Blackberry has got your back in an emergency–or, at least, they’ve developed an app for that. READ MORE
Cisco Systems announced Monday it would eliminate 14 percent of its workforce, or 11,500 jobs. Of those, 6,500 jobs will be eliminated in a general downsizing, while 5,000 more will be off Cisco’s payroll when the company sells its set-top plant in Mexico to Foxconn. The cuts include a 15 percent reduction in VP and higher-level employees. READ MORE
Just after September 11th, Suleiman Bakhit got a nervous call from his father. “Change your name,” he urged. “Say you’re from Mexico.” Suleiman was a Jordanian studying at the University of Minnesota and unfortunately, his father’s worry was justified. A few days later, he was attacked on the street for looking Arab. That night began what a 10 year journey in which Suleiman would transform from a masters student to the CEO and lead creative force behind a growing Arab youth media empire. READ MORE
Netflix has announced that they’ll be reaching out to a total of 43 new countries in coming months. The company is expanding to markets in Latin America and the Caribbean despite little information on how much demand there may be in these areas for streaming videos. READ MORE
The cost of maintaining IT in the business world is not cheap, and sometimes can even be astronomical. Large companies with in-house IT staff must hire specialized employees, and spend large portions of their budget on computer maintenance. There are updates, downloads, upgrades, IT staff overtime and perhaps even company downtime. Small and mid-sized businesses that outsource these services can save some money, but still can spend a big chunk of the company budget getting the job done. But there may be a solution already available, in fact one that’s been around for ages and whose time has finally come. “Webtops make absolute sense for a … [small or mid-sized business] that’s looking for an easy and inexpensive way to maintain its system and afford to hire more workers,” says Chris Pirillo, podcast tech guru and former host of TechTV program Call for Help. “It’s less of a power drain, and a much lower cost in IT expenses for multiple people.” What a webtop is The webtop — sometimes less accurately called a WebOS, or Web operating system — represents a return to the old client/server model of mainframe computing. The term “webtop” — short for web desktop — was coined as early as 1996 to characterize the migration of desktop applications to the browser. Webtops provide an environment similar to that of Windows, Mac, or a similar graphical user interface on Unix and Linux systems. They are virtual desktops running in a Web browser. In a webtop, the applications, data, files, configuration, settings, and access privileges reside remotely over the network. Much of the computing takes place remotely. The browser is primarily the window used to access the remote desktop software. To be called a webtop, it must have four things: Able to be launched automatically from a browser (i.e., no manual download, installation, or update process on local machine). Tight integrated between the user’s native browser and all the Webtop applications. Communicate seamlessly with a central server using HTTP. Use a graphic user interface (Windows-like environment). Back in 2000, Gartner Research released a prediction that “Webtops will become mainstream by 2002, and users will be free from relying on laptops to access the applications and information they need.” While that hasn’t come true, what’s held it back is not any lack of technology, but just the lack of Internet speed and computing power to manage this long-distance functionality. The world of Web 2.0 is changing that deficiency, and some companies are paying attention. Businesses revising desktop strategies Many large companies, including DaimlerChrysler, Sabre, BMW, Amadeus, and Deutsche Bank, are revising some of their desktop strategies to take advantage of webtops. And small and mid-sized businesses can likewise benefit. In contrast to the usual IT money pit, companies offering webtops handle the majority of maintenance remotely with limited client interaction required, with the company left to handle only a fraction of the costs. This distribution of computing power can not only dramatically decrease IT costs, but can also significantly improve a team’s performance through integrated data sharing and closer communications within the webtop platform. The webtop is an inevitability in this age of Web 