I’m thinking about organizing Business of Software 2008. It’s still just a twinkle in my eye. I’d like to know who you’d like to hear speak / who you’ve heard in the past who was excellent. The only criteria are:

• Relevant to the business of software, even tenuously
• Interesting

They don’t have to be speakers who we could ever net (see my list below …), but they don’t have to be well known either.

My personal list so far includes:

• Seth Godin
• Edward Tufte
• Steve Ballmer
• Larry Ellision
• Steve Jobs
• Shai Agassi
• Vint Cerf
• Dan Pink
• Chip Heath
• Donald Norman
• Alan Cooper
• Jakob Nielsen
• Robert X Cringely
• Richard Stallman

Comments on my speakers? Who would you like to hear? Post here.

P.S. Subscribe to this feed to keep informed about the conference.

A quick reminder that there’s a Business of Software facebook group. It’s now an open group so anybody can join. It’s one of the mechanisms I’ll be using to tell people about BoS 2008 so if e-mail and RSS feeds are inconvenient or just too old fashioned for you then please join the group.

Matt Mason’s book on "The Pirate’s Dilemma" is now out. I was lucky enough to get hold of a preview copy of this a few months ago, and to talk (very briefly) to Matt after his presentation at Business of Software 2007. At the time, I thought Matt was onto something very big. I now know he is.

His is one of those big ideas that just clicks. Matt’s premise is that pirates perform society a valuable service. They show where the marketplace is broken. Pirate radio DJs were the bellwethers that created the path for commercial radio in the UK. File sharing and online music pirates opened up the way for iTunes. Matt puts it better himself in this blog post about other people’s property.

You should buy Matt’s book.

Eric Sink, founder of SourceGear, was one of the speakers at Business of Software 2007. Here he talks about why he founded SourceGear, marketing for geeks and other topics. His talk went down extremely well out with conference attendees, with 85% ranking his talk 4 or 5 stars.

An announcement before the holidays captured my attention: Red Hat named Jim Whitehurst, formerly COO of Delta Airlines, as its new CEO.  Maybe too hastily, I had a flashback to John Sculley’s disastrous tenure at Apple.

Whitehurst did some great things in pulling Delta out of bankruptcy and infusing employees with much-needed company spirit.  He is more than casually knowledgeable about open source and has definitely turned around opinions of people who’ve spoken to him.

But even if he is a self-proclaimed geek, does he have the background to succeed at Red Hat?  Are the company’s challenges in the near future operational or market- and technology-oriented? Do software companies need leaders who have a software background?

I’d like to hear opinions from the source — people in the business of software.

My day job is as co-founder and joint CEO of Red Gate Software. I’ve just been set up with a blog on the Red Gate blogs site too. In the future, I’ll post more Red Gate related content to the Red Gate site and more general stuff here. I’ll link between the two.

My first Red Gate blog post this year is a product-centric round-up of what we got up to last year, and what you can expect next.

If you’re interested, many other Red Gate people have blogs too.

Our assumptions bind and blind us. Often we believe them with no evidence, simply because everybody else does. They have no reason, no logic: they just are. This is as true in the business of software as it is in life.

They can be so ingrained that we’re not even aware of them. In the West, killing cows is acceptable but killing whales or dogs is not. Artifical additives are bad for you, ‘natural’ ones are not. Our intelligence is innate, measurable and fixed, and determines how successful we will be. Having children makes you happy. Terrorists are crazed, mad, brainwashed killers.

These assumptions are all commonplace. They also all have little or no evidence behind them. The cow/whale distinction is clearly arbitrary. Natural additives are often chemically identical to artificial ones, simply produced using yesterday’s technologies. There is no reason why ‘natural’ is better than artificial, and the boundary between natural and artificial is blurred. Syphilis is natural, penicillin is manufactured (and a good example of the blurring between natural and artificial). Assume that your intelligence is fixed and determines your success then you are more likely to fail than if you don’t. Having children makes you less happy, until they leave home at least. Most terrorists are normal, often middle class, well educated people who believe in a cause that they feel is worth dying for.

