E-Summit 09: Day 1: Epilogue (Part XII + I)

We all applaud Mr. Jobs for his innovative work at Apple but even he has made mistakes. He launched the first iPhone with a faulty price plan. He has struggled to get television shows and digital movies to the mainstream. He was probably 10 years late in getting Windows on the Mac. There is no doubt that he is a creative genius who produces top notch products but the scoreboard shows that no Apple product, beside the iPod, can claim even 10% global market share.

What Steve Jobs has done is laid the foundation for Apple to grow, with or without him, for the next generation. Nobody who buys this stock should be buying it because of Steve Jobs. This story is much larger than one man. Apple is protected by rigid barriers to entry. Do you realize how difficult it is to crack into the computer operating system market? I’ll use the word impossible.

Microsoft (MSFT) has created such an OS monopolistic ecosystem that it has become impossible for any competitor to get compatible software written for their start-up. Apple was smart/lucky enough to maintain a niche group of loyalists who used the Mac OS through the generation of Microsoft’s growth phase. That was so vital to their success because there were always just enough users to warrant software development for the Mac platform. Good luck to any company who wants to try and launch a new OS, there won’t be any software to run. We happen to live in a time when computers and phones are more than just gadgets; they have become essential elements of business and social society. These devises are more of a necessity to us than cars, clothes, and according to the latest data, even religion. Not a bad era to have the only OS in town.

Microsoft’s folly with the Vista release has allowed Apple to become a mass market share player. In the most recent Net Applications Survey Apple’s share of the operating system market grew 5.69% in May to hit a record 7.80%, while Windows in all its flavors dropped half a point to 91.17%. That’s a record low for Microsoft, which nonetheless still runs on 9 out of 10 computers on the Internet. This trend has taken years to develop and Apple is about to reap the rewards, with or without, Steve jobs. He has set something very powerful in motion that not even he can stop.

Apple’s use of Leopard on the iPhone will cause every $199 iPhone user to become comfortable with the Mac system. If you thought the iPod had a nice halo effect for Mac Computers just wait for the iPhone halo. Apple’s OS provides the solution for modern day touch screen technology and mobility.

Apple is the next Microsoft but they will be even bigger because they dominate the hardware as well. Legendary investor Warren Buffett says, “In business I look for economic castles protected by un-breachable moats.” Thanks to Steve Jobs’ reluctance to outsource the Mac OS, Apple is perched in the protected castle. His company will live on much longer than he. It’s time to come to terms with the fact that Steve Jobs won’t live forever and that doesn’t change the fact that Apple has the best fundamental growth story in the world.

— Dominique Trempont

With this, E-Cell concluded first day of the E-Summit. The audience stood up in applause, visibly dazed after such an enlightening session. We, here at IIT Kharagpur, remain truly indebted to the respected speakers for giving us their valuable time. The day was far from over though. Sramana Madam and Dominique Sir were surrounded by budding entrepreneurs from the audience, whom they were gracious enough to answer despite their tight schedule. They were also very generous in allowing E-Cell to use/distribute the slides freely. Sramana Ma’am also left us with a copy of the first volume of her series on demystifying Entrepreneurship, Entrepreneur Journeys, which I hope to get my hands on.

Till then, lets just call it a day and continue with our present journey, with E-Cell, IIT Kharagpur. The Summit has just begun… see you on Day 2!!

E-Summit 09: Day 1: The audience asks…(Part-XII)

There was a very interesting round of questions from the audience. As expected, and as seen during the rest of E-Summit, one of the first questions asked was on the effects of Global meltdown, on Apple, and on budding entrepreneurs. Dominique replied by saying that the recession was way overdue since long, and thinks it might continue for another year or so. This calls for major reshuffling.

For start-ups, this is actually a good time. In fact, in Dominique’s view, the next 2-3 years should be excellent for new ventures. The down side could be a bit less VC funding, but the start-ups stand to gain quite a lot once the market correction phase enters. If you have an idea, come up with a venture soon. If only some people would listen!

Another interesting question asked was “What next after the iPod?”

