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 apple.com 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 Apple.com 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.

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.

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!

GranFondo - Thanks Levi!

Went up to Sonoma County this weekend to ride my bike, along with 5,999 other lucky riders, in Levi's King Ridge GranFondo. Levi in this case is none other than Levi Leipheimer, professional bike racer on the RadioShack team, 3 time winner of the Tour of California, podium placer at the Tour de France, Santa Rosa hometown hero and all around nice guy. The ride was a great success for Sonoma County, the sport of bike riding and my riding buddies and I had a blast. It was one of those weekends where you remember why you live in California. The incredible natural beauty, the weather, the food, the great people...and the fantastic riding.

The people of Sonoma County were really fantastic, out cheering and ringing cow bells for the riders all day. Lots of signs welcoming the riders. Some of the people living on King Ridge were not too happy about thousands of riders using and discovering their little hidden piece of paradise, but that's a whole 'nother story. I guess October isn't the best time to take a bunch of strangers up into the west Sonoma hills. The number one crop out there isn't grapes and it is harvest time. The Fondo organizers wisely put some of their charitable donations into the local schools and fire departments along the route, and everything went smoothly.

Bottom line:  If you are a bike rider in California, recommend you put this event on your calendar for 2011.

The one-day ride had courses of 103 miles and 8,000 feet climbing (Gran), 65 miles and 3,800 feet climbing (Medio) and 30 miles and pretty flat (Piccolo). Not feeling particularly masochistic nor having too many miles on the legs this season, I choose the Medio course.

The ride started and ended in Levi's hometown and road cycling hotbed, Santa Rosa. The night before the ride, the town was thronged with expensive carbon bikes and their uber-fit owners. My riding companions Tim and Georges wisely suggested we decamp for dinner in Petaluma and avoid the mayhem of 6,000 bike riders carbo-loading in downtown Santa Rosa.

Petaluma's Seed Bank is a.....bank

The morning of the ride we set out at 630a for a pre-ride coffee at the Flying Goat, determined to get to the start early enough to ensure a good position at the front of the peloton crowd masses. Below is a shot of the crowd at about 720a, by 8a it was pretty packed with all the riders stretching farther than we could see, both in front of us and behind us. We hung out at the start for 40 minutes listening to the loud and annoying announcer talk about all the pros at the ride (Levi, Taylor Phinney, etc.)  and on and on about Patrick Dempsey. Yes, McDreamy was on the ride.

After a Hendrix-esque electric guitar star spangled banner from Cat 3. racer/ pro rock guitar dude, we were off.  Tim immediately set a fast pace as we made our way forward through the peloton, determined to get out front of the masses. The roads in west Sonoma County are narrow and rutted, it's better to be up front in the pack, riding fast with experienced riders. It's more dangerous to be stuck in the back of the pack.

Tim decided to tackle the Gran course, which features an additional 38 miles of riding and 4,000 feet of additional climbing, courtesy of the famed and feared King Ridge portion of the course. Georges and I rode with Tim the first 25 miles of the ride, before the courses split. Tim had his motor going. I can't remember ever seeing our speed dip much below 22 mph, except on a few climbs.

Georges and I kept the fast pace going, through Duncans Mill, Jenner, up to Highway One, past the amazing views of the seastacks and waves. It was a crystal clear day as we rode with a pack of other fast riders, including a 12 year old boy who was riding really well.

The bliss of the ride left at about mile 40 or so when we turned off Highway One onto Coleman Valley Rd. The much talked about, much dreaded climb of Coleman Valley Road. It was a hard climb, but not too bad. Some steep pitches, exposed to the sun, a bit of a grunt and grind at first followed by some ongoing rolling climbing. Kind of like West Alpine Road with a longer section at the top. Now if you had just climbed King Ridge and then Coleman Valley came up, it would really not be fun. Tim didn't think so later that day.

The last 20 miles after Coleman was some rolling riding on the ridge tops into Occidental, some rolling riding out of Occidental (some of the small climbs were starting to hurt by now) and finally the last, fast and flat 10 miles. Georges and I traded some pulls. We caught a train being lead by a strongman on a tandem and powered behind those guys, ready to be done.  It was just starting to get hot, the car traffic was increasing on the roads and most dangerous of all, we were starting to run into a lot of the Pico riders returning from their merry jaunt to Occidental.

We put our heads down and just pedaled hard, coming in to the finish on an really, really long Santa Rosa bike path. With a few miles left, I was digging so deep that I started hallucinating that my bike seat was coming loose. That couldn't be. We made a hairy U-turn off the bike path and got on Stony Point Road. We had 500 yards to the finish line. Georges started his sprint to the finish - it was a timed event. I forgot about that and focused on my seat which was definitely falling off. I got out of the saddle and pumped out the last yards. Done.  3.5 hours riding. 3.75 hours with 2 rest stops.

It was right before noon, and after getting my seat fixed we enjoyed the post ride festivities. We immediately scored our freebie fat tire beers and made for the line for our post ride meal, the legendary Gerard's Paella. It was delicious, although it was kind of like pouring 5 pounds of cement in my belly. So good, but uggghhhhh, I felt full. It made the ride back to the Hyatt interesting, although at least my seat was attached to my bike. The post-ride fog was slowly erased by a dip in the pool, and a shower.