2.0. With the growth in sheer numbers of Web-based applications, combined with the ubiquity of high speed Internet the capability for a completely portable operating system has arrived. The kind of functionalities you’ll find in a webtop includes file hosting, applications like word processor, spreadsheet, graphics and video programs, games, e-mail and contact management, desktop widgets, and almost anything you’d expect from the operating system existing on your desktop. While the general opinions of webtop reviewers make it sound like everyone should embrace the concept, not everyone sings their praises. There’s been plenty of resistance to the use of webtops — a large portion of the industry of software makers, for instance. The use of remote shared software applications — much of it open source — means far less commercial software will need to be installed on each workstation, meaning fewer software licenses sold. “If the webtop became a reality, Microsoft has the most to lose,” says Gene Phifer, managing vice president and analyst at Gartner, “because right now Microsoft owns the eyeballs of corporate Earth.” A work in progress Keep in mind webtops are still a work in progress, and as you’ll see when you test them, they are still finding the occasional bug to squash. Response lag time is still an issue at times, for one thing. Coming advances in new technologies, like the soon-to-be-released Adobe Flash 10 (currently in beta), may increase their functionality and speed the response time, but only time will tell. “I’ve tried several of them over the years,” said Pirillo, “and haven’t found any that are quite ready to handle the business world — yet. It may be a few years before webtops will be considered a business tool. But I have no doubt that it’s coming.” Webtops are a major strategic shift for many small businesses, especially those who have resisted outsourcing any IT services. Given the advances in reliability, security, and redundant backup protection that hosted services provide, however, it’s much more cost effective to focus on your core business than to dedicate resources to IT. Once webtops achieve a standardized level of functionality, and all of a company’s applications, data, and e-mails can be brought to individual users with lightning speed through any mainstream browser from a secure, managed data center, then the change will come. A webtop might be useful for your company needs, but before you spend a cent, run a few tests to see if the concept fits your business model. SIDEBAR: Webtops to Get You Started This Mashable page also has a much more comprehensive list of 45 webtops. Here’s a short list of a few of the better webtops to look consider: Glide — Has full suite of usual desktop applications, including word processing, spreadsheets, presentation, etc. Also handles video, audio, and digital pics, with graphics editing built in as well. Includes integration with and support for almost any cell phone or handheld, including BlackBerry, Palm, Windows Mobile, Symbian, and iPhone. Looks and works great on the iPod Touch as well. Just point your handheld or cell phone browser at Glidemobile.com and you’ll see what I mean. Offers 5 GB storage free, 15 GB is 4.95/mo. Also has a kids’ version, KidsGlide.com. G.ho.st (Global Hosted Operating SysTem) — As their slogan says, “G.ho.st provides a free Web-based Virtual Computer to every human being.” In alpha testing so far, but nice set up. Won a number of awards, including a Red Herring 100 Europe award. First joint Palestinian-Israeli technology start-up, operates in the Palestinian territories. Integrates with Zoho for office software. Well thought out, one to watch. Cloudo — Founded in 2006 in Stockholm, the company is privately held. Offers standard fare in terms of a webtop, including file hosting, virtual desktop widgets, applications, e-mail and contact management, and a full suite of programs you’d expect from a regular desktop OS. Visually appealing standard layout, but Cloudo offers a big range of themes, and can even mimic other operating systems including various flavors of Windows, Mac, and Linux so you can feel right at home. Currently in private developer alpha as of February 2008, Cloudo is an Ajax based virtual desktop application. Desktoptwo — Based in Mexico, built and hosted by Sapotek.com. Desktoptwo includes 1GB of free space, and includes a fully-featured OpenOffice.org suite, converted into a Java applet. Also offers RSS reader, mp3 player, IM, blog, mail and more.
