Last week I kicked off a Seth Godin action figure photo competition. I’ll keep it open for a few more days and announce the winner early next week. It’s not too late to enter.

The entries are so good I think I may well have to hand out several prizes. The weirdest photo category will be particularly hard fought.

So far Jim Kring, Tom Randle, Mr Flibble, embe and s3a have all submitted photos.

If you want to see Seth being attacked by a teddy bear, upside down in a glass of cider, posing as Lenin, reading his little book of marketing secrets or tied up as Darth Vader’s prisoner then check out the photos on the original competion post.

I heard this interview with Michael Moritz, the Sequoia Capital venture capitalist, on Radio 4 the other day. It’s well worth 30 minutes of your time. Moritz talks about his journey from childhood in Wales, history degree at Oxford, journalist for Time magazine and on to Sequoia where he has invested in, among other companies, Google, Apple, Yahoo!, PayPal and Cisco.

Here’s an excerpt (apologies for the ropey and inaccurate transcript):

Peter Day: Many investors throw their money at lots of investment targets, hope that two or three will be survivors and that one will be a superstar success.

Michael Moritz: That isn’t how things are done at Sequoia. It’s not the way you think of it. Every single time you write a cheque you expect, or pray, depending on your inclination, for that investment to succeed.

You can hear the interview as .ram streaming audio, or a downloadable mp3 (note the interview doesn’t start until about a minute in). The Radio 4 web page is here.

I learned some time ago – and this has been reinforced many times since – that my sense of humour is not a good guide to marketing decisions. Luckily, other people at Red Gate quickly overrule me any time I try to get involved in marketing. That’s why, if you visit Red Gate’s stand at Tech Ed this June, you’ll get a funky Red Gate t-shirt rather than a cool pair of Red Gate underpants.

Occasionally, and regrettably, I get my own way though. And that’s almost always a mistake. That’s why I sent out 140 Seth Godin dolls out to last year’s attendees of Business of Software 2007. Seth is speaking at Business of Software 2008, and I thought this would be a really cool way of getting people who came last year to sign up to this year’s conference.

They seem to have sunk without trace.

Or have they? I want to find out. I’m running a photo competition. If you have a Seth Godin doll (from me, or maybe you have one anyway) then e-mail a photo of your Seth doll to me at neil.davidson@businessofsoftware.org, and I’ll post it up.  The more interesting the better. Assuming that anybody enters (a big assumption), I’ll send out a copy of one of Seth’s books to what I judge to be the best photo.

[Update: you can’t post images in typepad comments so you’ll need to e-mail me the photo and I’ll post it up]

The entries

Jim Kring:

My entries:

Here is Tom Randle’s entry:

You can see another of Tom’s Seth Godin photos, and read the story behind this one, at Tommy Toast’s flickr stream.

Mr Flibble’s entry:

Mr Flibble’s flickr stream is well worth a look too.

These three are from embe:

This one from s3a is called I said bring me a Sith, with an i!

You can find a larger version at s3a’s flickr stream.

Mr Flibble saw s3a’s entry and was inspired to send in two more entries:

Another one from s3a:

Sheri’s entry:

I’ve just learned that Embarcadero are planning on buying CodeGear, the Borland division that’s responsible for their developer tools (but not the more enterprisey application lifecycle management stuff). They’re paying $23m.

Embarcadero currently have revenues of $60m but expect the merged companies to have revenues of $100m. So they’re buying annual revenues of $40 for $23m. That’s an interesting multiple.

Earlier this month, Thoma Cressey Bravo, the private equity firm that owns Embarcadero, agreed to buy InstallShield and FlexNet from Macrovision for $200m and form a new company called Acresso. Given Thoma Cressey Bravo’s stated aim of ‘creating value through the strategic use of acquisitions to accelerate business growth’ I wouldn’t be surprised if Acresso buys Embarcadero, or vice versa, some time soon.

It’s a business model that I find a bit fishy. If I thought that Thoma Cressey Bravo’s plan was to heave CodeGear back to greatness then I’d think differently. But I suspect that they’re more interested in the quick buck. They’re taking slightly shabby, flabby companies that are stumbling into decline and gluing them together, hoping they’ll stick long enough for a 12-month increase in sales followed by a re-float or trade sale and an enormous profit. It’s like taking an apple, an orange and a banana, banging them together and calling it a fruit salad.

