The year 2011 was certainly the year of mobile.  The apps world exploded, and many developers are thriving in that space.   It was also the year in which content consumption and even online shopping shifted dramatically in favor of mobile devices, primarily tablets.  I have become accustomed to all my reading on my iPad – from the WSJ and Economist to my library of books.  Choosing to read in print this week a book that interested me but for some reason was not available in any ebook format was not a welcome experience.   Barnes & Noble is a great place to browse, and the Nook is a fabulous device, but its current big box category killer stores are doomed in my opinion.

A particular article in this morning’s WSJ on the immobility of the labor force caught my attention and resonated with a number of personal experiences this past year.   I’ve “borrowed” its chart above since links to WSJ content expire quickly for nonsubscribers.   Here’s a classic quadrant grid, but one where you do not want to be in the upper right box.  The article speaks to the inability of the labor force to relocate to where it is needed because of underwater mortgage loans.

Classically when one was applying for jobs in corporate America, checking the box labeled “willing to relocate” moved you way up the priority list.   Now many are willing but not financially able.   And, there’s a limit to which corporations can cover relocation expenses when someone applying for a $150K job may be $300K upside down in a house.  

Gowalla here in Austin was very recently acquired by Facebook, and its team has already moved to the Valley.   Neither the Valley nor Austin appear on the accompanying chart, but judging by the dots for Dallas, Houston and San Francisco, I’m supposing that move was financially practical for most of those employees.  Facebook can afford to pay them enough to offset much higher housing prices and those California state income taxes.   There’s also a considerable reverse flow from the Bay Area to Austin; about half the residents in my development are California transplants.  

Meanwhile, there is a considerable talent shortage in Austin for software developers and technology oriented creative types.  And, I know personally of suitable resources in Atlanta and Orlando that could do that work.   So what are some possible solutions to removing this “friction” in the labor markets:

1.  “On-shoring” certainly works for many companies.  We seem to have perfected the art of putting call centers and software development shops in distant continents, but those price advantages are eroding, and US cities with deep pools of technical talent would do well to organize their efforts of importing work from cities where that talent can be utilized.   We have long had the technology tools to make telecommuting practical, and, in particular, cities like Atlanta and Orlando have easy air service to just about every location where in-person appearances might be needed.  (That’s one knock on Austin; air service here too often requires hops through Dallas, Houston or Atlanta.  The local airport is lovely; even the dining is destination quality; but it’s just not that big.  It will be interesting to see how the Formula 1 spectators from so many international destinations get here in November next Thanksgiving week.)

2.   Management teams can even function remotely for earlier stage companies.   Ventures can form around scattered key people if the core operations are in the right location for investment, customers, and other strategic resources.   Management by Walking Around involves a little more flying around from time to time, but I’m seeing this model work.  Better leadership teams become available when the net can be cast a bit farther and relocations are not required.

3.   HomeAway is a local success story in the vacation rental market, and I wonder if companies like that might be able to remove some of the housing friction by enabling people more easily to lease their primary homes in order to pay rent or a mortgage in a new job location.  The WSJ article quotes one person as saying he has no interest in maintaining a rental property 2000 miles away, but that model certainly is common in vacation rentals and has spawned an industry of property managers to handle all the maintenance and leasing headaches.   They get their cut, of course, but they generate cash from otherwise idle real estate.

4.  Is there a way to create a housing exchange market?   Being able to swap your underwater home in Vegas for one with similar numbers in Phoenix might make sense if you means you get a better job, but the current morass of rules and regulations and the brokerage processes present considerable impediments to that idea.  I don’t plan to work on that opportunity, so it’s yours if you want it.

There are many reasons other than mortgages why workers are immobile, and I can appreciate those.  I know of two medical professionals now who have considered relocating but are highly constricted by varying state licensure rules.  The same applies to lawyers who have to qualify for the bar state by state.   And, there are the very important family concerns like being near an aging parent, not displacing kids from schools where they are comfortable, especially during the teenage years, and just plain liking where you live and the current friends you have.

