entertainment, announced layoffs to its staff. Cuts were pretty even across all parts of the company, and we’ve been able to learn that about 65 people in total lost their jobs, or roughly 20 percent of staff.

Joystiq was the first to get a hold of the layoff memo from president Roy Bahat, who wrote:

We are losing colleagues who played an important role getting us to where we are — #1 in games and men’s lifestyle, and growing 40% over last year in the total size of our audience. We are deeply grateful to our colleagues for everything they’ve done. We as a company are absolutely headed in the right direction, and while today will be hard, it won’t stop us.

In other words, don’t let the door hit you on the way out. The layoffs at IGN follow larger cutbacks last year at sister site MySpace, which laid off 30 percent of its U.S. staff and two thirds of its international staff last summer. More recently, MySpace replaced its CEO.

Murdoch is definitely not enamored with the Web anymore.

Brands are increasingly prominent on the App Store and Apple tends to love featuring folks like Britney Spears and Coca-Cola on the App Store’s front page. But who’s actually succeeding and which brands have managed to maintain high download numbers?

PositionApp, the app that lets you track how iPhone apps are doing on the App Store rankings, might have the answer. They track and record the top 300 apps across all demographics and have provided us with details on the top 15 apps in the US App Store. Hit the jump for the list.

Read the rest at MobileCrunch >>

Every generation thinks that they are the first. The first to feel this way or that, the first to make this or that revelation, the first to do and make things that we find later have been done and made since before we could record their doing and making. But while these illusory and fleeting firsts are common to every generation, there are true firsts being achieved constantly, though they are often subtle enough that they are not noticed even by those in their midst. My generation has been lucky enough to be part of a very important first.

At no other time in history, and perhaps never in the future, will there be a group of people whose own growth and maturation is so perfectly reflected in the principal technological and cultural advancement of the age.

Continue reading…

A new startup dubbed nPario and formed by ex-Yahoo and SAS executives opened its business operations today. The company essentially wants to help clients better understand and market consumer commercial intent through optimal data management and data mining products and services.

The company is led by former senior Yahoo executives Bassel Ojjeh (he left the Sunnyvale company in November 2009) and Krishna Uppala, and former SAS executive Basel Tutunji. According to a regulatory filing, the Palo Alto startup recently raised $300,000 in seed funding.

The company’s website is pretty scarce on details, but according to the release nPario will deliver data solutions that allow companies to increase their revenue by acting upon consumer behavior insights.

In the words of Ojjeh, founder, president and CEO of nPario:

“The digital world gives us an unprecedented opportunity to identify and understand the commercial intent of consumers in order to deliver the right message or product. At nPario, we believe that organizations stand to boost revenue by more than 10% if they harness the power of consumer intent.

Our goal is to provide our customers with a comprehensive set of data products that focus on the vast amount of commercial behavior data and generate immediate impact to their business and revenue.”

Prior to nPario, Ojjeh served as Senior Vice President of the Strategic Data Solutions division at Yahoo, where he was responsible for building data products that leveraged Yahoo data to drive audience engagement and advertising revenues, so it’s safe to say he knows what he’s talking about. Still according to the release, CTO Krishna Uppala is behind more than 15 database technology patents – he served as Senior Director/Architect at Yahoo before nPario.

Finally, nPario Chief Revenue Officer Basel Tutunji will be responsible for sales and business development for the startup. Before nPario, Tutunji held sales management roles at several multinationals including SAS, Intershop Communications and Oracle.

In case you haven’t noticed, the MacBook Pro line is starting to get a little stale with just a lowly Core 2 Duo CPU. Even the Mac Pro with it’s Quad-Core Xeon isn’t the fastest kid in town anymore with the six-core Core i7-980X making the rounds. Hopefully all this fuss concerning a supposed leak of new Mac pricing that’s a bit higher than the current MSRPs foreshadows updates coming in the near future.