Case in point: I recently had dinner with a friend to do some catching up.  He explained that another mutual acquaintance had an absolutely brilliant idea for a startup.  My friend really wanted to be a part of it, and he confided that they were thinking of going the Y-Combinator route.  I’m sure it’s annoying to my pals (especially the ones who are themselves Angel or professional VC investors), but any conversation that focuses more on the investors than the idea and business models immediately launches me down a set path that the recipient often finds a little bewildering if not downright antagonistic.  Despite all that, I asked my friend why he wanted to go with Y-Combinator?  Why get any invested capital at all?

He spent quite a while, too long really so it only lit my fire brighter, talking about the $30,000 they would receive in exchange for 15% of the company.  I asked him to explain what the $30,000 would allow him to do that he couldn’t otherwise accomplish on his own.  After all, $30,000 is really not very much money.  This goes to the heart of one way Entrepreneurs don’t think right about their plans.  If $30,000 seems like a lot of money to you, if it seems like an enabler of some kind, it’s my belief you’re using it to solve the wrong problems, and that in fact, they aren’t real problems to start.  You’re thinking of using it to quit your Day Job, to hire others, or to pay for advertising.  You don’t need to do any of that, as it turns out.

Let me explain–I’m a firm believer in Bootstrapping ala 37Signals.  Their formula is pretty simple–you can build a company on 10 hours a week while you keep your day job.  David HH wrote a great post on this not too long ago entitled “All or Something “.  The gist is that you don’t need to adopt an all-consuming commitment to get something interesting done.  The intro to his article is worth reading carefully:

One of the most pervasive myths of startup life is that it has to be all consuming. That unless you can give your business all your thoughts and hours, you don’t deserve success. You are unworthy of the startup call.

This myth neatly identifies those fit for mission: Young, without obligations, and few if any extra-curricular interests. The perfect cannon fodder for 10:1 VC long shots.

They’re also easier to rile up with tales of milk and honey at the end of the rainbow, or the modern equivalents, “compressing your working life into a few years” and “billon dollar waves”.

But running your life in perpetual crunch mode until the buy-out or bullshit-IPO fairy stops by your door is not surprisingly unappealing to lots of people.

In fact, what you do might even be better and more successful if you take your time by only working 10 hours a week on the idea.  I’ve seen this for myself with my CNCCookbook bootstrap.  The problem is you think you know exactly the right thing to build and if you could only get it done, riches would be yours overnight.  The reality is that nobody knows exactly the right thing to build in a vacuum.  You benefit by interacting with the market, and it takes time for the market’s message to come back to you and be properly infused in what you’re building.  You can’t infuse it at a 100 hour a week pace because it simply doesn’t come to you fast enough.  It requires a feedback loop and a little more gradual change.  This applies not just to the product itself, but to achieving a content-audience fit and then growing that audience to an interesting stage.  If you think otherwise, then you’re not being realistic.  You’re looking for that long-shot of completely unbridled demand that will seize your company and carry it in the vortex to the Land of Oz.  You’re looking for that 10:1 VC long shot.  Unfortunately, you don’t have a portfolio so that the 10 that didn’t work before the 1 that did doesn’t sink you.

Here’s the other issue–if you can’t overcome the kinds of problems $30,000 will solve without the $30K, you may not have the right idea or you may not have the right team for the idea.  Creating a successful multi-million dollar company is a big accomplishment.  If all it took was $30K, a little advice, and some networking, there’d be a lot more people with their own multi-million dollar companies.  There’s a set of skills your team must have.  There’s a set of qualities your idea and market must have.  Without them, $30,000 won’t begin to fix the shortfall.  $30K is just a convenience, not a solution.  It’s not even aspirin, it’s a vitamin pill.

So $30,000 is actually not really very useful to someone that is focused on the 10 hour a week plan.  Certainly it isn’t worth giving up say 15% of your company and potentially a lot more than that in terms of control and heartache that will still be there long after the $30,000 has been spent.  To his credit, my friend did get off the $30K after a little while and suggest that having all that networking and mentoring would be worthwhile.  That’s actually something I see as being much more valuable, but in truth, it actually isn’t all that hard to come by in Silicon Valley.  After all, the networking is one reason why we put up with so much cost to live here, isn’t it?  If you think you need an incubator to be mentored, to ask questions, and to learn how to do it, ask yourself how that’s any different than signing up for a bunch of the Anthony Robbins-style self-help seminars?  You know the kind–some flashy personality is telling you they have all the answers and they’re willing to share them so that you too can be a multi-bazzillionaire loved by everyone.  All for a price.  Guess what, this works for some people, but for most, they could’ve had the same answers without much effort.  I told my friend I’d be happy to help him understand how to launch and build a business having founded 4 software companies and been involved in 7 software startups.  I also told him the cautionary tale of those making their livings off such advice.