But, unemployment will be the centerpiece issue of the 2012 elections, and it behooves us all to think of more creative ways to address this when so many of the contributing factors are different from past eras of job losses.

I chose to move in 2011.  I had the flexibility to do so and was able to move to a city where I had family and friends.   It has turned out great for me, and I’m about 60% of the way closer to this year’s Georgia Tech bowl game.   However, the remaining 40% will be traversed on my couch by TV viewing. 

<image from WSJ attributed to Moody’s Analytics; CoreLogic>

Twas the night before Christmas, when through the co-working space

Not a creature was stirring, not even coders apace.

The ideas were drawn on the whiteboards with care,

In hopes that St. Venturesome soon would be there.

The designers were nestled all snug in their beds,

While visions of MVP’s danced in their heads.

A friend this week passed along to me the Cult of Done Manifesto, which was first “poted” on the linked blog in March, 2009.  Evidently proof reading was deferred to the post-done phase.  Nonetheless this is a timely topic in that several projects in which I’m involved are fast approaching their launch dates.

Nothing focuses a development team on a deadline more acutely than the presence of a real customer and/or an investor who wants to acquire a working product.  There are always more features to be considered and more final tests to be run, and there are inevitable environmental issues such as OS or other component upgrades that can impact even the most buttoned-up designs.  However, at some point the risk of delay outweighs the risk of releasing a few mistakes.

Having grown up in the software business when almost none of the underlying elements worked as advertised, I came to respect our loyal Peachtree Software customers as beta testers.  We didn’t in those times have the Internet to blast out instant updates, but we didn’t bring any business to its knees if its books were out of balance for a few days.  The pressure is much more intense now that very large customer bases count on systems performing flawlessly, particularly with respect to security and money handling functions.  Experimenting on end users in this context certainly has its perils.

A more mature company with other revenue streams may have the luxury of absorbing delays.  Or, as in the case of RIM, we seem to be observing even a heavily entrenched brand being derailed by just that issue.  If you’re at the startup stage, and particularly if your access to funding depends on filling customer orders, you have no cushion.  When you’re at the “fume” stage, as Bob Metcalfe calls it, your options become mighty limited.

Lots of entrepreneurs deal with this by designing the proverbial “minimally viable product” and letting it loose into the wild.  Sometimes that strategy works for things like apps that are not exactly mission critical.  If your core concept resonates with a customer audience, you’ll get the chance to make updates and solidify your base.  One of my favorite products is Evernote, and I’ve stuck with it through a bunch of “upgrades” that have at times almost rendered it unusable.  But, that company seems to eventually get things right, and I have work-a-rounds for the bugs that affect me.  Evernote is far beyond the MVP stage, but it’s a good example of something that resonates with users.

If on the other hand you’ve chosen to create something much more complicated and one where fatal errors can be fatal to your business plan, and you absolutely have to get it out the door, what is the answer?  I think it’s just basic engineering problem solving.   You’ve got to work back from a deadline and define exactly what has to be done and how it is going to get done, and just make it happen with whatever resources you can muster.  You have to make all decisions on what to do next in the context of such a plan.  I’m about halfway through the Steve Jobs biography as of this writing, and he was able to motivate his engineers to do the impossible on many occasions when product releases were due.  And, as you know, he was generally unwilling to make any design sacrifices to make developers’ lives easier.  You may have no one above you on the org chart that exerts that level of personal pressure, but you are the one who faces your customers and investors, and they’re just as persuasive.   If necessary, pause for a moment to regroup, but only a moment, and then go forth on the plan.

I debated titling this post either “It’s Done, Right?” or “It’s Done Right?”  The answer to both has to be “Yes.”

<Poster by Joshua Rothhass from Flickr "spatulated">

Yours truly attended the semiannual Georgia Tech Research Corporation (GTRC) board meeting in Atlanta along with its 75^th Anniversary celebration.  GTRC and its affiliates manage the considerable flow of sponsored research dollars into the University and handle technology licensing and many other functions.   As a member of the Audit Committee, I was especially pleased that the most boring part of the meeting was the report of that committee.  One never wants any semblance of excitement when it comes to auditors’ findings.  That means all is well.

