The story of the locked cellphone

This is a personal story of a trivial mistake and its aftermath. I wanted a cellphone; actually, an Android phone that ran on a GSM network and, most importantly, was unlocked so I could buy prepaid SIM cards in any country I went to and use them in the phone. This was my desired solution to avoid the big roaming charges most carriers charge when you leave the country.

I had a trip to Mexico City and planned to do my shopping there. My colleague brought me to downtown, near Plaza Zocalo, and we found a raft of cellphone vendors. We picked one and started shopping. I told my colleague what I wanted, and he conducted the transaction in Spanish. They had a used phone for about $120. Android? yes. Did it work? Yes. Was it unlocked? Of course!

They demonstrated the phone by inserting a SIM card, messing around with the web browser and an app so I could be assured it worked. I was ready to buy. One more question: was it unlocked? Oh, yes!

I felt very happy with my purchase. I bought a SIM card in Mexico and the phone worked fine. And then, I brought my phone to the UK a month or so later, and... it didn't work. I tried several SIM cards and couldn't get the phone going. Where did you get this phone? I was asked. Mexico. OK, that explains it.

It was locked. After all that. I was thousands of miles from the guy who sold it to me. (As if I could even find him again.) As I pondered my mistake, I realized I could have made sure the phone was unlocked, at the shop in Zocalo, by simply asking them to test it with SIM cards from several different carriers.

But that couldn't help me with my current problem - which is that I have a cellphone that works great in Mexico, where I go a few times a year, but nowhere else.

There is a silver lining to this story, and that's what I wanted to share. I actually use the phone every day, just not for its intended purpose. I had been looking for a device other than my main phone that I could use to play music from the cloud. I considered buying a tablet, but eventually I realized I had the Mexico phone. Even if it couldn't connect to the cell network, it worked with wifi, so I could use it at home. It was Android, so it could access my music apps. A perfect solution.

So, the point is this, and I have learned this again and again. Very rarely is a mistake or failure a total loss. If you take the time to look for it, there is residue that you can use for other purposes, or take forward to your next project. When you buy a phone that ends up being locked, it's not so bad - you are instead the owner of a somewhat overpriced music player.

Entrepreneurs to Cornell Tech students: "It's a miracle if a startup gets off the ground"

From the New York Times profile of Cornell NYC Tech, a new university with an introductory class of eight students. The school, which is building a new campus on Roosevelt Island off Manhattan, focuses on combining research and practical work, saying that "business, technology and real-world experience are baked into the coursework."

Not long ago, three young high-tech entrepreneurs sat with the students, talking about failure. They talked about questionable technical, financial or personnel decisions in start-up businesses they had created or worked in, about companies they had seen disintegrate, and about detours into projects they later discarded.

A question was asked about Andrew Mason, co-founder of Groupon, who had been fired a day earlier as the company’s chief executive.

“We should all be so lucky as to build a company that the investors care enough about to fire us,” Tim Novikoff, the C.E.O. of a small company making mobile phone software, said with a wave of his arm around the table, prompting laughter from the students and knowing nods from the Cornell Tech staff. A rail-thin man with the deep-set eyes of someone who could use a little more sleep, Mr. Novikoff is in his early 30s, making him the oldest of the three visitors.

“It’s a miracle if a start-up gets off the ground,” he said. “The last six months I’ve had no income, I have no health insurance. But I got to fly out to a C.E.O. conference and talk with Ashton Kutcher about mobile video for 10 minutes.”

The visitors urged the students to take risks but to expect, at least at first, a precarious existence, riddled with setbacks, that will require obsessiveness and a thick skin — and they made it sound like the grandest of adventures.

To jump back in after failure, you need to have, or build, irrational confidence

Interesting post on HBR Blog Network by Art Papas,co-founder and CEO of Bullhorn, a vendor of recruiting software.

Papas declares in his title that "For Entrepreneurs, Failure Isn't Always a Good Teacher" and goes on to write,

Failure makes many of us less confident and less aggressive. We become gun shy. That's not surprising. Unfortunately, the cold reality is that once you've failed as an entrepreneur, you need to have blind confidence and a healthy sense of aggression to prove to people that you actually can succeed. You need to try again, and brace yourself to be criticized, lectured, doubted, and flat-out ignored by investors and sometimes even your own team. If at first you don't succeed, you're in for the fight of your life.