Challenge assumptions and you can change the world. Challenge the assumption that the banking system works and it fails. Earlier this year, people in the UK lost faith in a single bank and withdrew their cash. Only a £40 billion ($80 billion) state bail out saved the system.

We make assumptions in software and in business too. We often aren’t aware of these assumptions until we challenge them, and when we do challenge them things get interesting. Here are some assumptions, past and present, which are worth challenging:

There is no such thing as the business of software. Software should be free. In 1976, Bill Gates challenged this assumption. He’s done quite well out of it.

There’s no room for a new search engine. In 1999, Altavista had search sewn up. It was the unassailable king of search. Google challenged that assumption. Now the assumption is, yet again, that there is no room for a new search engine. Google has won the search engine wars. What if that assumption is wrong?

We should work 9 to 5, and be measured by our input not our output. Historically, when we were all basket weavers or pin makers, interchangeable cogs, fixed working hours made sense. People are now challenging this. In Brazil, Ricardo Semler is experimenting in industrial democracy. Workers set their own salaries and hire and fire their managers. When somebody tries to fill in a timesheet, Semler sends them away, not knowing what to do with the information. What if we all followed this example? What if we worked when and where we wanted, and if we were judged on what we produce and not the hours we keep? What if we removed all mention of hours to be worked from our contracts?

Only men aged 15-30 are interested in games consoles, and all they care about is graphics and speed. Nintendo challenged these assumptions. By cutting down on graphics and processor power they produced the only high level console that sells for more than it costs to make. By reducing the cost and widening the target audience, the Nintendo Wii is currently outselling the Playstation 3 and the XBox 360. The Nintendo DS, which is also aimed outside of the usual demographic (25% of users of its best selling Brain Training application are over 45), is doing well too.

Screen displays are expensive. Bill Buxton has pointed out that in 20 years time screen space will essentially be free. 25 years ago, when 300 baud modems were the norm, few people predicted that bandwidth would become essentially free and infinite. The same thing will happen with displays. The 32" screen I bought for over $2000 a couple of years ago now costs $800. Companies are already building factories that will ultimately produce flexible, plastic-based displays for one hundredth of the cost of their LCD counterparts. How will free, ubiquitous displays of arbitrary size change the business of software? It’s a question worth asking.

My product is so good it will sell itself. What if you’re wrong … ? And you are.

Half the money you spend on advertising is wasted, you just don’t know which half. It’s a neat aphorism, but that doesn’t make it true. Why not challenge that lazy assumption and try to disprove it?

China is an unstoppable economic force, and that’s bad. That’s what most people are saying, but is it true? For a start, China might seem unstoppable economically, but it’s facing enormous political and environmental problems. And if it really is an unstoppable economic force, what do an extra 1.4 billion potential customers mean for you? Is that really bad news?

Software is a people-intensive craft. At the moment it is, but does it have to be? What if we’re currently in the pre-industrial revolutionary stage of software development? Or the era – only 140 years ago – before the standard screw, when a bolt from one city wouldn’t fit a nut from another? Can software development become industrialised? And will it, and should it? And how will this change your business? Already, some are pushing software factories as the next big thing.

The Internet is here to stay. What if it isn’t, at least in a recognisable form? The world wide web has only been mainstream for 12 years. Much has changed in those 12 years, and much will change in the next 15. Will we still be using html, ajax and flash? Will a world of nearly infinitely fast connectivity, ubiquitous and free screen display, and computers 30 times faster than today’s still rely on http and html? Again, it’s an assumption worth challenging.

As I am, you are bound by thousands of assumptions about the way the world works. These assumptions range from the macro to the micro: they might be specific to your culture, to your country, to your company or even to yourself. Every once in a while it’s worth practising what Alan Bennett calls ‘subjunctive history’. Pick something you absolutely know to be true, something so obvious that you’re not normally even aware of it, then switch on Professor Farnsworth’s machine and ask "What If …".

