Brian's Brain

How come every time Bush's approval ratings sink dangerously towards an all-time low, there's a white-house press conference announcing some major new intelligence finding that terrorist want to hurt us -- and thanks to our on-the-ball whitehouse administration, we can now be aware of this and should go about our daily lives so as not to be too terrorized, but we should be very grateful to the whitehouse administration for being so with-it. This announcement is also timed quite nicely.

What follows are some random thoughts pulled from a recent email I composed. I thought they would make interesting blog content, but they may seem a little strange out of the context they were originally in.
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I’ve said it before, and I will say it again – the real tech-boom is coming. It will be bigger than the one in 1999/2000. Much bigger, and it will have one key differentiator: This time it’s for real. It’s actually already started.. There’s been more VC money flowing into startups in 2005 than in 1998 and 1999 combined. Every time in the history of the modern world a life-changing technology reaches critical mass, there’s an economic bubble, followed by a correction, followed shortly thereafter by a second, massive surge in the economy, which generally sustains itself permanently. The real leaders in the game are established during the SECOND bubble, not the first (Google, for example, was a nobody during the first boom – they are now a 4 billion dollars market leader). Classic examples in U.S. history (although you can follow it all the way back through the 1500’s) are the birth of the automobile during the roaring 20’s, followed by the great depression, followed by a MASSIVE (and sustained) up-swing in the economy as the technology reached critical mass (there are dozens of examples of this happening in the past).

Internet adoption has finally reached "Critical-mass" (70%+ of American households have access to broadband internet). The internet is engrained into the lifestyle of the American consumer so deeply that most teens no longer feel they could function without it. Billions of dollars are being spent through the internet as legacy market-places are being re-defined and large retailers find themselves competing in a world they never thought possible -- head-to-head with mom & pop shops, battling for the best price. The internet, as dreamed of in 1999, is here. It's now time for the "second-phase" to emerge -- the one that will change the world, not just your lifestyle.

It’s beginning now, and it will not be a “bubble” like the previous one, because the values will be real. Not based on potential, but on actual solutions and revenues. Unlike 1999 when all valuations were based on what companies MIGHT do to change the world, valuations in the next few years will be based on what companies ARE doing to change the world. Companies developing REAL solutions that solve REAL business problems in the new e-marketplace will be well-poised to be on the receiving end of the new string of acquisitions that's already begun (and will continue with great force for the next few years). As the big players in the market realize the shortcomings in their service portfolio's, they'll be scrambling to fill in the gaps. This time, however, the gaps they fill will be proven, revenue-generating, opportunities being filled with proven, recognized industry players.

So what are the key problems that need to be solved? Who will be the winning companies in the emerging market? I believe the most obvious category will be those that can deliver high-end, advanced business applications seamlessly over the web. (Salesforce.com has already proven the market exists for CRM -- I'd say it's a no-brainer to assume that even more complex applications will emerge in a subscription-based, hosted model, and they're going to give the major vendors like Oracle, Microsoft, SAP, and others a major run for their money as SMB's and Enterprises find they can all afford the same high-quality solutions). In 1999, the ASP model was all the rage because people assumed everyone would want their applications to be "hosted". What they didn't realize is that they didn't want their EXISTING applications to be hosted, they wanted NEW, better, more tighly integrated, and more entperprise-grade applications to be hosted. There was no point to pulling the application off the desktop if it was the same application being delivered remotely (just slower). No benefits were derived for the consumer of the product.

Now, 6 years later, The emergence of cost-effective enterprise class software will have an interesting impact on the ability of small businesses to compete on a global economics scale with the big-boys of today. Suddenly the ability to dump hundreds of millions of dollars into tools like sales force automation, supply-chain management, predictive ordering, and more will no longer be a factor as small businesses will have access to the very same technology.

6 years later, with emerging technologies such as AJAX, web-based applications are quickly becoming indistinguishable from normal desktop applications, and those creating the applications that will handle the needs of the consumers, SMB's, and enterprises from a single delivery platform with a unified, shared database will emerge as the dominate players in the new market. Vendors who continue to operate under the legacy-model of software development, delivery, and payment will lose ground rapidly over the next 2 to 3 years as people shift towards more integrated, highly-available, enterprise grade solutions at price points that make existing solutions extremely difficult to justify.

Brace yourself. The internet finally has traction, and it's a steam-roller in overdrive. It's time for it to change the world.

I was recently reading an article in readers digest about how CEO's make too much money. The basic argument was.. well.. I'm not sure what the argument was, other than they get paid a lot and somehow that can't be right. They did manage to sneak in some vague data about how CEO's who don't perform still make a lot of money. It made me wonder if writers who write crappy articles still get paid. I suspect they do.