What do you think of the acquisition? What does it mean for CodeGear? Post here …

[Disclosure: Embarcadero are theoretically a
competitor of Red Gate, but our paths don’t cross much]

When I was 12 years old, Mr Pretorius, my sadistic, South African high jump teacher, favoured a triangular, metal high jump bar over the usual fibreglass pole or bamboo stick. He would have wrapped it in barbed wire if he could: his theory was that failure should be painful but rare. The more that failure hurt, the less likely it became. My fear of knocking the bar off and landing back-first on its skin-scraping metal corners would spur me on to jump ever-increasing heights. Of course, since it was physical ability rather than mental toughness that held me back, the only thing it spurred me to do was to give up high jump classes as soon as possible.

Although Mr Pretorius was wrong, there is a kernel of an interesting idea here. In many cases it’s not our lack of ability that stops us succeeding. We fail because we don’t bother getting started; or once we start we don’t stick at it; or we don’t really want to succeed; or playing just one more game of Mario Kart is more appealing than knuckling down and solving that knotty problem.

People often say they fear failure, but it’s not failure they fear but failing in public. Failing in private, when nobody finds out, is easy: making a total tit of yourself in front of strangers or – even worse – people you respect is scary. It’s something most of us will do almost anything to avoid.

We can take this fear of failure and flip it round so it becomes a powerful motivator. Here’s my suggestion: to succeed, put yourself in a position where failure is publicly embarrassing.

On the Joel on Software forums, people often post asking if they should start their Micro ISV, or they’re earning some money and should they go full time. I say just go for it. But don’t tip-toe half-heartedly into it, telling nobody and keeping the safety net of the day job. That’s not going to help you succeed. Jump into it head-first, shouting and screaming; tell the world what you’re going to do.If you fail, people will point at you and mock you, snigger at your misguided audacity and say they always knew it was never going to work. You don’t want that, so you’re more likely to succeed.

Here’s an example I’ve used before. At last year’s Business of Software conference there was a point when it wasn’t looking good. I only had 30 attendees signed up. I – and people I trusted – were questioning its viability. The least risky option would have been to quietly back down and cancel. But I decided to go ahead, knowing that there was a reasonable chance that the conference would flop and that I’d embarrass myself. That was the psychological turning point: it was the moment that I made an absolute commitment to running the conference, no matter what the consequences, or how foolish I’d end up looking. It was also the moment that things started to pick up, and I don’t think that was a coincidence.

If you’re feeling really brave you can artificially raise the stakes. Make a stupid, public bet, for example. Want to leave your day job but aren’t sure that you’ll succeed? Tell people that you’re going to run through the streets of New York in a gorilla suit if you haven’t given up work and made your first sale by this time next month. That should be a powerful motivator. Let me know how it goes.

So go on: be bold, and risk making a tit of yourself.

Today’s guest post is from Dan Nunan. Dan is Chief Marketing Officer at Red Gate, an advisor to several UK government bodies on marketing and a visiting lecturer at Cranfield university. He also spoke at Business of Software 2007. This is a re-post: unfortunately I had to pull the original.

Did you hear the one about the French guy who bet $73billion on the stock market and lost? You have? Of course. Financial doom and gloom has, primaries aside, been front page news for weeks. The general consensus is that a recession is inevitable in North America, and very likely in Europe. So let us assume that the economic pundits break a habit of a lifetime, and actually get this one right. What might it mean for folks in the software business? Here are five things to think about.

1. Overall, recessions aren’t good news
Let’s start by being pessimistic, and look at what happened to the software business in previous downturns. In 2000/2001 firms that got into trouble lacked a viable business model, weren’t able to generate cash, and relied on too much external funding. In short, the sort of things that will drive businesses to the wall even in good economic times. So, let’s go back to the last ‘proper’ recession in the early 1990’s. The software business was much smaller then, but in his book ‘The Business of Software’ Michael Cusumano describes at length how in the early 1990’s recession companies reliant on product revenue were harder hit than those who had substantial services revenue, such as renewals on support contracts or consultancy agreements.

The bulk of software spend comes from business rather than consumer markets, and Gartner is already advising CIOs to have a plan ready for making cuts in 2008. But the CTO/CIO can only cut what s/he knows about. So if you sell at the enterprise level, and require senior management sign-off, then expect a harder sell and longer sales cycles over the next year. If your sales are ‘under the radar’, such as on corporate credit cards, then things might not be so bad. However, companies are increasingly aware of their expenses bills. Management consultants will point to personal expenses as an easy target for cuts, as it has the smallest impact on customers or staff.  It’s expenses like 1st class flights, not to mention the all-important team building events in luxury hotels, that the bean counters are after but software purchases will inevitably be caught in the crossfire.