Answered with an extremely quick “I’m not gonna tell you!” 😀

On a bit more nudging, Dominique just remarked that it will be very interesting, and we’ll see for ourselves in due course of time.

Then there was this question straight from Pirates of the Silicon Valley, asking Dominique to compare Steve Jobs and Bill Gates. Dominique replied that the two are simply very different as people, and have different skills. While Jobs is the more creative minded, Gates is gifted with a good ability to market and to do business. Without venturing further, he simply remarked that the two are actually quite good friends outside of the business world.

And there was the biggie: OPEN SOURCE!!!

Dominique said that he personally was not a great fan of the movement. For one, the open source movement has gone to virtually destroy entities like SUN and other enterprises from the Silicon Valley. Besides, there have been concerns over quality as well as sustainability of the idea. So while it may all be very romantic and revolutionary today, the future of open source is quite uncertain. He concluded by saying that open-source movement, free culture etc may all be “good things”, but he’s all for proprietary.

And then for the conclusion.

E-Summit 09: Day 1: Risk it! (Part-XI)

The greatest risk one can take is not to take risks. This can be seen as a direct result of the need to innovate for entrepreneurs. To innovate, one needs to take certain risks. If one chooses not to do so, that’s probably the easiest way to make the enterprise obsolete, which, in fast times like these, is the road to certain death for the startup.

Simply put, it’s necessary to take chances from time to time, to look away from the actions which result in the obvious, and dare to discover the unexplored. At worst, one can fail. And who says that’s bad.

To hear from the horse’s mouth, just tune in to Steve Jobs’ Stanford commencement, if you haven’t already. Steve Jobs has made some great mistakes, no doubt. But he learnt from them, and subsequently (and perhaps consequently) rose from them. The important thing here is not to repeat the mistakes over and over again.

This is especially true for start-ups, to take risks earlier, so as to exhaust the mistakes. You would rather make your mistakes when small, than big.

And then, there was this very interesting round of questions from the audience.

E-Summit 09: Day 1: Why two heads are better than one… (Part-X)

DUOOOOOOOO…………

As soon as the slide saying “The Power of the Duo” came up on the screen, glances were once again exchanged amongst the students sitting in the audience. But more on that later.

Dominique and Sramana are serial entrepreneurs. In fact, Dominique has partnered in enterprises that are spread out across various sectors. It is quite impossible for him to have an expertise on all those fields. And how does that work? Simple. He has partnered with the right people. It’s all about forming the right duo.

The power of the duo should not be underestimated. There is a long and pretty obvious list of examples — Bill Gates & Paul Allen (then Steve Ballmer), Larry Page & Sergey Brin, Niklas Zennstrom & Janus Friis, Chad Hurley & Steve Chen & Jaaved Karim, Pierre Omidyar & Jeff Skoll, Steve Jobs and Steve Wozniak ,… In fact, I’ll write a post exclusively on the power of the duo later… The point is, people that complement each other, say, one with the technical skills and other a marketing mogul, or any other coupling that suits the startup, and who share some common traits as well, so that they may be good friends too, make good entrepreneurs when working together. I myself hope to come up with such a partnership, just have to convince the other guy. I hope to convince him to take the risk, since it is all about taking risks anyway…

 

E-Summit 09: Day 1: What NeXT? (Part-IX)

A major mistake made by NeXT was in understanding the market. You can upload/view the relevant slides  which may need to be referred.

The Computer Industry Circa 1980 was Vertically integrated – Value Proposition: ”The Best Computer”

In this vertically integrated model, the objective was to come up with the “best” computer: best own chips, best own computer, best own operating system, best applications (Visicalc was the killer app that gave its fame to the Mac).

This proprietary model produced tremendous stickiness as it was difficult and costly to switch vendor.

However, things were bound to change with time. The scenario in 1995:

The microprocessor appeared and combined several previously proprietary chips.
Then IBM made the mistake to rely on DOS then Windows from Microsoft.
Then the whole industry switched to mass production of interchangeable parts, hence lowering the cost of each.

In this horizontal model, no one company can afford its own stack. Each company picks one microprocessor from the chip bar, one OS from the OS bar, one manufacturer from the hardware bar, a set of apps from the apps bar.