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Matt’s thesis is that piracy can be a good thing. Pirates are
bellwethers, flagging the existence of emerging markets. Rather
than fighting them, we should consider competing, or even co-operating,
with them.

Here’s Matt Mason talking about the Pirate’s Dilemma at last month’s conference:

It was extremely well received at the conference and it’s well worth a listen. You can find out more at Matt’s excellent blog.

At last month’s conference, Alberto Savoia gave a great talk about crappy code, what it is and how to avoid it. Alberto is a wonderful speaker with a lot to say (90% of the conference attendees gave his talk 4 or 5 stars).

Here’s the video:

You can read an interview with Alberto here:

http://blog.businessofsoftware.org/2007/09/alberto-savoia-.html

And visit the crap4j home page:

http://www.crap4j.org

Enjoyed Alberto’s talk? Then register your interest in Business of Software 2008.

In 1880, at the age of 27, our protagonist decides to become an artist. He has already tried, and abandoned, the careers of art dealer, lay minister, school teacher and book seller.

This is one of his first drawings, of a carpenter:

5 years later, our protagonist is on the way to mastering his craft. He paints these potato eaters:

4 years, and over 2000 drawings later, he paints this:

There are some interesting parallels with software development here. Here are a couple. One fairly obvious, one less so:

• van Gogh had to master his craft before he became an artist. He spent years perfecting his techniques and copying other painters before painting any significant works. Software development is a creative process as well. You too will need to copy, try and fail, and eventually master the fundamental techniques before you can produce your masterpiece.
• Put the 27 year old van Gogh in a sketch-off with me and there’s no way that you could tell from our drawings that he would end up one of the most influential and famous artists of the past 200 years and that I was destined for eternal mediocrity. The same thing holds for software developers. If you’re faced with two untrained, wannabe software developers then you have no way of distinguishing van Gogh from the muppet.

What do you think? Post here …

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Bear with me here. This will turn out to be relevant to the business of software. I’ll explain later on in the week.

Have a look at this drawing of a carpenter:

Pretty average, bordering on poor, right? The hands are all wrong, the skull’s been chopped off, it doesn’t look quite right.

So who do you reckon drew it? Post here …

In the late 1980s I bought a game for my Acorn Archimedes. It came on a floppy disk and was shipped with a piece of laminated card printed with a 10×10 grid of coloured cells. To run the game I had to insert the floppy disk and type in the colour of the cell at a given, random position. Floppy disks, bits of coloured card, dongles daisy-chained four deep into the printer ports, funny plastic lenses: this was the state of copy protection back in the 1980s. Did it stop people cracking games? No. Did it piss users off? Yes. Unfortunately, although the mechanisms are different now, the result is often still the same.

Much copy protection is based on a fundamentally flawed assumption. Obviously, the point of copy protection is to stop people copying your software. Obvious, but wrong. The point of copy protection is to maximise the amount of money that you, the vendor, make from your software.

These two goals are not aligned, as a simple thought experiment shows. Imagine you’ve written an application that can decode any encrypted message. You’ve spent years perfecting the algorithm. You’re protected by patents and you’ve obfuscated your code but you’re worried that your customers will copy your application and not pay you. You devise a fool-proof, dongle-based copy-protection system. The Pentagon hear about your software and want to buy it. They’ll pay you $250,000 a copy and want 1,000 copies. You’re happy: your copy protection will stop the Pentagon from stealing from you. You dream of retiring to the Caribbean, a multi-millionaire. Unfortunately, the Pentagon have an anti-dongle policy. You refuse to budge. What if they bought 1,000 licences but installed the software on 2,000 machines? You’d lose millions. They don’t buy. You end up with nothing and end up burnt out and penniless.

Here’s another story. Say you’re selling software at $500 a seat. Alice downloads a free trial of your software. She tries it, it’s not for her. She doesn’t buy. You’ve made no money.

Bob also downloads your software. He tries your software, and likes it. Your only copy protection is a nag screen encouraging people to buy. Hitting the ‘remind me later’ button is easier than opening his wallet, so Bob doesn’t buy either. You’ve made no money.