2. Get some perspective
When economic pundits talk about recessions they are talking about a whole economy. Unless you are responsible for a whole economy – and I’m guessing you aren’t – then you should be more interested in your own business. Say the economy shrinks by 3%. This would be bad, although hardly Armageddon. Does that mean that your business will shrink by 3%? No. The macro economic climate is just one of the factors that decide how well your business does, and it’s probably not even the most important factor. If you write software, the provision, or lack of, high quality snacks and caffeinated beverages for developers will probably have more than a 3% impact on the bottom line. Great software, produced for the right market is still going to count for a lot. Looking at the current forecasts from big software firms, a software recession might just mean that things don’t grow as quickly as they have done over the last few years.

3. Don’t panic
Douglas Adams was right. If you walk around the office constantly reminding people of how bad the economy is and how uncertain their jobs are, don’t be surprised if your best people start to have other ideas. The last time a recession loomed in the US applications for business schools went up 70%. Talk about ‘battening down the hatches’ and even the best employees are going to start revisiting those alternative career plans that sit at the back of everyone’s mind. Whether it’s doing an MBA, setting up a Web 2.0 organic chicken farm, or fulfilling that life long dream of starting a brewery, good people always have options. So stay focused on your business.

4. Less is more
Research shows that in smaller companies innovation is more likely to happen in an environment of limited resources. As companies grow, inefficiency creeps in. It becomes about “what’s the easiest way to spend” rather than “how do we get the most out of this money”. As more technical employees become available, miraculously the number of resources required for projects goes up. Marketing starts talking about superbowl ads, and you notice a drastic reduction in the golf handicap of your best salespeople. Having to make do with more limited resources means that your people are more likely to find those innovative solutions to problems that require persuasion rather than just checkbooks.

5. Think ahead
Conventional wisdom says that a recession is a terrible time for business, but economic downturns don’t last forever. But, assuming you are in the right market, a recession is a great time to grow market share. Some of the most successful businesses ignored the news and kept investing through a recession, whilst their competitors were busy scaling back. If you have a strong balance sheet, and your competitors are short of funding, then they are likely to become increasingly short-term in their outlook. It’s also a great time to think about opportunities and attack the new markets that your competitors are scared of.  Build a reputation as a company that’s ambitious and growing and you’ll find also find that recessions are a great time to hire.

Meanwhile, make the most of the $1 coffee at Starbucks whilst it lasts…

Here’s a quick update on Business of Software 2008. In case you weren’t aware, Joel Spolsky and I are running this conference in Boston, September 3rd – 4th. We’ve got some great speakers lined up including Seth Godin, Eric Sink, Jason Fried and Joel himself. You can find out more at www.businessofsoftware.org.

Since I last blogged about the conference, I’ve signed up one more speaker. Tom Jennings is a Managing Director at Summit Partners. It’s odd how we’ve all got a lazy stereotype of the venture capitalist as the sharp-suited, good-haired, smooth-talking, count-your-fingers-after-shaking-hands, wheeler-dealer vulture out to shaft the entrepreneur and make a quick buck, yet I’ve never actually met any who fit that description (although, without fail, they do have great hair). All the venture capitalists I’ve met have been urbane, smart, articulate, thoughtful people doing their best to help entrepreneurs build successful businesses. It’s not a route I agree with, but I understand why people take it. That’s why I’ve asked Tom to speak on "Why everything you’ve ever heard about venture capital is wrong". It’ll be a good talk.

In case you’ve missed it, we’re running a Pecha Kucha competition. If you want the chance to present 20 slides in 6 minutes 40 seconds, a rigorous and hopefully vigorous 20 seconds per slide, or even just find out what Pecha Kucha is then visit www.businessofsoftware.org/pechakucha.asp

Registrations are going well. The early signs are that we’re going to fill the 392 seat auditorium that we’ve got available to us, so if you want to book then don’t hang about. So far, we’ve got people from some 20 US states, from Alaska to Florida, and eight countries (Australia, Poland, Ireland, USA, Canada, Belgium, Sweden and the UK). It’ll be a good, international mix of people with plenty in common but enough to set them apart for things to be interesting. Judging by people’s job titles the attendees include software developers, CTOs, founders, CEOs, consultants, VPs and product managers so that’s good too.

I’ve got a couple more speakers I’d like to invite, so if you want to keep up to date then use the link below to subscribe to the RSS feed.

See you in Boston!

Elmore Leonard once wrote that the key to great writing is to leave out the boring bits that people skip.

