Rethinking Software Patents

When I was at Borland at the beginning of the decade, I was amazed to discover that the company held patents for the "tab" user interface element and even the right mouse click, amongst hundreds of others. Few of these patents ever really helped the company and we had long debates internally about what to do with them, and whether there was really anything that could be done with them. Here we were, a very successful software company, inventing many new technologies, and really getting no credit (and no protection from competitors) from the software patent process. At the time I felt that software patents were probably at best a waste of time.

Well I have just had a very frustrating few months. And my experience is causing me to rethink (or maybe to think through for the first time) my position on the software patent debate.

I am coming to see some value in issuing patents to innovative young companies in order to protect them from the abusive behavior of large companies. An established company, like Borland, was capable of pursuing market opportunity through execution. But small companies are too often frozen out of the market by bigger companies. But they can also be an enormous source of innovation -- if we want to foster this innovation from small companies, shouldn't we find a way to provide them with protection?

One client I am working with right now clearly invented something four years ago that a number of large companies have now studied and learned from. My client applied for patent protection in 2007 and the application is slowly moving through the various government processes and will likely be issued in 2011 or 2012.

But in the technology world 5 years is a lifetime. And in those 5 years a dozen companies have now taken this startup's invention and implemented their own versions.

There is one particularly egregious example of a large tech company that asked the startup for a version of the software for testing back in 2008, spent a good deal of time actually using the product, and now has (a) shipped their own version of the technology and (b) refuses to meet with the company.

So how will my client ever recoup the time and money invested in creating the innovation in the first place? The most likely outcome sadly is to sell the patents to a specialty firm, often derisively called a "patent troll." One might look at such firms as being the worst kind of lawyers - those that create no value and just seek to take value out of other, "legitimate," businesses.

But stop for a moment and think about how the firm that enforces patents is actually doing our system a favor -- they are saying to the big company that abuses its power and steals from small companies that there WILL be a reckoning day and a price to pay for this abuse. While they keep a lot of the money from the patent infringement cases, they are at least one way for a small company to someday make something back for their innovation.

And the patent enforcement practice is byzantine at best, with numerous places for a small company to go wrong and lose their ability to effectively prosecute their case. They need someone who specializes in such knowledge to help them.

I'm afraid our world DOES need patent lawyers -- as long as big companies are willing to treat small ones with such reckless disdain.

Relentless Focus and a Data Driven Culture

Wondering what Google, Facebook, Foursquare, Twitter and Zynga might have in common? Hint: something other than the creation of incredible new businesses that are enormously valuable and growing at an unbelievable pace? I have been asking myself this question and thinking about how the lessons of these five could be applied to every business. A few nights ago I had dinner with an old friend who is now a senior executive with Zynga and I put the question to him. His answer?

"Relentless Focus"

But over the course of dinner he admitted it wasn't that simple. Sure, dedication and hard work and staying on top of the right issues and opportunities was a critical factor, but how did you know what the RIGHT things are to focus on? Couldn't you just as easily fail by having a relentless focus on the wrong stuff?

Zynga is an amazing success, how amazing we can only guess until they file for an IPO though we do know they have grown to 1250 employees already and are continuing to grow fast. But my friend didn't claim that he and the other executives were just so smart that they had simply known the right things to do as they gre the company. And while he admitted that there is an element of luck, when pressed he began to talk about something very interesting, something that probably is the difference for all five of those companies. He said,

"we have one of the best data analytics guys in the world"

Why is this important? Because it represents an enormous sea change in the way business is conducted. There are companies that have truly embraced a data-driven culture, and they are rewriting the way decisions are made, issues are surfaced, and on what we should relentlessly focus on to succeed.

The hierarchical decision making process of the twentieth century promoted the best decision makers into positions of greater decision-making authority so that the smartest and most experienced (although sometimes the best political players) made the important decisions for our companies. But that isn't what happens in data driven businesses.

At a lunch with some friends on the Google campus recently one of them gestured around the Mountain View lunchroom and asked me, "do you think anyone in this room knows what our stock price is?" He went on, "most of them don't, but they do know the data on how many users are actively using their products." And people at Google relentlessly focus on this metric. Looking at "7 day actives" or how many people used your product (or feature) in the past week means that you can, each week, establish experiments and evaluate the impact that making one or another change has on usage. As has been discussed elsewhere (How Google Works infographic), virtually every search you do on Google is either part of an experiment or control group. This iterative product improvement method is well understood in web businesses because data is an inherent part of the customer experience. But the principles can be applied much more broadly.

