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April, 2005

  1. Why the bubble burst

    April 27, 2005 by max

    I remember the heyday of the Internet bubble back in the late 90’s. Champagne, million dollar business plans and irrational exuberance everywhere you looked. Those were the days. But why did the bubble burst ? Were we really that ignorant ? Did the emperor have no clothes on ?br /br /I think that many of the ideas, businesses and paradigms conceived during the bubble made good sense. ( Of course, I have to say that, I founded one of the crash-and-burn dot-coms) The problem lay not in the ideas, but in the psychology of consumers. br /br /What happened was that a new enabling technology, The Internet, emerged and brought with it a vast array of business opportunities. Entrepreneurial minds saw the opportunity and jumped at it, convincing investors and media that this would change the world in a way we couldn’t even begin to imagine. And they were right. But they missed the timing. br /br /Entrepreneurs argued that consumers would use a technology if it would save time, money, or make the consumers life easier in some way. Which all sounds perfectly credible. Unfortunately for the entrepreneurs, and the investors backing them, humans don’t deal very well with change. We like things to stay the way they are, we are a reluctant species when it comes to change. br /br /The graph shows how entrepreneurs argued implementation of a new technology would roll out, and how quickly it actually /br /img src=”” /br /br /br /We all made the mistake of assuming that consumers would be rational and use a technology if it made sense. But they didn’t. They waited. And the bubble burst. But history shows us that we are reluctant. It took ten years from the commercial introduction of microwave ovens until it was a commonplace household item. Even though it solved a real problem. This discrepancy in time meant that investors didn’t get the returns they were promised, and pulled the plug leaving the dot-com’s to sink. br /br /But when you look back at the predictions of the dot-com age, many of them are beginning to become realities. Consumers are getting into the technology, and getting on the learning curve. Now is the time for making money on the Internet. Even my mom uses it /br /So if you are an entrepreneur, make sure that your tming is right, and if you are an investor make sure that your pockets are deep enough to keep the company afloat until average Joe and his neighbour discovers your amazing new /br /A first mover advantage often requires deep pockets and lots of patience.

  2. Probabilistic classification

    April 27, 2005 by max

    Most of us are overwhelmed by information in our professional lives, and we are hard pressed to organise it in a consistent and coherent manner. This is a profound change from 10 years ago, yet we still cling to a hierarchical classification of data. We desperately roam our computers, trying to organise the overflow of information coming at us from all angles into neat folders. But for most of us it doesn’t work. Does the funny e-mail from a client belong in the “customers” folder, or the “fun stuff” folder. Does the powerpoint you made for the board on rising sales belong in the “presentations” folder, the “board of directors” folder, or maybe in the “sales” folder. Or maybe in all three ? The hierarchical way of sorting information is becoming obsolete, it just can’t keep up. br /br /It doesn’t take a genius to see that there is a major market waiting to be tapped into, and the bets are being placed to replace the old paradigm of hierarchical classification of information. Google Desktop search, A9 and Apples spotlight are all trying to corner this market. All of them by using search algorithms, letting the user search for a word or phrase and returning appropriate results. br /br /But I think that this approach is not good enough to fulfill a users need for information. How do I search for pictures of my motorcycle ? And how can I be sure I have got all of them in my results ? How do I search for funny e-mails ? Can I make a search for tender and loving e-mails from my former girlfriends ? No, not really. br /br /So we need something different, that will present me with the information that I need when I need it. Probably in a graphical manner, since this is the best way of presenting a lot of information in a limited space. br /br /What will it be ? How will it work ? I don’t know, but I am thinking hard about it, the stakes are high.

  3. Why Danish programmers are the best in the world

    April 7, 2005 by max

    A friend of mine was trying to sell one of his companies a few years ago. The company in question collected sportsinformation from various sources, condensed and filtered it, and offered it as an SMS based service to media outlets, so that these could offer their customers up to date sporting information and not have to handle all the technicalities themselves. The company did quite well, and were leading in their technology. Eventually a large American corporation approached them, and wanted to buy them. The initial terms were drafted and due diligence performed. br /br /Then something strange happened. When the Americans discovered that the company had only one technical employee they got very worried, because according to them there was no way that a company with that kind of technology could have only one technical employee. According to them it would take at least a staff of eight to develop and maintain the product they were seeing. And so the deal fell, because my friend could not convince the potential buyers that this one guy had actually programmed the whole thing. Which he had. br /br /This made me wonder. Especially as this is not unique, I have seen similar cases before. br /br /So the obvious conclusion is that Danish programmers are just plain better, or at least more effective, than their American counterparts. And why is this ? After having thought about it for a while, I came to a conclusion: In Denmark programmers (and other employees) are paid to think about what they are doing, in America they are, at least to a greater extent, paid to do what they are told. The implication of this is that a Danish programmer will spend a substantial time thinking through the the project, asking questions, and coming up with alternative solutions before he starts doing anything whereas an American programmer will start coding right away, changing things as he goes along. Often with the result that things need to be redone, and that unexpected problems arise late in the development phase. br /br /It is obvious to me that paying people to think is more productive than paying people to do as they are told. So why don’t more people (especially Americans) do it ? Well, because it is hard and because thinking has to be part of your culture. br /br /It is harder to manage people that constantly ask questions, and leave if they don’t get sensible answers than it is to manage people that do as they are told. It requires management to be very fluid and constantly open to new ideas. And actually know what they are talking about!br /br /It is also a culture thing. Danes take pride in doing a good job, and shipping a great product that works flawlessly. Americans take pride in shipping a product that sells, no matter how it looks. This is also why Danish design is generally held in very high esteem, why American cities and cars are terribly designed, whay Windows always crashes, and why Danish designed products don’t sell as well as they should. Americans may be terrible designers and developers, but they are the greatest salesmen in the world. br /br /So when I grow up and become a billionaire I will place my R D labs in Denmark, and my sales force in America. Maybe Danes are great at designing and creating products, but nobody beats Americans on sales.