Hemingway wrote that "The first draft of anything is shit."

Robert McKee: "No one has to see your failures unless you add vanity to folly and exhibit them."

Hawthorne: "Easy reading is damn hard writing."

I think there are obvious parallels in software development, which I won’t spell out. Leonard also said never to start a book with a description of the weather. If I could shoe-horn that into a software development analogy then I would.

A couple of weeks ago I blogged about some brilliant advertising I saw at a petrol station. The increasing petrol (gas) prices are an interesting illustration of how pricing changes people’s behaviour. Here in the UK, petrol is about £1.20 a litre. That works out at around $9 for a US gallon. How will people react? And what has that got to do with software? I’ll try to explain.

To understand people’s behaviour, it’s useful to differentiate between the short and the long term. In the short term, we’ll cycle more, drive less and share cars. There’s not much more we can do about the money we spend on fuel while we’re stuck with our current cars. In the long term, however, we have other options. If fuel prices remain high then, as we replace our cars, we’ll ditch our SUVs and buy hybrids, or more fuel efficient cars.

If you’re Shell, or Exxon, or the UK government (more than 60% of the price of petrol is tax in the UK) then these are heady days. In the short term, your customers have no choice but to buy your product. For now, we’re locked in to petrol. The costs of switching (to a cheaper car, or to alternate fuels) are too high to be feasible, in the short term. In the long term, that changes.

Locking in your customers muffles an important signal. As I’ve blogged about before, getting negative feedback is hard. If your customers are locked in then you can maltreat them and not notice their squeals. Prod them with pointy sticks and they might rattle the bars of their cages but they’re safely locked in and cannot leave. One day they’ll break the lock and escape and then you’ll have a horde of unhappy ex-customers on the loose. It’s much better to have willing customers than hostages.

I write from personal experience. A few years ago, I chose InstallShield as the installer for Red Gate’s products. Bad decision. It became apparent, quickly, that it’s a shoddy product. Each heftily priced new version introduced unwanted new features while old features remained untested and buggy. Always one to make the same mistake twice, I signed up to their hosted update ‘service’ (I use the word loosely) and had the same experience. By the time I realised I’d made a dumb decision I was locked in. Our installers all used InstallShield, and the switching costs were high. But I was only locked in for the short term: in the long term – and it was too long – we switched to Wix. Because I was locked in, it was easy for InstallShield to ignore my feedback, and they ignored it impressively actively. Presumably, sales were up and life was good. But only in the short term.

If your customers are locked in then be careful. Look after them, and keep an ear out for the rattling of cages.

I’ve just come back from a short trip to Paris. Although I enjoy Paris, the Champs-Élysées, Montmartre and the Marais are stifling on a weekend. So on Sunday morning I headed over to Bercy, crossed the Simone de Beauvoir passerelle over to the New Bibliothèque Nationale and watched Blade Runner at the MK2 cinema.

The New Bibliothèque Nationale is an impressive, but odd beast. It’s the largest of François Mitterand’s grands projets. Its four book-shaped, letter Ls, made of glass and 25 storeys high, surround a sunken garden of trees transported fully-grown from Normandy. Its 400km of shelves provide space for up to 20 million books. It cost 8 billion francs ($1.5 billion) to build. It was completed in 1997.

It’s impressive in another way too. It’s an impressive example of our tendency to solve yesterday’s problems. In this case, yesterday’s problem was how to house tens of millions of printed books, and how to store, index and access the hundreds of thousands of new books being published worldwide every year. With Google, and its ambition of organizing the world’s information, I’d call that problem solved. Or, perhaps more accurately, side-stepped. Scanning the 10 million books in the current library, and persuading publishers to release digital versions of their new books are just logistical details and utterly tractable.

Here are some more examples, from the business of software:

Windows Vista – solving yesterday’s problem of trying to improve the desktop operation system.

Sarbanes Oxley – targetted at yesterday’s corporate misdemeanours, it missed today’s.

Digital Rights Managements – yesterday, people sharing music was a problem; today it’s an opportunity.

I’m sure you can think of more examples, and better ones than I have. Post here …

I tried out a new Indian restaurant last week. The experience wasn’t terrible, but it wasn’t great either. It was, well, mediocre. The waiter brought out the wrong food. My butter chicken turned out as a chicken tikka carbonara, and a poor one at that, with chunks of roasted chicken floating in a custard sauce. The naan bread was cold. When I ordered a pudding the waiter giggled and wrestled the menu out of my hands. They were good enough to bring out, unprompted, a glass of scotch at the end of the meal. Nice gesture, but I don’t like whisky. Horrible stuff.

