Joining the MIT E-Center

Posted on September 20, 2009 by Simeon Simeonov

I’m excited to join the Entrepreneurs in Residence at the MIT E-Center. It’s a new structure for fostering innovation and venture creation pushed forth by Bill Aulet who runs the center now. I’m fortunate to be doing this with great group of entrepreneurs including:

  • Susan Whoriskey (Cubist Pharmaceuticals, Momenta Pharmaceuticals, Whoriskey Associates)
  • Jean Hammond (AXON Networks, Quarry Technologies, Spider Systems, ZipCar, HubAngels)
  • Brian Halligan & Dharmesh Shah (HubSpot)
  • Roger Freeman (Solventera Energy)

Having been involved with MIT for years in various ways, I look forward to more regular contact and engagement.

Posted in FastIgnite | Tagged , , , , , , | 2 Comments

More cloud computing

Posted on September 15, 2009 by Simeon Simeonov

I am doing another cloud computing event next week, this time moderating a panel at a MassNetComms event titled “Cloud Computing – Beyond the Hype – A Discussion on the Real Benefits and Issues.” There is a great speaker line-up:

  • John Considine, CTO, CloudSwitch
    Cloudswitch is about helping enterprises get into cloud computing on their own terms. This is a hot area of innovation. Even Amazon got in the game with their Virtual Private Clouds (VPCs).
  • David Skok, General Partner, Matrix Partners
    David invested in CloudSwitch and has spent a lot of time looking at various investment opportunities in cloud computing and related spaces, trying to separate hype from reality.
  • Omer Trajman, Senior Director for Cloud and Virtualization, Vertica Systems
    I’ve known Omer for many years. He is a sharp technologist, always aiming to tackle the next big problem. He is also not at a cloud computing company per se and will bring the valuable perspective of a vendor looking to the cloud for their own benefit and for the benefit of its customers.
  • Michael Werner, Senior Platform Strategy Advisor for Microsoft’s developer and cloud-services technologies, Microsoft
    Mike wins the award for the longest title of any panelist I’ve had the pleasure of working with over the years. Beyond that, he’s someone who’s deeply versed in technology distribution and adoption by developers and companies and will have an interesting perspective on when and how cloud computing will become broadly deployed.

I hope to see you there. Bring your enthusiasm, skepticism, ideas and questions.

Posted in cloud computing | Tagged | 2 Comments

Do social networks care about your privacy?

Posted on August 26, 2009 by Simeon Simeonov

Following my post yesterday on Twitter having to think carefully about privacy, a friend pointed me to a study that shows how social networks leak deep personal information, allowing third parties to combine what you do with who you are. Read the story here.

By itself, this may be absolutely OK depending on how much of this data is collected and how it’s used by third parties. However, most of the entities (targeting companies, ad networks, etc.) operate in a rather opaque manner for most consumers. First, you often don’t even know who those third parties are because they have no visible presence on the websites you visit yet your browser makes HTTP requests to them and they typically set multiple cookies on your machine. Many of them don’t even have a web site for a consumer to visit, for example, to figure out which business sits behind the URL and read their privacy policy.

A good (random) example is ad.yieldmanager.com, requests to which are typically hidden in the HTTP redirect chain. You need a tool like Live HTTP headers for Firefox to see them. If you make a browser request to ad.yieldmanager.com or yieldmanager.com you get nothing. The WhoIs record shows that Yahoo owns the domain.  If you go to www.yieldmanager.com you’ll be redirected to the HTTPS version of the page https://www.yieldmanager.com which Firefox will refuse to display because it has an invalid security certificate. You’ll have to go through several dialog screens in Firefox to make a security exception and see the site. It will show a login screen for RightMedia (an advertising exchange bought by Yahoo) but no information for consumers. If you hit the home page of RightMedia, you’ll see a tiny link to “privacy” on the bottom which takes you to the privacy policy of the corporate site. At the end of the third paragraph, there is a link to the privacy policy on ad.yieldmanager.com. If you click on that, you’ll finally get to find out what RightMedia collects from you and what they do with it. Well, sort of.

The privacy policy says “Non-personally identifiable information is automatically sent to the Yield Manager technology by a user’s web browser. This information includes the date and time of the ad request, the user’s Internet Protocol Address, browser type, and the web page that the user is visiting.” How can they be sure that the web page I’m visiting doesn’t have personally-identifiable information? Does my Facebook URL personally identify me? Do my LinkedIn, blog, FriendFeed, Twitter URLs personally identify me? You bet they do. I have no idea whether RightMedia operates on those sites but if they do and if they can see links that can be tied to my account I’d certainly argue that their privacy policy is misleading.

Oh, one more thing. Do you know what’s the title of the privacy policy? “CONFIDENTIAL” Huh? Somebody better fix that.

