Thoughts on Samsung, Apple, and Patents

I’ve been struggling about what to make of the recent patent spat between Samsung and Apple.  I do think that the level of discorse provided by most techies on this issue is somewhat lacking.  Hacker News seems to have come down firmly on the “patents are evil, ergo Apple is too” side of things.  I’m not sure it’s quite so simple.

Here’s what I know:

  • I’m against business process or “method” patents.  This generally covers most software or patenting things like algorithms.
  • I think there is an incredible amount of copying that goes on in the tech world.  Every company does it, and every company cries foul when it’s done against them.  I’ve written about this before.
  • I do believe that copying a tangible product should not be legal or tolerated.  Fake clothing brands, for example, or counterfeit items are not only crass, they can be dangerous (remember the baby formula issue in China?).
  • It was obvious from day one that Google and Android blatantly, crudely, and poorly ripped off iOS.  They didn’t spend any effort on being original or attempting to innovate.  I think the mental gymnastics that are performed by many geeks trying to absolve Google in this respect are intellectually dishonest and silly.
  • In my experience, the best defense is a good offense and the only real way to beat someone who’s ripping you off is to out innovate them.  Consumers will generally figure out who’s for real and who is playing second fiddle.
  • There have been several incidents over the past few years on Hacker News where a startup felt they were being copied by others, and the entire community expressed a lot of outrage over this.

I’m an Apple stock holder and an Apple customer.  Have been for years.  I think the conclusion that I’m coming to on this particular issue is that I feel a guilty party got what they deserved (for product trade dress copying) but the means to the victory was really awful (using the patent system).  I’m not a lawyer, but it seems to me if Levis can sue someone for ripping off their logo or making fake goods without owning a patent to the blue jean, why can’t we have that method in the tech industry?  I’m curious if using the patent system in this respect was a “nuclear option” that sends a signal to everyone else who might cross them in this area.  Apple certainly learned a lot during their lawsuit against Microsoft in the nineties and probably had their playbook well thought through prior to even launching the iPhone.  I also feel like Google got away with something here, as they were culpable in ripping Apple off as well.

The most bizarre thing about this whole mess is that somehow Microsoft came out looking like a world class innovator with their new Metro mobile OS which looks nothing like iOS.  Ten years ago, who could have imagined a scenario where Apple wins against someone ripping them off, Microsoft is the innovator, and Google is the evil corporation blatantly and poorly copying someone else?

Cynical Optimism: Technical and Business Planning

I thought Rand Fishkin’s recent blog post on “Cynical Optimism” was a nice read.  He talks about how while there are plenty of things to be cynical about when it comes to humanity and our tedencies towards negative things, there is plenty to be optimistic about with regards to our progress as a whole.  The phrase “Cynical Optimism” is one that I really like to use when describing how to attack business plans, budgets, technical roadmaps, or other kinds of planning.

First, Be Optimistic

When setting goals, you definitely want to be an optimist.  Aim high, don’t limit yourself, and always strive for accomplishments that are meaningful and aligned with your values.  This is the classic “CEO” way of looking at the world and deciding where to go – strategy, vision, and confidence are huge assets here.  When goal setting, make sure you show your work!  Define goals in the form of “We’d like to do X because of A, B, and C”.  This provides important context and you’ll find that there are often other cheaper better routes that could be had which your haven’t considered.

Second, Become a Pessimist

Once you’d laid out your goals, make sure you switch hats and cast an incredibly cynical eye over your plans.  You want to identify everything that can, will, or should go wrong.  This is the perspective that a “COO” or “CTO” would take, as they’re the ones seated more firmly in the trenches.  The important thing here is to engage your team and let them know it’s OK to second guess goals in the context of determining how they’ll be achieved.  By critically assesing what it will take to arrive at your destination, you’re ensuring you don’t run off the rails enroute.

