I’ve been bugging my friend, and highly esteemed business associate, Jerry King to get a blog for about a year now. While he has not quite managed to get the blog part done yet, he recently managed to post this treatise on DemoCamp4 this past Tuesday in Toronto:
Would it kill software developers to mention commercial terms? Are business models the new Kryptonite?
Last Tuesday evening was my first Toronto BarCamp, so as a newbie, I am still learning the rules. I recognize that my work as a management consultant biases me, yet even if that were set aside and I reverted solely to being a recovering electrical engineer, I was dumbfounded at the percentage of presenters whose software applications lacked a business model.
Why so many?
Mind you, I was not expecting a 4” 3-ring binder, crammed with a detailed market entry strategy to accompany each 8 minute presentation, but was it too much to expect that a developer who’s been labouring nightly for 3 months to develop an application, to offer a few comments on the potential commercial appeal of said application to his or her audience? Surely the thought must have crossed the mind while consuming cases of Red Bull.
Is it that BarCamp attendees disdain commerce or believe that being mindful of commercial terms as one explores one’s pet projects somehow dulls the creative edge? Or is it that attendees acknowledge its importance, but believe that they can neatly slot a successful business model into place AFTER their software application is built?
Don’t get me wrong, serendipity has a role. There is something to be said for unfettered, undirected research-for-research-sake. Over the past five decades, a number of useful things including the transistor, the laser, the mouse & graphical interface, etc. have emerged as inventions which found commercial application well after their creation.
But the famed labs which produced those inventions in the 1950s, 60s, 70s–the Bell Labs, the Westinghouses, the Xerox Parcs, with their massive budgets and their ability to undertake pure research, of academic quality, on an industrial scale—seem to have either disappeared or been radically downsized and/or become increasingly applied in their outlook. Research today, undertaken by their offspring, the Intels, the Microsofts, the Googles of the world, tends to be more applied–think small “r” and really BIG “D”. Maybe there is a reason for this trend.
Here are two propositions. The first is that Tuesday evening’s presenters at BarCamp reflect a breadth of fresh air, the ushering in of a more democratic and a more cost effective way (e.g. Open Source) to explore their pet projects. And in exploring their pet projects, the presenters self-actualize and that’s good enough for society at large.
The second proposition is that the presenters were symptomatic of something more troubling–a Canadian tertiary educational system which, with the noticeable exception of the U. of Waterloo, continues to pump “technologists” into the workforce. Technically competent, these technologists arrive with undisciplined minds and largely unskilled at the process of converting ideas into world-beating products, or raising money, or mediating customer needs, etc. Deliberately oversimplifying, this second proposition would see Canadian universities teeming with absent-minded, pipe-smoking, tweed-jacket-wearing Ivy Tower professors as opposed to the PhD-entrepreneur, Porsche 911-driving professor heroes that populate the campuses of MIT, Stanford, and Carnegie Mellon.
Here is why we should all care about which one of the propositions rings most true.
At a micro level, what are BarCamp organizers and attendees to do and think when future presenters show up with yet another photo-sharing Web application or yet another search engine application that is, at best, only marginally better than the incumbent? Time—no—more accurately, attention, is a commodity and an increasingly scarce one at that. As BarCamp becomes more popular, there will be an ever-growing number of attendees and demonstrators. Inevitably, there will arise a need to ration demo space, to manage the “draw” on our collective attention. Commercial success—in the eyes of the BarCamp organizer and presenters—might be a useful, practical criterion, one among others, that could be used to organize future BarCamp.
Staying at the micro level, my mind thinks back to the second presenter on Tuesday evening night, a digital camera hack from Disposable Digital Cameras, that claimed no discernible business model.
No business model?
Consider the following:
1. There are new populations, tens of millions strong in the emerging markets of coastal China, India, Brazil and South Africa, that are coming on-stream as their disposable income levels rise (Google C.K. Prahalad “Fortune at the Bottom of the Pyramid”).