The Fourth Annual Inc Web Awards: Killer Apps Company: Saddletech.com, in Woodside, Calif. URL: www.saddletech.com What we liked: A wealth of Web-collected data fires an innovative twist on customization In October 2001, Lands’ End began selling custom-tailored pants on-line. Consumers plug their measurements into the clothier’s Web site, and a program turns the data into dimensions that a computerized cutting machine at a plant in Mexico uses to make the pants. Now a small company called SaddleTech.com has introduced a comparable service for horses that is less lucrative than Lands’ End’s offering but considerably more noble. After all, an ill-fitting saddle can cause painful sores. Ill-fitting jeans just make your thighs look fat. The long-standing problem with saddles is that they’re not adjustable, explains Saddletech.com founder Robert Ferrand. Horses’ backs, by contrast, vary significantly by breed and size, and change over time in response to age and exercise. Furthermore, when tack-shop proprietors perform visual inspections to see whether a saddle sits comfortably, they don’t consider the rider’s weight, which can add a couple hundred pounds of pressure. Ferrand has been selling saddle pressure sensors to veterinarians and saddle makers since 1992. Earlier this year he began offering his customers a computer-based “saddle-fit management program” as well. Now his direct-to-consumer offering allows horse owners to retain their existing gear — which can cost thousands of dollars — and still give Trigger a more comfortable ride. When customers register on the Saddletech.com Web site, Ferrand sends them a patented gauge, which they can use to measure the arcs and angles of their mount’s back and compare them with the arcs and angles of the saddle’s underside. Customers enter the gauge data, the horse’s weight, their own weight, and other information into a series of fields on the site. Ferrand feeds the Web data into a patented algorithm of his own devising, which calculates the difference between the shape of an unloaded horse’s back and the shape of a horse’s back with saddle and rider. He then uses those measurements to design and manufacture a thermoplastic orthotic which, when placed between horse and saddle, evenly and comfortably distributes the rider’s weight to prevent the formation of sores. Ferrand is also conducting research on the site, asking horse owners to plug in body measurements and ancestral data for close to 80 breeds, from Akhal-Teke to zebra. The idea is to determine whether there are clusters of horses with similar measurements. That would allow saddle manufacturers to build products that fit better without individual customization. The orthotic costs a hefty $350, and so far Ferrand has sold fewer than 100 of them. (The rest of his nearly $100,000 in annual revenues comes from instruments for measuring saddles, computer systems, and saddle-fitting clinics.) But the product is brand-new, and Ferrand has done nothing yet to promote it. At press time, he was planning an E-mail campaign targeting U.S. equestrians, who number in the millions. “You’ve got a $500-million business out there that operates on the principle that the customer cannot possibly tell whether the product will actually fit,” says Ferrand. “This solves the problem.” Leigh Buchanan is a senior editor at Inc. Anne Stuart is a senior writer. The Fourth Annual Inc Web Awards Killer Apps Printing Money Rental Health Lab Retrievers Take My Payroll, Please Hoof and Math Please e-mail your comments to editors@inc.com.
Bulletin Board Matthew Upchurch travels a lot — a lot. As CEO of Virtuoso Travel, which provides marketing and technical-support services to luxury-travel agencies in North and South America, he roams the world to cut deals with hotels, cruise lines, and resorts. Upchurch, who has a heavy schedule of clients at every stop and must keep in touch with his 125 employees as well as his family back home in Fort Worth, needs a portable phone. What he doesn’t need is the headache of finding local providers in the tangled web of overlapping cellular networks around the world. His solution? Rent phones from IMC WorldCell, a Silver Spring, Md., company that maintains contracts and roaming agreements with service providers in more than 120 countries around the world. Like its British competitor CellHire, which offers similar services in nearly 100 countries, IMC WorldCell offers the convenience of operating in many places with one phone and one number. However, if Upchurch is traveling to Japan, Korea, Mexico, or Brazil, each of which has a cellular platform incompatible with the platforms in the rest of the world, he needs to order a separate phone for that country. IMC WorldCell delivers the phone in advance, so Upchurch knows his phone numbers in Seoul or Tokyo before he leaves Texas. After renting phones for about four years, Upchurch purchased an IMC WorldCell phone with a permanent number in countries running the GSM (which stands for “global system for mobile”) platform, the operating system used throughout Europe. IMC WorldCell’s prices are sometimes steep: calls to the United States range from 55¢ a minute for preferred customers in the United Kingdom to $5 or more a minute in Kosovo. But the company can give travelers reliable access in countries like Russia, Kazakhstan, and China, where service is otherwise hard to arrange. Bulletin Board See Bot Run Rent a Phone, Lose a Headache No Receptionist Necessary Things We Love: Home-Phone-Line Networking Log On, Turn Off, Spend Less Acronym Watch A Network for Networkers A ‘Black Box’ for Your Car Please e-mail your comments to editors@inc.com.