Now You’ve Got a Plan

Forcing yourself to wear both hats is hard – it’s often difficult to pull yourself across the chasm if you’re naturally predisposed to one outlook or the other, but if provides the following:

  1. Builds a culture of intellectual honesty.  It’s always easier in a team environment to just go along with the flow and feel like you don’t have any skin in the game.  If your team feels they can object or hone objectives, they’ll perform better.
  2. It can reduce the risk of making major mistakes.  By critically attacking your objectives you’ll anticipate problems and avoid major pitfalls that could have been forseen.  You’ll never know what you don’t know, but often teams drift into problem areas they could have avoided.
  3. In dysfunctional organisations, it’s amazing how almost everyone involved will know (and be able to point out good reasons) how goals won’t be achieved, well ahead of time.  You’ll prevent this kind of “death by politics” syndrome which affects a lot of companies.
  4. Bottom up planning is always the best way to meet top down objectives.  In other words, the high level goals can be set by the product owner, CEO, or visionary, but they’re on the worst vantage point to actually see how to go about achieving these things.  A tip on how to encourage realistic plans – don’t confer time estimates of any kind when setting strategic goals.  Just say “We’d like to do X” and see what comes back!

Lastly, Remain Engaged

Plans sometimes need to change.  You’ll need to react to new things.  As your team engages with the problem the goal-owner will need to remain intimately engaged with the team.  Fine tuning your goals is a necessary part of any meaningful project or endeavor – not fine tuning will just ensure failure.

Simplify Everything

There’s a lot of abstract advice about employing simplicity when building great products or writing great code.  However, life and products (particularly in the Enterprise software market, where I’ve spent most of my career) are complicated.  It’s often hard to gleen concrete examples of what these maxims are trying to communicate.

The other day I was in a pub waiting for a lunch meeting to start and I got to witness the week’s beer delivery.  This is a fairly hard problem to solve efficiently if you’re in a city where parking is difficult (or nonexistent), buildings were constructed hundreds of years before accessibility laws (meaning stairs and tight doorways), kegs are very heavy (over 200 pounds when full), and where a lot of beer is consumed requiring frequent deliveries.

If you or I were designing a solution to this problem, we might come up with this solution:

  • 1 truck
  • 2 employees (1 driver, 1 loader/unloader)
  • 1 automatic lift at the rear or on the side of the truck
  • 1 appliance dolly that can move up or down stairs

We’d be pretty happy with that.  Not the worst solution in the world.  It’s possible we could reduce to one employee but the automatic lift will take enough time setting up and lifting that we’ll probably exceed our very short “stop with flashers on” window.  We’d therefore need to park and have someone stay with the truck, or make several “fly byes” to stay within the unloading time limit.  This will really limit how many delivers we could make in a day, possibly requiring a lot of delivery crews.

Here’s how they actually do it:

  • 1 truck
  • 1 driver / unloader
  • 1 airbag

The driver pulls up, parks the truck right outside the entrance of the pub with the flashers on, whips out his airbag from the passenger seat, rolls up the side of the truck, pulls off the keg and lets it fall right on the airbag.  He then rolls it into the pub (for those with cellar keg storage, they have their own airbag) and after about 20 kegs and less than 5 minutes, he’s out of there.

A lot less cost, a lot faster, and no expensive equipment.  

Simple.

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Hating Your (Potential) Customers: Content Licensing from a Major Record Label

Have you ever wondered what’s involved in licensing a popular band’s music?  A few years ago I was curious and wanted to see about using a rock band’s song (signed to a major record label, Sony’s Epic music) for a marketing project.  There are some bands who get the internet, and some who don’t, and this band (one of my favorites) is probably somewhere in between.

First, I had to spend quite a bit of time googling and navigating around their record label’s website.  Finally, I found an obscure reference to call a certain phone number.  I called it, and had to navigate through a maze of IVR options, pressing several numbers to wade through several different menu levels.  Finally, I got dumped out to an answering service that played a message instructing you to write a physical letter describing the band, song, use you had in mind, and several other criteria.  The message helpfully repeated itself, then hung up.

I remember being shocked at how arcane the entire thing was, despite the well documented track record of major media labels and distributors to make things as difficult as possible for consumers.  Needless to say we never sent in the physical letter, and I never actually found out what it would cost.