At the end of the meal, the waiter asked how I’d enjoyed the meal. Fine, I mumbled, and smiled.

Maybe it’s a British thing, but I just don’t like giving feedback. Negative feedback, anyway. That’s a shame for me, but also a shame for the restaurant. This was a great opportunity for them to learn, to hear how poor their food was, and how much they could improve. But they missed it, because they had no way of gathering true feedback; no way of hearing anything other than what they wanted to hear.

The same is probably true of you. You’ve probably got no way of getting true feedback. If your product stank, if your management sucked or your service was lousy, would people tell you, or would they just mumble that it was fine, and smile?

There are things you can do though. As Bill Buxton points out, and as I’ve blogged about before, if you frame the question as a choice then it’s easier for people to give feedback. If I show you a single product design, you might shy away from telling me your true opinion. If I show you two or three options, you’ll be more open. It’s hard for you to tell me that widget A sucks, but you’ll tell me that you prefer widget B, and why.

You can apply this technique to other areas of your business too. Rather than ask your customers if they’re happy with your customer service, or to score it out of ten, you could ask them how it compares to other, concrete examples. How does it compare with their experiences with dealing with Microsoft, or Symantec? With their insurance company, or their bank?

Another trick is watch what people do and not what they say. I said that my meal was fine, but what I didn’t do was eat it. People might say that your product is great, but if they don’t buy it that tells you more. They might say that the design is fine, but you need to watch them to see if they can use it. They might say they’re happy with your customer service, but what do they do during those interactions?

There are plenty of chicken tikka carbonaras in the world of software. Sometimes they’re obvious and there’s no lack of honest feedback (Vista and Office 2007 are the most egregious examples), but quiet mediocrity is more dangerous. How would you know if you’re serving up chicken tikka carbonaras? And how do you give, and elicit, honest feedback? Post here …

I’m pleased to announce that registration for Business of Software 2008 – A Joel on Software Conference is now open.

This is the second year I’ve run this event. Last year’s event went down very well (Joel Spolsky said it was the best conference he went to last year and 94% of attendees gave it four or five stars; you can check out some videos and read testimonials on the conference web site).

This year is going to be even better.

If you’re not familiar with the conference, then here’s a brief summary.

It’s being held in the Seaport hotel on the Boston waterfront. The dates are September 3rd – 4th. The confirmed speakers include:

• Joel Spolsky, founder of Fog Creek software, author of several books and the man behind the joelonsoftware blog
• Seth Godin, Business Week’s "Ultimate Entrepreneur for the Information Age", is the best-selling author of 7 books (including Permission Marketing and Purple Cow) as well as the most popular eBook of all time.
• Eric Sink, founder of SourceGear, author of "Eric Sink on the Business of Software" and the person who coined the term "Micro ISV"
• Steve Johnson of Pragmatic Marketing and winner of last year’s Software Idol competition
• Richard Stallman launched the development of the
  GNU operating system, now used on tens of millions of computers today.
  Stallman has received the ACM Grace Hopper Award, a
  MacArthur Foundation fellowship, the Electronic Frontier Foundation’s
  Pioneer award, and the the Takeda Award for Social/Economic Betterment
• Paul Kenny is one of the UK’s top sales trainers,
  consultants and speakers. He has worked with many customers in three
  continents, including IBM, Perot Systems, The Guardian and tens of
  others.
• Dharmesh Shah is a geek, serial entrepreneur, founder of HubSpot and blogger at OnStartups.com
• Jessica Livingston is author of Founders at Work: Stories of Startups’ Early Days and a founder of Y Combinator
• Jason Fried is founder of 37signals (developers of Basecamp and Ruby on Rails) and Signal vs Noise blogger

That isn’t the full line-up: I’ve got some other speakers I’d like to invite too.

The early bird price of $1,395 is available if you book before June 7th. You can find more details about booking on the registration page. I don’t know how quickly tickets are going to sell, but I’d encourage you to book early to guarantee a place.

The best way to stay up to date with the conference news is to subscribe to the RSS feed. Alternatively, sign up for the conference newsletter and get a free eBook.

If you’ve got any questions about the conference, then post them here or e-mail me at neil.davidson@businessofsoftware.org

See you in Boston!

P.S. I’d really appreciate your help spreading the word about the conference. If you could blog about it and tell your friends and colleagues than that would be great.

