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Business of Software conference news

Business of Software Conference 2007

The conference web site is now live. I’ve managed to persuade a whole bunch of world-class speakers to talk over 2 days in San Jose at the end of October. The speakers include (in no particular order):

Guy Kawasaki
Joel Spolsky
Eric Sink
Rick Chapman
Dan Nunan
Jennifer Aaker
Tim Lister
Jeff Pfeffer
Hugh MacLeod
Bill Buxton

All awesome people with a lot of insights to teach. To find out more, visit www.businessofsoftware.org

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Not with a bang but a whimper

How many web 2.0 companies can you name? I can probably think of about 10. The ones that pop to the top of my mind include flickr, digg and youtube.

According to web2.econsultant.com there are over 1,200 companies that call themselves ‘web 2.0’. The true number is probably a lot higher than that. There are 54 bookmarking services alone. I recognise one name in that list (del.icio.us). Digg isn’t on there. The others don’t ring a bell.

When we estimate the chances of something happening we’re not rational beings. We don’t coldly analyse the probabilities. Instead, we’re biased towards vivid, easily imaginable outcomes.  If asked whether murder or diabetes is a more common way to die, we say murder. We’re more worried about our flight than the drive to the airport. We’re wrong on both counts.

We also tend to exaggerate the similarity of things in the same groups. If two items share one characteristic then we assume they share others too. I’m an ex-software engineer. Bill Gates is an ex-software engineer. Therefore I can expect to duplicate his successes. That definitely doesn’t follow.

We’re seeing a similar thing with Web 2.0 sites. When we think ‘Web 2.0’, we think of Digg, the vivid and easily generated example. We don’t think of the other 53 social bookmarking sites that will fizzle out and die. We see superficial similarities between Digg and our site, and draw incorrect conclusions (hey! We both use Ajax! We both use the word ‘social’ to describe ourselves!  Therefore my site will be a success too!).

We can see the same cognitive biases when we think about startup failures. How many internet startups in the 1990s failed? Like me, you’ll probably come up with a figure based on the easily imaginable, high profile failures of the era (think webvan and pets.com). In reality, the five year survival rate of companies receiving VC money in the late 1990s was close to 50%. That’s actually pretty good.

Several things happened in the last bust. A few companies lost spectacular sums of money. More companies lost a few million dollars of VC money. Some companies just lost the savings of friends and family. Others – a significant proportion – struggled on, changed and somehow survived. It’s the dramatic implosions of the first group that we remember and that colour our perception of the bust.

So what will happen this time round? Will the web 2.0 boom lead to a bust? The eye watering and eye catching investments of the last boom are missing, so there won’t be a spectacular bust. On the other hand, almost all of those 54 social bookmarking sites will quietly fizzle out or morph into other, hopefully more sustainable, businesses.

Web 2.0 will die not with a bang but a whimper.

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We're not quite there yet

I’m running a conference on the business of software (www.businessofsoftware.org). This is the second venture I’ve set up, so I thought it would be a whole lot easier than the first (in 1999 Simon Galbraith and I set up Red Gate Software). It should have been easier because i) I’ve learnt a lot and ii) The technology now is a lot more mature.

Up to a point. It’s still damn fiddly.

Back in 1999, taking credit card payments was hard. You had to set up at least two merchant accounts (one for mastercard / visa, one for American Express). Or you could use a provider like WorldPay (very expensive, atrocious service and not to be touched – at least my experience has taught me something).

Nowadays, there’s PayPal and Google Checkout. Right, I thought – I’ll just use one of them. PayPal charge about 2.5%. Google Checkout’s actually free, assuming you’re an adwords users.

However, the next few days revealed a few glitches. Google has an unfortunate habit of not actually paying its customers the money it owes them. And I couldn’t even manage to work my way through PayPal’s sign up process. That didn’t stop them from debiting my credit card though. Twice. And they’ve got no record of my payment.

It’s not 1999 any more. This stuff should just work.

So, back to square one. I’ll soon have my old-fashioned merchant accounts through my local bank. At least they’ve not asked me how much inventory I’ve got in my warehouses this time.