2. That for digital goods, the Web is the perfect platform for agglomerating geographically dispersed market segments–the proverbial ‘Long Tail’.
3. Bollywood (India’s film industry centered in Mumbai, formerly Bombay) already churns out more movies annually than Hollywood. Nigeria, yep Nigeria, also has a thriving film industry.
Now think about the disruptive effect that radically bringing down the price of digital movie making will have in India and Nigeria. OK, now let’s add in the heretofore excluded consumers in emerging markets such as Brazil and South Africa.
As I understand the presentation by Disposable Digital Cameras, cheap disposable cameras—hardware—plus their software = really cheap movie making. Sounds like a disruptive way of entering an uncontested market—selling to folks who are currently non-consumers. Clayton Christensen will be pleased.
But have we seen this movie (no pun intended) before? If we chat with Canadians over 70 years old, they’ll tell us that Japanese goods in the 1950s and 1960s were distinctly down market, synonymous with schlock. Akito Morita’s Sony, Toyota, Honda and other manufacturers systematically penetrated North American consumer markets (e.g. radios, televisions, autos, motorcycles), at the low end, took away market share and then moved up-market, leveraging scale economies, improving quality and raising prices.
Can Disposable Digital Cameras find a company, somewhere in the world, to manufacture under contract a cheap disposable camera? You bet! Across China today there are probably 100 entrepreneurs with the acquisitive mindset of an Akito Morita, circa de 1955, AND under utilized contract manufacturing capacity at their disposal AND cheap engineering talent on tap AND a bottomless supply of labour capable of doing the most minute, the most intricate, manual tasks. These folks are lean and hungry and accustomed to staying up nights figuring out how they can further assault global markets with their goods. Say Disposable Digital Cameras were to marry low-cost Chinese manufacturing prowess with a Tucows-like distribution model for the actual delivery of their hack application, and then take rifle aim at the emerging markets in Brazil, Russia, India and South Africa. I believe Disposable Digital Cameras will have a recipe for some serious coin—er, make that yuans, rupees, and rubles, etc. Please, tell me again with a straight face that there’s no business model to this hack!
Finally, we should care about which proposition rings most true because at a macro level, entrepreneurship remains heavily vocational, complete with a disturbingly high failure rate, but it remains essential to Canada’s productivity levels and our standard of living. Many know that 80% start-ups less than 5 years old fail. However, what’s less well known is that most new ideas also fail. According to The Economist, March 9, 2006 of 1,091 Canadian inventions surveyed in 2003 by Thomas Astebro of the University of Toronto, only 75 reached the market. Six of these earned returns above 1,400%, but 45 lost money. If you combine the two, i.e. the prospects for new products put out by new companies, they are harrowing. Indeed, you’re operating at the riskiest part of the economy. If we as Canadians are serious about narrowing the growing productivity gap with the U.S., then we need to improve both the quantity and quality of entrepreneurs that we generate. We need to produce more folks who are comfortable innovating in a commercial environment. BarCamp is a great place to start. After all, we can’t depend solely on our tech giants—case in point, CGI announced yesterday that they’ll be cutting 1,000 jobs in 2006.
By regularly encouraging our best technological talent, at an early age to be mindful of the commercial appeal of their applications, the discipline of that way of thinking will imprint and we will gradually raise the bar. Look at it this way, if the folks presenting at MaRS on Tuesday evening can’t speak intelligently about the commercial aspects of their very own ideas, who can? From where will Canada’s next generation of startups emerge? There is a lot to be said for exposing 3rd and 4th year engineering and computer science students to an introductory marketing course, if only so that they can learn how to recognize and structure a problem. Listen to the interdisciplinary seminars Stanford puts on for their engineering and business students
NOTE: I totally pilfered this from Osh comments (thanks Osh). Be sure to check out Osh’s blog at http://www.myownpirateradio.com/.
Finally, a closing remark from me…DemoCamp is out of control. 150 people showed up…it’s like a grassroots woodstock er something…David it’s your baby – nice work.