Hacker News is a good place to find such people, and I’m not picking on HN for it, that’s just where the paying customers are for these peddlers.  I call them the Entrepreneur’s Self-Help Gurus.  Don’t get me wrong–there are some dynamite folks out there who can and will help you, but I’m referring to a different sort of group.  These are folks who did something that if examined closely, was not an especially big deal.  Yet now they’re making more than they ever did on the not-especially-big-deal telling other people how they did it.  ”I’ve got the secrets, and I’ll share them for just a small fee.”  Perhaps they created a software company in an odd little niche, never cleared more than $100K with it, but now they’re making $200K and more telling others how to do it.  To me, there is something wrong with that picture.  Just for kicks, I signed up for a bunch of the more popular pay-for-content mailing lists.  You can get them on sale all the time from AppSumo, for example.  After going through about four of them promising everything from SEO expertise to how to get 10,000 Facebook followers, I finally quit.  I hadn’t managed to learn a single useful thing from them.  In fairness, if I had been at the very beginning of my journey, they might have helped a little, but everything they had to say that was useful was available for free on some blog somewhere on the Internet that I had already read.  FWIW, I keep a clipping blog of such information I call Firehose Press.

I finally realized, that what these people were selling, was not the information, but the confidence to use the information.  That’s not something I really needed, and I hate to be a wet blanket, but if that’s what you need, are you sure you’re ready to be an entrepreneur?

One more thing on the subject of networking–you can go have coffee with so many extremely talented and successful people in Silicon Valley at the drop of a hat that it’s ridiculous.  People here are incredibly generous with their time.  Heck, if Y-Combinator fascinates you, go look up the Alumni and go ask them what they learned there and what they got out of it.  You just need to find a friend of a friend to introduce you and most decent people will share a cuppa joe with you.  Why not?  I often do.

Okay, so maybe the networking mentoring isn’t the thing.  What about all those juicy introductions to VC’s?  I have several problems with this one too, being the VC Curmudgeon and all.  It isn’t that I haven’t dealt with the VC’s.  In fact, they’ve been involved with every company I’ve been with until this latest one.  Let’s start with the intro process.  It’s not hard.  You need a CEO who they would want to talk to and an intro from someone they know.  If you have such a CEO, they can get that VC intro from someone they know.  VC’s actually want to meet people, they just want to meet people who won’t waste their time.  Same with Angels only it’s even easier to meet one of them and you might not need that CEO quite yet (but you will, so may as well find them so they can help you from going too far astray).  You don’t need Y-Combinator to meet these people.  What you need to meet a VC is pretty simple:

-  A product finished enough to be sold.

-  Real paying customers who will say extraordinary things about your product.

-  Traction.  The amount varies with the space, but there needs to be evidence that pouring gasoline on the fire will make it bigger in a hurry.

Too many entrepreneurs think investors want to give them cash to make some or all of those three things happen.  I won’t say it can’t work that way, but it works less and less that way every day in the Valley.  Y-Combinator, for example, used to invest more than $30K.  Most of the VC startups I’ve done raised a couple million dollars on a slide show and a team.  Those days are long gone.  You’re going to have to bootstrap to a greater or lesser degree (and mostly greater) anyway, so you may as well get started learning how to do it, even on 10 hours a week.  In fact it’ll be better if you limit yourself to 10 hours a week–it will teach you to focus.  The realization that I had to bootstrap to raise VC is what set me on the bootstrapping path, by the way.

Too many entrepreneurs think they need something to be able to be entrepreneurs.  They need money, advice, connections, confidence, permission, or at the very least, a guru they pay to tell them how it’s done.  But here is the amazing thing: you don’t need any of those things.  You can do everything that needs to be done in 10 hours a week to build a very successful multi-million dollar a year company.  Do that first, ahead of worrying about investors, and you will be 10x better off.  Because, here’s the thing, if that company explodes with a growth rate beyond your wildest dreams and you need a lot of capital right now just to keep the site up and running, that’s not a crazy home run extraordinary case for the VC’s.  That’s what they expect to see.  That’s what they’re looking for to get their checkbooks out.  That’s table stakes and we’ll see where it goes from there, whether you can monetize it, whether you’re the right ones to run it, and whether it is a passing fad.  If you have a deal at that stage, congratulations.  You’ll have to beat the VC’s off with a stick, and you’ll be able to dictate your terms.

But what if you don’t have one of those?

Don’t despair.  Remember:  an Enterprise Software Company that puts together a steady-but-not-sexy business and manages to get to $100M in revenue and an IPO is often seen as a failure in VC portolios.  They want the $1 Billion deals.  But you?  Heck, you’d be thrilled to be the 100% owner of a $15 million dollar a year software business with 20 employees that was throwing off cash like crazy and whose customers loved you.  That is unless you are that rare Zuck/Gates/Ellison/Brin type that really does care more for power than money or lifestyle, of course.

One last reference to recent influences that spurred this post.  I saw Jake Lodwick’s post in Pando Daily, “An Acquisition is Always a Failure.”  I understand exactly where this guy is coming from having had 2 of the companies I founded acquired.  Surpass was acquired by Borland and that was the Quattro Pro product and Integrity QA was acquired by Pure Atria.  Surpass was a great acquisition.  I joined Borland, we sold over $100M of Quattro Pro the first year, I moved up through the ranks to eventually run R&D for Borland in its heyday, and it was a fabulous company to be a part of.  I learned a lot.  Pure Atria was a great company too, but it didn’t last.  Six months after I got there it was gobbled up by Rational.  They already had a product with a brand that competed with Integrity QA’s product and it was based in Boston, not Silicon Valley.  Despite Integrity’s product being one of the most innovative things I have ever worked on (Genetic Algorithm-Based Software Testing), it basically never went anywhere because politically, it was stuck in a closet where there was no light.  It exists today as an IBM product called TestFactory, but it’s growth was stunted and it never recovered.