I like to remember this experience when thinking about the barriers our customers have when attempting to give us money.

The Efforts of a Generation – Some Thoughts on PPC Advertising

I’ve been spending the last month or so setting up, honing, and dialing in our Google Pay Per Click (PPC) strategy.  I have a few thoughts on this experience that I’d like to share and see what the current conventional wisdom might be on these topics.

A little background – we’re decidedly in the “long tail” camp of online advertising, which means we’re going after search terms that are very specific.  We’re not bidding on keywords like “cheap software” or something that would broadly appeal to all consumers.  Our target market is training companies who need software to help them manage their training businesses.  Search terms like “training management software”.  Even terms like “training business” are much too broad for us as this would usually refer to people starting a personal training business, and while they could use our software, we’re more geared to the type of training company that delivers many different classroom style courses (online and offline).

Is Google Adwords Designed to Scam You (or at least Mislead)?

Google’s motto is famously “Do No Evil”, but I believe that the way Adwords is configured by default is designed poorly at best and possible designed to flat out scam you.  Let me explain.  When you start a new campaign and begin adding keywords, Google accepts keywords you enter as a “broad match” type, which their documentation describes as “synonyms, related searches, and other relevant variations”.  This is totally reasonable on the face of it, and I’ll bet that most if not all campaigns get started with these parameters.  They’re the default and everyone would like to include synonyms!

Here’s the problem – Google buries the only way to sanity check which keywords your campaign is actually being clicked through on in a very hard to find option.  They also don’t update these stats until 24-48 hours later, when every other stat available through Adwords seems to be updating hourly or better.

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What does this mean?  It means that the default report you see which shows your keyphrases and the clicks via those keywords is not accurate – users aren’t actually clicking on those keyphrases, they’re often clicking on things that have almost zero relevance to your campaign particularly for those campaigns that are designed to go after “long tail” keywords.

Instead of showing you the real keywords that you’re paying for, Google hides these away on another report in a dropdown menu labeled “Keyword details”.

Google repeats this tactic of (at least from what I can see) in not allowing you to whitelist display network sites.  They allow you to select sites on which you’d like to run your ads, but they also require you to run on “automatic placement” display network sites which were all 100pct irrelevant and probably would be to most companies.  Sites like screensaver downloads, free software download sites, or a wide variety of other sites that seemed designed to be Adwords honeypot properties.  From what I can tell you can either disable all display network advertising, or login every day and manually “Exclude” sites where you’ve potentially wasted money the previous day.

Why does Google do this?  It’s clearly in their interest to extract as much revenue as possible, but the thing that’s weird to me is the entire approach here seems to be designed in a way to ensure a negative customer experience, at the expense of a few bucks of revenue.  Consider the client who doesn’t care, has unlimited budget, and wants to blast out to as wide an audience as possible – let him start with a specific audience, then suggest that he loosen up his criteria and increase his spend.  In fact, Google already has this tool – their “Opportunities” tab.  The flip side is the long tail client who without really careful exploration and attention is going to get hosed.  I’m sure there are millions of small adwords advertisers (mostly small businesses) who are getting taken for a ride and will never know it.

At the very least, the keyword clickthrough report should have a one-click drilldown to the actual keywords clicked to help users see and hone their campaigns.  I mean, certainly this is one of the most valuable reports (if not the most).  This report only increases in value as you widen your net of keyphrases.  Why effectively hide it?  Because you might rethink your spend when you see what you’re actually paying for.

Another really annoying thing possibly designed for lockin reaons (although probably just an oversight) – you can’t export your keywords.  Yes, it’s true.  You have to “spreadsheet edit” then copy and paste them out.

This is Probably a Conflict of Interest

It’s a really uncomfortable feeling to know that you’re bidding on keywords within Google Adwords while trying to optimise for those same keywords via Google Webmaster Tools.  This is a massive conflict of interest and Google would be well served to break these into separate companies or at least detail what kind of protections they have in place to prevent the obvious issues that could crop up should the teams begin to collude together.