Techniques: Microcases Human Resources Problem: Finding professional staff to help grow the company Solution: Using the Web to let overseas talent bid on projects Payoff: With good teams in place, revenues triple in four years In 1998, soon after Rafael M. Lopes expanded the services offered by the Envien Group, his Los Angeles-based consulting firm, he realized he needed to find cheap programming help — and fast. Envien was pitching business-development services with an emphasis on marketing over the Web but was being continually underbid by computer whiz kids who, Lopes says, offered none of Envien’s project-management and business-development expertise. Moreover, Lopes wanted to expand beyond the United States and sell the company’s services in Latin America and in other overseas markets, but he couldn’t do so without hiring skilled workers to help him. At the same time, clients that Lopes had already cultivated and helped to move online were ready to graduate to more sophisticated Web sites that offered E-commerce and database integration. Lopes’s fledgling firm couldn’t afford to pay for even a part-time programmer with that kind of expertise. So in June 1999, Lopes started to explore bidding out projects piecemeal over the Web. He turned to eLance Inc., a company that allows its customers to post projects and review bids from independent contractors around the world online. Lopes has now assembled an international team of programmers, designers, and translators, which enables him to add streaming media, database integration, and Flash animation to the menu of features that his clients can choose for their Web sites. Now Envien can offer more competitive prices and win more projects. As a result, Lopes’s jobs are getting more ambitious, and he’s expanding his client base deep into Latin America. What’s more, his firm’s revenues have tripled. In 1998 the company had gross revenues of $40,000. In 2000, Envien billed $84,000, and this year Lopes expects the business to bill $120,000. Although Lopes won’t disclose his net income, he happily reports that profits have risen steadily along the way. According to Lopes, eLance has made it effortless for him to find affordable talent in such far-flung places as Brazil and Ukraine. After he receives bids for a job he’s posted, he reviews contractors’ profiles on eLance.com. Then he checks the company’s five-point rating system to see how previous clients have graded the contractors he’s interested in. ELance doesn’t allow Lopes to E-mail a contractor directly until he selects a winning bid. Still, he says, he has always had enough information to be confident about the bids he has chosen. And once the project is finished, Lopes has no trouble paying his international workers. When he first started using eLance, he had to send payments by Western Union. Now the site has a built-in payment system. After receiving Lopes’s authorization for payment, eLance bills his credit card and pays the contractor for him. So far Lopes has posted 11 jobs on eLance.com, and he hasn’t paid a dime to do it. Service providers pay eLance a fee of 10% of the cost of the awarded project. And if Lopes wants to work with contractors again, he signs them up directly. For example, a Mexico City-based contractor whom Lopes found on eLance is now working as a partner with him on a new venture: Mercadotecnia.com, a Web site named for the Spanish word for market. While Lopes reaps the rewards of hiring international talent, he doesn’t believe that he’s exploiting his overseas workers. “The Web allows people in third-world countries to use their technical skills to make money that’s above average for their markets,” he says. Please e-mail your comments to editors@inc.com.