This is a good point, and he backs it up with an amazing story:

When I first started Bullhorn in 1999, our original concept was the product of some brainstorming between me and my co-founder. His idea was, "Why don't we build a platform for people to display their creative work on the internet?" Then I added, "We could make it a marketplace for those people to get jobs." Nobody had ever told us that this was a problem that needed solving, yet we thought it was a great idea. So did our original investors. In fact, when we took the idea to creative professionals, they really liked it as well. Unfortunately, when we took it to the businesses that were making hiring decisions, it was a total flop.

So our first business model failed. After a few months, as our cash dwindled, we thought up yet another problem that we could solve. Our investors loved that idea too. But, much like our previous efforts, we discovered that no one actually suffered from the problem we were out to solve. Our second business model failed, as well. Then the dot-com bubble collapsed. Our early investors quickly turned from loving their investment in Bullhorn to hating it and they shut us off from any additional capital. We decided to forgo salaries to stretch our cash. I was paying my rent by maxing out my credit cards. Then a business dropped in our laps. We met someone with a problem that needed solving and we were uniquely poised to solve it. We realized we had a game-changing idea on our hands: creating the first software-as-a-service applicant tracking system for recruiters. When our new product started to take off, we needed more money to get to the next level. Unfortunately, our investors looked at me like I was the boy who cried wolf and rejected the idea out of hand. The sales traction and momentum was not compelling to them in any way. They told us it would never be a big business. Fortunately, they were dead wrong, but we didn't feel so confident at the time.

I had identified our winning product, but I was late to the game. So what did I do? Did I pick myself up off the floor, dust myself off, and power ahead? Not really. My team and I still had total faith in our concept, but the reality of having failed before made me nervous to take risks. I didn't have the confidence to push my investors to support the idea and decided to essentially bootstrap the business, which worked, but cost us precious time. The business succeeded and the rest is history 13 years later, but we would be three times the size we are now had I been stronger.

Failure is a great teacher, but it's painful and rattles our confidence big time. Who wouldn't be "gun-shy" after the kind of failure Papas describes, especially one (or two) in which investors' money was lost?

And this is the amazing point. Logically, it doesn't make sense to keep going. It would be easier and safer to go in another direction. But entrepreneurs don't think logically at this point. They have, or have built, an irrational self-confidence that allows them to jump back into the fray, maybe to succeed this time, or maybe to fail again. And thank God for the people who do that. They are kind of heroes, aren't they?

Reed Hastings and Netflix bounce back

We've followed the Netflix/Qwikster mistake story since it broke in 2011. Here's our earlier chronology:

September 19, 2011. Netflix's Reed Hastings: "I messed up" in communicating price increases
October 10. Netflix backs off - a little - from their radical restructuring
October 20. Opposing Views: Netflix restructure - bold embrace of the future or customer debacle?
October 23. Reed Hastings reflects on Qwikster & pricing controversies
April 10, 2012. "Strategy + Business" magazine says "Netflix wasn't all wrong" in its strategic changes (See the tide of opinion beginning to turn?)

If you need a quick recap, here goes. That summer, to capitalize on the growth of streaming media (and, possibly, to hasten the customer transition from the legacy DVD-by-mail business to streaming), the company announced separate pricing for DVD rental and streaming. The total price for customers signed up for one DVD & streaming would rise to $16 per month a 60% increase. Then, in October, Netflix announced that it was splitting its business into two parts - DVD-by-mail (to be renamed Qwikster) and streaming (keeping the Netflix name). Customers would soon have two separate accounts to manage, in addition to paying more.

Fallout was widespread and intense.

Within a week, CEO Reed Hastings said he "messed up" and apologized to customers. Two weeks later, Hastings pulled back on separating out the DVD-by-mail service and ditched the Qwikster name. The price increase, however, stayed.

Last week, eighteen months after Qwikstergate, Netflix announced stellar quarterly growth numbers, basked in rave reviews of its original series "House of Cards" and enjoyed a stock price that was the largest riser among the S&P 500 this year (of course, the stock is still below where it was before Qwikstergate broke).

So, while the crisis did not end up being what the New York Times' James Stewart called a "near death spiral," there is plenty to look back on now. What did Hastings learn from the experience? Here's what he told Stewart:

Mr. Hastings said he realized that the company’s attempt to both raise prices and separate into two companies, one the legacy DVD-by-mail business and the other the up-and-coming broadband streaming business, was trying to do too much too fast....

