Monday, September 12, 2011

Apple Post Steve - Complete Disaster!

Did the headline get your attention? It's true. In the post-Steve Jobs era, over the course of 10 years, Apple falls apart completely. Crappy products, weak leadership, eroding margins, loss of marketshare, loss of technology leadership, terrible financials. You don't believe me, do you?

Well, it's true. That's how it went down went Steve left Apple 1.0 in 1985.  I was at Apple from 1988 to 1997 and witnessed the decline first-hand. Perhaps you thought I was referring to Apple's fate with Steve leaving in 2011? No, no, no. That's a story that hasn't been told yet and I think that will turn out very differently.

Despite all the press around Steve Job's recent departure from Apple, no one has reflected back on Steve's previous decampment from the six colored fruit company (remember when the logo had six colors?).  Thus this post.

Quick plot summary on Steve exodus 1.0: Steve and Steve achieve marketing and engineering success with launch of Apple II in 1977, aided in part by a program called VisiCalc. Steve Jobs, Apple CEO, is America's technology wunderkind. Steve Jobs visits Xerox Parc in 1979 and decides the future of personal computing is the GUI. Apple fails with the Apple III. While the company works on two GUI personal computer projects, the Lisa and Steve's baby, the Macintosh. The Lisa fails commercially in 1983 and the Mac launches with huge fanfair in 1984, though not stunning financial success. In 1983, Steve hires PepsiCo. executive John Sculley to come in and be the Apple "grown up" CEO. In 1985, Jobs and Sculley begin scuffling for power. Steve is not getting along nicely with many in the company and Sculley moves to oust Steve. The board sides with Sculley. Jobs is out.

Not this Sculley

The correct Sculley and Jobs 1.0

Fast forward 3 years to 1988. I end up joining Apple and running the Apple 401(k) program, which like many things at Apple, was royally screwed up due to years of hyper-growth and a lack of systems, attention and a lack of talent in the non-engineering ranks. Over the next 9 years, through roles in support, higher eduction, power macintosh, consumer and organizations, I had a front row seat on Apple's decline. Didn't see it that clearly at the time. The Mac OS was the best computer operating system by a mile. Margins were fat in those early years. Profit sharing and bonuses. Stock appreciation. Friday beer bashes. Flashy parties and amazing off-sites (remind me to tell you about the 3 day off-site to Santa Fe sometime).

But the lead was in the water (that's a clever allusion to decline of Rome by the way). Without Steve Job's fanatical approach to product definition and his uncanny knack for designing the product that the customer didn't even know they needed yet....Apple's product line slowly sank into mediocrity. While there was early sucess with the Mac II in late 88 and the Powerbook line in 91, the Quadra, Centris and other crappy Macs followed in the 90s. And the Mac OS aged. We won't even talk about the Newton. While we at Apple kept laughing at MS-DOS, corporate America kept buying it. And then Windows 95 came out and computer users could have their GUI and a reasonable product price too. I'll skip the John Sculley to Michael Spindler to Gil Amelio management shift from 88 to 97. Suffice to say it was a long downhill slide. Still a great company, still cool products, still a great place to "grow up" - I loved Apple then and love it now. But the company was living off the fumes of the magic and culture that Steve Jobs had brought.

So this tale has several lessons. Woe unto the Silicon Valley company at the pinnacle of success which becomes more infatuated with its own past success than on product innovation. These are the companies that get their lunch eaten by market shifts (hello SGI, Yahoo and Apple 1.0). Also, most importantly, be careful when you cast out the innovative (and maybe difficult) founder - sometimes you cast out the magic.

My last job at Apple in late 96 was manager of properties. So my very last professional assignment was covering the December 1996 press conference announcing Apple's acquisition of Next. It was a weeknight right before Christmas in the Apple auditorium. There were about 100 screaming Next employees there and about 20 Apple employees. Steve was more impressive on stage that night than Gil. Foreshadowing. The rest is history. I went off to start-up land and Steve revived Apple. Absolutely magnificent job. That first iMac (remember than fat squat blue plastic thing?) was the beginning of a series of incredible market disruptions. But you know all about that.

Apple post-Steve 2.0 will be very different. Steve has had time to prepare the company and build an impressive management team. He's still around as Chairman the help with the important stuff. The company's product line and talent pool are both deep.

I do regret never having worked in an Apple run by Steve Jobs. But I do treasure my years at Apple, the company he founded and the culture he molded. I thank him for saving the company that all of us Apple alum still love deeply, for creating insanely great products and for proving that a devotion to great software and hardware design do win out in the end.