It’s fascinating to read the comments in Lodwick’s article and contrast them with where Jake is coming from.  He says:

Whereas we’d once been free to work on whatever seemed interesting, we now found ourselves in vaguely defined middle-management roles, sitting through pointless meetings where older doofuses who didn’t understand the Web challenged our intuitions and trivialized our ambitions.

That was basically my experience working for Oracle, where I learned a lot, but couldn’t accomplish much.  Similar with Rational.  Big Companies do work much differently than smaller ones, or as Jake says:

They’re another class of entity entirely, more concerned with sustaining their own rhythms and control structures than experimenting with strange ideas from acquired ex-founders. It wasn’t long before I was ejected like a virus.

Then he describes the frustration of being loose with money, but without company all founders who get acquired feel:

With a fat bank account, I was pretty set to do whatever I wanted for a long time. The sale afforded me the ability to make art, invest in other companies, and unwind. But it didn’t take long to realize that my new life was a hell of a lot less exciting than running an independent company had been.

So true.  Then we have the commenters, and as I read through them, it’s hard to see them as being focused on much but the money, whether this is an indictment of what they need to do (investors need an exit/cash out), or whether there aren’t a few examples where an acquisition made a thing far greater than it otherwise would have been (Android).  Most of them missed Jake’s message and wisdom entirely.

Here’s the thing.  At one point Jake talks about getting $50,000 checks each month.  Do the math carefully before you decide you need a VC-scale company to make enough money.  I went through one of those VC-backed Enterprise Software IPO’s, and while I made good money, it was #3 on my hit parade of exits.  Owning a business 100% that plops $50K checks on my desk each month would’ve been a much better deal, and this is to say nothing of all the deals that crash and burn because the VC was driving for a 10:1 Long Shot.  You have to live through a lot of Ramen noodles on the long shots, then maybe you’ll see that big payoff.  Or maybe you’ll have been diluted out of your mind and it won’t be such a big deal.  I’d have been much better off owning that $50K/month business that I could keep on running that doing the IPO I did.

In the end of the Day, as an Entrepreneur, you need to get crystal clear about a few things:

-  How much money do you need to get from your venture?  If $1M a year is a happy number, the chance is a bootstrap is much less risky than a VC deal.  Remember, income equates to investment portfolio about 20X.  That $1M a year income stream requires a $20M liquidity event after taxes before you can live like that without working.

-  How much control do you have to have?  Hey forget whether you’re an ego maniac.  I’m talking of control more akin to artistic control.  The control to deliver on what you do well.  On why everyone always says they love you, but that Boards, CEO’s, and Professional Managers are only too quick to override if it suits their agenda.  If that artistic control to do what you do best is important, adding people who own significant parts of your company can only dilute that control and maybe even result in your being “ejected like a virus.”  OTOH, if you want Bill Gates or Steve Jobs-style control over an industry, you’re gonna need VC’s.  If you want to change the world with Electric Cars and Private Spacecraft like Elon Musk, you’re gonna need VC’s.  Just be really honest with yourself about what you need versus what might be nice to have.

-  Most importantly, how will your venture change your life?  What does it have to accomplish to make you happy?

Too many entrepreneurs get signed up for the promise of (to quote David HH’s article), “compressing your working life into a few years.”  Sounds great, but it better be just a few years to put up with the amount of BS that kind of pressure cooker entails.  And the truth is, it is never just a few years.  It’ll be 10 long years to reach the conclusion, assuming it is a happy one.

Why not start out with a venture that makes you happy every single day you pursue it?  If it has VC potential, you’ll know soon enough and you can decide then what path to take.  If it doesn’t have VC potential, you may still wind up realizing everything you’d hoped for and more.  Even better, it may be at much lower risk.

Here’s the money quote for me:

It might actually be good, or even better than Evernote. But I still won’t use Keep. You know why? Google Reader.

I spent about seven years of my online life on that service. I sent feedback, used it to annotate information and they killed it like a butcher slaughters a chicken. No conversation — dead. The service that drives more traffic than Google+ was sacrificed because it didn’t meet some vague corporate goals; users — many of them life long — be damned.

Looking from that perspective, it is hard to trust Google to keep an app alive.

Google is now squarely in the Evil Doing Business, and it will cost them over time to get back out of that penalty box.  Regardless of how well Google Reader may have been doing in terms of revenue and strategic objectives, it was doing what it did for the wrong people to be messing with, starting with Om Malik.  I say that because the primary users were the very people who write the news on the web.  That’s a tough audience to make angry.

If Google was as smart as they claim to be, they’d issue an apology to everyone involved and make Google Reader promise to keep Google Reader happy and healthy for at least 5 more years before evaluating the decision again.

Not only was it not declining, it was actively growing, while Google+ stayed flat.  Cancelling projects like this is what happens when politically unpopular projects start to make the higher up’s projects look like failures.  It’s one of the many ways Big Companies manage to shoot themselves in the foot every day.  It isn’t a stretch to believe that somebody got concerned there might even be a resurgence in Google Reader’s popularity underway.

1.  Just use Twitter

There are so many problems with Twitter as a replacement for Google Reader that I’ll only list a few of the most important:

-  You can only search 140 characters when looking for meaning, whereas with RSS/Reader you get to search the title and the full contents of a blog post.

-  The signal to noise ration on Twitter is terrible.  Save one silly article where the ZDNet writer said he had failed to organize his RSS feeds but had very carefully tended to his Twitter followings, this is not something many disagree with.  Twitter is overrun by chittering twirping bots.