“[To bounce back from the crisis,] there was amazing pressure to come up with the shiny object that would make everything better,” he said. “But the phrase I used was, ‘There are no shortcuts.’ We weren’t going to find an idea or gesture that would make people love us again overnight. We had to earn their trust by being very steady and disciplined. And we had to be careful because we were on probation. We had to stick to what we do well and not lose confidence. I couldn’t say for sure we’d recover. But I was confident that our best odds were to be very steady and focus on improving the service.”...

With this week’s developments and the stock over $200, “in one sense I can say this is behind us,” Mr. Hastings said. “But it’s like a partially healed bone. It’s still quite fragile. Were we to make a similar mistake, we’d be right back in the penalty box. So we’re not really out of the woods. We’re growing and we’re making good progress, but we’re still not fully back to where we were.”

I am struck by Hastings' combination of humility and confidence. When things were difficult, and people urged him to find a "shiny object" to make everything better, he had confidence that his general strategic direction was correct and kept his patience. Now that growth is returning, he is not bragging - instead, he realizes that "it's still quite fragile."

Guy Kawasaki's Top 10 Entrepreneur Mistakes

A great talk from tech guru Guy Kawasaki. This talk is full of humor, bold language, and good insight. Kawasaki has been in the startup business a long time and, as he says, has seen just about everything. It's worth an hour of your time to check it out.



Hat tip Garr Reynolds at Presentation Zen.

A misunderstanding redirects a career

Mistakes can take you to new places. That's a theme of the upcoming Mistake Bank book, and it was underlined in a New York Times interview of Blair LaCorte, CEO of XOJets, an executive jet airliner. LaCorte explained how he first got into high tech:

My dad had advised me to work for people I wanted to learn from. I always remembered Eric Herr, who had been a managing partner at the Michael Allen Company, a consulting firm where I had worked one summer in business school. I contacted him and he mentioned a position at Sun, which I assumed meant Sun Oil. I told him I'd take it, that I trusted him and that I didn't need to know any more. I told my friends I was taking a leave from consulting to work at Sun Oil for a year. When the offer letter arrived, however, it was from Sun Microsystems.

That misunderstanding changed my life. For the next 12 years, I worked at a variety of technology companies. I loved the innovation in this industry; merging my business skills with colleagues' technical skills allowed us to move very quickly.

Another idea is proved in this story: always take your dad's advice.

"30th Anniversary of E-mail" mistake persists

Word went around the internet last week that 30 August 2012 was the 30th anniversary of e-mail, without doubt one of the most significant inventions of the past 50 years.

The anniversary was meaningless, of course. The occasion was the 30th anniversary of the copyrighting of a system called EMAIL (which did support electronic mail), developed for a small New Jersey college. The owner of the copyright is V.A. Shiva Ayyadurai, who was a teenager in 1982 when he developed this system.

David Pogue, the New York Times tech columnist, was one of the many who jumped on the bandwagon (via a tweet, of course, the easiest way to jump on a story without fully checking it out). Yet, when confronted with the error by readers, he wrote a lengthy apology of the whole EMAIL issue, including a detailed explanation from a reader, Thomas Heigh. A bit of Heigh's email to Pogue:

A colleague sent me a copy of your tweet, “Happy birthday to EMAIL! 30 years old today!” I’m afraid that you’ve inadvertently endorsed the propaganda campaign of V.A. Shiva Ayyadurai, who has been mounting a vigorous but quixotic effort to convince the world that he invented email as a schoolboy between 1978 and 1982. He mounts his case at www.inventorofemail.com. However, his claims have been almost universally rejected by technology experts and historians, on the simple basis that you can’t invent something during (or after) 1978 that was already in widespread use by that time.

The roots of email stretch back more than 40 years, including to a DARPA RFC (specification) covering a "mail box protocol" in 1971. (The source for this is a powerful apology from Washington Post ombudsman Patrick Pexton published in March, 2012, after he and a reporter had similarly reported Ayyadurai's copyright as the "invention" of e-mail.

It shows how a determined self-promoter can, through sheer effort and chutzpah, convince top-line journalists of something that is demonstrably not true; not once, but over and over again.

Quicken admits a mistake and sets out a path to making it right

Karen Wilhelm of the Lean Reflections blog sent along this email she received, dated 22 December 2011:

Mac users have been steaming about this issue for some time. Intuit has never supported the Mac community very well (I run QuickBooks on Windows via Parallel - not a good solution by any means). And this falls short of an apology to users. "We have not always delivered on this promise" and "I understand the frustration" are a few steps below "I'm sorry." But the company does appear to be responding to the outcry from users.