The first task is to understand what data a given business needs to have to make better decisions. This in itself is an iterative process, with the definition of what data is valuable evolving over time. The second task is to develop the right processes to collect this critical data. Web businesses are swimming in data but often the wrong kinds, so even here there is an important job to be done which we call "incentive design." In short, how do you design your customer interactions in order to obtain the data you need to make decisions? And how do you use new social and mobile interactions to collect data you never had access to in the past.

Exposing this data inside the company is a critical step in the process -- you don't know who will need access to the data to make a decision so in a data-driven culture the company provides a powerful dashboard for all employees to explore and interrogate the data being collected. This is where the name of our company, Open-First comes from -- employees need open access to complete and accurate information in order to make good decisions. So change your culture to be open first, before you do the next step. The next step though is all about the data.

Once you have the data you can start talking about experiments that let you rapidly and inexpensively test your ideas and give you the feedback loop you need to find your focus. Andrew McAfee talks about this in his recent HBR article titled "IT's Three Key Organizational Transformations" in which he says

I see companies in all industries using computers to accomplish three broad and deep transformations: they're becoming more scientific, more orchestrated, and more self-organizing. None of these is complete yet, and I doubt that they ever will be. This is because innovation keeps opening up new opportunities to go further with orchestration, self organization, and science, and companies keep taking advantage of these opportunities.

These three elements are all critical, a scientific approach (we call our methodology PHAME) and devolved decision making (self-organizing which is at the same time coordinated (or orchestrated) results in an organization that is capable at moving at a speed that hierarchical twentieth century business is incapable of duplicating. So companies like Zynga will run circles around traditional businesses.

Your business needs this - a deep understanding of the data that you need to make decisions, the right processes for gathering that data, tools for presenting the data to your employees, and an experimental methodology for learning from the data and decisions.

And oh yeah,

Relentless Focus

Why AT&T Pricing Threatens Google

There is a very good reason for believing that Verizon will NOT follow AT&T's lead in eliminating the unlimited mobile data pricing, that is if Google has anything to do with the decision. In fact if one was to assume that Steve Jobs has enormous intellectual powers and a keen strategic mind, and why wouldn't we, the AT&T pricing model could be seen as a direct threat to one of the key differentiators between Apple's iPhone and Google's Android -- namely, where do you manage your data?

As users of Apple's product well know, the iTunes desktop application is a critical part of how the product is used -- operating system updates, third party applications, and all content (audio, video, etc) can be loaded to one's PC or Mac and then synchronized to the phone.

In contrast Google has been promoting a model in which all of this data is synchronized "over the air" (OTA) to the "cloud." This clearly plays to Google's strengths and is arguably a much more powerful long term strategy which Apple will have to adopt as well. After all, not every smart phone user in time will have their own PC as well, and even those that do won't always have access to their PC.

However, a metered data model from your carrier will be an enormous threat to this OTA model -- as a consumer I can't afford to have my device "burning" a limited amount of data each month on simply keeping the information on my phone up-to-date. I can't afford to have my operator push an operating system update of unknown size and use up my data allocation. And I won't buy songs or movies and add them to my cloud based storage solution without knowing how expensive it may be to actually watch them or listen to them once they have synchronized to my phone.

So look at the new AT&T data plan in a new light -- if they can start a rush toward these new data limits, it would put an enormous new constraint on what would otherwise emerge as an advantage of Android over iPhone - cloud vs. PC synchronization of our data.

Location, Location, Location

Yes the joke has been made before - what has long been said about the real estate industry is now also true of the mobile industry and even of the Internet more broadly as mobile access continues to grow and eventually becomes the primary way we access the Internet. The ability to detect a user's location is changing the way we design and use applications and is already creating enormous new business opportunities. What is truly amazing is that this is only the first of a series of sensors we'll carry with us in our phones -- the "low hanging fruit" of the mobile revolution that the 2010s will bring to our society.

Here at Open-First we have been studying the emergence of the mobile paradigm and have been applying our knowledge in advising our corporate clients. The graph shown here is an important key to understanding the tremendous shift underway. It shows the first 5 quarters of user growth for the now enormously popular Twitter service, and the more recently launched Foursquare service. Both of these services can be seen as "lightweight social networks" in the sense that they provide one particular way in which people will interact, as opposed to Facebook and others that aggregate a variety of interaction modes.

But Foursquare reached 1 million users in half the time that Twitter did, even after a huge growth spurt for Twitter following the 2007 SXSW conference, largely acknowledged as the point at which the technology world "discovered" Twitter. Why has Foursquare grown so much more quickly?

