Founders at Work - Part 2

I have finished the book. I skipped some chapters that I didn't find interesting.

I had this belief before, but it was confirmed in the book. Most of successful startups are childrent of acccidental success. Most founders didn't set out to build these big empires. Most of them were quite surprised at their own success. How amazing.

There is also something that I can't let go. It's the role of chances and luck. In any given circumstances, we can make any number of decisions. I remember Sliding Doors, less well known movie with Gwyneth Paltrow. It was a sappy movie about fate of love. The movie diverges when Gwyneth misses a train and when she catches the same train. It comes together in a hospital, where two parallel universes converge.

Anyhow, right now where I am is the result of sequence of decisions I had made. Some major, some very minor. We make decision all the time. I am writing this essay instead of getting ready for bed. There are external factors that affect me, and I may or may not have caused it.... Also a decision I make would affect others. I wonder what may have happened if admission committee of University of Pennsylvania rejected and I had gone to Virginia Tech instead. Or if I decided to stick around at Topspin instead of going to Korea and working for Samsung. Or more recently I put off looking for a job to help the bank sell assets and IP of the last company - GigaFin Networks - so that the business would continue. And now I find myself in worst time to be without a job. I made the decision not knowing what would lay ahead. Is it just bad luck? What about writing this essay at this moment? Would someone read it just by chance that may cause whole different chain of actions tomorrow and in the future?

Bottom line is that you don't know. Just like many of the founders said that the reason why they were successful was because they didn't know any better. They were too naive to know how hard running a startup would be. And they didn't give up when perhaps they should have. Sometimes is ignorance is indeed bliss. You can't be paralyzed by past and what-ifs. Make whatever best decision you can make at the moment, and go for it!

"A good plan, violently executed now, is better than a perfect plan next week."

Future of advertisement

I was watching "CSI" and "Eleventh Hour" today, and I was amazed at product placement of iPhone. It also reminded me of the first season of "24" where I saw clear product placement of Cisco and Dell.

Today was rare. I don't watch much TV. I spend a lot of time online to watch TV shows (and video clips) on Hulu, Veoh, and YouTube. Why? It's purely convenience. I can watch it anytime at anywhere whenever I want. I guess I could have TiVO, but I am cheap.

A few weeks ago, I attended Bay Area K group's technical seminar on IPTV, and I am not quite convinced whether IPTV will be the future. Unless there are programs that clearly take advantage of two-way communications, I don't see the need for IPTV.

I don't know if video websites will ever take over cable or over-the-air market, but it's getting clear that new business model for TV advertisement will be required. One of them is obviously product placement, and I can't believe so many actors you see on TV are using iPhone! That's one great strategy. 

Founders at Work - Part 1

I've recently picked up a book called Founders at Work. I thought I've heard about it when I was trying out my start-up in 2006, but it has copyright date of 2007. It is a collection of interviews of founders at various (successful) start-ups.

There are definite similarities between all these successful founders.

1. Most of them were singles when they started companies.
   
2. They all started early, mostly around college period and sometimes in high school.
   
3. Because they started early, they were all inexperienced and naive. Yet, most of them got funding from VCs. That seems to contradict conventional belief that VCs bet on a jockey, not on a horse. Big difference? Working prototype. They all had products and prototype already working.
   
4. Most of them had gone through some tough times during the life of the start-up.
5. Their first idea rarely worked. Many have gone through multiple iteration of ideas to get it right.
   
6. Most had good partners and co-founders that supported each other in tough times. They all persevered, and made it at the end.
   
7. They all attributed a lot of their successes to luck. It's not that they didn't work hard and only waited for Lady Luck to smile at them. They worked really hard, and while things could have gone many different ways, some things just fell into place....by chance.
   

I haven't finished the book, but I have to wonder if I had given up my company way too early. There were many additional obstacles; like having to support the family and having no committed co-founder (my partner left in less than six months). Though, I don't regret having started a company. It was once-in-a-lifetime experience. Another thing the book said was that start-ups tend to require more than professional commitment from employees. People say you don't get in to business with friends, but start-ups do need friends because of its high emotional requirements.

Nevertheless, it's very interesting book. I wish I had read this book before I started my company.

Open, Closed and Whole Product

In previous entries, I have covered the rate of change in technology advances, peril of attempting to predict the future, and current trend in developments of cloud computing, data centers, and smart phones. A report by NPD says that iPhone 3G is now the best-selling smart phone (past BlackBerry’s and Palm Treo’s) and 2nd-best selling phone after Motorola Razr in US. The proliferation of new smart phones and the birth of whole new eco-system of applications developed by any programmers and available to all users present interesting security problems.

Mobile phones in general are now considered an essential item in one’s life. It’s hard to imagine what the world was like without them, not being able to connect to anyone at anytime from anywhere (even interrupting us at anytime). Most people nowadays cannot imagine what it was like before the Internet and mobile phones. Because of its portability and must-have status, the number of mobile phones vastly outnumbers any devices that connect to the Internet.