Charles downloads your software. He tries it, and likes it. His trial expires. He could try to get round the copy protection system, or search for a warez site, but he’s an honest man so he gets out his credit card and buys. You’ve made $500.

David downloads your software. He tries it, and likes it. His trial expires. David is a student. He thinks that charging for software is evil. No way will he pay $500 for it. He spends a couple of hours cracking your software and gets it for free. You’ve made no money.

Out of the four people who tried out your software, there are only two interesting cases. Alice and David are never going to buy: Alice, because she doesn’t want the software, and David because he wants it but will never pay for it. You want to make Bob behave like Charles. All you need to do is to make it easier to buy than not to buy. There is no point in worrying about the Davids of this world. And David might even grow up one day, get a job, and actually buy a copy.

You might not even need copy protection. If Alice is your typical user then you need to fix your software. If you’re just starting out then your biggest problem isn’t people not paying for your software. It’s that they don’t want to buy it. Either your software doesn’t fit people’s needs or you’re not able to tell enough people about it. Don’t spend time and money on copy protection: spend it on product development and marketing instead.

In real life, users are on a continuum. At one end lie those who are honest to a fault: people who’ve actually paid for a WinZip licence. On the other are those who will crack software they don’t even want, just to prove a point. Most of us lie somewhere in the middle. The point of your copy protection system should be to encourage us, the honest but imperfect and lazy users, to buy without pissing us off.

Do you use copy protection? How draconian is it? Post here …

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At last week’s conference, Dan Nunan told a story of how some bozo had claimed that if somebody built a better search engine then people would switch from Google in an instant. Some Silicon Valley start-up could do to Google what Google did to Alta Vista. Since that bozo was me, I think I’d better justify myself.

Dan’s point is that Google is much more than an algorithm. It’s a brand. We use Google for the same reason we eat at McDonalds or Starbucks: it delivers a guaranteed, consistent experience whenever we use it, wherever we use it. And it’s not just about the physical experience: we identify with brands and their values. The brands we eat, drink and wear are symbols we use to communicate to others in our tribe.

Starbucks vs Peets, Coca Cola vs Pepsi, Dasani vs Evian. These are battles fought over brands, not substance. Brew a better coffee, create a better fizzy drink or produce better water and you will not dent these brands’ dominance. And it’s not just about marketing: even Virgin Cola, backed by Richard Branson’s flair for marketing and publicity, failed to hurt Coke or Pepsi.

With commodities, brand beats product. In Seattle, I came across two neighbouring coffee shops. One was Starbucks, one was a local one-off cafe. The local one sold better coffee, had better service and was empty. The Starbucks sold worse coffee, had worse service and was full.

Dan’s thesis is that Google’s dominance is based on more than technology. Even if search becomes commoditized (is Google really technically much better than Ask or Live?), Google’s strength is its brand. We’re familiar with it, we trust it and we won’t switch, the same way we won’t switch from Coke to Virgin Cola or from Windows to BeOS.

I’m not sure I agree though. Our interactions with search engines are too fleeting to build a significant bond we’re reluctant to break. My choice of clothes, music or fizzy drink might say something about me, but does my choice of search engine? The ease of switching is high, and the costs and risks low. If I change the coffee I drink, the clothes that I wear or the music I listen to then I risk drinking bad coffee, looking stupid in ill-fitting clothes or making a fool of myself in front of my peers. I use Google maybe 30 times a day. That’s 200 times a week I have a chance to surreptitiously flirt with Live over Google. It’s not that embarrassing and nobody will ever know if it doesn’t work.

So I have the means to switch (it’s free), and I have the opportunity (200 times a week). All I need is the motive. If somebody built a better search engine maybe the world wouldn’t beat a path to their door, but I for one would try it. And if it were better, I’d switch.

Would you?

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The conference is now over. It’s been hard work, but worth it. The talks were consistently excellent, and I got to meet a whole bunch of interesting people (speakers and attendees). People came from all over for the conference. From within the US we had people from 30 states, from Alaska to Georgia. Internationally, people flew in from 12 different countries including Australia, Brasil, The Czech Republic, Denmark and England.