It's interesting that the letter writer, Aaron Forth is an outsider to Intuit. He came to the company via its acquisition of Mint.com. Perhaps this made him more open to supporting the Mac community than Intuit lifers. What do you think?

Charlie Crystle: when it comes to a cash, verify the numbers

Here's a great story from Charlie Crystle, one of the greatest tech entrepreneurs in Central PA (yes, there are some here in Silicon Pasture!). It's from his Digging In blog, essential reading if you're interested in starting a tech business here or anywhere.

Managing cash flow is an important practice to get to know early. It's pretty simple: you have your known ongoing expenses, known revenue (or not), and known investment (or not). You have to manage your cash--the combination of investment and revenue--to cover the expenses on an ongoing basis.

That's why hiring someone early on is such a big commitment. You're asking them to change their lives on your behalf, so you damn well better be able to make payroll.

I blew that in a big way once; I thought I had a certain amount of cash, and knew I had to contract the company to make the cash last, but then I got an email from my right-hand man informing me he had made a mistake--by $200,000. Oops is right. We laid 10 people off the following Tuesday.

Which raises another point: you're the leader, the CEO--you need to verify the numbers. I failed to do that, though my practice prior to that year was to know everything about finances. It was a mistake I still regret today.

[Remember, regret is not necessarily a bad thing.]

Dan Frommer shares one of his bad predictions

Predictions are fun to make and usually fun to forget. It's so easy to write about what you think will happen, and awkward or painful to look back and compare that to what really took place.

Dan Frommer of the cool SplatF blog took himself to task for an old prediction about how Palm and Flash could create a powerhouse mobile partnership ("The Dumbest Thing I've Ever Written About Flash"). Here's what he wrote in 2007 in Business Insider:

If Palm and Adobe could work together on a stunning user interface and offer the massive community of Flash developers wide-open access to a solid phone platform on good-looking devices, it could be a huge hit.

And here's the November 2011 view (after Palm had been purchased by HP and then set adrift, and Adobe announced that it would no longer develop Flash for mobile):

But it was so impractical! Not just the idea of Palm and Adobe banding together — they actually did try to work together on Flash for WebOS devices, and it still failed. But the idea of Flash working well on a mobile/touch device was so far-fetched in 2007, and is still pretty looney today. And that’s a big reason why Adobe is now winding down mobile Flash development.

Bad predictions are eight for a dollar in the tech world, but a sense of humor and self-reflection, as Frommer practices here, are much rarer commodities.

Reed Hastings reflects on Qwikster & pricing controversies

Netflix CEO Reed Hastings has come in for a lot of criticism in 2011. Whether or not you agree with Hastings' strategic moves and tactics around the future of Netflix' DVD-by-mail and movie-streaming businesses, watching the process unfold in public view is a rare and educational experience. In this interview in the New York Times Magazine, Hastings reflects (pretty soon after the fact) on the decisions he made and the fallout that ensued:

You really botched the handling of the DVD spinoff, Qwikster. In your recorded launch announcement, you flubbed your lines. You somehow neglected to secure the Qwikster Twitter handle. Then, facing a backlash from shareholders and consumers, you put the kibosh on the whole idea. Seriously, what’s the deal?
Over the last couple of years, we’ve been moving toward streaming, doing the Starz deal, doing the Xbox deal. We simply moved too quickly, and that’s where you get those missed execution details. It’s causing, as you would expect, an internal reflectiveness. We know that we need to do better going forward. We need to take a few deep breaths and not move quite as quickly. But we also don’t want to overcorrect and start moving stodgily.

Last month, when announcing Qwikster, you apologized for the way Netflix handled its price hikes, writing, “In hindsight I slid into arrogance based upon past success.” But wasn’t introducing Qwikster the way you did the most arrogant move of all? 
No, I think it was just a mistake in underestimating the depth of emotional attachment to Netflix.

With all these backup systems, there's still a single point of failure

TechCrunch reported this about RIM's explanation for the worldwide email delivery issues in October 2011:

RIM held a quick press conference call today to address the ongoing outages which started in Europe but have spread to the rest of the world, including the US. The message was straightforward: a “core switch failure” in their European unit (though they did not give the exact location) that failed to turn over to one of the backup systems. The total failure resulted in a backlog of messages that they are chewing through at this moment.