In our opinion the disparate growth has everything to do with what Geoff Moore called in his famous book of the same name, "Crossing the Chasm." At the risk of losing all of the subtlety of Geoffrey's invaluable book (go buy it and read it if you haven't already) the simple explanation for how a product moves from "visionaries" to "pragmatists" is by providing some easily understood real value in the use of the product. Thus the difference in the growth rate of Twitter and Foursquare in our view was the time it took for each to establish that value.

Foursquare's advantage in this race was location. The shift is at once subtle but fundamental. Twitter is at heart a message bus, merely a facility that enables a wide range of activities. But Foursquare inherently incorporates purpose into its use. One could even say that location is a proxy for purpose -- I am in a particular place because I am doing a specific thing there. Others that come to that place are likely to be doing something similar for similar reasons. I immediately share purpose with others -- a social network of purpose will prove its value much more rapidly than a social network of interest like Twitter.

And even aside from mobile we currently have an explosion of social networks of purpose. The social buying site Groupon for example. But the other important aspect of Foursquare is the way in which it is leveraging a mobile sensor, in this case GPS for establishing location. This is important because we are about to see an explosion in the number and variety of sensors deployed in the built environment and on our bodies, generating vast new quantities of data, often into social pools (see Dr. Andreas Weigend's Social Data Revolution for more on this).

In each case, as a type of sensor is popularized, new applications (and new businesses) will emerge and because they will be tightly coupled with purpose, these applications will leap to "pragmatists" quickly and grow in importance and use quickly. What are these other sensors you ask? How about a device that accurately monitors how many calories you are burning? Or a personal pollutant sensor? Location will be extended to monitor social proximity and we'll also know more and more about an individual's activities while with others based on text, audio, and visual content collected and correlated based on content location tagging.

Our mobile phones have been turned into a global distributed sensor network. These devices will contain an increasing level of sophistication in what they are able to sense and transmit into networked database that will then overlay and correlate data from other sources. In a recent guest post for TechCrunch Robert Scoble imagines how this new world of location based services will change the way we live -- Location 2012.

And really, this is just the beginning.

The End of FB or of Mark Z?

I checked my newsfeed before writing this post to see whether it had already been announced -- the Facebook BOD asking for (and getting) Mark Zuckerburg's resignation.

It is only a matter of time. PR 101 - when you have a storm the size that Facebook faces now the only course of action is to sacrafice someone to the gods to quell the angry swirling energy.

In some ways the attention Facebook is getting every minute on every media outlet is wonderful publicity to educate the next hundred million "frienders" but only if the meme shifts from these guys are evil to some more apologetic "committed to good for society" story

They just need to have a heart (or be perceived as having one) and firing the chief is the only path at this point - someone has to take the fall.

Gotta post this so I can check my newsfeed again.

My Heroes

If anyone is going to save our species, it will be the brilliant scientist/inventors who are rethinking the possible and making it real. Here are three of the people you have to rank as heroes of our generation if you believe at all in innovation as the key to our survival -- Dean Kamen, Ray Kurzweil, Craig Venter

Don't tell me its impossible -Dean Kamen

If you reach 1 percent and keep doubling your growth every year, you’ll hit 100 percent in just seven years -Ray Kurzweil

A doctor can save maybe a few hundred lives in a lifetime, a researcher can save the whole world. -Craig Venter

Wakeup CA Republicans!

We are facing a historic moment in California. And it is up to every member of the California Republican Party to call your elected representative in the statehouse and inform him of your preference:

(a) I would like to have my taxes raised in order to protect essential services and education for the poor in our state. I know I voted for you on a "no new taxes" promise, but I release you from this pledge, and give you a pass until the economy recovers. Keep giving those Democrats hell, but let's put compassion back into our platform!

Or

(b) let's just finish this off. Balance the budget by cutting all support for services which could be funded locally. That way we can insure that local communities have complete control over the quality of service that is provided to their citizens (limited of course to their ability to pay)

This is a crossroads, and we need to be clear as a state that we understand the choice being made. Select (b) and you are choosing a system that is fundamentally unequal, one in which rich communities have the police, fire, education, parks and one in which poor communities do not.

It means that children in poor communities grow up without hope and without opportunity. We'll need to make sure we fund more prisons as we'll be breeding more unrest, more crime, more dissatisfaction with a system that no longer promises the possibility of upward mobility.

Come on California! Is that really what we want?

Call your representative and tell him you want (a)

Do it for all of our futures.