<head>
<title>CONFIDENTIAL</title>
<link rel="stylesheet" href="http://my.yieldmanager.com/styles/css.php" type="text/css">
<link rel="shortcut icon" href="http://my.yieldmanager.com/images/default_icon.ico" type="image/x-icon" />
<script language="JavaScript" type="text/javascript">if (top.location != location) { // if in frame
	top.location.href = document.location.href; // break out!
}
</script>
</head>

Do you think most consumers care about their information being potentially misused? I haven’t seen the studies but I hope lots do. How many of them do you think will be able to find out that yieldmanager.com/RightMedia exist and get around to finding the privacy policy and understanding it? Right.

In a world where it’s hard to even know who these third parties are let alone what one of the them says they are going to do with your information, how can anyone one be certain whether they’ll actually do what they said they would? Is it too much to ask that consumers have an easy way to (a) find out who collects data as they browse the Web and (b) have the privacy policy of those entities at most one or two clicks away?

Posted in Advertising, Digital Media, Facebook, Social Advertising, social media, Twitter | Tagged , , , , , , , , , , , , , , , | 3 Comments

Twitter gets in the privacy game

Posted on August 25, 2009 by Simeon Simeonov

TechCrunch saw Twitter re-writing all links to point to their site. Great idea as it gives them wonderful data. Potentially bad idea from a privacy standpoint if they do anything more than count how many times a link is clicked. If the link is to a URL shortening service, they’d get a lot more data by looking at what the link redirects to. The problem is that the end URLs can be parameterized in any number of ways, including with information that can be considered personally identifiable by the latest thinking from industry associations and the FTC (per David Vladeck’s recent interview).

Q: The marketers make a distinction between personally identifiable and non-personally identifiable information, that they’re only collecting anonymized information.

A: Well, but we saw what happened. There’ve been all sorts of disclosures with allegedly anonymous data. The problem is that it’s like a mosaic. If you have the information released and you can match it to other publicly available data about somebody, you can often put together a pretty complete picture. You know, I think were past that debate. At least, I think the F.T.C. is past that debate; whether the rest of the world has caught up with us, I don’t know. But we don’t find that a tenable distinction. And if you look at our online behavioral advertising report we make this point, I think, pretty emphatically.

I recently went to the OMMA Behavioral conference in SF and talked to a number of chief privacy officers about problems at the intersection of data collection, advertising and privacy. The bottom line was that many companies unknowingly make false claims to consumers and violate laws and self-governing principles. One of the stories I heard was the epitome of how easy it is to get into trouble. It had to do with an SEO change made to a publisher’s site resulting in personally identifiable information going to an ad targeting company. Previously, the targeting company had been collecting some basic URL info from the publisher. The SEO change moved potentially sensitive data from query strings into the path of URLs. The SEO team had no idea of the impact of their change–they didn’t even know about the data sharing deal. There was no notice to consumers or the targeting company. The ad targeting company discovered this after the fact (and after both they and the publisher had significant liability exposure).

I’d love for Twitter to collect and make use of more information about how people use the service. As volumes increase, they need more meta-data to create a better service. However, I hope they have experienced advisors on the privacy side, e.g., folks like Dan Jaye who co-wrote the P3P spec and later did TACODA.

Posted in Advertising, Twitter | Tagged , , , , , | 1 Comment

The great terrible CraigsList

Posted on August 25, 2009 by Simeon Simeonov

Lots of press recently about CraigsList given Y Combinator’s call to entrepreneurs last year to find a way to create a more for-profit version. The call was repeated again this year. Lots of analysis followed with plenty of opinions about what’s good and bad about CraigsList. Bottom line is that the site works and it works well despite all its warts. The business should be an inspiration to entrepreneurs everywhere about how to do more with less and how to win through simplicity. Fred Wilson has a good summary post of that.

Posted in startups | Tagged , , , | 1 Comment

The Cultural Revolution in Boston

Posted on August 13, 2009 by Simeon Simeonov

Scott Kirsner writes about the cultural revolution in Boston and the evolving ecosystem that supports emerging entrepreneurs. He mentioned a few key resources and contributors. Two more to mention are MITX‘s work in the digital media world and MTLC‘s entrepreneurship cluster. I’m helping both with works in progress that will help the cultural transition.

IMO the transition has been happening ever since Bubble 1.0 in a less-visible manner. It was enabled by the radical lowering of the cost of development and deployment of Web-based solutions. That was important because it lowered the launch capital requirements and hence increased the pool of entrepreneurs who could launch. (Cloud computing and the bootsrapping ethos of Web 2.0 were additional accelerators.) It wasn’t until the spread of social media that the trend became more visible and allowed like-minded people to band together.