-  What signal that does exist on Twitter is largely coming from people who use RSS Readers to curate what they pass along.

-  Twitter is the poster child of a company that frequently upsets and destroys its ecosystem in its own self-interest.  If you think that is bad while it’s been private, just wait until it is under the publicly traded spotlight to show growth to sustain its ridiculous multiples.  Why would you trust that whatever you value about Twitter has any permanence at all?  Particularly after watching the Google Reader-you-are-products-not-customers drama unfold?  As the saying goes, fool me once…

-  Twitter has all the problems of the River of News Metaphor, which is next up.

2.  The River of News is a Better Metaphor

I can’t avoid addressing the “River of News” metaphor when RSS inventor Dave Winer says that’s the better mousetrap and when so many who prefer Twitter think they want the River of News.

My problem with the River of News is not that it isn’t a good metaphor.  Rather it’s that Google Reader could function just fine as a River of News (you don’t have to care about unread vs read or put anything in folders, just reader the latest arrivals as you wish) and that the River of News doesn’t solve the problem Google Reader is ideally suited for.  More on that problem below, but right here, let’s focus on what problem the River of News does solve.  It’s the problem of Finding Something Current of Interest Right Now.  That’s a useful problem to solve for many people.  If you just want to be on top of the latest industry gossip so you don’t feel silly at lunch, it works.  If you just need to kill a little time and want to learn something new, it works.  However, if you actually want to solve the Real Problem that Google Reader was the best at solving, the River of News is useless.  The River of News is what True Google Reader Users spent their time trying to get past.  Let me illustrate.

I used Google Reader in some specific ways precisely because I was trying to avoid the River of News.  The River views that the most important dimension is arrival time.  The more recent, the better.  Consequently, I used Reader’s folders to group noisy sites under a category I called “Bulk Feeds”.  These were the general purpose news sources like Techmeme, ZDNet, GigaOm, or (back when I cared) TechCrunch.  Every single day I would start the morning by marking all read except today’s entries in the Bulk Feeds folder.  I wish I could’ve automated it by saying, in essence, “For this folder I only care about what came out in the last 24 hours and you can delete the rest.”

I had a second group of folders I called “A-List”.  This was a group of very very good bloggers who were more likely to be worth wading through more articles than the Bulk Feeds, but who were still extremely general in terms of their content.  Seth Godin would be a good example.  It would’ve been nice to be able to mark these as read if older than a week.

Every thing else went into a folder by subject, because these were blogs that were highly focused on deep areas (outbound marketing, seo, UX design, etc.) and that wrote content that was essentially Evergreen.  Any blogger or SEO marketer knows what Evergreen content is–it’s content that is not perishable and that you’ll get value out of for years.  This is content that I explicitly do not want to see lost in a River of News, that I do want to be able to read through over time so I will not mark it as read without at least skimming it.  This is the content Google Reader is really the best tool for curating, and it is the content that River of News substitutes are the absolute worst at helping me acquire, manage, and consume.

3.  Google Reader Was Preventing Innovation

Mark Masterson gets my award for silliest and most confused outlook on Google Reader.   His long and bizarre rant against it seems to boil down to it being bad for any software to be around for too long, apparently because it stifles innovation.  Apparently it is some sort of impediment to evolution.  Baloney.  There’s been plenty of misguided evolution going on and none of it has solved the problems Google Reader solves.  There are cases where there isn’t any particular benefit to be gained by trying to evolve further solutions to a particular problem.  When that happens, it’s a good thing if the solution has commanding market share and is allowed to stand while others see clearly the ecological niche related to that market is now filled.  Aside from a desire to keep enough competition to avoid monopolistic price gouging, there’s no real evolution needed.

One of the biggest risks is that in their effort to fill the gaping Google Reader void with something new, New, NEW, we will lose sight of what Google Reader did well.  By deciding to fix its shortcomings, we’ll get a magazine like Flipboard, a way to read something later like Instapaper, or an ambient noise generator like Twitter.  These are not innovations on Reader, they’re different eco-niches entirely.

4.  RSS is Dying Because It’s Not Social Enough

We’ve all met people that approach “friends” in one of two ways.  There are those people that form extremely deep and long-lasting friendships.  Then there are those who will refer to anyone they’ve met as a friend.  Certainly there are possibilities between these extremes, but on the whole, people tend to fall more at one end or the other than not.  Those people that argue RSS is not social enough are from the “If I’ve met you, you’re my friend” extreme.  They have a zillion follows on Twitter, a zillion friends on Facebook, and a zillion more connections on LinkedIn.  Or, perhaps their bipolarity is a function of type of relationship, with a zillion business-related connections and relatively few personal connections.

But here is the thing–RSS is for those people that want to form extremely deep and long-lasting connections.  That’s what the RSS experience is all about–I don’t want to miss anything you’re saying so I will subscribe to you in my Reader, and once there, you’ll probably stay there for quite some time.  The River of News crowd thinks that because they’ve exchanged the occasional Tweet with someone they don’t really know and may never Tweet with again, that’s being more Social.  No, not at all–they’re different kinds of Social and we’re losing essentially half of the Social spectrum when we walk away from RSS.

That same ZDNet writer who never organized his RSS feeds but carefully curated his Twitter and then complained RSS was too noisy claimed:

SS readers don’t exactly lend themselves to conversations either — the sorts of conversations that happen quite naturally on social media (including social bookmarking/linking sites like Reddit).