I can’t say for any other countries, but in US, smart phones are absolutely necessary in business because of its ability to access corporate emails and calendar. In fact, they are two major functions why millions of business users buy smart phones, which have become mandatory communications device for business users.

In addition to the vast volume of general mobile phones, smart phones are becoming more and more like small computers. With wide variety of applications available to download and install, new smart phone users enjoy the same freedom of choosing whichever application they’d like to use as those desktop users. As a rule of thumb, the technology advancement will continue and they may become as powerful as some laptops, as today’s laptops are as fast and powerful as desktop. It’s inevitable and just matter of time.

So, if you think about billions of laptop-like mobile devices with wide variety of Internet applications, any security professional will cringe. Infecting mobile devices with malicious code could result in devastating results. All the personal information stored on the laptop including address book and emails could be leaked. Someone could also tap into user’s location information through GPS and keep tracking the user for criminal purpose. Since they will become as powerful as some laptops, it’s entirely conceivable that some sort of P2P applications (good or bad) might be developed for mobile phones. As more advanced botnet uses encrypted P2P network rather than traditional IRC channels, the mobile botnet can be certainly created with P2P network as well.

Apple keeps tight control over applications developed for iPhone, but when the number of applications is increasing faster and faster, they won’t be able to keep the full control. However, restriction and control are not the answer. They will only limit innovations and may even kill the very technology and/or product it is trying to protect. Internet was able to flourish because it was open. While there are some parasites, the benefits of openness vastly outweigh negatives. There are numerous cases when open system/architecture triumphed over closed counterpart. Open system encourages competition, which in turn fosters innovations in the market. Then, how does one make money in such environment? It may not be easy, but it’s possible. Good example is Cisco. Most Cisco products are based on open standards, yet they command highest market share in most markets. Worse yet, they do not build the best or the fastest products in the industry. Slightly different, but similarly, Apple was able to come in to crowded MP3 player market and dominate in short period of time. There is no secret to make a MP3 player, as you can see in high number of MP3 manufacturers. How did Apple do it? Is it because it looks beautiful? Americans are quite practical folks. Knowledge of America might be limited to what they see on TV or movies for some, but most Americans are definitely not frivolous. It wasn’t because of its looks. Then, how did Apple succeed?

In marketing there is a concept of “Whole Product.” It’s not enough to win in the market with just main product. In order to complete user’s experience, you have to consider what user would go through from before the purchase to what afterwards. Apple iPod was successful because of iTune software and iTune store. In order to complete MP3 experience, a user would have to find a way to manage his music collection and a way to add more songs (either by ripping a CD or buying online). iTune software and store completed that, and they worked flawlessly with iPod. How about Cisco? Cisco’s “Whole Product” is Cisco product plus millions of professional service and technical support professionals either from Cisco or 3rd-party vendors. Cisco made it legitimate with its certification program so that their customers, if chose to seek outside help, can find quality professionals by checking their certificates. It’s this auxiliary knowledge base that is keeping Cisco in the top place. Because they are market leaders and have most customers, their position is reinforced by many other companies that build and offer additional auxiliary items/accessories and service for them such as cases, boom boxes, adapters for iPod or training centers, system/network integrators for Cisco.

So which way is right for mobile security? It’s a million dollar question, and also where incredibly attractive opportunity could be.

Danger of isolation

The release of Chrome solidifies the importance of web browser and decline of desktop in the future of computing. There is a new wave of computing revolution going on, and I am afraid Korea is being left behind in spite of its blindingly fast technology adoption. I believe here is where the difference lies: adoption vs. innovation.

Since the birth of the Internet, Software-as-a-service (SaaS) model has been attempted (remember those Application Service Providers in the early 2000’s?), but it truly gained momentum with rush of web 2.0 sites and also wild success of mega Internet companies like Google, Amazon, eBay, and etc. Since these companies needed to have massive processing power and deal with tremendous amount of data, they were early (commercial) adopters of high-performance computing. They wanted to monetize their expertise in running scalable data centers, and that’s how (commercial) cloud computing was born. Both Google and Amazon let a company or individual to run their web applications in their data centers and they charge only for resources used. This is especially good for web 2.0 start-up companies who cannot afford to run their own scalable data centers. Current cloud computing service isn’t perfect as demonstrated by outages from both companies. But, you can bet this is where the future of computing is headed. In turn this is also pushing development of products specifically targeting high-performance data centers, and both larger companies such as Cisco and Juniper and many start-up companies are jumping in the bandwagon.

This is also exactly why desktop and subsequently operating system is losing its significance. In other words, they both are going back to their basics, as they were meant to be. There is no reason for bloated OS. Actually some will even argue that OS is really just the kernel and anything else is application. It’s a religious war that I don’t want to get into. Nevertheless, it’s clear that as desktop applications move to the Internet (or cloud or somewhere remote accessible by URL or IP address), web browser becomes the window to all the applications. It doesn’t matter whether you use Windows OS, MAC OS, or Linux OS, all you need is a web browser. There will be some specific desktop markets that always need more processing power such as gaming and intensive computer graphics, and they will become only small fraction of entire desktop market.