Plaudits are due to Georgia Tech President G. P. “Bud” Peterson and his leadership team for bringing focus to twelve key areas of research among thousands of projects on campus being conducted by resident faculty and by full-time research scientists:

•   Big Data

•   Biotechnology and Biomedicine

•   Electronics and Nanotechnology

•   Manufacturing, Trade, and Logistics

•   Materials

•   National Security

•   Paper and Science Technology

•   People and Technology

•   Public Service, Leadership,
and Policy

•   Robotics

•   Sustainable Infrastructure

•   Systems 

The most newsworthy segment of this trip was a presentation at the board meeting by my friend, classmate, and fellow former Alumni Association Chair Bill Todd, Professor of the Practice, College of Management, and Executive Director for Healthcare Initiatives.  (I love his title; I was once a “professor practicing on my students” at Emory University, not quite the same and covered in an earlier post.)  Todd (photo above) talked about how Healthcare is 20% of GDP and growing, relatively recession-proof, relatively difficult to off-shore, badly in need of systems-based solutions, and desperately in need of systems-thinking talent.  If you look at the list above you see the makings of expansive expertise in these areas at Georgia Tech, not to mention Emory University’s medical school and the Atlanta headquarters of the Centers for Disease Control.

He noted that the US seems to have conquered systems-based industries such as banking, telecommunications, and aviation but that healthcare, despite considerable investment to date, has eluded this.  Our country is #1 in per capital health care expenditures in the world but only #37 in life expectancy.  Part of his charter is to help lead Georgia Tech’s efforts across disciplines to tackle this problem.  Bob Metcalfe is often quoted at UT on his position that the world’s problems are not going to be solved by another web site, and that is clearly not the answer to our healthcare deficiencies.  We’ve all experienced the process of giving the same data repetitively to doctors, hospitals, and insurance companies, likely ending up with multiple records that bear scant resemblance to each other.  Do you know how many mg of a particular medicine you take each day?  You may know it’s round and white, but that’s about it.

So, Atlanta entrepreneurs and policy makers, perhaps it’s time to jump on the healthcare opportunities emanating from Atlanta’s research prowess.  Perhaps that is the Next Big Thing for the city. 

Clearly there is a significant opportunity in this arena.  GCMI, the Global Center for Medical Innovation, which involves Georgia Tech, two major hospital groups, and the Georgia Research Alliance, is being built as a focal point for biomedical device initiatives.  That’s a great start.  The question now is how does all this energy translate into industry that stays in the area.  Does it result in research that gets commercialized where the investors, manufacturers, and distributors are based, or does it become an economic engine for Atlanta? 

Todd cited in an email to me the example of Houston and its Texas Medical Center as an economic development initiative.  Today 70,000 people work there, primarily driven by the presence of M.D. Anderson, Texas Heart, and Texas Children’s.  All of them have a strong in-migration of patients from outside the normal service area, and they spend a lot of money touring Houston in the process.  Atlanta is in fact the largest source of Patients to M.D. Anderson outside of Texas. 

By the way, I had occasion on the preceding day to meet with a group of local investors and ATDC officials in a small forum hosted by Georgia Tech’s Venture Lab, a key cog in the translation of research into enterprises.  I gave them a roundup of what I’ve observed in Austin and around the University of Texas with respect to the tech industry and entrepreneurship.   Bottom line – I encouraged them all to show up for SXSWi, so if you see a big RV on 6^th Street wrapped for Georgia Tech or the ATDC, blame me. 

<Bill Todd photo from GT College of Management site> 

Yes the weather outside is delightful.  (Actually we’re in the midst of several rainy days in Austin, which is indeed delightful in this drought-stricken area.)

But, you’re trying to run an early stage technology business, B2B, B2E, B2C or B2TheMoon, that does not benefit from the rush of Holiday spending, and you may well be counting the hours until about January 9 when most everyone is back on deck.  (That of course excludes BAMA and LSU fans who probably won’t regain their wits until a couple of days later.)