Yet, he has 33 comments on that post as I write this, and I’m sure there’ll be many more before people quit commenting on it.  Many of the comments are more thoughtful than 140 characters can support.  Ironically, so far this year he has had exactly one post (on why the cost of the 128 GB iPad doesn’t matter) that had more comments.  I’m not going to bother counting how many of his Tweets had more conversation as the point is made that he couldn’t hope for a more social medium than RSS and blog comments.  There isn’t one that exists.  I doubt even Fred Wilson could claim otherwise given how his blog comment ecosystem works even though he is an investor in Twitter.

5.  Since Google Reader Was Never Profitable, It’s Best To Shut It Down

This is a popular refrain:

Google is a business it has to make money and it has every right to shut Google Reader down because it wasn’t making money and you have no right to complain about it because it was free.

Bollocks.  If Google was Walmart choosing not to carry some product or other that I used to be able to buy there cheaply, that’d be one thing.  But here is the difference:  Google is igniting real negative sentiment towards the Google Empire as a result of this decision.  They’re making a mockery of their business motto of, “Do no evil.”  In fact, I would argue that very root of the Evil they claim to want to avoid stems from the idea that most of the people who use their software (I am carefully not calling that software “products”) are not their customers.  Google’s Customers pay for advertising and give them money.  Rather, those of us who use their software are in fact the real “products” Google has to sell.  When you look at it that way, any massive sentiment issue among the “products” is a defect that is ultimately bad for the business.  You can only mistreat the “products” for so long before they revolt.  Unfortunately, these “products” are fickle and don’t have to stay with Google.  They can be “products” for lots of others.

Closely related is Google’s Valuation.  It is unnaturally high for a reason–because people believe in them.  Actions like sunsetting Google Reader damage that belief right at its core.  This is a grass roots problem that ultimately leaves only the role of commoditizer open to Google, and this is not good for their long term valuation prospects.

6.  RSS and Reader Are In Decline and the Average Consumer Never Used It, So Why Bother?

Let’s leave aside for the moment that some of the folks who worked with it say this has little to do with decline and everything to do with trying to prop up Google+.  While I find that notion entirely plausible and painfully Microsoft-like in its execution, it’s worth musing about the “decline” of RSS.  It’s a bit like saying that since so many Prius’s have been sold Porsche’s are in decline.  Porsche’s were never meant to take the place of the Prius.  It is not unusual for the power tool to come along first followed by the tool the mere mortals can use, but that does not in any way diminish the value of the power tools.  Look, we started with HTML and people had to know it and deal with it to have a web presence.  Then we got some better tools such as blogs.  Eventually we made it all the way to things like Twitter and Facebook, where anyone can have a web presence very easily with absolutely no need of technical knowledge or even the creative ability to write more than 140 characters or so of text.  That’s great, but it in no way means that since we can create 140 character messages easily we’ve no need of static HTML pages or blogs.  It’s fuzzy thinking.

I have no problem believing the number of people who engage in use of the power tool may have declined a bit, but as I mentioned on the Twitter note above, these other tools remain vitally dependent on the power tools users who are curating content.  It’s less a decline and more of a saturation.  This is the same fuzzy thinking that leads us to declare that since people are buying smartphones and tablets like there is no tomorrow the desktop PC must be dead.

The idea that the only thing that matters is what appeals to the lowest common denominator is what’s wrong with the news today in general.  It’s why there’s a more enlightened crowd out there that very much wants to seek the Long Tail, needs Google Reader to do it, and couldn’t care less about USA Today, Fox News, Huffington Post, or Techcrunch.

What Google Reader Really Was:  Super High Octane Page Rank

Laura Hazard Owen’s, “Google Reader, Please Don’t Go — I Need You To Do My Job” is one of the best takes on what Google Reader really does I have seen.  She makes her case well:

-  Twitter is no substitute for RSS:  The best thing about Google Reader, from my point of view, is that it allows me to scan a lot of information quickly, with the assurance that I’m not missing anything.  Exactly what I’m saying about Twitter and the River of News metaphor.

-  Neither is Flipboard:  Services like Flipboard are great if you want to see the most popular stories on a given topic. But as someone who really geeks out digital book publishing, I don’t just want to see the stories that an aggregator recommends for me because they’ve reached a critical mass.  Amen, sister!  I want to lever myself as far out onto the Long Tail as possible because that’s where the real action is.  Everything else is processed and homogenized for mass consumption.

Let me go beyond what Laura has to say to cut through to essence of what I think Reader is.  Laura talks about it being for someone who wants to, “…keep track of what’s going on at the roots of my beat” or to “…really geek out” on some subject or other.  It solves a very deep Search problem by facilitating a connection between the consumers of the information who want to get it in as dense and pure a form as possible, uncut on the street with the baby laxative the various aggregators use to define what will be popular.  It is information curation in its purest form.  If we once manage to find the true experts in the subjects we thrive on, the very wellsprings from which the best ideas flow, how could we not want to establish a permanent pipeline into those cognitive reservoirs?  How else to do so than by use of a tool like Google Reader.  This is the Super High Octane driven by true Human Intelligence alternative to Page Rank.  It’s Quora done more deeply than a single question at a time.  It’s more deeply Social than anything seen since for those who genuinely want to be a part of a select community of Thinkers.  It is Ernest Hemingway and all of the others in Paris.  It’s plugging directly into particular cyber-cognitive neighborhoods the way only Gibson and Stephenson could imagine before it came along.  And Google wants to burn it down.