Tremendous economics of scale and lower price for the customer. A $10,000 PC now costs $2,000 and keeps decreasing in price and increasing in features/functions.
Competition is horizontal as well as vertical.

So maybe NeXT was just too ahead of its time. But it’s still a mistake then. It’s all a matter of correct timing… and luck, or crossing the chasm, as Dominique puts it. This is inspired by “Crossing the chasm” be Jeff Moore, which Dominique recommends as a must-read. The chasm being talked about is the apparent “ditch” between the early adopters and the mainstream adopters (the biggest market-share holders) of technology. Making the leap across this chasm is what the real challenge is.

There is also every chance of the danger of thinking “inside the box”. The markets are dynamic, and like never before. What holds today may not hold true tomorrow. Hence, there is a need to constantly change and grow. There is a need for constant innovation. Any extrapolation made from past success is an illusion. It’s just invalid. This can be also seen as another example of 20/20 hindsight. Thus, the key is to innovate, and “truly remarkable innovation is driven by talent and freedom to think [very] different.”

Speaking of talent and freedom, how can we forget the power of the DUO.

E-Summit 09: Day 1: Steve Jobs as a Leader (Part-VIII)

Steve Jobs is universally known for being a perfectionist. Dominique, with all his experience, discussed the pros and cons of the same.

He recollected how he used to guide the company’s engineers about how to downplay themselves initially and to come out with the best of innovations at the right time, so as to pleasantly astonish Steve. This reminded me of the way Steve himself introduces the major innovations by Apple in his keynotes at the MacWorld and Apple Expos, famously known as Stevenotes. An archetypal Steve Jobs Keynote starts with Jobs presenting sales figures for Apple products, and a review of Apple products released in the past few months. He then moves on to present one or more new products of moderate importance. After that, he feigns some concluding remarks, turns to leave the stage, then turns back and says “One more thing…”, finally revealing products which go on to define the Expo.

Dominique Trempont making a point

Steve is also known to be a great leader in very High-pressure situations. If you haven’t already, then you must go on to watch/read Steve Jobs famous Stanford commencement speech. Jobs left the company he started, his dream venture, Apple, only to start another company that would ultimately bring him back to Apple, as the CEO. Amidst all this, he also started up another big company, Pixar, which is now the leader in animation. An Entrepreneur has to be driven, by something, to be able to handle this. It could be philosophy, it could be motivation to succeed, it could be anything!

Being a perfectionist, however, has its downsides. Being a perfectionist means always demanding everything to be perfect, whatever be the conditions. While it sounds great in theory, it might lead to missed opportunities due to the wait for the perfect moment. Dominique recounted that NeXT had been offered to buy Mosaic, the first popular web browser, and the deal appeared to be good. Mosaic was the final link in the chain of technologies (TCP, IP, ftp | nntp | gopher | http, URL, HTML, etc.) which Tim Berners-Lee had earlier brought together to invent the World Wide Web. After the appearance of Mosaic the concept of the World Wide Web took off globally at an explosive rate. However, Steve felt that Mosaic was lacking in many ways, and was too far from being perfect. Ultimately, he turned it down.

Mosaic was born very mature. Fifteen years later the most popular browsers, Internet Explorer and Mozilla Firefox, retain many of the characteristics of the original Mosaic graphical user interface (GUI) and interaction experience.

Mosaic’s direct descendant on the coder line, via Marc Andreessen, was Netscape Navigator. There were brief discussions between Netscape and NeXT on investing in each other, which, however, did not materialize.

NeXT had awesome server software and a killer application development environment, called WebObjects, that would have strengthened Netscape’s lead on Microsoft. NeXT proceeded to very successfully launch WebObjects on its own, while Netscape became a casualty of the First Browser Wars. While the product was good, Netscape lacked the technology that NeXT had. Though this could be subject to the 20/20 hindsight argument, it can be said that had NeXT not turned down Mosaic, the present would’ve been very-very different. Dominique discussed more of this in his concluding words.