This is the season of “pushing a rope” for many entrepreneurs.  You want actions to happen, but there’s no one on the other end of the phone or email.  Not that any of this is a surprise, it does seem to happen every year at the same time.  However, the things you can best control, e.g. your expenses, continue apace.  The things where the timing is out of your control are the revenues or sometimes the investment dollars that cover those expenses.

There are some positive exceptions.  Many large enterprises that have fiscal years ending December 31 may have budgets to clear out and are eager to consummate transactions.   To a line manager, budget money not spent is money forsaken, so there’s a powerful motivation there.   If by now you don’t know exactly where those buyers are, you are too late.  But, I recall from my days after selling Peachtree Software to MSA that the mainframe sales team generally achieved all its annual quotas between Christmas and New Year’s Day.  Nobody in the revenue side of the house went to the beach; they finished the year in a dead run to exhaustion.  The CEO and the EVP of Sales always together wisely visited every field office in January just to re-energize the teams for the next year’s marathon.

Likewise you may find a venture capitalist that has some money to put to work and would like to have your deal on the books to dress up a year-end report to the limited partners.  I’ve been on that side of the table, and our limiteds didn’t want to see management fees being paid on cash sitting in checking accounts.   But, if you don’t have that process pretty far along by now, don’t get your hopes up.  There’s a lot of due diligence minutiae, and the necessary attorneys and accountants may go off the grid even if the principals are ready to move forward.

If you’re not so fortunate as to enjoy one of those positive circumstances, and if things haven’t gone quite according to plan, the best you can do is to be open with your employees or vendors and ask them to work with you when cash flow is diminished by Holiday interruptions.  Those who believe in your company and enjoy the business relationship will go an extra mile to be accommodating.  Those who don’t are probably not going to be part of your ecosystem when Christmas 2012 rolls around, either by their choice or yours.

Unfortunately it’s usually decisions that were made in the summer that result in these year-end pinches.   Capex outlays, counting on big deals to close fast, product delays, and rosy forecasts can all be part of the mix.   And, who doesn’t have a rosy sales forecast going into the fall?  Perhaps I should republish this article in August as an advance reminder.   Right now it’s like I’m suggesting you lay off the biscuits and gravy right after one of your arteries has just closed up.

The important issue is to understand the seasonal dynamic of your business model.  If you’re a retailer of anything that is “giftable”, you are probably enjoying making all your annual profit this month.  From my very early career in the hardware store business, I learned that just about everything is a gift in someone’s mind.  (I also learned that just about all those gifts can be returned on December 26.)  If you’re in one of the aforementioned categories where the Season impedes your company progress, all I can recommend is just to stay in the game, clear your head, catch up on your TechDrawl reading, enjoy your family, and look forward to a great 2012.

Next Up on TechDrawl:  Some observations from my semiannual Georgia Tech Research Corp board meeting in Atlanta.

<Image from the Coca-Cola gallery>

Here’s something a bit different for today’s post.  I always enjoy attending lectures at the Austin Forum, and this past Tuesday’s SRO crowd enjoyed one of the best of the year.  Dr. James W. Pennebaker, Chair of the Department of Psychology at The University of Texas at Austin gave a presentation entitled “How our words reflect who we are.”

Dr. Pennebaker’s latest book The Secret Life of Pronouns reports on his extensive research in computational linguistics and in particular what our words say about who we are.  The book title may not sound like a thriller, but the implications of his work are profound to all of using any form of social media.  As one who writes more than 100,000 public words on this blog each year, plus some multiple of that in Tweets, Facebook posts, and Quora and Google+ musings, I was interested in his findings.  That’s not to mention the huge volumes of private words we all write via emails and texts and often create from transcribed voice messages.  Unlike nostalgic olden times, say the Jimmy Carter era, words linger in electronic media almost in perpetuity.  There’s no more tossing the old hand written letters into the trash.