Last week I was filling my wife’s car up with petrol (gas). It’s a big car, with a big tank. Here in the UK, petrol costs about £1.10 for a litre. That’s about $9 for a US gallon. $200 for a full tank. There’s not much to do as the fuel gauge scrolls relentlessly upwards. Not much but stare at the nozzle in my hand:

I think that’s a great advert. It’s an example of how interrupting people to tell them something can work. It fulfils most of Dan and Chip Heath’s criteria for stickiness:

• It’s simple – anybody can understand it
• It’s unexpected – I wasn’t expecting to be marketed to
• It’s concrete – no intangibles here, just some solid facts
• It’s credible – do I believe it? Yes.
• It’s emotional – it made me smile, and caught me at a moment of panic
• It doesn’t tell a story, which is the last criterion, though

It’s also got a lot in common with Google adwords: it’s relevant, targeted and interrupts its audience at a point when we’re interruptable.

But is it effective? Probably. At any one time, roughly 5%-10% of us are thinking about buying a new car. That means that about one million interested, persuadable, interruptable people would see this advert a week (in the UK), assuming a decent campaign roll-out, at a cost of about 5p a hit. I’d like to see a TV ad that can do that.

Another reason that I like this advert is that it goes against the conventional wisdom. Well, the new conventional wisdom anyway, which claims that we are so bombarded with information and marketing – billboards, television, t-shirts, pop-ups and so on – that there is no point in trying to interrupt us to sell us something. We just won’t notice, and if we do notice then we won’t care.

If the conventional wisdom about interruption is wrong here, I wonder if it is wrong elsewhere too; or at least that there are striking exceptions which skilled marketeers can discover. Perhaps the right print ad, or the right banner ad, or the right superbowl ad can still work.

There are some other interesting parallels between petrol pumps and software. I’ll blog about them next week. Subscribe to the RSS feed to keep up to date.

Over a million people downloaded Radiohead’s In Rainbows album in the two months it was on their web site. In 2000, when Stephen King put Riding the Bullet on his web site, the servers crashed under the load. Seth Godin estimates that over 2 million people downloaded Unleashing the Ideavirus when he released it as a free eBook. These examples demonstrate how the internet is killing the middle man. Disintermediation is the (ugly) name of the game. That’s how the conventional wisdom goes, anyway. I’m not so sure. I think there will always be middle men: better, smarter, different middle men. Sure, traditional travel agents, book stores and music companies will vanish, but this is the first stage in a cycle of creative destruction.

Here’s an example of how the slayer of the old middle man is the midwife of the new. Say you’re buying a car. A second hand car. You can buy from a dealer, or you can buy from an individual. In the past, if you bought from a dealer then you had the advantage of choice. There were a lot of cars in the same place. Similarly, selling to a dealer was easier than selling to an individual. eBay has changed this: you can bypass the middle man and buy direct from the seller, and with more choice than a dealer could ever provide.

There is, however, a need for a new type of middle man. The used car market is famously dogged by the lemon problem. The buyer has less information than the seller, and doesn’t know if the car he is buying is a lemon. Therefore, he will assume that it is indeed a lemon, and will only pay the price of a lemon. If the price of used cars is determined by the lemons in the market, then sellers have no incentive to sell good cars (since buyers will assume they are lemons, and only pay the lemon price). Hence the bad cars drive out the good ones. This, however, relies on the asymmetry of information available to the buyer and the seller. If the buyer knows what the seller knows then this problem vanishes. This is an ideal role for a middle man. Not an Arthur Daley who trades on quantity and dishonesty, but somebody who trades on information and whose goods are expertise and trust. Would you pay a middle man to seek out a used car, verify its quality and then guarantee it? I would.

Recruitment is another example. In their attempt to cut out the middle man, sites like Monster have evolved into heaving meat markets of employers and employees. Unfortunately, Sturgeon’s law – that 90% of everything is crap – applies. This cuts both ways: 90% of candidates are crap, and 90% of positions are crap. On Monster alone, that’s something like 100 million crap applicants, and 50 million crap jobs. But there are gems buried deep in the crap, and sifting the crap is a precious skill. In other words, good middle men – recruitment agents – are now more valuable than ever.

It’s not just physical goods where middle men are becoming more important, it’s virtual ones too. The Internet provides an easy way for writers to connect with readers, musicians with listeners and artists with viewers, bypassing the traditional middle men such as newspapers, books and magazines. But the infinitely increased available data clashes with our finite capacity to absorb it. We don’t have the time to filter the infinite down to the finite, so people – middle men – who can do this are increasingly prized. The quirky, human, personal editorial judgement that the BBC, Slashdot or Boing Boing apply to the morass of information out there is more valuable, to me at least, than the lowest-common-denominator mob ‘wisdom’ of digg, or the cold logic of Google’s algorithm.