Try asking Ernest Hemingway to communicate with his peers 140 characters at a time while anyone who wants can crash the party and conversation.  Writing is a lonely business, but it doesn’t have to be that lonely.

I’m not the only one, Om Malik says it is his second most used Google application after Gmail.  Ditto for me.  I’d like to see Google publish the real figures on the supposed decline in Reader usage.  I bet it was still huge.  This is just a typical big company move to push their customers, I mean products, into toeing the line they’ve drawn.  They want us to go to Google+ or some darned thing where they can sell more ads or beat some competitor into submission.

What will be next, Google, turning off GMail?  Or are you too intent on bashing Microsoft over the head with it?

I’m tired of companies treating me like the product instead of the customer when they’re ad-driven.  It’s a sham and a bait-and-switch.  It is the root of all the evil Google claims they will never do, and keep doing with ever increasing frequency.

If you think I’ll move from Reader to some other Google product, drop dead.  It ain’t gonna happen.  From here on out, I will look to minimize my involvement with anything new from Google.  In fact, I’m shutting down my PPC advertising as soon as I am done here.  At least where that is concerned, I am a customer, and I can vote with my pocket book.  Learn how to save your data out of reader here.

This is bad news indeed for bloggers all over the world, who should find their own ways of letting Google know they’re not pleased.

A Modest Proposal

What Google should have done, is ceded Reader, source code and all, to a company that actually values Blogs and Bloggers.  How about the WordPress folks?  They should take it up, or failing that, create a WordPress theme that emulates reader and make it available for free via WordPress.com.  Matt Mullenweg, are you listening?

Failing WordPress, either Microsoft or Yahoo should dive onto this just for the customer goodwill.  I bet both companies would get back folks who haven’t been enthusiastic about them for years if they could field a good replacement within 3 years.

Postscript

A quick perusal of the comments in these various blog (blog == duh!) posts about Google Reader tells me there are lots of unhappy products, um customers, out there when it comes to this latest Google decree:

GigaOm

Techcrunch

Gizmodo

LifeHacker

And, here is a list of potential alternatives:

OldReader:  Very slow as I write this.

NewsBlur:  Down as I write this.

Rolio:  Awesomely slow as I write this.

GoodNoows:  Performance not too bad.

There are likely more, but I am too disgusted to root around for them right now.  Notice I’ve commented on site status, which has been poor this afternoon, no doubt due to the tiny few who still used Reader (yeah, right, there are zillions of us) looking for alternatives.  I haven’t looked into any of them yet, so I have no favorites to recommend.  These sites are all about to get a huge windfall of users as they choose alternatives, but it remains to be seen which ones can really take up the exodus.

There’s also things like Feedly, NetVibes and Flipboard, but I don’t want that ilk.  I don’t want a magazine.  I subscribe to nearly 200 blogs and need a power tool that lets me triage minimalist summary lists the way Reader did so I can get right to the good stuff.  I also don’t need an iOS or other mobile app.  While I often access Reader via my iPad, I also want desktop access without the nuisance of an app.

My CNCCookbook blog is experiencing it’s second outage so far this month.  That’s a cause for visitor unhappiness and potentially lost business.  I use Page.ly, because I believe in SaaS services.  CNCCookbook is bootstrapped, and I try not to spend any of my time at all doing something that I can easily have done for me by a SaaS provider, like hosting a WordPress blog.  Page.ly has been pretty good in most respects, though far from perfect in terms of outages.  Frankly, there have been too many outages and having two in one month is starting to be a bit much.  Their story is that their hosting provider, FireHost, has created both of these problems.

It’s even affected the Page.ly blog, as it did the last outage too.  Ironically, I wouldn’t be posting this blog except that Page.ly’s blog went to the same screen I’m showing here when I attempted to comment that maybe it was time they thought about Firehost alternatives.

Whatever’s going on at Firehost, and however much it saves Page.ly to use Firehost instead of some more reliable service, it’s not worth it guys.  It’s making you look bad, and through extension, that makes my business using your service look bad.  The good news is if it continues, it is very straightforward to migrate to Page.ly’s competitors.  I also have experience with WPEngine from a prior company, and found them to be more performant and a nicer service, but quite a bit more expensive.  Perhaps some of that expense is going to a better hoster for their service.  At CNCCookbook, we use Amazon for our own services and I can’t remember the last time we had an outage.  Maybe once have we had one, and it involved the simple expedient of rebooting our EC2 instance.

In the end, if I do move the CNCCookbook blog, I will be checking who the new provider uses as their hoster.  If it’s FireHost, there’s not much point in moving.  Some service should start aggregating up time data on the hosting services.  It would be good to know who your SaaS provider uses–unless they’re huge they probably don’t have their own servers–and how reliable that provider has been over time.  While it may not seem like it, it will be in every SaaS company’s best interests to cooperate with such data collection simply because it shines a light on the hosting providers that will require them to rise to the next level of reliability.  As it stands, they’re a step removed and much harder to track.

Sorry Page.ly and Firehost–no links for you.  Not happy today.

Let’s walk through it.

