Startups and the Stockdale Paradox

Joe Krause has a story from Jim Collins’ book “Good to Great” and a message:

…on the one hand it was about unswerving faith that one will ultimately prevail while on the other hand its about banishing all false hopes? As usual, the guy who lived it says it best: You must never confuse faith that you will prevail in the end which you can never afford to lose with the discipline to confront the most brutal facts of your current reality, whatever they might be.

Holding those two seemingly contradictory notions in his head simultaneously was the key to Stockdale surviving, even thriving, in his experience. And, I believe, it is a perfect summary of the mindset youve got to have in starting a company.

You have to believe that your vision will come to pass. Youve got to do everything you can to make it happen. But, you can never let your belief and faith cloud your confrontation with reality.

In the front of each notebook I write in, the first thing I put on the inside cover is face reality. I write it to remind myself that many startups fail because they dont take a true accounting of the facts of the market (usually because theyre never as good as you want them to be and it sucks to look them in the face). Most startups are long on faith and short on reality.

Entrepreneurs are wired for optimism. But, in Stockdales story, it was the optimists who died. Dont forget to balance optimism with fact and belief with reality. If that can get someone through 8 years of being a prisoner of war, it certainly can get anyone through a (trivially compared) startup.

Mobile Push

MocoNews points to an article by Mike Masnick:

With the ongoing struggle to figure out the “content” market for the mobile environment, it appears that there’s a return to something that sounds very much like Pointcast-style push technology. While others are focused on moving broadcast-style TV to mobile phones, some have been moving forward with what is called Interactive Mobile Broadcasting.

The idea is that, just like with Pointcast, the content is downloaded in the background. While the phone is “idle,” the content displays on the screen — just like a screensaver. It’s not intrusive. It doesn’t bother the user at all, but simply appears silently. It can be news, weather, sports or whatever the operator wants to provide. The subscriber can then click through for more information, making an active move to get the information, but making it easier than going through a typical mobile web or WAP portal.

There’s clearly some demand for this. It’s being used in China and India, and it appears that people are definitely making use of it. Of course, a lot of people used Pointcast as well. While this doesn’t have the problem of overloading the network that Pointcast had, it does require maintaining this separate broadcast network. Furthermore, as Pointcast discovered, this solution is totally limited to what content the providers decide to offer through it. While many mobile operators are still stuck in a walled garden mentality, as the networks increasingly open up, and outside developers are encouraged to make use of the network in new and innovative ways, the idea of staying within walled gardens becomes less interesting. Furthermore, as cellular networks improve in bandwidth and devices become more powerful, the more annoying part of mobile web surfing starts to go away. That’s not to say this version of mobile push doesn’t have potential — but providers would be wise to pay attention to the lessons that Pointcast learned painfully, and try to avoid them. Otherwise, the future of this mobile push will be quite similar to the history of Internet push.

MocoNews: “Operators are cottoning on to the idea of pushing information to mobile phones where it resides quietly in the background until users want it. Its a pretty nifty idea, especially for 2G networks where downloading something might take a long time. The service is best suited to persistant but constantly changing data, in my opinion, such as weather, sports scores or traffic updates. However, the writer compares it to Pointcast, an Internet technology that ended up failing because it was depended on what the operator included.”

Internet Trends for Investors

Seeking Alpha discusses four trends:

Trend 1: Web advertising becomes really useful
Trend 2: Web sites become progressively easier and cheaper to build
Trend 3: Syndication and filtering dramatically improve web publishing and information dissemination
Trend 4: Search continues to improve and grow in significance

A follow-up piece suggests that the web will bcome more fragmented and transparent.

1. Easier and cheaper web publishing makes it possible for individuals and small companies to establish niche web sites.
2. Contextually relevant advertising makes it possible for small Web publishers to support their sites with advertising relevant to their specific niche.
3. Improved search then makes it easier for web users to discover those narrowly-targeted sites.
4. RSS and mark-up languages then make it easier for people to become repeat users of those sites.

In other words: the four trends together fuel the rise of the small, narrowly-focused Web site.

It also means that:

Implication 1: Fragmentation will reduce the dominance of the information portals.

Implication 2: Search engines will erode customer loyalty and the value of brands.

Implication 3: Information transparency will benefit the companies with the lowest expense structures or which add the highest value.

Implication 4: Unique content and exclusive transactional relationships will become more valuable.

Personalised Search

BBC News writes:

Search is not just about finding your way around the web. It is now about unlocking information hidden in the gigabytes of documents, images and music on hard drives.

For all these advances, search is still a clumsy tool, often failing to come up with exactly what you had in mind.

In order to do a better job, search engines are trying to get to know you better, doing a better job of remembering, cataloguing and managing all the information you come across.