So RIM had backup systems, but they were dependent on a "core switch" - ostensibly a single one - to do its job. This story reminded me of an experience I had a few years ago.

My company had contracted with a large hosting provider for data center services. The company touted their highly secure building, bulletproof systems, redundant power & network, and backup diesel generators. We signed up and felt fully protected.

A few months later, a massive snowstorm hit the town where the data center was located. The electricity went out soon after the storm started. A few hours later, our servers went down. What happened?

We found out the next day, after we came back online, that a technician had noticed fuel leaking from the diesel generator as they prepared to start them up. This was a fire hazard, of course, so the generators remained powered off until the mess could be cleaned up and the fire department could affirm that the generators were safe.

So this facility with redundant everything had, after all, a single point of failure: if fuel was leaking, they couldn't provide backup power. Herein is a lesson for business continuity folks everywhere.

Here's RIM Co-CEO Mike Lazaridis talking about the issue:

"Hey, would you like to help create the World Wide Web?" "No, thanks"

An interesting story from Ian Ritchie, former head of Office Workstations Limited (OWL), an early maker of hypertext software for personal computers, speaking at TEDGlobal 2011. Ritchie describes how he (and several others) were in a position to help Tim Berners-Lee realize his dream of the World Wide Web, but failed to see it Berners-Lee's way and declined to participate. And the rest is history.

Mistake: Being Too Small. Solution: "Look Bigger"

This post by Scott Weiss of Andreesen Horowitz doesn't dwell on a mistake as much as recovering from one. As a tech startup selling to large enterprises, Scott's company IronPort learned that they were being disqualified from consideration because of their size alone. [This is an issue faced by B2B-focused startups everywhere.] As one prospect stated: “We like what you guys are doing but there’s no way we’d replace the aorta of our communications infrastructure with a beta box from a 20-person startup.”

So: the mistake, as Scott and his fellow leaders determined, was acting small. Now, the fascinating part: Scott goes into great detail about what they did to fix their mistake.

We felt like the little kid that kept getting turned away at the height chart at the rollercoaster—we can handle the ride, just give us a chance! Somehow, we had to find a way to look bigger and more credible quickly. After an intense brainstorming session, we hit upon a really important concept: since perception was reality, any weakness that the customer couldn’t see and couldn’t touch did not exist. By being absolutely maniacal about each of our customer touch points, we would appear to be far bigger than we were. No matter how rinky-dink the “man behind the curtain” was, it didn’t matter because the Great Oz would be massively impressive.

What IronPort did to change how they were perceived included both surface items (website design, business cards, custom faceplates for their servers) and, most profoundly, operational strategies and tactics:

All of these details mattered, but the key to the entire plan to make our little company appear big was to perform like the very best large companies. For us, this meant dramatically beefing up customer care (CC). In general and especially in high tech, CC had been a backwater—treated like a cost center to be minimized. Since this was arguably the most important early customer touch point, we took a completely opposite approach: we treated it like a marketing expense. With a firm belief that this was the primary catalyst for word of mouth, we invested heavily in the entire post-sale ecosystem. Our approach was to answer email inquiries instantly and telephone calls on the second ring with little to no hold time. We concentrated on how to deliver the best possible experience first and then went back and figured out how to cost-optimize it later

.

To me, it's very instructive that customer service was the key operational area that made IronPort appear bigger than they actually were. Telling the board and investors that they needed to staff up in customer service must have been a difficult discussion. But, as Scott points out, support was the most visible aspect of their service offering to customers; therefore, it needed to be world-class if they were to be viewed that way. I have never read a better business case for excellent customer service before (and I've read a few).

There's more elaboration on all these items in Scott's entire post.

Steve Jobs in 1997: "You can't start with the technology and figure out how to sell it"

Steve Jobs has been getting a lot of press recently, as if he needed that. But this clip was referenced by VC Brad Feld and is tailor-made for this site. Jobs is answering a confrontational question at the Apple Worldwide Developers Conference in 1997, soon after he returned for his second act at Apple.

The meat of the story, at least for me, happens at 2:00, right after Jobs states that design should start with the customer experience and work backward. He lays out that starting with great technology and figuring out how to market it is wrong--and he says that he himself has made this mistake "more than anyone else in this room."

Also, while clearly under attack, Jobs shows his maturity by not only not immediately getting defensive or attacking his questioner, but in fact taking some time to reflect and think, during a high-pressure, public address, and ultimately giving a powerfully thoughtful response. We can all learn from that.