SOHO Balance A garden-tool distributor rakes it in by carefully deciding what he needs to do himself — and what he doesn’t Lars Hundley received his entrepreneurial epiphany while mowing the lawn. It wasn’t his lawn; it was his landlord’s. But Hundley was responsible for mowing it, and gosh darn it if he was going to spend $1,000 or more on some gas-belching mower to cut grass he didn’t even own. Hundley bought the cheapest push reel mower he could find, an $89 Home Depot special. Then he started mowing. He couldn’t believe how easy it was. It’s not as though Hundley, 31, had always dreamed of becoming an entrepreneur. “If you had told me 10 years ago that I would be in retail selling lawn mowers, I would have laughed you off the planet,” he says. At the time he was doing tech support at a videoconferencing company in Boulder, Colo., 30 hours a week. Upon encountering the push reel mower, Hundley grew interested in starting his own E-commerce company. He decided that the Internet marketplace was the best venue for him to make money selling the item. What are the chances that in any given location you could find enough people interested in environmentally friendly lawn and garden products? he asked himself. The videoconferencing company’s tuition-reimbursement program enabled him to attend an executive M.B.A. program at Colorado State University. Hundley immersed himself in Internet technology during the day and in business-school fundamentals at night. Three years later Hundley’s site, CleanAirGardening.com, is the number one online U.S. dealer of Brill push reel mowers, a top-of-the-line German brand. Hundley also sells electric mowers, trimmers, and blowers, as well as compost bins and garden tools. Last year Clean Air Gardening made $300,000; Hundley turned a profit of $100,000. His only office: a corner of his living room, in a one-bedroom Dallas condo. The office consists of no more than a wooden desk, a standard chair, and a one-drawer filing cabinet from Office Depot. For no-frills soloists like Hundley, success hinges on knowing what to automate, what to outsource, and what to do yourself. Hundley has automated much of his company’s back-end process. Yahoo Store provides him with an E-commerce engine for $100 a month. “Yahoo Store is awesome,” he says. “There’s no way that a Web-design company could build a site that does what Yahoo Store does, at least not for less than $100,000.” Hundley stores his contacts on Yahoo’s E-mail address book. He’s even automated his accounting system by setting up a Wells Fargo Internet banking account, with his suppliers designated as payees. “I don’t have to mess with licking envelopes,” he says. Some things are too complicated or important to be automated. When customers phone with questions, for example, Hundley handles the calls himself. But by last summer initial-order calls were taking up too much of the CEO’s time, so he outsourced product orders to Personalized Communications Inc., a Dallas-based call center. He paid the center about $500 to teach its operators about his products and to program his products and prices into its system; now the center charges him about $350 a month for handling basic orders and tracking marketing information. Hundley still handles customer service himself. That’s the thing about outsourcing: it saves time, but it costs money. Hundley performs certain key functions himself because for now, he says, it’s the best way to keep expenses low and profits high. But it’s always a delicate balance between minimizing expenses and maximizing his impact as CEO and sole employee. One of Hundley’s most important functions is deciding what to sell, a task he would be loath to farm out. But even so, Hundley needs to be judicious about the time and expense involved in selecting new products to offer. When he chooses a new product — a cordless hedge trimmer, perhaps, or a human-powered snow thrower — he orders as few as he can. He tests new products himself at his parents’ farm a few hours south of the city. Once he thinks he’s found a winner, he snaps a picture of it with his digital camera and often tests consumer response by listing a few items on eBay. “I won’t just sink $50,000 into ‘I think this might work,’ ” he says, because he might end up with a warehouse full of duds. That “warehouse” is actually a 10-by-17-foot, $200-a-month ministorage unit half a mile from his condo. Each day, Hundley tallies his E-mail orders — 30 to 40 a day in the spring, 5 to 10 a day the rest of the year — and prints shipping labels on his inkjet. He drives his 10-year-old Volvo sedan to the storage unit and loads the mowers into the trunk and back seat. “You can fit a surprisingly large amount of stuff in a Volvo,” he says. He drives to UPS and ships the mowers himself. Hundley works six days a week but insists he hasn’t fallen into a soloist-workaholic rut. He takes his dog to the park twice a day and rides his bike around White Rock Lake for hours. He taught a friend how to work the Volvo supply chain and then treated himself to a trip to Mexico. For his next vacation, he’s considering an outdoor-survival school in Utah. “They teach you the skills you need to survive with nothing,” he says. As if he couldn’t figure it out himself. Jill Hecht Maxwell is a reporter at Inc. Technology. Hundley’s SOHO Essentials Office: iMac computer, $1,600. Lexmark inkjet printer, $150. iOmega Zip CD burner, $189. Canon Digital Elph camera, $500. 