Posted in Uncategorized | Tagged , | Leave a comment

Non-competes and innovation

Posted on July 30, 2009 by Simeon Simeonov

Much has been written about non-competes in MA and whether our tech sector is at a disadvantage compared to CA. The debate is moving slightly forward (and to the side, unfortunately) with recent comments from the state, which Xconomy covers.

I can see both pros and cons but there is no doubt that non-competes hinder labor mobility and startups’ access to talent. My experience from the recent past:

  • One lawsuit preventing an engineer from joining one of my companies. The judge upheld the non-compete. The engineer had a rare and very valuable skillset acquired over decades in the industry. He worked with me in a previous company. I seriously doubt he learned that much new material at the company that went after him. The opposite is probably true–he contributed tons based on what he already knew. That didn’t matter. The domain was deemed “close enough.”
  • Two execs barred by former employers from discussing potential CEO or executive chairman roles at another one of my companies looking for funding. No, the company is not a direct competitor of their previous employer. It’s more likely a future partner. Again, however, because the domain is close-enough, the non-compete may be enforced and nobody wants to go to court or have their reputation tarnished by a previous employer talking behind their back about how they violated their non-competes and acted without integrity. It’s hard-enough to find experienced C-level leadership willing to jump into companies before investment, let alone leaders with any specific domain experience. Restricting the pool further leads to fewer companies getting funded, less innovation, less jobs and less revenue for the state.

In technology, velocity of execution is everything. The pace of innovation is accelerating. Twenty years ago, when release cycles took 18-36 months, a one year non-compete wasn’t such a big deal. Today, when agile startups can ship every week, a year-long non-compete can have a significant impact on a company’s ability to compete for and recruit great talent and on individuals’ ability to apply their talents and skills early in the development of new markets.

The other issue is the scope of non-competes. Since the typical wording is along the lines of “don’t do anything similar to what your previous employer did at the time you left,” it risks putting employees in a position of ever-expanding restrictions due to industry consolidation. Startup X is in the block level continuous data protection business but it gets acquired by EMC which is in anything having to do with data and storage. Startup Y is in the mobile geolocation ad targeting space but is acquired by Microsoft which is in everything that’s big.

I wish more people realized that while non-competes haven’t changed that much over the years, the tech industry has. I can appreciate some arguments for non-competes but, if they were to stay, I’d like to see them capped to a reasonable timeframe of 3-to-6 months max and scoped tightly to a core domain.

Tagged , , , | 7 Comments

How IBM and Yahoo made Microsoft and Google

Posted on July 30, 2009 by Simeon Simeonov

Here is the five-step recipe for creating the most important software companies of the past 30 years:

  1. Convince the market leader to give you something big they don’t see the value in for cheap
  2. Innovate, innovate, innovate
  3. Make a ton of money
  4. Eat the market leader’s lunch
  5. Bet on everything big

Guess which is the most important step…

The case of Microsoft

About 28 years ago, IBM made one the biggest strategic mistakes in its history. Being a company primarily focused on hardware, it didn’t understand the value in the PC operating system. It outsourced that work to a, at the time, little-known company called Microsoft. From Wikipedia, the ancient lore of the computer industry:

On August 12, 1981, after negotiations with Digital Research failed, IBM awarded a contract to Microsoft to provide a version of the CP/M operating system, which was set to be used in the upcoming IBM Personal Computer (PC). For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products, which IBM renamed to PC-DOS. Later, the market saw a flood of IBM PC clones after Columbia Data Products successfully cloned the IBM BIOS, and by aggressively marketing MS-DOS to manufacturers of IBM-PC clones, Microsoft rose from a small player to one of the major software vendors in the home computer industry.

The rest is history. Microsoft took the job seriously, created a pretty darn good product for the time and used the PC clone explosion as a way to increase its dominance in the value chain. IBM lost it leadership. The DOS and then Windows franchises generated massive cashflow which MS plowed into innovation (often in the form of cross-subsidies lasting a decade) to create often dominant product lines such as Office, the server business (don’t forget that Sybase in a no less brilliant move licensed core tech to MS enabling them to create SQL Server) and others. Now, the company bets on pretty much all large markets in the software space. If it’s big, there is no way MS would ignore it. In fact, from conversations with execs there, it seems like much of new market development planning begins with a process as simple as ranking future market sizes. That’s why Microsoft will relentlessly pursue search and why it was probably willing to do an even better deal with Yahoo. (Jason Calacanis has a good post on the Yahoo-Microsoft deal.)

The case of Google

In the case of Google, the strategic mistake was Yahoo’s. The company didn’t value search. It outsourced it to Google. Google took the job very seriously. They innovated a ton behind the scenes while smartly keeping the simplicity of their user experience. Through AdWords and later AdSense + the DoubleClick quisition, Google gained significant control of the advertising value chain. They passed by Yahoo and never looked back. The search franchise is so profitable that it gives them freedom to bet on everything from browsers to OSs to mobile, something pretty much no other company save for Microsoft can afford. Google’s version of the cross-subsidy is the perenial beta that just keeps getting better. Very, very hard to compete with that.