I’m going to post up links to the speakers’ blogs, books and, where possible, slide decks and videos. Initially this is on the Facebook Business of Software group (http://www.facebook.com/group.php?gid=7006257142) but once I’ve got time I’ll update the main web site with highlights.

Thanks again to everybody who made the effort to attend the conference, and I hope to see you all next year.

Bob Cramblitt reports on Jeff Pfeffer’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Ignorance might be bliss, but it is anathema to a great company.

Jeffrey Pfeffer of the Stanford Graduate School of Business capped the two-day Business of Software 2007 conference by urging conference participants to start the future tomorrow, and to decide what they will do differently.

Pfeffer’s presentation, titled "Why Software Companies Don’t Do What They Know — And What Leaders Can Do About It" was peppered with anecdotes from his experience with diverse organizations such as SAS Institute and Men’s Wearhouse.

Overcoming fear, the corporate star system, and the millstones of the past were central themes.  Pfeffer discussed the principal obstacles to closing the gap between what companies know and what they do, including:

• Doing what everyone else is doing.
• Measuring too many things and the wrong things. Measure the two or three most important things for your business, and not what is easiest.
• Absence of an action orientation because of fear of making a mistake.
• Fear of job loss, telling the truth, conflict, or not being liked.
• Ego that gets in the way of admitting what we don’t know and that we’ve made mistakes.
• The victim mentality — seeing things as happening to us instead of feeling efficacious.
• Commitment to the past.
• Choosing "better before worse" instead of "worse before better."
• Reluctance to doing things differently.

For more on Pfeffer, please see the interview on this blog:
http://blog.businessofsoftware.org/2007/09/think—-and-th.html

Bob Cramblitt reports on Hugh MacLeod’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

A Savile Row tailor, a South African winery and Microsoft.  Strange bedfellows, perhaps, but not if it’s Hugh MacLeod’s bed.  MacLeod (www.gapingvoid.com) has helped all three define themselves in new and distinct ways that have nothing to do with product, and everything to do with people and their embracing of social objects.

The tailor, Thomas Mahon, has established a blog (http://www.englishcut.com/) that personalizes his craft, leading to recognition around the world, and demand that far exceeds supply.  The South African winery, Stormhoek (http://www.stormhoek.com/blog/), has tripled its sales over the last few years with its "smarter wine" campaign.  MacLeod’s cartoon for Microsoft (see below) has become an underground hit within the company, leading to a new mantra: "Change the World or Go Home."

As for software, MacLeod says, "If geeks aren’t geeking out over your product, you’re in trouble.  Make your product a social object and you will succeed."

MacLeod’s iconoclastic insights might not seem immediately relevant to software, but look a little closer, and you’ll see the connection.  Check out his tips on how to be creative: http://www.gapingvoid.com/Moveable_Type/archives/000932.html

Bob Cramblitt reports on Jennifer Aaker’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

What’s your favorite product at Trader Joe’s?  If you are a Trader Joe’s customer, you can no doubt name more than a few.  What’s your favorite product at Safeway? You probably have trouble naming one.

What would your reaction be to torn packaging at Trader Joe’s vs. the same thing at Safeway?

The companies are in the same industry, and offer the same basic products.  But, your reactions to and perceptions of the two are quite different, because you have different relationships and social contracts with the two stores.

Relationships — formed immediately and changing over time — define brands and your perception of the companies behind them, according to Jennifer Aaker (http://gsbapps.stanford.edu/facultybios/biomain.asp?id=04071874) of the Haas School of Business and Stanford Graduate School of Business.  Good companies know this and make decisions based on the impact of relationships.

In her presentation at the Business of Software conference, Aaker defined four basic points:

(1) Rethink your concept of brand. Reputations color all interactions.
(2) Reactions to brands depend on implicit contracts — the do’s and don’ts of the relationship.
(3) Rethink transgressions: Letdowns aren’t always bad; they can serve as an opportunity to re-engage.
(4) Engagement is multi-dimensional — essentially about memories of the time spent.