I don’t think these examples are isolated. As the Internet removes the need for dumb middle men, it creates the need for smart middle men. The producers have removed links in the chains separating them from consumers, but consumers are slotting new links back in. As we get swamped by more and more information, and more and more choices, we’re going to need more and more help filtering the data and making our choices: which cars should we buy, which holidays we should go on, which people we should hire and which news stories we should read. It’s a paradox: the more we can remove middle men, the more we need them.

The middle man is dead. Long live the middle man!

My day job is at Red Gate. Although we focus on tools for SQL Server and .NET, I’m currently concentrating on making a fledgling Microsoft Exchange tool we’re working on a commercial success. Here’s a bit of background on what we’re doing.

I think most business software sucks. It’s buggy, poorly designed, unusable and expensive. It’s sold by complacent companies who do not care about their customers. If you’ve got an iMac at home, and use Google, Flickr and iPhoto recreationally, why should you put up with crap at work?

I think we’ve found a potential niche for a tool for Microsoft Exchange. I can’t tell you much about it, but if you’re an Exchange admin then your life is going to get better. This tool will you make you smile.

This creates a dilemma, and I’d like your advice:

How much should we tell people about what we’re doing? On the one hand, the more we talk about it, the more likely it is to succeed. On the other hand, we’re months away from even a beta and we don’t want to tip off the competition.

So what would you do? Post here.

Also, we’re looking for people to join the beta program and participate in user research. If you’re an Exchange admin and are interested then drop me a line. If you’ve never taken part in a usability trial then it’s an experience worth having. Plus we pay $100 (amazon vouchers) for an hour of your time. My e-mail address is neil.davidson@red-gate.com.

A couple of years ago Antonio, a good friend of mine, decided to open a bar in Pantelleria, a small island 70 miles off the coast of Sicily. Its turquoise lakes and volcanic landscapes are persuasive enough for Giorgio Armani to split his time between Milan and the island. Madonna and Sting are regular visitors too. But if you go to Pantelleria today you won’t find Antonio’s bar anywhere, and it’s not for the reasons you might expect.

Antonio had the foresight to produce a business plan. He used the structure of the plan to feel his way around the opportunity. Who were his customers going to be? He spent time on the island chatting to the locals and to the tourists. What was the competition like? Dedicated, late night partying in the handful of bars already on the island was the only way to answer that question. How much would it cost? He found an old villa, produced plans to convert it to a bar and worked out what the running costs would be. Once he’d been through the process he could see that his head clearly contradicted his heart. There was no way he could make it work.

I count this a success. The process of creating the plan helped Antonio make the right decision. Planning saved him months, if not years, of disappointment and misery.

It’s not the powerpoint slides or the twenty page document that counts. The colourful hockey stick graphs, quadrants and pie charts do not matter. It’s the act of production that is critical. A business plan provides a framework for thought. You’re standing on the edge of a chasm, in the dark, ready to leap. You need to know that a better place lies across the gap, and that you’ve remembered to tie your shoelaces.

Here are some more reasons why it’s the process that counts:

• Helmuthe von Moltk, the chief of staff for the Prussian army said no battle plan survives contact with the enemy. You need to think about different outcomes, and understand the lay of the land.
• If you’re setting up in business with somebody else – and I recommend that you do – then a plan has another advantage too. It’s a way of reaching a shared understanding about what you’re trying to do and why you’re trying to do it. It will force you to check that you share common assumptions and goals, and that they hold true.
• Writing can be a good way to think. Putting your thoughts down on paper forces you to crystallize them.

Once you’ve written your plan, you’ll put it in a drawer and leave it there for twelve months. The next time you read it, it will be to have a good laugh about how wrong you were.

So write your plan – that’s important – and then burn it.

Bill Buxton is an astounding character. I’ve had the good fortune to chat with him a couple of times, and I always come away with my head fizzing with his ideas. Most recently, I persuaded him to join a few of us from Red Gate at the Pickerel in Cambridge for a quick pint. I’ll let some of his ideas ferment and I’ll write some more about them in the coming weeks, but here’s a quick taster of some of what I learnt.