For entrepreneurs, while it’s great to be a perfectionist in terms of quality and customer satisfaction, one does not always need to wait for the perfect moment, the perfect combination of favourable conditions to come up. This is the time to make this realisation. If there’s any time you want to start, it’s now… Your call!!

E-Summit 09: Day 1: Dominique speaks (Part-VII)

Following Sramana’s lecture on Entrepreneurship Opportunities in India, which included a presentation by Dominique focussed on the the WATER crisis as an area of Entrepreneurial opportunity, was perhaps the most awaited lecture of the Summit, ironically on Day 1 itself. Dominique Trempont stepped on to the stage to acquaint us about his experience with Steve Jobs at NeXT.

NeXT, Inc. was started by Steve Jobs in 1985 after his resignation from Apple Computers, a company he founded, following an [in]famous boardroom coup. NeXT unveiled its first product, the NeXT computer, at a gala event in 1988.

Dominique was recruited by Steve Jobs to turn around NeXT, first as chief financial officer and later expanding to lead all operations. He led NeXT’s shift from hardware to software and brought the company to profitability. He successfully restructured the company financially, organizationally and strategically, and finally sold NeXT to Apple in 1997 for $462M.

NeXT was instantly recognised for its competency. McCaw Cellular, Inc., the first Mobile Telephony company, was entirely powered by NeXT computers. Major Stock markets began using NeXT computers for trading and analysis. The American intelligence agency, CIA, also preferred NeXT for dealing with highly sensitive data. The computer used by Tim Berners-Lee at CERN which became the world’s First Web Server was also…. you guessed it… it was a NeXT. But that was just about it.

The NeXT computer used by Tim Berners-Lee at CERN became the world’s first web server

NeXT had a very limited commercial success. In fact, it is estimated that in totality only about 50,000 units of NeXT Computers have been sold ever. However, the company had a profound impact on the computer industry. Object-oriented programming and graphical user interfaces became more common after the 1988 release of the NeXTcube and NeXTSTEP, when other companies started to emulate NeXT’s object-oriented system. In fact, the GUI used on Apple computers now is actually a descendant of the one used by NeXT. There is much to be learnt from the successes as well as failures of NeXT.

Since we were talking about a company founded over 2 decades ago, and discussing its failures and successes, Dominique started by pointing out the fact that Hindsight is indeed 20/20. This carries a bit of sarcasm in it, since it says it’s easy to be critical of an event that happened in the past. This is because one judges the wisdom of decisions made then, in the light of new information and AFTER knowing the outcome, which is unfair since that info was not available when the decisions were made. While lessons may be learnt from experiences, they are definitely not indicators of bad decision-making abilities. This is especially true for the IT industry, characterised by rapid changes and a highly dynamic environment. This can also be seen as a philosophy which asks not to look at the past with suspicion/guilt but for the sake of mere reference.

Talking about philosophy, what should actually be the philosophy of any startup, any company, any enterprise, is the focus on Customers. Anyone who as ever used an Apple product, especially an Apple computer, even once, will understand what Dominique was talking about when he emphasized Steve Jobs’ keen eye on user experience. Using a computer should not be rocket science for the user. Jobs ensured that the user was always pleased to use an Apple product. Even today, while Apple may not have a very large share in the market, Apple customers are extremely loyal to it simply because they are just too comfortable with it. I don’t remember the last time I heard a Windows user say that!

This was also emphasized when Dominique spoke about “Brand=Trust”. This is especially important for entrepreneurs. The focus should first be on developing a brilliant product, about great innovations. Once you have a product, you may advertise it all you want. But while marketing is important, no Brand image is built on a defunct product, no matter how it’s marketed. Once the product is experienced to be satisfactory by the market, the brand name goes a long way after that. Dominique also talked about Indian Entrepreneurs lacking in marketing skills. A product may have great deal of innovation in it, but it most-definitely needs to be presentable as well. Apparently, Jobs lays great stress on the aesthetic beauty of the product as well as user-end satisfaction in general.

This brought us to the topic of Steve Jobs as a leader.