The moral of the story

The moral of the story is that the two most important software companies in recent history were enabled by massive strategic errors on behalf of the market leaders in their respective sectors. It was the market leaders who put the companies on the map, gave them distribution and scale and enough revenue to fuel innovation. IBM and Yahoo nursed the companies that nearly killed them. One could argue that without the explicit support of the market leader, a startup wouldn’t have had the chance to grow at a rate that allows it to have Microsoft’s and Google’s escape velocity.

Kudos to IBM for innovating around its business model and evolving into a company which is still a huge industry player. I’m not sure Yahoo will have that chance.

The interesting question is whether this will happen again… Do you think a market leader will make that type of mistake again? Can you point to where this is happening now or likely to happen in the future?

Posted in Google, Microsoft | Tagged , , , , , , | 4 Comments

Startups VCs are dying to invest in

Posted on July 21, 2009 by Simeon Simeonov

VCs have a big problem. Many entrepreneurs just don’t want to solve big problems anymore. After hearing the fifth socially-responsible-Twitter-client-running-on-fuel-cell-powered-unlocked-iPhones pitch this week, it’s understandable how VCs want to take August off. So, in the interest of helping everyone, I’m going to share the high-level areas for a couple of the types of startups that VCs are dying to invest in. If enough credible entrepreneurs are interested, we could probably set up a C Prize (as opposed to merely an X Prize).

Weather management

  • Elevator pitch: What weather do you want today?
  • How: Different ways to go about this one. You could create weather on a macro or micro scale. Or you could grab weather from one location, package it up and move it to a different location at reasonable cost. For example, ship rain from Boston to the Middle East. Ship sun from wherever to Boston.
  • Business model: You have options here depending on how you solve the problem. Enabling equipment works, provided you slap on a hefty maintenance and operations contract and get your customers to fund the capex. Alternatively, you can go for a straight marketplace or exchange. If you want to have fun, don’t automate it. Instead, hire young up-and-comers from the commodities exchanges. They make for great footage.
  • Why: Because you don’t just want to be rich. You also want to be the One Who Saved Earth.
  • Who will back you: This one is custom-tuned for getting backed by a Boston or New York VC, especially after the never-ending rain this summer. However, if you have a credible plan, you can expect crazy bidding up of terms from Scandinavia and the Middle East.

Productivity enhancement

  • Elevator pitch: Do you want to be super-human?
  • How: Different ways to go about this one also. You could eliminate the need for sleep. If you can’t find any other way to do it, go for genetic engineering but read this first. Alternatively, you could find a way to pack way more than 24 hours in a day. (Caveat: it’s been tried several times before and everyone has gotten stuck on the cost analysis of the fast-moving spaceship.) Last but not least, if you are based in Massachusetts and, therefore, part of the best robotics community on Earth, you can go the cybor path but watch the aesthetics–they matter a lot in social media world.
  • Business model: This one is custom-made for a subscription business on a per-life basis. Perhaps as a percentage of lifetime earnings?
  • Why: Because you want to be the first to take advantage of the invention but don’t have the money to do it on your own.
  • Who will back you: A Chinese VC with shady government ties will back you while the US VCs are tied up in congressional hearings.

With ideas of this caliber there is always a risk of being kidnapped and turned into a research slave for a powerful government’s dark agencies. That may, of course, be prevented through some startup innovation. Topic for another post.

Update: (thanks to FN’s comment) Bill Gates has already taken the lead in the weather management startup space. Hmm, I wonder you’ll back him?

Posted in startups, VC, Venture Capital | Tagged , , , , , , , , | 10 Comments

Don’t Ignore The Least Common Denominator

Posted on July 21, 2009 by Simeon Simeonov

Good post by Fred Wilson on the ubiquity and ease-of-use of SMS messaging: Don’t Ignore The Least Common Denominator. Two points worth adding:

  • SMS is completely portable across the world, which is particularly important in developing countries where the majority of consumers cannot afford fancy smart phones.
  • It’s quite easy to get ubiquitous access via SMS to devices because of (a) SMS aggregators and (b) email interfaces to SMS.

Personally, I’m a big fan of SMS and it has played a role in the two mobile startups I’ve worked with. I take many Facebook actions through SMS. It’s much more efficient that logging in to the web site. I’d use it for Twitter also if there was a smarter way to reduce the volume of messages. One of the great benefits of SMS is that it is not that widely used and hence there is a lot less clutter there than on email.

Posted in Mobile, startups | Tagged , , , , | 2 Comments