The idea that CEO's are overpaid bothers me for a number of very important reasons:

1. Good CEO's are really, really hard to find. Really. What it comes down to is supply and demand. If you want a good CEO (one with a proven track record) they're going to cost. How much? At least as much (probably more) than the next guy is willing to pay for him. This is what Economics 101 refers to as "the law of supply and demand". What's ironic is that YOUR salary is calculated the SAME WAY. In other words (for those who are slow) the reason he makes so much money is because someone else, somewhere, is probably willing to at least match it. That's not unfair -- that's market-rate for genius. How does "genius" become cheaper? By being less in demand. As soon as companies aren't interesting in smart people anymore, their salaries will go down. For your sake, I hope that doesn't happen any time soon.
2. Being a CEO is hard work. We admire their lavish houses, their fancy cars, and their beautiful women, but they also tend to work 90 hours a week, travel 90+% of the time, and rarely see their families, their homes, or their fancy cars. Furthermore, it doesn't matter how poorly or how well the company is doing, there's always somebody breathing down their neck that they could and should be doing better. Billions of dollars better. I should also be sure not to leave out the amount of work required to actually become a highly-paid CEO (believe me, these guys didn't get there by taking weekends off, like you seem to do).
3. Why do you care how much the CEO is making? It's unlikely the salary of the CEO is impacting your bottom line. The paycheck you receive likely be unchanged if the CEO took a pay-cut. While I realize this concept may be difficult to grasp for some, the reality is that your value to the company is unrelated to the CEO's value to the company, and therefore, neither is the size of your paycheck related to theirs. Your job is much different from the CEO's job. He was hired for one task, and you were hired for another. The real question you should be asking yourself if you believe you should be making money money is: How come you're not? Are you worth more than what you're getting paid? If so, why are you not getting it? Should you switch jobs? If not, maybe you're getting paid fairly. Calculating how much money a person is worth to a company is simple: How much is that company paying them. Compare to how much the company would pay them if the employee was on the way out the door OR the amount of money another company has offered them (NOT how much they "could" make if they switched -- but what's actually been offered -- this is an important distinction because most people feel they're worth far more than any company might be willing to pay them).. If it's the same, then the employee is making what they're worth.

If you've got an issue with how much your CEO is getting paid: I've got three words for you: Welcome To America!! Land of opporunity!! Why don't you start your own company and grant yourself the same title with a big fat raise?

I know I'm not alone when I curse the dropped call, the static, the "can you hear me now" (Yeah, Verizon, I'm talking to you!), and the 5-bars that should probably be zero (your turn, Cingular!!). What surprises me so much is that I can't think of another time in human history when a technology that only barely worked ever reached mass consumer adoption without first being fixed.

The reasons, I guess, are clear. We need our cell phones! Most of us (studies have shown it's inversely proportional to age) couldn't live without our constant side-kick. I'm certainly not one to dismiss the advantages of having a cell phone, either. Being in constant communication with the people in our lives, no matter what we or they happen to be doing, is pretty compelling. Services introduced recently (within the last 10 years) that allow us to send text messages, photos, sound clips, and smiley faces without ever actually having to speak to the person on the other end have also taken rapid hold of our daily routine (again, this seems to be inversely proportional to the age of the cell phone user). Without a doubt, the invention of the cell phone has permanently changed the face of American culture, advanced our productivity by factors of 10 or more, and made us all safer, to boot. There's absolutely no question why the adoption has been so rapid.

But if cell phones are so great, and nearly every American owns one, why does my cell phone service still suck?!?

Back in the early days of the cell phone adoption (mid 1980's) the only people who could afford the mobile / brick phones were the wealthy businessmen. Coverage was limited to highly urban areas, but the signals were strong, the voices were clear, and the system rarely dropped a call. These days, I've come to the conclusion that every carrier is the same, each with their own advantages and disadvantages, their own dead-spots and their own good spots (although I would argue that even in the best of spots, with the best of carriers, you're still going to have the "can you hear me now" moments and the occasional dropped call). While newer and better features have been added to the cellular networks (they're digital now instead of analog [by the way, I would argue this has made things WORSE, rather than better], we have internet access through our phones, we can send text messages and photos, and the phones are much cooler and smaller) the actual quality of the services rendered have plummetted faster than the price itself. Note, however, that the total amount on your cell phone bill probably hasn't changed in the last 5 years, despite the fact that service plans continue to get cheaper. They find newer and more creative ways to charge you for "extras" that you probably aren't using. The common mistake people make in their minds is believing their current carrier is worse than the others, and if they just switch, their service or their price will improve.

Enter the world of a market that's reached absolute critical mass (everyone today who needs a cell phone or wants a cell phone probably already has one). The cell carriers make money only by stealing customers from their competitors with fancy phones and promotions, then they lock you into a 2-year contract because they know you'll discover their dirty little secret -- That they're absolutely no different than the carrier you came from.

What's caused things to go downhill so fast? Why are you paying the same price per month you've always paid but getting more dropped calls, fewer bars on your phone (maybe you're getting more bars, but realizing they don't actually mean anything) and finding that your coverage has more dead-spots than ever??

It's actually YOUR fault. Yes.. You!!

Because you put up with it. The cell carriers have us exactly where they want us. You can't switch to another carrier because it won't make any difference (and if you switch to carrier X, they just got another customer from carrier Y, so it all balances out). They spend more money on marketing, clever promotions, and bringing in the latest and greatest phones than they spend improving the quality of their networks. And it won't change until you refuse to pay them.

This isn't a call for everyone to stop using your cell phone, I'm not sure I'm there yet. This is a call for regulation (and believe me, I'm the LAST guy in the world who wants the government interfering in your life) but once a technology reaches critical mass, it can't be controlled effectively in a free market anymore because the demand no longer alters the spply. If your home phone worked as well as your cell phone, your congressman would have solved the problem for you a long time ago. Critical infrastructure (and I would argue that cell phones have reached that point) need to be protected, and the cell carriers lack the motivation needed to treat their products as such.

Unfortunately, for the time being, I don't see my $75 a month getting me anything more than a few extra text messages a month, which I may or may not receive. I am, and will probably continue to be, frustrated.