Electronic paper is going to be huge. Bill had brought his iRex iLiad device, and the hardware is astonishing (the software less so). It’s about the size and weight of a thin hardbook book, and its resolution is way better than I’d expected. Its display is like a sheet of laser-printed paper, reflecting and absorbs light like ink on paper does, rather than emitting it like conventional displays do. Although there are niggles with the device, it’s utterly convincing that we’re all going to be carrying these things in the future. Of course, exactly which device we all end up carrying depends on factors other than the technology, just like Apple’s success with the iPod was due to software, the iTunes store, DRM, distribution agreements with record labels and so on. Amazon are on the right track with the Kindle though. As soon as they come out in the UK, I’m buying one.

Here’s Bill with his iLiad:

Here’s a close up:

Note how Bill is annotating the document he’s working on. The paper that Bill is reading is Engelbart’s 1968 Study for the Development of Human Intellect Augmentation Techniques. It’s worth a read.

Bill also talked about how people are underestimating Microsoft’s ability to design, and to innovate. Many (including me) have sniggered at the original Zune, but the latest version is actually quite good. Not as good as the iPod, maybe, but that’s not the point. Bill’s point is that you need to separate out the art of design from the craft, and that you must first master the craft before you can attempt the art. Microsoft are now mastering the craft, and they’ll soon be practising the art. Compare Bill’s original brown Zune with the sleeker one on the right and you can see how Microsoft’s design skills have evolved over just 12 months:

Bill has some other interesting ideas about innovation and invention. Just as Chris Anderson of Wired has his Long Tail, Bill Buxton has his Long Nose. The tip of the technology nose is 20 – 30 years ahead of the face. William Gibson said the same thing differently with ‘The future is here; it’s just unevenly distributed’. Take the mouse you’re holding. It’s been ubiquitous for a decade, ever since the launch of Windows 95. If you’re an original Mac user you’ll think the mouse is 20 years old. If you’re a real old-timer then you’ll know it was used on the Xerox Star and PERQ workstations in 1982. But it was actually invented by Doug Engelbart and Bill English in 1965. That’s a 30 year gap from invention to ubiquity, and it was the popularisers rather than the inventors who got the money and the fame. Similarly, if you’ve been wowed by the iPhone’s multitouch interface and the way you can stretch and squeeze photographs with your fingers then you ought to know that Bill Buxton was building multitouch interfaces in 1985. Don’t expect multitouch to hit ubiquity until 2015.

Bill also has much to say about sketching and design. For example, it’s way better to represent a handful of sketches to users rather than get feedback about a single, detailed, design. With a sketch, it’s obvious that you’ve not invested much time, so users will feel less awkward about giving feedback. Also, if it’s framed as a comparison between two designs, users are more likely to evaluate options and give opinions than if they’re focussed on a single design (‘I prefer the round widget to the square widget’ is easier for people to say than ‘The square widget sucks’). Bill expands on this in his book Sketching User Experiences: Getting the Design Right and the Right Design. If you’re at all interested in product design or development you should get hold of a copy.

Finally, here’s Bill with (from left to right) me, Stephen, Marine, Dom and Tom:

At the end of 2006, Claire over at Simple-Talk put together a book of recipes "by geeks for geeks". It’s only tenuously linked to the Business of Software but it’s a cool idea, and an example of how you can give away eBooks to drive traffic to your web site.

Besides, I’ve always wanted to have a blog post entitled "It’s a cook book!" and it’s the only way I could think of doing it. Award yourself a gold star if you get the reference without looking it
up in the characteristically overly explained wikipedia entry.

Here’s the link:

http://www.simple-talk.com/opinion/opinion-pieces/the-simple-talk-cookbook/ 

And what was it?

Post here …

I recently read Founders at Work: Stories of Startups’ Early Days by Jessica Livingston. Jessica interviewed a whole bunch of really interesting people (Steve Wozniak, Ray Ozzie, Mitch Kapor and 29 other entrepreneurs) and has written up the interviews in this collection. It’s fascinating to read the stories of other people’s experiences as they make it big. The book has 53 reviews on amazon.com with an average rating of close to five stars.

I tried to give away an eChapter of Jessica’s book away on my conference web site, but for various reasons that fell through.

However, Jessica has published interviews with Steve Wozniak and Joel Spolsky online. You can go to the Founders at Work web site to read them.

Jessica is also one of the founders of Y-Combinator, which is early stage venture capitalism done the way it should be. It’s one of those things I wish I’d thought of.

Jessica has kindly agreed to speak at Business of Software 2008. Other speakers include Seth Godin, Joel Spolsky, Eric Sink and Jason Fried. Registration isn’t open yet, but subscribe to the RSS feed if you’d like to be kept informed.