10-inch cardboard Elvis. Sleeping border collie mutt. Telecom: Two-line Siemens cordless phone, $199. Cordless headset, $100. Voice mail from Telco, $9 a month. Panasonic fax machine, $130, with dedicated phone line, $24 a month. Nokia wireless phone, $149, with service for $80 a month. Internet: DSL connection, $40 a month. Outsourcing: Basic incoming-order phone calls handled by Personalized Communications of Dallas, $350 a month. Desktop: Yahoo Store, $100 a month. Yahoo Address Book, free. Wells Fargo online bill payment, $5 a month. Q+A with Elaine St. James Keeping it Simple People often decide to work from home to simplify their lives. But they frequently find that it just makes things more complicated, especially when they’re sharing their home-office space with family members. Inc. Technology contributor Alessandra Bianchi recently talked to Elaine St. James, author of Simplify Your Work Life, for tips on how to have your home-office cake and eat it, too. Inc.: Do you have a system for keeping family life and work life separate? St. James: It’s important to remember that a home-based business is not a substitute for child care — or elder care. My kids are grown now, but I recommend that parents who work at home educate their kids on the concept of “work time” versus “playtime.” Even young kids can learn the concept if you stick to your guns. It’s important to educate your spouse, friends, and other family members who think that because you’re at home, you’re not really working. Most adults won’t learn that concept as quickly as your kids will, but they, too, will eventually catch on. Inc.: How does technology fit into the picture? St. James: There’s no question that technology makes it possible for us to vastly improve our productivity and simplify our work lives. But be selective in giving out your cell-phone number, and don’t be timid about setting boundaries, like, “Please don’t call me between 5 and 7. That’s my dinnertime,” or “Please don’t call me on the weekends. That’s my time with my family.” It’s hard to relax and have time for yourself and your family when you know you can be interrupted at any moment by a ringing phone. Please e-mail your comments to editors@inc.com.
Welcome to the New Economy: Act III Dot-coms have discovered that they have to make money, and the Fortune 1,000 have learned that E-commerce isn’t all that hard. What happens now? From .com to .profit, by Nick Earle and Peter G.W. Keen (Jossey-Bass, 2000) How Digital Is Your Business? by Adrian Slywotzky and David J. Morrison (Random House, 2000) The radicals of the 1960s got it wrong. The (technical) revolution will not merely be televised, it will appear on your computer screen in glorious, living color. In the new-economy tech wars, we are now in the third act of what promises to be a three-act play. In Act I, small companies used the Net to their advantage. In Act II, old-economy companies caught up with remarkable speed. And now, with the digital playing field more or less level, the best ideas and services will win. A series of new books reinforce the point that if you don’t understand what is going on, you — like thousands of generals before — are doomed to fight your last war. In their book From .com to .profit: Inventing Business Models That Deliver Value AND Profit, authors Nick Earle, president of Hewlett-Packard’s in-house incubator, E-Services.Solutions, and Peter G.W. Keen, a technology consultant who has written 20 books on business and IT strategy, deconstruct Act I clearly and informatively and delineate the new ground zero: being a dot-com, they say, “is about being open for business on the Web. Profit is about making money as a business on the Web. And they are not the same thing.” That distinction is being made painfully clear to tens of thousands of now struggling Internet start-ups. To underscore the obvious: being on the Web is no longer an objective but rather the price of entry for being in business. The ultimate goal is still to create a business model that makes sense. Ironically, that gives large companies an advantage. Prior to the advent of the Internet, old-economy companies had sales and almost always reported earnings. In general, costs fell dramatically and sales climbed as those companies went digital. GE is a perfect example. Once the company made the decision to master the Web, it caught up to, and in many cases surpassed, the dot-coms. What’s a smaller company to do now that the first-mover advantage is gone? Well, you could do a lot worse than spend some time with How Digital Is Your