Monday, March 13, 2017

Startup.com

Startup.com is a documentary that follows three friends who start a company, govWorks. The principals are Kaliel, Tom, and Chieh (who got very little screen time.) It's the early 90's and the Dot.com boom is nascent. The friends have a great idea, but no experience. They are confident anyway that they can capitalize on that idea and bring it to market: collect revenue for municipalities, what Tom calls "traffic tickets" through the computer. No days off for court or long lines, cost savings for the municipalities, and the probability of greater compliance. Slowly they achieve more and more success before even launching, more and more employees, and more and more funds to put into the business. The film shows the myriad of problems that the engineers had to attempt to overcome -- which they did not do efficiently. They do get it off the ground and acquire a large amount of capital, but that capital wasn't managed well. Chieh eventually wants out; Kaliel and Tom do not. Chieh ends up dropping out of the business, and the other two push on.

It's an interesting look at the business of a start-up, especially their pitfalls. They don't really have anything except for a general idea.Time becomes their main investment, which puts a strain on Tom especially, who has a daughter to care for. Kaliel starts with a girlfriend, but she disappears from the documentary, seemingly sacrificed for his pursuit of a successful business, and he ends up with another. She, too, vanishes. The subplot is kind of weird, honestly. They grapple with others who have similar ideas, personal conflicts, and a seemingly endless succession of bugs in the program.

Eventually, they go bust. They lacked the ability for their site to properly handle everything, they overvalued their company, they poorly managed funds, and Kaliel essentially ends up firing Tom. Tom was the technical guy, the detail-oriented nerd who wanted to move methodically; Kaliel had the big personality, complete with the platitudes, vague ideas on how to do things, and silver tongue. I think in the end it was necessary to let Tom go, at least from what we saw. He didn't seem to be able to adapt when presented solutions for the website, and wasn't willing to start from scratch.  The documentary made it seem like they parted ways for good.  In real life, they regrouped later on to form another company, Recognition Group, and to write a book about their experience: Living in the Bubble: Seven Sins of Early Entrepreneurship. Bloomberg reports that Kaliel was to be arrested for securities fraud in late 2015. He now lives in Colombia.

South Sound Technology Conference

March 3, 2017
UW-T

The conference began with opening remarks by Andrew Fry, who introduced Congressman Derek Kilmer, who talked about municipal government, the relationship between the private and public sector, the impact technology has had on them. He stressed that cyber security is woefully underfunded, which lead into the next session: "Cyber Resiliency – Preparing for Before and After a Cyber Attack." Eric Eid of Columbia Bank stressed that there needed to be a collaboration between organizations, and that requires a certain level of trust that isn't necessarily there. DC Grant, a UW-T graduate now teaching cybersecurity at Columbia Basin College, asked the question, "Where are you storing everything?" He pointed out that it's not economically viable to protect every asset. He urged people to be realistic, and to prioritize. What is most valuable? What is most likely open to attack? Kurt Hermanns from Honeywell said to "Dial back the hyperbole" and change the the tone of discussion to Risk Management, which sound not as ominous. That aligns with Grant's point of view, that it's not realistic to assume that risk can be wholly eliminated, only that it can be better managed. That management is a challenge to Washington state. The question "What are the main challenges that face the state, and how do they differ from the rest of the nation?" was asked. Grant responded that Washington state had traded security for convenience. Everything is or is in the process of being connected to the Internet. This leaves the state vulnerable. Eid said that the state needs to be more transparent in how it handles data.  Hermanns felt that expanded regulations might help, and that Washington state had already made leads in setting up regulations for cyber security. Eid, who is a lawyer, suggested that the current standard of care can be regulated, and that there needs to be a clearer definition of what activities constitute legal problems. In addition to laws that don't always keep up with technology, it was pointed out that there are issues with legacy systems and compatibility.

This segued well into the next session, Machine Learning and the Internet of Things.  Matthew Tolentino, UW lecturer, said that we're now in the 4th Industrial Revolution, a meshing of the physical and technological worlds. The panel gave real world examples. Since the Tacoma Fire Chief, (who is working on a project with Tolentino) was there, they shared how the machine learning would help the current system of firefighting. Their Indoor Positioning Systems Project gives real-time data on the locations of firefighters using embedded systems. In a fire, losing the location of a firefighter can mean injury or death. IPS should reduce those tragic incidences. Applications currently in use include sensors on machines, on garbage, and even on cows. These are not without their problems, though. One issue that Duggan, the fire chief, ran into was frequent callers. These are people who call the fire department several times a day without legitimate cause. He is hopeful that machine learning can analyze and identify patterns for these calls, though the department will still be left with the problem of needing to respond. Audience questions included privacy concerns. Just as Grant pointed out in the previous panel that there needs to be a balance between convenience and security, there needs to be a balance between privacy and efficiency.