“Personalisation is going to be a big area for the future,” said Yahoo’s Yonca Brunini.

“Whoever cracks that and gives you the information you want is going to be the winner. We have to understand you to give you better results that are tailored to you.”

This is perhaps the Holy Grail of search, understanding what it is you are looking for and providing it quickly.

BitTorrent Origins

Mary Hodder has a piece by Mark Pesce:

BitTorrent is a computer protocol (a language computers use when communicating with each other) which allows computers to freely and efficiently share information with one another. This free-for-all of sharing is often called peer-to-peer or P2P, and it has become one of the most popular activities on the Internet.

If you’re just one person with one recording of one show, and it’s a popular show, your computer’s internet connection is going to get swamped with requests for the show; eventually your computer will crash or you’ll take the show off the Internet, just so you can read your email. And in the early days of peer-to-peer, that’s how it was. Someone would find a computer with a copy of the song they wanted to listen to, connect to that computer, and download the data. It worked, but anything that got very popular was likely to disappear almost immediately. Popularity was a problem in first-generation peer-to-peer networks.

In November 2002, an unemployed programmer named Bram Cohen decided there had to be a better way, so he spent a few weeks writing an improved version of the protocols used to create peer-to-peer networks, and came up with BitTorrent. BitTorrent is a radical advance over the peer-to-peer systems which preceded it. Cohen realized that popularity is a good thing, and designed BitTorrent to take advantage of it. When a file (movie, music, computer program, it’s all just bits) is published on BitTorrent, everyone who wants the file is required to share what they have with everyone else. As you’re downloading the file, those parts you’ve already downloaded are available to other people looking to download the file. This means that you’re not just “leeching” the file, taking without giving back; you’re also sharing the file with anyone else who wants it. As more people download the file, they offer up what they’ve downloaded, and so on. As this process rolls on, there are always more and more computers to download the file from. If a file gets very popular, you might be getting bits of it from hundreds of different computers, all over the Internet – simultaneously. This is a very important point, because it means that as BitTorrent files grow in popularity, they become progressively faster to download. Popularity isn’t a scourge in BitTorrent – it’s a blessing.

TECH TALK: The Best of 2004: Trends

A good commentary makes one think, challenges ones beliefs and can even change them. It puts things in perspective and provides insights into both the past and the future. It can simplify a complex topic to bring an a-ha feeling as one reads it. For the better part of our lifetime, writing commentary to be shared with others has been the domain of a few. But blogs have changed all this. There is now a diversity of thought which is more easily accessible because writing on the Web has become so much easier and syndication delivers it to us without is having to go looking for it. As we look ahead to 2005, I decided to compile together what I think were the best commentaries of 2004. Many of these selections come from bloggers writing not in print but on the web. Hopefully, these will help add more perspective to the year just gone by, and provide inputs and insights for the year that lies ahead.

Well start by summarising the key trends that we saw emerge in 2004 and which will continue to impact us in 2005.

Search: Googles IPO was one of the defining moments of 2004. With a business model that focuses almost entirely on connecting advertisers to interested consumers, Google also redefined what free means with the launch of its 1 GB email service. Going ahead, we are likely to see more and more services being offered centrally some on subscription-basis, and others funded by advertisers and merchants. Search has become, for many, the interface to Web. There is now plenty of innovation that is starting to happen, even as the three majors Google, Yahoo and Microsoft get ready for bigger battles to come.

Devices: The cellphone is emerging as the uber-device. It has become the one device that we carry everywhere with us. The result is that more and more features are being integrated into the cellphone. From photography to music, from computing to television, the mobile phone has the capability to do it all. While there will be a market for specialised devices (Apples iPod is an excellent example), the relentless improvements in semiconductor and storage technology will push for a single omni-purpose device that we can carry and which is always connected to a network.

Triple Play: A single service provider which offers voice, video and data access is the direction we are heading in. Voice is increasingly being carried on the Internet, and we are moving towards flat-rate telephony. Cable companies are bundling voice, while the telephone companies see television as part of their future. As broadband networks get deployed, the triple play for a fixed monthly price becomes increasingly closer to reality.

Asias Rise: With growth stalling in technology in the developed markets, the focus now is on the emerging markets. Here, China and India are on the forefront with their billion-plus population potentially offering a huge captive customer base. Even as China is now seeking to translate its manufacturing prowess by moving up the technology value chain (as evidenced in Lenovos purchase of IBMs PC business), India is becoming a critical component in the services value chain. With South Korea and Japan already offering a glimpse of the future with their 3G networks and abundant, cheap broadband connectivity, the region is set to be the innovation driver for times to come.

Tomorrow: Trends (continued)