Business? by Adrian Slywotzky and David J. Morrison, authors of The Profit Zone and Profit Patterns (Random House). The book’s premise is that your company should have a “digital business design” — another way of saying that you need to have a detailed business strategy that actually makes sense. To Slywotzky and Morrison, a digital business design is “never about technology for its own sake; it’s about using technology to create a unique and better business design.” The authors go on to list eight areas of importance and pose eight questions that they say you need to answer when building that model: Customer selection. Which customers do I choose to serve? Unique value proposition for the customer. Why do they buy from me? Unique value proposition for the talent. Why do people work here? Value capture/profit model. How do I make money? Strategic control/differentiation. How do I protect my profits and my customer relationships? Scope. What do I do to add value? Organizational systems. What organizational structure and culture do I create? Bit engine. How do I manage and distribute the intelligence inherent in the system? Although the first seven concepts are fairly basic, they are important and necessary to mutually reinforce one another. But what is perhaps most intriguing about their list is the eighth item. In creating their concept of a bit engine, Slywotzky and Morrison are building on a concept put forth by Nicholas Negroponte, author of Being Digital and founder of MIT’s Media Lab. Negroponte drew the now accepted distinction between managing atoms and managing bits. Managing atoms is manipulating physical assets: stockpiling inventory, shipping product, building factories, and so forth. Managing bits is all about manipulating information. Obviously, given a choice, you would prefer to have your company stationed behind door #2. That, as Slywotzky and Morrison point out, is where digital business design fits in. “On the surface, Digital Business Design is about what fraction of your business processes are conducted online,” they write. “At a deeper level, it’s about whether you’ve transformed the way you do business by taking advantage of the new strategic options enabled by digital technologies.” Now, if you think some of that sounds familiar, you’re right. And concepts like the “choiceboard,” a process by which customers are allowed to interactively design the exact version of the product that they want, are just mass customization in a different guise. And many of the corporate examples given in the book (Dell, Schwab) will be well known to even the most casual business readers. But Slywotzky and Morrison have put this information together in a way that is useful for managers. They provide specific examples — including international cases such as Cemex, the Mexico-based cement company — that show how companies have digitized their business effectively. Their book could help you write your own Act III. On the Other Hand, Maybe We’re All Doomed The Coming Internet Depression, by Michael J. Mandel (Basic Books, 2000) Maybe you shouldn’t be thinking about technology at all. In fact, if you listen to Michael J. Mandel, a truly smart guy, you might want to use your computer to sell every tech stock you own and then go hide — with your money — under your bed. That would be a perfectly understandable reaction after reading Mandel’s book, The Coming Internet Depression: Why the High-Tech Boom Will Go Bust, Why the Crash Will Be Worse Than You Think, and How to Prosper Afterward. First a discussion about why you should believe Mandel, and then a summary of his argument. Mandel is an economics editor at Business Week. But unlike most editors, he actually knows something and has the credentials to prove it. (Mandel has his Ph.D. in economics from Harvard.) Second, he has written well on the new economy for some years. Third, unlike most economists, Mandel has a definite opinion about what’s going to happen. And that opinion is this: we are heading for a heap of trouble, and technology is to blame. The intriguing thing about the new economy, Mandel says, is not that it has repealed traditional business cycles, as some contend. Rather, it’s that it has amplified them. Innovation is clearly the lifeblood of any economy. But in the new economy, funding for a large chunk of research has come from venture capital, and how much venture capital is available depends on how well tech stocks are doing on Wall Street. Mandel writes: “Faster growth and a rising stock market increase the incentives to invest in innovation — which yields more start-ups, faster adoption of technology and more pressure on existing companies to keep up. But when a downturn starts, watch out.” In a downturn, not only will funding for research dry up but established firms will have little to fear from start-ups, the economist contends. That will allow the veteran companies to set higher prices and boost margins, which in turn will lead to higher inflation. And suddenly we are in a