Many companies tend to see relationships with customers as an optional thing, without a solid impact on the bottom line.  Studies and business results show otherwise.  Ignore the relationship with your customers at your own peril.

Bob Cramblitt reports on Rick Chapman’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

It’s coming, and many software companies will either ride it or drown in it.  It’s the SaaS tsunami, and its success is inevitable, according to Rick Chapman’s presentation today at Business of Software 2007.

The success of SaaS is evidenced by a 21% a year growth rate. It will be a $21B market by 2009, according to Gartner.  Ironically, Microsoft has supplied two key drivers for SaaS success: The failure of Microsoft Vista, and Microsoft WGA copyright protection, which, in Chapman’s words, makes Microsoft look like an "old fart company" interested only in circling the wagons around its fiefdom.

Companies buy Saas for the following reasons:
new capabilities — 59%
operating, not capital expense — 16%
other — 14%
replace client/server — 11%

For those interested in following the SaaS tsunami and other software issues, subscribe to Rick Chapman’s Softletter: http://www.softletter.com/

Bob Cramblitt reports on Matt Mason’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

"Greed is good," said the Gordon Gekko character in the movie Wall Street.  Although it goes against most established thought about software, Matt Mason, author of the upcoming book, The Pirate’s Dilemma (www.thepiratesdilemma.com), says that piracy can be good.

Mason, a former pirate radio DJ, makes the compelling argument that piracy drives innovation by exposing flaws in the current marketplace — the music business is a prime example.  Historically, piracy has been imbedded into the very fabric of business, especially in America, a nation practically founded on piracy.

Having your work copied can be a powerful force in the market — think about mods in the gaming industry or designer copying in fashion. And, pirating doesn’t necessarily hurt the marketplace as much as one might think: Despite all the pirating of movies, Hollywood had its biggest summer ever this year.

The dilemma comes from the thin line between when piracy does good for an industry and when it does harm.  I have a feeling that Mason’s book, with a cover blurb by Seth Godin, will be a "must read" for business book readers.   

Bob Cramblitt reports on Dan Nunan’s talk from Business of Software 2007. To sign up for BoS 2008, visit www.businessofsoftware.org

Writers have long known that it is easier to churn out 1,000 words on a subject than 100.  The same goes for software according to Dan Nunan, chief marketing officer for Red Gate (www.red-gate.com).  Nunan kicked off the second day of the Business of Software 2007 conference, attended by more than 150 people from 30 states and 12 different countries.

Although simplicity is more difficult to achieve, it is worth it, according to Nunan.  Unnecessary complexity — such as the four different versions of Microsoft Vista — tends to inhibit decision-making, effectively paralyzing the customer.

Nunan presented four steps toward marketing simplicity:

• Be authentic — Be transparent, trust your employees and use common sense (Microsoft’s policy on blogging).
• Make do with limited resources.  Throwing money at marketing doesn’t make marketing more effective.
• Respect your customers  — and don’t worry about what your competitors are having for breakfast.
• Worry about complexity — Your customers don’t need 100 reasons to use your software or be presented with 300 new features.  Focus on one or two things that resonate with customers.

Nunan has learned 10 things about software marketing:

1. If your software is completely lousy, go home.
2. Just because a piece of software doesn’t have any bugs, doesn’t mean it is high quality.  The customer is the arbiter of quality.
3. Software marketing people are the organizational glue between technical people and sales.
4. Sales works (but you need something to sell).
5. Print advertising doesn’t work (but not for the reasons you think). It doesn’t work because of how much time is spent doing it; time that could be better spent doing something more effective.
6. PR isn’t press releases. Work with influencers; those who write books, blogs.  Communicate with the community and get feedback.
7. Understand Google. You need someone in the organization who understands Google and everything they do.
8. The future of graphical display ads is dim. Use of ad blockers is increasing; it’s difficult to display graphics in e-mail.
9. Software is a great place for the future of marketing.
10. Branding still counts, but you don’t need $10M to build an awesome brand.