Click Fraud

Google allows you to pay for ads based on conversions, which is something we haven’t experimented with just yet, but on the face of it seems like a good idea.  Good fora business and for Google as in theory it makes click fraud irrelevant.  Who cares if they fradulently clicked the ad as long a they didn’t buy your product?

Since we’ve been live, we’ve noticed 1-2 signups per week that come with good names, reasonable email addresses, and plausible phone numbers.  Some of the phone numbers are even real, but are innacurate.  I’m pretty sure these are due to click fraud that’s designed to earn money for sites that get paid based on conversions.  If you’re a site owner, you won’t know how your ads are being paid for but it’s a good bet that no matter what a “real signup” will look less like click fraud and could net you a few extra bucks.

I’m not sure what the best solution here, but I am sure that click fraud is probably responsible for at least 10pct of clicks (more for higher value products or “shadier” industries).  I wonder if Google releases its suspected rate of click fraud over time?  That would be really interesting.

The Alternatives are Poor

Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time

– Winston Churchill, Speech in the House of Commons, 1947

The alternatives to Google Adwords seem to be Facebook, LinkedIn, and Bing (which services Yahoo as well).

Bing’s ad platform doesn’t work with Google’s Chrome browser.  Their coupons they send you for free ad credit upon signup don’t work for companies outside of the USA.  Fail.

LinkedIn’s ad platform currently has a bug where your ad previews don’t work for reporting or management purposes. This means you stare at a report of metrics by ad and can’t actually see which ads are generating those metrics.  You have to clone the ad, then cancel, then go back to the report to even see which ad your stats are referencing!  LinkedIn also only lets you target based on things like title or group associations.  You can’t actually target companies by any kind of meaningful industry criteria from what I can tell.  It’s genuinely bizarre.  Their tool also has about 1/10th the information that Google’s platform gives you.

Each of these is unbelievably painful compared to Google’s options.  It’s really hard for me to believe that multibillion dollar companies are built upon these platforms (exception of Bing), or at least see them as their route to profitability.  If an entire generation of techies gave their lives to these platforms, they should be ashamed of themselves.

I haven’t setup our Facebook campaign yet, so we’ll leave them aside just now.

Google Should be Ripe for Disruption, but Isn’t

The really sad thing about this, is there’s very little chance of Google getting dethroned or even having someone to compete agains in the next couple of years.  It’s possible mobile ad networks will provide some heat, but it seems really fragmented and Google already targets these through its existing Adwords tools.

This was My Brand Too!

Recently I’ve had two really dissapointing experiences with companies that I’ve admired and sought to emulate.

One of them I’ve admired for something like 12+ years.  If you asked me who the top companies in the world were, unequivocally, I’d list this particular outfit.  I loved their philosophy, their marketing, their service, everything.  I told people the way I felt as well.  The other company was a fast growing outfit who conquered their industry and was an inspiration to me at every step of the way.

Both of these companies have clearly lost their way and it’s a cautionary tale for those of us who are running, growing, or seeking to start out on something new.  The weirdest part of it is that I feel as though heroes of mine are gone.

These companies were my brands too!

How could this have been prevented?  What can we learn?

  • Don’t overreach – both companies broadened their product line to the point that they were doing too many things.
  • Don’t ignore the small stuff.  Things like consolidated invoicing don’t seem like a big thing in the developer scrum, but they’re huge to customers who are probably using all of your products because they love you.
  • Don’t underestimate the power of a financial credit.  Several times along the way a discount or permanent waiving of fees for what was admitted to be substandard service would have set things right in my mind.
  • Don’t ever tolerate rudeness to customers by you staff.  If this happens, get the staff to seak out the customer and apologise.
  • Don’t blame your failings on a third party.  It’s your fault for introducing the third party – third parties mean more responsiblility for you, not less.
  • Don’t allow tickets to wallow unresolved for months.  This just festers the entire situation.

At the end of the day, I won’t be using these providers as much anymore, and that’s sad, because I truly loved both companies.  We’re probably all guilty of a some or all of the above at some point, but it’s how we respond that matters.