never-ending downward spiral. “Hardest hit, of course, will be the stock market,” he writes. “Rather than a single sharp crash, the market will sour over time. The leading-edge Internet companies will tumble even further than they did in spring 2000. Initial public offerings will come to a dead halt and the downdraft will spread to the technology stocks, which accounted for roughly 45% of the gain in market value during the New Economy boom [which Mandel dates as beginning in 1995].” He goes on: “Attempts by investors to pull their money out of the market will drive down stock prices even further.” And down and down we go. Since a downturn is inevitable, are we truly doomed? Well, almost buried in this well-written, well-reasoned book is one reason for hope: “The venture capital business only represents about $100 billion of the $9-trillion U.S. economy.” So on an absolute basis, if it dries up, the hit should not be fatal. Mandel’s response? Yes, of course, the hit won’t be devastating — if people react rationally. But investors don’t always do that, he points out. A major sell-off in technology could have an amazing ripple effect. Maybe it’s time to bring out all those survival kits we prepared for Y2K. Who Needs Publishers? A smart CEO called me the other day, looking for some general background information on the publishing industry. (He was thinking about writing a book.) When I told him it usually takes from nine months to a year for a finished manuscript to appear in print, he was appalled. “Wait a second! It’s going to take me nine months to write the thing, and at least that long until it’s on the shelf?” he asked. “That’s a year and a half — if everything goes well, and you’re telling me I should count on two years from start to finish? How in heck can you do a technology book that has anything meaningful to say with that kind of lead time?” It’s a great question. So far, publishers don’t have any great answers. Why should you care? Three reasons: You want access to the best information you can get on a timely basis. You want to know who is a timely and reliable source of the information you need. Someday you may want to write a book. Traditionally, the book-publishing industry would have been the logical place to take all those desires. But as the CEO with whom I spoke the other day found out, conventional book publishing is becoming progressively irrelevant. With that in mind, keep an eye on what’s going on at sites like MightyWords ( www.mightywords.com) and Soapbox.com ( www.soapbox.com, created by the people at Motley Fool). Some sites allow nearly anyone, with some restricting conditions, to be an author. You post your approved original content and split the revenues. Not surprisingly, so far the content on such sites is remarkably uneven. However, as more people learn about the opportunity of taking their message directly to the marketplace, the better the material is likely to be. (Things will improve further as more companies, such as Soapbox.com, provide a feedback mechanism that allows users to evaluate the content.) Traditional book publishers dismissed Stephen King’s self-publishing efforts, through which he sold a remarkable number of copies of his novel The Plant (north of 150,000 downloads at $1 a pop) directly to consumers. (Interestingly enough, the book is about a human-devouring flora that’s sent to a publishing executive.) Book publishers would do well not to ignore new business models — and you would, too. If the plant doesn’t get traditional book publishers, the competition will. Paul B. Brown is the author or coauthor of 10 books and editor-in-chief of DirectAdvice.com, an online financial-planning company. Executive Reader George Pace CEO of Rocco Inc., in Harrisonburg, Va., parent company of the Shady Brook Farms brand of turkey Recent fave The Greatest Generation, by Tom Brokaw. “About 15% of our employees are from that generation,” Pace says. “Brokaw’s book helps you understand where they are coming from. Each story in the book is about the extraordinary actions average people took in tough situations.” Business basic A Passion for Excellence, by Tom Peters and Inc. contributor Nancy K. Austin. “You can have the greatest strategy in the world, but if it’s executed poorly, you can still lose,” Pace says. “If you execute well, you can win with an average strategy. Peters writes about finding a way to communicate to your employees no more than five priorities the company has, and how everyone can accomplish them by pulling in the same direction. That’s easy to do when you have 5 employees, but not so easy when you have 3,500. But if you can do it, it’s magic. Executional excellence is critical.” For fun The Bear and the Dragon, by Tom Clancy. “I like Clancy. I enjoy thinking about how someone could think up all that stuff and keep it straight. Plus, it’s 1,028 pages. If you travel a lot, it’s good to have one book to hang with for a while.” –Jill Hecht Maxwell Please e-mail your comments to editors@inc.com.