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Ajax – the dancing dog of software development

Ajax is the dancing dog of software development. Creating platform-independent, highly interactive, installation-free applications is a noble aim, and Ajax is a very clever solution, but it is not a solid foundation for the applications of the future.

Writing thousands of lines of Javascript, running as an interpreted language inside incompatible web browsers, communicating with web servers using slow and verbose data streams via stateless protocols designed for text-based hypertext systems is an absurd solution to the problem.

Abstractions will be developed to eliminate some of the pain. Frameworks such as Atlas will help ASP.NET programmers, and the Google Web Toolkit will help people using Java. But the underlying foundations will still be on sand.

Ajax might be the only – and a very clever – solution to the problem given current constraints, but rather than trying to create more and more hacks to overcome the constraints, shouldn’t we be removing the constraints?

There’s a lot of hype about Web 2.0 at the moment. Currently, it’s just a meaningless label stuck on a meaningless bubble of technology and marketing hype. Why not make it a real Web 2.0, rather than just a pointless naming exercise? Bin HTTP, HTML, XML, the web browser, and Javascript. Web 1.0 was a prototype. Throw it away and let’s do the next version properly.

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Great books about the business of software

There are very few good books about software and business out there. Here are some excellent ones:

Dilbert and the way of the weasel by Scott Adams
There’s more good advice about running a business in here than there is in most ‘proper’ business books.

Peopleware by Tom Demarco and Timothy Lister
If you read one book about creating and managing software teams, this should be it.

The mythical man month
by Fred Brooks
A classic.

The psychology of computer programming by Gerald Weinberg
Athough this book is 35 years old, it’s still a worthwhile read, with interesting chapters on topics such as computer programming as a social activity.

Facts and fallacies about software development
by Robert L Glass
The title says it all. An excellent book

In search of stupidity: Over 20 years of high-tech marketing disasters
by Rick Chapman
Covers, among other things, the mistakes that Netscape and many other of Microsoft’s competitors made.

Information rules
– by Carl Shapiro and Hal Varian
Written at the peak of the dotcom boom, this is one of the only books to point out that profits still mattered, and that everything hadn’t changed.

Showstopper
– by G Pascal Zachary
An account of the deathmarch to ship Windows NT

The design of everyday things – Donald Norman
Read this and you’ll spend weeks swearing at door handles and kettles.

Good to great – Jim Collins
One of the few business books out there based on hard research and facts, this examines the characteristics that companies that make the transition from good to great have.

Hard factsPfeffer and Sutton
If you’re convinced that performance-relatated pay, forced rankings and separating work from the rest of life will make your business better then you should read this book and be prepared to change your mind.

Anybody want to suggest some more?

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Dog whistle marketing

In the UK, the term ‘dog-whistle politics’ is used to refer to campaigning that contains a deeper message only audible to a certain audience. In politics, the hidden message is often something that’s not quite acceptable. Michael Howard used it in the UK’s 2005 election campaign to appeal to voters concerned about immigration but without explicitly mentioning his plans.

You can get a more benign form of steganography in marketing. You know the big, glossy full-page adverts in tech magazines? They’re not always aimed at you, the technical audience. Their audience is often venture capitalists and private equity firms. The message isn’t ‘buy our software’. It’s ‘buy our company’.

There are other examples of dog-whistle marketing out there too. Adverts can contain messages to regulators as well as to consumers (do you really think those drink responsibly messages in tequila adverts are aimed at you?). Sometimes the message is really aimed at a competitor – in the UK, Ryanair, Virgin and Easyjet have all run campaigns whose hidden aim was to rile British Airways.

You need to be careful with dog-whistle marketing though. It can backfire. Do it too overtly, or use the wrong hidden message, then you can alienate and lose your audience.

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Welcome to the Business of Software blog

In October 1999 Simon Galbraith and I set up Red Gate Software. Over the past 8 years we’ve grown from 2 people to almost 100. Although we have had our successes, we’ve also made plenty of mistakes.

I’m running a conference in San Jose at the end of October. The people I’ve invited to speak are world-class thinkers, doers, writers and speakers who I wish I’d heard of earlier, and listened to more. I’m hoping that by bringing them together in one place, over two days, we will all learn how to grow, set up and run our businesses better.

To find out more about the conference, go to www.businessofsoftware.org

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