As for Tim, he did the Gran course, conquered King Ridge and took the strong man prize for our little group. My only consolation was that I was laying on a lounge chair at the Hyatt pool while Tim muscled to the top of the Coleman climb, with another 20 miles to go.

Levi...you and your crew did a fantastic job. See you next year.

Tango in the valley

So last year I had the good fortune to visit Argentina.
 
Having traveled a bit in Brasil, Peru, Ecuador and Bolivia in the 90s, I expected a 2nd/3rd world travel experience. Sure I had heard about Buenos Aires being the "Paris of Latin America", but I knew better, I had done my time in the backalleys of Lima and Sao Paulo and Salvador and Rio and Quito. I was ready for the grime, the crime, the beggars and the pollution.

Actually I was very wrong. Buenos Aires blew me away. As did Argentina as a whole. It was a first world country tucked away down south. Beautiful city and countryside. Very proud Argentines, and rightfully so. Great food, culture, design, infrastructure (around BA anyway). Admittedly I only saw a small part of the country, BA and a side trip up to Bariloche in the Andes for some skiing. But it was pretty awesome. Steak, malbec, excellent chocolate and those amazing Andes. Oh yeah, and it was pretty cheap too, the dollar actually had a great exchange rate against the peso.

Downtown BA, at Plaza e Mayo

Musica Folklorico in San Telmo district, BA

Up in the Andes, Cerro Catedral ski resort, Bariloche

The purpose of my trip last year was to speak at a LatAm venture investing/company pitching event, Puente Technologica, being thrown by the cities of BA and Barcelona. I heard lots of pitches (good and bad), spoke about the 2009 state of Silicon Valley (bad but getting better) and connected with lots of good people in the technology entrepreneur eco-system of BA. Net: Lots of great software talent, especially good with UI, games, mobile; Argentina a 40M person market with the real big LatAm markets being Mexico and Brasil; and that there is a lack of available venture capital and successful LatAm start-up role models. There is lots of potential in the Argentine tech sector, but it is still embryonic, needing some dedicated government and private sector help.  More on that in a moment.

I have kept my ties to BA warm, meeting with BA entrepreneurs and government officials who come to Silicon Valley. This week I had the opportunity to attend two LatAm and BA related tech events.

Traweln - 200 of LatAm's tech leaders high up on Old La Honda

Lining up for some really fine Argentine style asado

1. Traweln event - I went to a Sunday afternoon asado high up on Old La Honda Road in Woodside which had 200 of LatAm's top entrepreneurs and venture capitalists. In addition to the incredible setting and fine malbec and the great asado (even the Argentine guests gave it a thumbs up!), I spoke with some very interesting people who had come to our neck of the woods to learn more about the process of building great tech companies. The Traweln event was thrown by an organization called Endeavor which seeks to help the developing world move forward by supporting entrepreneurship in these countries. They select the most promising companies from Asia, Africa, Latam and provide the selected companies with mentoring, connections, funds. If you have interest in helping out with this mission, check out Endeavor, they have a local office in San Francisco. I'm planning to meet with them soon.

2. Tango in the Valley - Another great LatAm tech organization is Palermo Valley. Palermo is a hip district of BA (kinda like SOHO in NYC or SoMa in SF) where a lot of tech companies are located. Palermo Valley, the organization, is a network of 50 regional chapters located all across LatAm that help promote tech related events and services. Maybe kinda like SDForum or SVase here in the Valley, but spread all over LatAm. The BA Palermo Valley along with LAVCA (LatAm Venture Capital Assocation) brought 30 companies from BA to come experience a week in SV. Last night I hard the companies pitch.

Here are a couple of ones I thought were cool (a combination of most likely to succeed plus interesting to me) out of the many fine companies I saw last night:

1. Avantrip – LatAm travel booking tools leveraging user social interests

I like the idea of using social profile data for helping book trips (also check out fb app BonVoy in this area). These guys are doing some real revenue. I think the whole Kayak-SideStep-Orbitz travel search model is ready to be disrupted, no innovation in years.. Are these the guys? Don't know. But someone has to.

2. Creation Flow –Saas service for proofing creative work

The founder says the product is for “For people working on photshop all day.” Online simple solution. Free trial and then $24 to $400 month. Solution for Animation, Architect, Designers.

I like the focus. Just launched and has customers in 5 countries. Will be interesting to see if they can get viral, word of mouth marketing effect. Got a nice write up in GigaOM/NY Times.

3. Taggify – AdSense for images

Pixazza like, has some differentiators like automated picture tagging.

Looks like a good (big) idea if it works. This has potential, maybe as a Latam version of Pixazza Maybe it can come to U.S. later if the Picture ad market takes off (how is Pixazza doing?).

For more info on Palermo Valley or these companies, email SV@palermovalley.com

Post numero uno - at the edge

OK. I've been meaning to start blogging again for a while. I was blogging pretty regularly when I was CEO at my last company, Habeas. But that sold at the end of 2008 and I've been busy with life since, always meaning to get back to writing, but never quite doin' it.

So this blog, "At the edge", is my new personal blog. It'll be a collection of random thoughts about life in Silicon Valley, music, family, home remodeling, Norwegian flora and fauna and why it is essential to own a sub-15 pound carbon fiber road bicycle.

OK, that's it for the introductory post. Catch you next time. Whew, this writing stuff is hard work! 

Des