Pennebaker’s research helps us understand why our writings correlate with how we get along with each other.  Some of his early research focused on the long-term toxicity of traumatic early sexual experiences, a grim topic but one too much in the current news.  His findings showed that the problems were greatest with those who kept their secrets and that divulging the details by writing about them actually improved health.  Using software he and colleagues developed to analyze word patterns, there was a demonstrated correlation between certain uses of words and more successful health outcomes.

I noted his comment that the most common word in the English language is I, yes I did.  His research subjects whose health improved the most changed often, from I to we.

So we continue….

Pennebaker described Content words vs Function words.  The latter are social and connected, words like a, the, at, etc.  He used the example a message that simply says “I will be here later.”  These are essentially all function words.  Where is here?  When is later?  There’s really no content in that sentence.

As a group the audience flunked some test votes on how men and women differ.  Men use “I” more, and women pay more attention to their internal states.  Men use articles because they precede concrete nouns that refer to things.  Women use more cognitive words to express complex relationships; men just say “carburetor busted.”

Pennebaker gave an example from the Bush v. Kerry campaign.  Bush used I a lot more.  Kerry, as you may recall, was perceived as cool, distant; he used we more often, and his advisers erred in telling him to increase that.  It became the “imperial we” and made him seem even more aloof.

Some interesting research projects:

Depressed poets use different language, about 1/4 of poets commit suicide and use I at a very high rate.  (Don’t yet let your children grow up to be poets!)

Before and after 9/11 , an analysis of a pool of blogs showed immediately afterward a big drop in I.  People distanced themselves individually from disaster and became part of we.  Positive emotions began to arise after about 6 days and quite literally showed us being brought together.

Truth tellers use I much more and more cognitively complex words. 

As I was saying…

To understand how a group gets along, see what words are used and realize that the higher status person uses I less.  An extensive analysis of emails revealed subordinates writing as I and their bosses responding as we.  Pennebaker’s research even showed that the higher the match in written word choices in a group, the more effective it was.

He also studied speed dating and found that his language analysis could better predict better successful matches better than participants could themselves.

At any rate, if you are brave you can test your own words with some demonstrations here.

You can even check your Tweets at this site.  As you see from the screen capture below, an analysis of my recent Tweets, which were mostly sports related around a college football weekend and Formula 1 news, shows that I am upbeat by Valley Girl spacy.

Here’s my chart:

Pennebake said that language is a reflection of a state of mind, not the cause of that state.  It’s more like speedometer than gas or brakes

What’s really cool about all this?  It shows that essay questions can be evaluated by machine about as affectively as by humans.  Your writing style can predict your love life and your odds of scholastic achievement.  (Lots of “connectors” help in a college entrance exam, so you can game the system by just typing “a” repeatedly.)

And, while much has been written on privacy issues with social media, we now learn that what you have already put into words can theoretically be used to evaluate you with respect to a job, a college admission, and maybe even a crime.  It won’t be long before we see a CSI episode that hinges on a pronoun. 

At any rate, I am what I’ve already written, or we are, not sure.

<Pennebaker photo from Austin Forum site>

The first ever 1 Semester Startup class at the University of Texas ended in style on December 1 with a “Demo Day” in which 20 teams from the class of 77 gave formal pitches for their startups.  As you may recall, the syllabus for this class was designed with the intention that student entrepreneurs would create real startups, not just ideas.   They were exposed not only to the wisdom of Professors Bob Metcalfe, John Butler, and Josh Baer but also to many luminaries including Michael Dell and Frank Moss.  Several dozen mentors, including yours truly, did what we could to help teams with which we were paired.

The company theses included lean startup web and mobile concepts, big data analysis, solar energy systems, an automobile company, PC games, “evolutionary” stock trading, and commercialization of novel isotope separation techniques from UT research labs.   (The latter doesn’t need private funding for some number of years, and I heard several eager investors grumble about that.) 

The audience easily numbered 300+ and included a broad cross-section of the Austin tech community.  Most of the tech investment money in Central Texas seemed to be represented, based on my informal observation of the many people I knew.  I even had cards handed to me by individuals asking for help in finding deals for their money.   Sean Parker and Ashton Kutcher were on the EventBrite attendee list, but evidently there was a bit of spoofing going on there.