The South Puget Sound Technology Company Sampler panel gave the audience a look at some of the tech companies in the greater Tacoma area. Why Tacoma instead of Seattle? Seattle is home to Amazon and Microsoft, two of the biggest names in tech.  Wouldn't it make sense to base a new tech company there? One of the major reasons is that the quality of life for Tacomans is on the rise, while Seattle is in decline. The traffic and congestion are not conducive to the tech culture that companies seek to establish. Another reason is both the cost of living and the cost of commercial space are significantly lower in Tacoma. It's easy to get to from almost anywhere, including SeaTac airport. Where will Tacoma be in 3-5 years?  In an even better place than today. Where will the panelists be?  Shadrach White, CEO of cloudPWR, expects to be working with more government contracts. Linda Rix, CEO of AvueTechnology, expects to be refining and creating software. Both of those will require good employees.

That was the next panel, Hiring and Retention in Tech Industries. Fry said that one of the most expensive things for a business is to lose an employee. Zach Nieman, corporate recruiter for Infoblox, said that it's important for a tech company, especially, to have a strong positive company culture. To this end, he tries to keep a pool of "High potential new recruits" to filter through. Hiring right the first time means that tech culture gets stronger with each hire. Sarah Champion of SiteCrafting says that a long interview process helps to make that decision and keep retention rates high. She aims to make sure that her employees are engaged and constantly learning. She says that it's important that they are highly trained and able to work anywhere, even if that means occasionally losing some to competitors. Dawn Williams of UW's Career Development Center reminds employees that they need a life outside of work. Where do these companies get their employees? Champion looks to community involvement. Nieman confesses that he networks, or in other words, poaches from his competitors.

The conference was interesting. I appreciated that the speakers were upfront and candid. I think the panel I found most fascinating was cyber resilience; it's a topic I've looked into independently in the past. If I'm in the area for next year's conference, I'll definitely go again.


Thursday, March 2, 2017

Dot.com to Dot.bomb


The 90's were a decade of rapid expansion in the dot com world. It was a time of high risk and high reward. Investors scrambled to get in on the next big thing, often trusting inflated company valuations and believing bills of good sold to them by anyone company with a ".com" at the end of it. It was on this humongous wave of confidence in the future of computing power that Andrew Fry cut his financial teeth. He had worked for Microsoft for a number of ears, but working there made him realize he wanted to start his own company with his own standards.

Fry's company set up DealerNet in March of 1994 for Marty the Car Dealer. A premier site for buying and selling cars, it was a hit, and gave Fry the working capital for other projects. This decade was about speed; who was first to market, who could quickly win over the public, and who could negotiate the best deals behind closed doors. It was necessary to be skilled in all three areas.

There were many casualties as the boom became bomb. The end of the decade and the Millenium saw the end of major companies, and the end of major dreams. A few continued to prosper, such as Amazon and eBay. Some survived, but came to a more realistic company valuation. Others such as Netscape were eaten up. Compuserve had been first to market as the first major commercial online service. They would not be able to hold their position and eventually got eaten up by America Online. “The VP of Compuserve was a dumbass”. Still others just disappeared. Investors, including large retirement funds, watched their portfolios decline by 75% or more seemingly overnight. The bust was the market adjusting itself from inflated values, similar to the housing bust of a few years back. The market isn't dead. On the contrary, it's a healthier, slower growth with much of the dross discarded.

The pendulum now swings closer to the center, neither boom nor bust. For those of us in the Northwest, it rests slightly on the boom side, though the market will (hopefully) never again suffer from the naivete that allowed the artificial inflation of values in the 90's. California tax laws and other lifestyle considerations have Silicon Valley companies looking north to Washington and east to Texas. That means better economic opportunity for those of us here.

My takeaway was that risk and reward often go hand in hand. The risks can be mitigated through research, but rare is the low-risk option that pays out high rewards. When you're able to more easily pick yourself up from a temporary failure is the best time to take on those higher-risk ventures.