Both sites have visitors who convert to something more.  In the case of the Ad-Revenue model, presumably it is a person who creates an account on a Facebook or Twitter-like site, thereby becoming a user.  Gabe says that conversion rate for a really strong property might be 5%.  It can be much lower, like 1 to 3%.  I went with the optimistic 5%–the model is already too hard to contemplate 1%.  In the case of CNCCookbook, the conversion is from visitor to Trial user for the software.  We have a 30 day free trial on all our products.

From becoming a User or Trial User, the next conversion rate is monetization.  For the Ad-Revenue model, I did a quick search for clickthrough rates on display advertising and came up with 0.1%.  Sure, you might get your Users to click on more than one ad over time, but let’s just keep these numbers simple.  They’re not going to click on 2000 ads to even the score, after all.  For CNCCookbook, we have a very high conversion rate from trials–about 13%.  I view that as a commentary on the high quality of our software–people like it if they try it.  I understand conversions in the 5% are more common, so you may be forgiven for deciding the ad revenue model is only 1000 times less effective than charging for a product.

Okay, given those conversion rates, we take the average revenue per transaction and multiply all that on through to find the value of an impression.  What is it worth to you to bring another visitor to your site?

In this analysis at least, it’s pretty easy to see why bootstrappers need to be charging for their products and not relying on ad revenue.  Unless you just happen to have an amazingly viral product, it’s just too hard.  You have to rack up way too much traffic to get to interesting revenue levels.

Or, to put it like 37Signals:  Charge for your products, Dummy!

It’ll be fascinating to see how the NYT responds.  Hard to imagine how they do anything but investigate Broder and ultimately move him along elsewhere.  To do much else would imply very little journalistic integrity.

My question for you is that since you’re reading this blog and are likely somehow involved in high tech hardware or software at some level, how does your product compare in terms of how well it can monitor what your users are doing with your product?

I’m fascinated with the idea of closing the feedback loop for the good of customers.  Yes, it’s great Musk can catch the NYT in a bogus review, and perhaps you will catch a reviewer too, but the potential for improving your customer’s experience is of much greater value to your product.  This may seem like a Big-Company-Only idea, but I’m pursuing it with a vengeance for my SaaS bootstrap company (CNCCookbook) because I need precise feedback that pinpoints where I can do the most good for my users with the scarce resources I have available.  I can tell you from experience that the tools are available and straightforward.  You can have the data for very little effort invested.

The next thing I am after is to automate responses to that data.  I’ve been reading the blog of a company called Totango with some interest.  They essentially want to provide SaaS automation for a Customer Success team.  Various folks have written about the importance of Customer Success and I’m also a big believer.  My thoughts at this point are to start out relatively simple.  I want to understand the early lifecycle of my products and be able to trigger automated actions based on that cycle.  For example:

Step 1:  Installation

Monitor the first time the customer has successfully logged into the product.  Offer increasing amounts of help via emails once a day until they achieve this milestone.  The emails can start with self-service help resourcs of various kinds and eventually escalate to offering a call or help webinar.  The goal is to get the customer properly installed.

Step 2:  Configuration

This seems like part of installing, but in fact there is significant post installation configuration needed for CNC Manufacturing software.  Same sort of thing: provide daily emails with increasing levels of help until the system determines that the user has properly configured the system.  Also, this is an opportunity to collect information.  We provide canned configuration for the most common cases and finding out what the next tranche of cases to target should be is very helpful.

Step 3:  The Path to Power Usage

It’d be great if everyone who signed up for our 30 day free trial actually got to see and understand all of the features that set our product apart.  I’ve seen some other products like Dropbox (Full disclosure: they give me another 250MB of storage if you use that link and then sign up. If you’d rather I didn’t get the extra storage, use this link instead. If you sign up, they’ll give you a link where you can get 250MB free too.) walk customers through a usage maturity exercise.  They’ve somewhat gamified it by giving out some of their “currency” in the form of extra storage if you complete the tasks.  My goals here would be to get everyone to see as many of our unique functions as possible during the 30 day trial.

Step 4:  The Holy Grail: Referrals

If all this goes well, the customer gets through the Trial, understands the unique capabilities of our products, and likes the product well enough to buy it, then the final stage in this incarnation is to ask them to refer others they know who might like the product.

That’s a pretty simple roadmap for how to create some closed-loop feedback of telemetry and drip email that improves your customer’s experience.  So I’ll ask again:

Is your company setup to monitor your users as successfully as Tesla monitors its drivers?  Why not?  I’ve used a lot of software where it is pretty clear they’re not monitoring much at all.  I’ve even talked to some of them to encourage change, and they seem receptive.

If you have a story about what sort of work along these lines you’re doing, please share it in the comments below.  I’m very curious.  I think we have the potential to personalize the experience for our customers like never before.

It’s a nice letter.  I admit I puzzled over who could be spending so much time checking out my profile–seems like a lot more than 1 in 100 people would be ahead of me in terms of attention and name recognition out of the 200 million on LinkedIn.  I would count most of my LinkedIn contacts for starters.

However, it didn’t take much thought to conclude this was probably due to my bootstrapped company CNCCookbook.  We get about 1.5 million visits a year to the web site, making it one of the top CNC sites and almost certainly the most popular CNC blog.

In other words, my marketing is working.  That’s a good thing in a bootstrapped SaaS company.  What a great Age we live in when a SaaS company can be created by just one man and reach so many.