The venue was the Red McCombs Red Zone in the newer north section of DKR Memorial Stadium.   Bob Metcalfe arranged with UT Athletic Director DeLoss Dodds to display the opening slide at the opposite end of the field on the “Godzillatron” – the world’s largest HD screen at the time it was built.   (Photo at top.)   The team was practicing on the field, and I’m sure there are some future investors in that crop.  About the time the presentations started, the team left and was replaced by The Showband of the Southwest warming for the Baylor game.  Texas fight songs provided a great musical backdrop for the presentations.

It was not possible to actually advance the slides and play the demo videos on the Godzillatron, so the audience watched them on more conventional screens in the luxurious confines of the Red Zone.   This was a highly intimidating setting for the young students, grades and perhaps careers on the line in front of a big and impressive crowd.  They were all very well coached, but probably few had much public speaking practice on that scale.  All in all the show went very well, with just a few of the requisite technical glitches and a couple of freezes (quickly recovered) where students relied too much on rote memorization.  

At half-time Bob Metcalf was asked to give his original pitch from 3Com circa 1980.   It was a very thick spiral bound book that he had to leaf through for investors.   In response to a question he said he probably talked to about 100 prospects before landing the capital that set him on his path to great success.  One novelty of his approach was that he had written a book on networking technology and required visiting investors to buy a copy – for $250!  Bob was later a director of the company that developed PowerPoint and sold it to Microsoft for $14M, but around 1980 the only alternative to paper was the 35mm slide projector, which required expensive outsource services to put graphics on slides.  Even that medium was subject to technical risk, as I discovered many time over the years.  For example, projector bulbs only failed during shows, never before or after. 

This is a bit of an aside, but the greatest demo innovation relative to those times that I recall was one that sprang from the mind of our Peachtree Software marketing genius Julian Puckett.   In an era where both hardware and software suffered from considerable unreliability, Julian made a folding cardboard replica of a microcomputer and display screen.   Software screen shots on their own boards could easily be inserted into the slot on the display, and we could walk through our product much faster than in real life, with never a technical hiccup, and then just fold the whole demo back into our briefcase – along with the check from the sale we almost always closed!

Back to the subject, my guess is that maybe 5 of the 1SS teams will result in real companies.  Some had the advantage of having formed teams and concepts before the semester began, and in fact that will be a requirement for next semester.  Others grouped together only after enrolling in the class in a few speed dating sessions akin to a typical 3 Day Startup format.  The advantage obviously fell to those with a head start.  I know from questions and conversations at the event that there was plenty of investor follow-up to be expected by the teams that really scored well in their pitches and had concepts somewhere within the general guidelines of local investors. 

More important perhaps in the long run is that of the 77 students, the course may have propelled a good number of bright young people who “will be” entrepreneurs as opposed to the “would be’s”.  It’s fun and intellectually stimulating to be part of a startup community, but to actually launch and create a scalable business from whole cloth is an entirely different level of achievement.   On this criterion it may be a few years before the real success of the course can be measured, but I suspect there will be some stars that emerge from this group.

I know the Austin Technology Incubator is actively addressing the problem of where to go next with the teams that have momentum.   Many will enroll again for the Spring Semester, and there’s a pressing need to create a working environment for them close to the main campus so they can get more done while also carrying on their other class loads.

In his earlier appearance before the class, Michael Dell was asked what courses he would liked to have had at UT that would have helped him with his business.   He mentioned that an accounting course would have been handy, but in my opinion he seemed to figure out inventory turns better than anyone else without benefit of formal training.  And, he was on a mission from day one at UT and was hardly distracted by classes as best I can tell.  However, I think with the advent of resources like 1SS, there will be even more Dell-type success stories than otherwise would be the case.  Imagine a music school where the students are not actually engaged in the performance of music, and that’s what traditional education has been in entrepreneurship.  Now we have in 1SS a new model that adds that performance element to traditional scholarship.  

 <photo by the author>