In closing, I wish the best of health to you Steve and great thanks for the impact you've had on my life and so many others.

Friday, April 22, 2011

Email - not dead yet

I've been pretty heavily involved in email industry since 2003, as CEO of Habeas from 2003 to 2008 and the last few years as an advisor, consultant and entrepreneur in messaging related companies. Email has always sort of felt like the Rodney Dangerfield of the tech world - "Hey, I don't get no respect." It's not because email isn't important - we all know how much we rely on it. It's just that it's had its problems with spam and phishing and inbox overload, etc. But email is not dead yet.

In fact email has been pronounced dead on several occastions. IM killed email. No, wait....SMS will take email down. No, Facebook messaging will definitely do it. In the parlor, with Col. Mustard. Predictions and declarations of email's death are manifold.

Did he kill email?

But wait, email is hot. In technology and investment circles (aka "the valley"), email businesses are exciting again. This wasn't the case until the last few years when some innovative business models were applied to SMTP and revitalized email. Email was like the girl next door, reliable friend, always there....but not really who you want to take to the prom. That would be anything mobile or social. So what's making the girl next door look pretty good today?

  1. Maturation and consolidation of email service provider market - A lot of Web 1.0 investment dollars went into creating email service providers - the companies that send the majority of  business to consumer email. But there weren't returns on those investment until recently. Constant Contact, used by over 400,000 (!) small businesses went public in 2007 and has a $900M market cap. iContact, also serving small businesses,  raised $40M last year. Responsys (MKTG) , who focuses on mid to larger size companies, went public yesterday (congrats Dan, Anand, Raghu and team!) with great first day market response (sys).  ExactTarget has filed to go public and has been raising (and spending) boatloads of private money. Silverpop and competitors are also growing rapidy and reaching critical mass level required for a public offering. Things are looking good for the leading email service providers.
  2. Innovation in consumer email space.  Great examples of innovative email or email powered models abound. Groupon would be the top example. Sure it's an innovative local commerce model, but it runs on email. Consumers still like to get relevant content in their inbox, especially when it's 50% off a foot massage. Another example is Daily Candy, a daily newsletter and website for women's fashion, or ThrillList, an urban men's daily deals newletter. Vertical content oriented websites with newsletters as a key component for monetization (deals, ads) and for driving traffic back to the site. Old model, but niche focused and nicely executed. On the email infrastructure side, sending the emails themselves has never been easier or more cost-effective - SendGrid and Amazon's Simple Email Service (SES) are both cloud based systems that outsource all the back-end services necessary for an app developer or business to send their own email. Even email service providers are taking a look at these as options to buying their own servers and renting co-lo facilities. (note: Amazon's AWS debacle of yesterday may take a little bit of the shine off of Amazon SES). There's lots of cool innovative stuff happening in email.
  3. Mobile and social.  Yup, the hot new areas of interactive marketing are strengthening email IMHO. A lot of people focus on facebook or mobile apps taking up more of a consumer's online activity at the expense of old school activities like email, search or browsing, and therefore see these new areas as threats to email. I see it differently. Mobile and social are just new mechanisms (mediums?) for brands to interact with consumers. Ultimately the online marketer's goal, whether  using mobile or social or search or SEO channels to reach consumers, is to get the consumer to a landing page on the website,  to collect consumer information (i.e., email address) and to add that consumer to their CRM database as a prospect or customer. And the CRM database will be used for emailing that customer on an ongoing basis to keep the customer engaged through their lifecycle. Email is still super cost-effective and utilized on an ongoing basis thoughout the customer lifecycle. So social peeps - keep working on that sticky ROI equation, meanwhile your email peers will be keeping the customer coming back to the website and buying...again and again.
So what's not to love about consumer email? Well there are some new dark clouds around the consumer email industry. There have been a number of hacker break-ins at consumer email services companies like Return Path, AWeber, Silverpop and most notably and recently, Epsilon. Over 100 Epsilon customers, major national brands like Sears, 1-800 Flowers, Citibank, US Bank and Pottery Barn have had their customer email address lists taken by the hackers. (Here's a great article on the email security breach episodes from pcworld and here's one from cnn).  Consumer email addresses have been stolen by the hackers presumably be used in future phishing attacks where the spammer will send you a fake email that pretends to be your bank or your favorite on-line store. They hope they can get you to give them more information about youself (your bank PIN?) or maybe use the phishing email send a virus to infect and monitor your PC. Creepy stuff. Some email security gurus are advising consumers to stop trusting their emails from businesses and to be careful about opening emails or signing up for new email subscriptions. Not good for consumer email if consumers don't open emails or sign up for new ones.