This post is not really about Big Data, other than to point out that I think it is a relatively small market in the end.  It’ll go the way of Object Oriented Databases by launching some helpful new ideas, the best of which will be adopted by the entrenched vendors before the OODB companies can reach interesting scales.  So it will be with Hadoop, NoSQL, and the rest of the Big Data Mafia.  For those who want to get a head start on the next wave, and on a wave that is destined to be much more horizontal, much larger, and of much greater appeal, I offer the notion of Suburban Data.

While I shudder at the thought of any new buzzwords, Suburban Data is what I’ve come up with when thinking about the problem of massively parallel architectures that are so loosely coupled (or perhaps not coupled at all) that they don’t need to deal with many of the hard consistency problems of Big Data.  They don’t care because what they are is architectures optimized to create a Suburb of very loosely coordinated and relatively small collections of data.  Think of Big Data’s problems as being those of the inner city where there is tremendous congestion, real estate is extremely expensive, and it makes sense to build up, not out.  Think Manhattan.  It’s very sexy and a wonderful place to visit, but a lot of us wouldn’t want to live there.  Suburban Data, on the other hand, is all about the suburbs.  Instead of building giant apartment buildings where everyone is in very close proximity, Suburban Data is about maximizing the potential of detached single family dwellings.  It’s decentralized and there is no need for excruciatingly difficult parallel algorithms to ration scarce services and enforce consistency across terabytes.

Let’s consider a few Real World application examples.

WordPress.com is a great place to start.  It consists of many instances of WordPress blogs.  Anyone who likes can get one for free.  I have several, including this Smoothspan Blog.  Most of the functionality offered by wp.com does not have to coordinate between individual blogs.  Rather, it’s all about administering a very large number of blogs that individually have very modest requirements on the power of the underlying architecture.  Yes, there are some features that are coordinated, but the vast majority of functionality, and the functionality I tend to use, is not.  If you can see the WordPress.com example, web site hosting services are another obvious example.  They just want to give out instances as cheaply as possible.  Every blog or website is its own single family home.

There are a lot of examples along these lines in the Internet world.  Any offering where the need to communicate and coordinate between different tenants is minimized is a good candidate.  Another huge area of opportunity for Suburban Data are SaaS companies of all kinds.  Unless a SaaS company is exclusively focused on extremely large customers, the requirements of an average SaaS instance in the multi-tenant architecture are modest.  What customers want is precisely the detached single family dwelling, at least that’s what they want from a User Experience perspective.  Given that SaaS is the new way of the world, and even a solo bootstrapper can create a successful SaaS offering, this is truly a huge market.  The potential here is staggering, because this is the commodity market.

Look at the major paradigm shifts that have come before and most have amounted to a very similar (metaphorically) transition.  We went from huge centralized mainframes to mini-computers.  We went from mini-computers to PC’s.  Many argue we’re in the midst of going from PC’s to Mobile.  Suburban Data is all about how to create architectures that are optimal for creating Suburbs of users.

What might such architectures look like?

First, I think it is safe to say that while existing technologies such as virtualization and the increasing number of server hardware architectures being optimized for data center use (Facebook and Google have proprietary hardware architectures for their servers) are a start, there is a lot more that’s possible and the job has hardly begun.  To be the next Oracle in the space needs a completely clean sheet design from top to bottom.  I’m not going to map the architecture out in great detail because its early days and frankly I don’t know all the details.  But, let’s Blue Sky a bit.

Imagine an architecture that puts at least 128 x86 compatible (we need a commodity instruction set for our Suburbs) cores along with all the RAM and Flash Disc storage they need onto the equivalent of a memory stick for today’s desktop PC’s.  Because power and cooling are two of the biggest challenges in modern data centers, the Core Stick will use the most miserly architectures possible–we want a lot of cores with reasonable but no extravagant clock speeds.  Think per-core power consumption suitable for Mobile Devices more than desktops.  For software, let’s imagine these cores run an OS Kernel that’s built around virtualization and the needs of Suburban Data from the ground up.  Further, there is a service layer running on top of the OS that’s also optimized for the Suburban Data world but has the basics all ready to go:  Apache Web Server and MySQL.  In short, you have 128 Amazon EC2 instances potent enough to run 90% of the web sites on the Internet.  Now let’s create backplanes that fit a typical 19″ rack set up with all the right UPS and DC power capabilities the big data centers already know how to do well.  The name of the game will be Core Density.  We get 128 on a memory stick, and let’s say 128 sticks in a 1U rack mount, so we can support 16K web instances in one of those rack mounts.

There will many valuable problems to solve with such architectures, and hence many opportunities for new players to make money.  Consider what has to be done to reinvent hierarchical storage manage for such architectures.  We’ve got a Flash local disc with each core, but it is probably relatively small.  Hence we need access to storage on a hierarchical basis so we can consume as much as we want and it seamlessly works.  Or, consider communicating with and managing the cores.  The only connections to the Core Stick should be very high speed Ethernet and power.  Perhaps we’ll want some out of band control signals for security’s sake as well.  Want to talk to one of these little gems, just fire up the browser and connect to its IP address.  BTW, we probably want full software net fabric capabilities on the stick.

It’ll take quite a while to design, build, and mature such architectures.  That’s fine, it’ll give us several more Moore cycles in which to cement the inevitability of these architectures.

You see what I mean when I say this is a whole new ballgame and a much bigger market than Big Data?  It goes much deeper and will wind up being the fabric of the Internet and Cloud of tomorrow.