E-Summit 09: Day 1: Visioning (Part-VI)

Sramana Mitra and Dominique Trempont give points for effective visioning:

¡  Start a journal

¡  Write out the vision for your life

¡  In present tense, as if you have already achieved it

¡  Taking into account your unique gifts, talents, passions, dreams, and expertise

¡  May include expertise you plan to acquire over time

¡  Keep updating as you go along

¡  Keep your journey focused

What did you learn from this series? Your comments are more than welcome.

Coming up: “My Days with Steve Jobs” by Dominique Trempont

E-Summit 09: Day 1: Guest Lecture by Sramana Mitra (Part V)

Now comes the big one.

ALTERNATIVE ENERGY. Sramana started off with the perfect example to demonstrate her BoP point of view. SELCO, started by Harish Hande, provides solar energy services for villagers without electricity. Solar energy has enabled them to double their productivity by enabling them to work after dark. Can there be a better example of a social enterprise that successfully gets past so many goals, solves so many problems, causes so much social upliftment, and yet, is for-profit. Kudos to Harish Hande!!

Other examples that may be explored include: AdiShakti (Solar Utility), Wind Energy, Nuclear Energy and BioFuels.

The RETAIL sector holds great promise as well. She exemplified this with Urja, an initiative in fashion. The idea here is targeted marketing, i.e., personalisation in retail. Thus, a customer does not have to go through thousands of samples and catalogues, but is offered the products based on their preferences.

Another similar idea is behind Oishi, but with Gifts. Besides these, retail has great space for innovations. For example, Indian artisans can work in tandem with designers from France and Italy. The resultant product will have both quality and innovation, and great marketability. Such products can do well on the export front, and could be tied with Global Brands.

For India, Sramana saw great potential in the TOURISM and HOSPITALITY SECTOR. Examples of good execution would be Tea Tourism in Darjeeling and Renaissance Luxury Hotel Rentals. The tourism sector in India needs to be aligned to serve Higher-End travel. Think High-end tourists, and the cash registers are already ringing in my ears, plus it’s great for the economy.

Similarly Sramana covered ENTERTAINMENT, which needs to go beyond Bollywood in India. She sees great promise in Framed Ivory (which produces period films) as well as Elixar (Animation Studio). Also, Non-Cricket Television Channels and Sports academies (NCTV) have got a great scope for entrepreneurship too.

The fields of REAL ESTATE, RURAL DEVELOPMENT and TRANSPORTATION, LOGISTICS & INFRASTRUCTURE hold great potential as well in India.

Now time to do some Homework!!

E-Summit 09: Day 1: Guest Lecture by Sramana Mitra (Part IV)

Sramana then went on to have a look at the opportunities in the Education sector. In her opinion, the education system in India is highly overrated. I, personally, agree with her completely. While we have the IITs, IIMs, BITSs and a few good NITs and other colleges, the higher education industry is not in its best form. And the school level education industry stinks!! Giving up on my temptation to further pursue this debate, let’s move forward with her ideas:

MIT India: An idea for an Engineering School Franchise. India needs a huge number of engineers. And good engineering students make good teachers as well. In India, outside of a few premier institutions, the people who teach are themselves no good at the subjects. It’s a blind-leading-the-blind problem. And it’s not only India, but pretty much universal. Maybe if teaching could be made more attractive as a profession… A similar suggestion is a Medical School Franchise: Harvard Medical School India.

Then there was an idea about a knowledge base for teachers to consult: Lucid. The ideology is to implement central planning on pedagogical techniques. Speaking from my own experience, this is an excellent idea, and has quite a few players in the market. I had the opportunity to work with one of them , and believe me, this is going to go places.

Talking about sensible ideas, edutainment takes the cake. Sramana suggests coming up with educational games that are addictive as well. WOW!! For once parents and teachers will be worried if their child is NOT hooked on to the game. This is truly a million-dollar idea, and I never use this expression loosely. All one needs to do, in Sramana’s words, is to understand “The Psychology of Addiction” (Expression of the day).

If you thought Social Networking was old hat, meet Educational entrepreneur Edward Fields. His initiative, Hotchalk, aims to provide support through social networking between parents, teachers and students.  Community and Content!