I’ve been following Google’s announcements from Google I/O with interest. Google announced version 2.2 of Android and a new set-top box, GoogleTV. The main takeaway from today’s events is that the competition between Apple and Google is heating up.
I think all of this is fantastic. Google and Apple both build great stuff, espouse completely different philosophies, and are scary in different ways. And they’re going to be fighting tooth and nail in a number of still unclaimed markets for every dollar of profit that’s available. There is no underdog here. Both operate from positions of strength and both have huge war chests they can bring to bear. Apple has $41.7 billion in cash. Google has $26.5 billion in cash. Microsoft wants to be a player in these markets as well, and they have $39.7 billion as well. So they have plenty of money to hire developers, build data centers, and buy up companies that look interesting. Nobody has market leverage of the kind Microsoft did in the desktop computing market during the browser wars of the nineties.
So right now we’re looking at a contest where the main weapons are quality of experience and openness. It’s going to be fun, and the competition is going to be incredibly beneficial to users.
Matthew Yglesias asks an interesting question today: why are the big tech companies sitting on so much cash? These are big companies full of smart people, is there no way for them to invest that money to earn a greater return than it is just sitting there? What’s that say about the state of the industry?
It’s not as though companies aren’t shipping new product — Apple has increased its cash reserves by around $13 billion over the past year even as it developed the next generation of the OS X for the iPhone and created the iPad.
Is it a lack of talent? Could these companies be moving forward on more fronts if there were more engineers they could hire to build cool new stuff? Is it that it’s so much easier to build big things with small teams that these companies don’t need to invest big dollars to build products? These days teams of five or ten people are building cool products on a shoestring, and big companies are acquiring them for small amounts relative to their cash reserves.
Any other ideas?
Meeting social and environmental standards is not optional. I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honor its contracts will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Wal-Mart.
Wal-Mart CEO Lee Scott at a conference for suppliers in China. I’m not the world’s biggest fan of Wal-Mart, but I can’t argue with Scott’s logic or principles in this case.
Here’s an important article on employee motivation I saw on Hacker News:
The great majority of employees are quite enthusiastic when they start a new job. But in about 85 percent of companies, our research finds, employees’ morale sharply declines after their first six months—and continues to deteriorate for years afterward. That finding is based on surveys of about 1.2 million employees at 52 primarily Fortune 1000 companies from 2001 through 2004, conducted by Sirota Survey Intelligence (Purchase, New York).
The fault lies squarely at the feet of management—both the policies and procedures companies employ in managing their workforces and in the relationships that individual managers establish with their direct reports.
Most of the prescriptions in the article are standard management advice fare, but I think they key point is worth remembering — people are generally excited about their jobs until the realities of the situation beat it out of them. The main responsibility of managers is to help them hold onto that enthusiasm.
The New York Times interviews George Cloutier, business book author and CEO of American Management Services. You might argue that he comes from the Genghis Khan school of management, but I honestly found very little to disagree with in the interview.
Author Charlie Stross explains the business reasons why Amazon pulled all Macmillan books from their online store last week. It’s the best overview of the dispute and why readers should care about it that I’ve seen.
Also check out this post by Jim Henley, in which he links to a bunch of reactions and runs some of the numbers in the dispute, and explains in concise terms exactly what’s at stake:
There are $7-8 in incremental costs coming off of every hardcover book as we move from print to bits, with some small new incremental costs for ebook production. So call it $7 a book.
One way or another, that $7 is going to be split among authors, publishers, retailers and customers. The question is, who gets how much?
Update: Macmillan wins, for now.
A primer on how Wall Street makes money and ways for the Internet to hurt its margins. It’s worth reading as a list of ways you can avoid financial practices that enrich Wall Street and cost you money.
Venkat Rao deeply examines the US and British versions of The Office and tries to distill a theory of management from them. Seriously, read the whole thing.
Update: The essay’s description of over-performing losers moving up to join the ranks of the clueless (if you read the essay this will make sense) reminds me of a story. There was a guy on our high school football team who wanted to come in first in every drill. If the coaches told us to take two laps around the track, he had to finish those two laps first. If the coaches had us pushing a sled, he’d push the sled the hardest. I won’t tell you what all the other players called him, but even at that early age, most people seemed to get that his effort was almost entirely misspent.
The guy wasn’t a great player, and the coaches didn’t give him any extra playing time because he practiced harder than he needed to. His extra investment in over-performing in unimportant drills didn’t make him a better football player. I wonder what he’s up to today?
Jason Fried’s rant about Mint.com selling to Intuit has really, really stuck in my craw for some reason. I have no special knowledge of Mint.com’s situation, and from my reading of Fried’s post, I don’t think he does either.
Fried constructs a fantasy world in which the noble founders of Mint didn’t really want $170 million and instead the mean old investors (who enabled Mint to exist in the first place) forced them into selling out and immediately becoming rich.
Anyone who reads Signal vs. Noise knows that despite their rejection of the label “lifestyle business,” 37 Signals is a company that brags a lot about the fact that its employees do not work a lot of hours. And I think that’s great, but something tells me that the 35 employees at Mint.com were not in the same situation.
The strength of Mint was that it was integrated with everything, banks, credit card sites, and so forth. What was obvious to me as a user was that they achieved this integration without the cooperation of those sites. Mint is at its core one of the world’s great screen scraping applications, and if you’ve ever worked on an application that does screen scraping, you know that it’s a ton of work to maintain. When Bank of America or Wells Fargo changed things up and broke Mint’s integration, people were at work until the integration was fixed. And Mint is integrated with hundreds of banks, all of whom can make changes to their Web interface at any time. In fact, I couldn’t use Mint because they never got their system to work with my bank, and yet they still tried. All that effort goes into the hidden plumbing that just makes the site work. Mint also has a shiny Web interface, a nice iPhone application, and the same uptime expectations as people have for their bank.
There were two very strong incentives to go through with the Intuit deal. The first was the opportunity to rake in a ton of cash as a reward for putting in the massive amount of effort that the company must have demanded of them. And the second was to change the relationship between the company and the banks with which it is tightly integrated.
Fried looks at Mint and sees Intuit as their main rival, but Mint faces a much greater threat from banks. Look at their revenue model — they use what they know about your accounts to present you with better offers for similar services. Mint offers checking accounts with less fees, credit cards with lower interest rates, and refi deals on mortgages that will save the customer money. In other words, Mint makes its money by cutting into bank profits. At some point Mint was going to get big enough for banks to go from ignoring them to actively trying to disrupt them, and they needed a strategy to counter that.
Sure it’s gratifying to look at an acquisition and say “greedy investors killed the dream,” but there are plenty of alternate explanations that make more sense and don’t require us to think in childish terms about heroes and villains.
Update: Mint.com uses Yodlee to integrate with banks, so they’re not doing the actual integration themselves. However, it does look like Yodlee uses screen scraping to get data from banks. My main point on the screen scraping was to point out that Mint probably demands its employees work long hours. After writing that, I noticed this on a Mint job listing:
We’re flexible when needs dictate you work from home (although you’ll miss out on free dinner!)
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