So what are we (the email industry) going to do about this? Can we come together and fix this mess before it undercuts all the progress we've made with email trust, safety and utility?

The email industry came together in the mid-2000's to debate, define and implement authentication standards. We pulled that off and fixed a major security flaw in SMTP. During that same timeframe, online marketers were evangelized and educated on the need for using best practices in email: opt-in subscriptions; relevant content; easy opt-out, etc. And those behaviors were reinforced with consequent good or bad inbox delivery rates as ESP and 3rd party reputation systems were deployed.
Meng and Craig came together

So we can come together as an industry - even cats and dogs can be friends when it's in their common interest: history proves it.  So to my industry colleagues, it's imperative we come together and define the minimum acceptable security standards for our industry - before we lose the trust of consumers. Or before the government decides they have to do it for us. So if you are a consumer email services firm

1. Review your security practices now. The Online Trust Alliance Security by Design guidelines are a great way to start.
2. This is a "CXO" level issue for your firm. It's not an IT issue for the dude in the black T-shirt in the server room to fix alone. Put executive attention on addressing your security shortcomings across the organization and support cross-industry security standards as well as governmental and public relations initiatives.
3. Have ongoing participation and involvement in the associations supporting email industry trust and security: OTA, MAAWG, EEC, ESPC are a few of the more notable organizations.

Email is great. We make a living at it. We (and our friends and families and customers) rely on email. Let's not let the bad guys screw it up - we fought them off once before. We can do it again.

Wednesday, April 6, 2011

I have seen the future. His name is Gary.

I'm a reasonably technology forward kinda guy. I am sporting an iphone 4 and toting a shiny macbook pro and I'm blogging irregularly. I can be found tweeting and posting on fb sometimes. So I'm not exactly living like the Amish. I also see and advise lots of early stage technology companies in the social and mobile spaces - I see a lot of innovation and promise in these areas.

But the most impactful recent innovation in my life and my family's life came from Costco. His name is Gary. He is a vacuum cleaner.

One of Gary's brethern - hard at work

Not just any vacuum cleaner - he is a shiny iRobot Roomba that wakes up every morning at 10am, sounds a nice little chime, undocks from his charger and cheerfully spends the next hour or so cleaning our hardwood floors. We are blessed to have a wonderful yellow Lab but cursed that our dog sheds light colored hair like crazy all over our dark brown floors (the picture above is a generic Roomba one).

Why is Gary an innovation which is so impactful on our family?
  •  Our floors are clean, every day, without any effort by us
  •  Our kids love Gary - they are totally entertained by his roaming around the house, chirping
  • Did I mention our floors are clean?
So this is the best $300 or so we've ever spent, I highly recommend a Roomba, especially if you have a pet that sheds hair. The Costco kit came with all kinds of cool accessories, like battery powered electric "fences" to keep Gary from cleaning certain rooms (e.g., like our cluttered office or laundry room).

But I admit that an automated, cute vacuum isn't the future. It's been very impactful. But maybe it isn't the future. But maybe there is more than meets the eye?

First of all the company is named after one of the classic books by Isaac Asimov, one of my all-time favorite science fiction writers (forget the crappy Will Smith movie with the same title). Asimov's book is a collection of short stories published in 1950 which describe the evolution of robots from primitive origins to intelligent life forms. From Roomba to Terminator.

But it's just sci-fi, right? Home robots are just for the Japanese - you know those strange Sony pet dogs.

But then I went to check out the iRobot website . They have home robots for bathroom washing, gutter cleaning and pool cleaning. They have a programmable robot for education and researchers. They have industrial ground (e.g., bomb squad robot) and maritime (e.g., remote underwater robots). Holy Asimov Batman! Isn't this like sort of how it all develops in Terminator 3 when a bunch of robots like this become intelligent and belligerent? I guess a belligerent vacuum cleaner isn't too much of a threat. Maybe a self-aware Predator with a Hellfire missile is a different story......

So, my eyes have been opened to a hot new area for innovation and invention that isn't green tech, social, mobile or bio-tech - and it's robotics! My takeaways after a little time with Gary:

  1. Robotics are apparently making impressive strides while we've all been focused on social and mobile. The future, in terms of robotics, looks a lot closer than I would have thought.
  2. iRobot looks like an impressive company with a diverse set of products and probably plans to expand into more applications. Medical costs, aging population, shrinking able-bodied  labor pool, defense - lots of room for them to grow.
  3. Clean floors are really nice, go buy an iRobot Roomba!