This whole trend got me thinking about how come Korea wasn’t able to cash in on its technology achievements. Anyway you look, numbers are amazing: highest broadband penetration, highly advanced mobile phones, highest mobile Internet speed, and etc. But why doesn’t Korea lead rest of the world in Internet or mobile innovations? Why isn’t there a Korean company or innovation that everyone talks about as setting the trend for the future, changing status quo, and making significant differences in high-tech world? Why isn’t there a Korean people talk in the same breath as Steve Jobs, Bill Gates, Jeff Bezos, Elon Musk, Bill Joy, Andy Bechtolsheim, Will Wright, etc.? Then I realized that it was because what we see on the surface is the result of fast adoption, not innovation. In addition, Korea is too isolated in terms of its technology reach. Concepts like Software-as-a-Service or cloud computing should have been initiated in Korea. Online gaming craze in Korea is well published even in US, but it’s a result of people spending tons of time playing games programmed and published elsewhere. Should fraction of these gamers have studied programming instead, we may have a different story. The social networking website was also pioneered in Korea. Cyworld was hugely popular and successful in Korea, but they failed to capitalize outside Korea. They tried much later, but it was too little, too late. A recent report shows that Facebook, a hugely popular social networking website in US, is growing the fastest outside US. I saw some report in Korea that complained Mozilla’s Firefox and Google’s Chrome do not display most of Korean websites correctly. It’s because most Korean websites were developed for Microsoft’s ASP.Net. This is certainly not Mozilla’s or Google’s faults, and they certainly should not change its code to support non-W3C standard web pages. Korean mobile manufacturers have been in mobile phone industry for a while, but they never have generated hype and loyal following like Apple had with iPhone (to be fair, it applies to all other mobile phone makers). Also, by opening of API and free SDK, and allowing users to buy and install any applications they wish, Apple is pushing mobile application development to whole another level. In addition, Google’s open-source based Android phone is sure to bring additional push for mobile application innovation. What’s interesting is while Apple has full control over its hardware, Google doesn’t. Google relies on others for hardware, and this is quite similar to Microsoft and cheap PC hardware alternatives to IBM PC and its OS. Mobile phone’s hardware is getting commoditized, as all electronic hardware goes through, and tremendous value is placed in OS and other software running on top. That’s why Kleiner Perkins Caufield & Byers, the most well-known VC in the Silicon Valley, has created $100 million iFund to invest in iPhone and iPod Touch applications. In addition, Research In Motion, the RBC and Thomson Reuters have invested in an $150 million venture investment fund, called the BlackBerry Partners Fund, to support developers of applications running primarily on the Blackberry.

In essence, I think Korea’s high-tech industry is not taking full advantage of its potential. One major part of the problem is the whole start-up environment, from investment community to engineers and marketing folks who are too isolated. When a start-up is started, it should look to US and Europe (and perhaps China) as its main markets, not Korea. Products should be architected and designed for more than just Korean market. The key to successful business outside Korea is to understand local business and consumer cultures, so Korean companies should not be shy of hiring someone outside Korea, and also tolerate other cultures or different way of thinking. Also, you need more personal investors willing to take very high risks and provide seed money. Successful entrepreneurs should be available to offer advice to those in need. Koreans are no doubt very smart on paper. What separates them and successful entrepreneurs in the Silicon Valley are basically thought processes: creative problem solving, seeing beyond what’s obvious, thinking outside the box, etc. There is a reason why most innovations and value/wealth creation is still happening in the Silicon Valley. One of the reasons is general acceptance of immigrants and differences in cultures and thinking. Silicon Valley’s position may certainly change in the future, but so far I believe it is still here. I sincerely hope that Korea can take full advantage of its highly-educated, smart population and its technology achievements to start creating values outside Korea (but NOT with Government initiatives). She has the potential and just needs to spread her wings.

Whole Product

The concept of "Whole Product" has been well known. In order to complete user experience, you need additional products, features or services in addition to the main product. For Apple iPod, it was the iTune that managed music collection as well as vehicle to buy a song at $0.99 (as opposed to buying an entire album). Apple perfected the art with iPhone and its App Store.

Thinking back, Samsung made critical mistake when trying to enter enterprise networking market. Most companies buy Cisco products not only for their technology, but also support and professional services, which make up the whole product. Even though networking products are based on open standards (IETF), because enterprise network is complicated and mission critical, it's important to design it correctly and to receive immediate support when something goes wrong. Samsung wasn't willing to invest money in the support and services structure.

Along with iPhone, Google's Android phones will also have Application Marketplace, so it would be very interesting if the success can be replicated. I say it would, but we shall see. There is clear business model for Apple iPhone application developers (by charging for apps), but I don't see it for Android. I suppose they would have to give developers freedom to charge for an application. So far I think they are supposed to be free, but money could be very strong motivator, so Google should strongly consider it.