As some of you know, I have experienced some recent [ahem] frustration while trying to build a technology business in Vancouver.

I experienced some catharsis last night reading Kevin Curry’s (is he a real person?) comments on the Vancouver startup scene over at TechVibes. You should really follow the link and participate in the discussion @ TechVibes, but I have pasted my thoughts and response below as well, for posterity:

I, too, had the opportunity to both work and raise capital in Silicon Valley. While I think every city has its fair share of bad, mediocre ideas (the Valley has lots too — see MC Hammer’s latest enterprise) I believe that the far more common theme here is ideas that are derivative, in which the best hope for success is a bunt, not a home-run.

Startups are supposed to swing for the fences, but there are too many startups here who fail to understand market limitations and try to boil the ocean. I spoke to a pair of entrepreneurs who honestly believed that they could replicate craigslist, zagat’s, epicurious, citysearch, and about half-a-dozen other best-in-class sites with a few hundred thousand dollars and no technical skills between them. I was embarassed for them.

The opposite problem is also true here: people looking at a technology sector and deciding they want to be in that space, without a clear idea of what the product will look like. That too is the wrong approach.

The best services and products solve problems. I’m not suggesting that RosterBot is the end-all be-all of web services, but it’s as successful as it is because it addresses a need, and I as an entrepreneur and athlete happened to experience that need so I was well-qualified to figure out how to solve it. It solves an obvious problem with some effectiveness, and it was built within the parameters, opportunities, and limitations that govern it.

Is it the next Google? Obviously not… but it was built entirely without outside funding and without defocusing me from other career obligations and objectives — and it’s beating other “Social gaming” sites because it is laser-focused on addressing the real needs that teams have.

I too have experienced major frustration with investors in Vancouver. I have always been comfortable saying “I don’t know” when, in fact, I don’t know something. This always played well south-of-the-border, when used in good measure, but here investors are looking for any sign of weakness to exploit in an entrepreneur and immediately go for the jugular.

There is a lack of respect between entrepreneurs and investors in this city. For the most part, I think that disgust is earned by both parties. To fix it, you’ve got to start from the top.

Vancouver has no successful mid-size (in U.S. terms) venture-backed technology startups. You can’t expect someone to go from junior individual contributor at a tiny aenemic startup to CEO of another aenemic startup in one step. With respect to many of the smart engineers I’ve met who are running small companies here, this is too often the case — and because they’ve never managed others or driven strategy and marketing, the results are predictable.

The lack of an informal apprenticeship system for information technology, such as exists within the medium to large technology companies in Silicon Valley, means there is little opportunity for workers to credibly jump from junior engineer or marketer to senior management or company founder. Lots have, and with some success — but I would submit that this is more due to happy accident and raw talent than anything else. So the catch-22 is that we need successful startups — who can stand on their own two feet, and not flip to the lowest bidder — in order to create more successful startups.

In the meantime, consider the following: we don’t need capital sources that are Canadian in order to nurture executives and companies on the Vancouver technology scene… and in fact doing so is putting the cart before the horse.

The Film and Video Game industries in this city are examples of technology-centric businesses that have developed and flourished within Vancouver, creating tens of thousands of jobs each, with capital from outside the city.

What we need to do is nurture programs that make it advantageous to invest, and remove the red tape from investing, in Canadian (and BC) venture startups for foreign VCs, and work to lure them to our city and province. This will attract capital from south-of-the-border, where investors are more seasoned and better-connected — and can bring more capital and greater exit opportunities to bear. These more seasoned investors will also act as a natural weeding mechanism to separate the wheat from the chaff in the local community, and they’ll force local investors to be more competitive and to bring more value to the table if they wish to participate in the upside opportunities. Honestly I think local VCs would appreciate and welcome the help and wisdom of their bigger cousins.

Solve the capital problem, and the other problems will fall into line over time. You’ll get mature, free-standing, profitable technology companies with seasoned entrepreneurs and middle management running them. We will all benefit.

Even after the stores opened and the customers have packed home with their lawn chairs, the disaster that has been the iPhone’s launch in Canada continues to ring (pardon the pun) in the ears of consumers. I took a spin around Vancouver on my motorcycle (sorry, going too fast for photos) this morning at 7:30 and counted 250-300 people at the Broadway & Arbutus Rogers store, some TV trucks, and some balloons but otherwise not much fanfare. The smaller stores had maybe a dozen or so people hanging around at best.

I was concerned that the media were going to get taken on a ride by Rogers with this launch. Fortunately, the CBC is reporting that desperately few of the customers who were encouraged by Rogers to go to Rogers flagship stores in 6 Canadian cities have walked home with the prize, while still others are getting denied the purchase because some Rogers outlets are showing preference to new customers (and thus, highly-spiffed new activations) over existing ones. The CBC has thus far been on the money on this issue I hope this REAL story is echoed in other media over the course of the day.

As Daniel Smith reported, Apple may have heard the more than 63,000 voices at RuinediPhone.com and diverted shipments destined for Canada to elsewhere. Plausible, but this clear internal “leak” might actually be a way for Rogers to blame the lack of supply on Apple in a very subtle way.

This is what happens when big, arrogant service providers who fail to remain customer-centric come into contact with a mass-market trend. The launch of the iPhone in Canada could (should) have had a huge impact on subscriber loyalty and shareholder value for Rogers, but today even those few folks lucky enough to actually have paid through the nose and signed their lives away on a 3-year contract to get an iPhone are embittered by the experience.

It seeps down from those obnoxious gouging prices and the three-year lock-in (in an industry where the life cycle of a phone is less than 2 years) all the way to the flagship Rogers store passing out Granola Bars from Costco instead of paying the overnight campers the respect of some eggs or pancakes (they promised ‘breakfast’).

Somewhere in between those two offences is the fact that, with diminished supply on hand, Rogers store managers failed to tell those in the lineups that there weren’t enough devices to go around. Moreover they failed to give those people any promise that they might get one sometime in the future, so as a result many fan boys have now sat on their asses outside a store all morning for nothing.

Rogers created a media event around the iPhone launch.. great for free marketing, bien sur. They made promises about special promotions and breakfasts and early openings for these stores, and encouraged crowds to concentrate at specific stores to make sure they’d be part of the media frenzy and make the event seem much larger in scale than it actually is. It’s an even trade, I guess, when the consumer ends up getting what they went there for. But with the biggest stores having fewer than 100 units on hand you can do the math: of those 200-400 people who waited at each of the flagship stores, as many as 75%-80% did it for nothing.

In essence, Rogers exploited them to generate buzz and get some free marketing, and gave them nothing in return. So let’s do the math: A Triple-Lock for the lucky few, a lost night’s sleep for many, and for everyone a granola bar.

Yeah, screw you too, Rogers.

The next thing I’ll line up for is to be the first subscriber on the nation’s next GSM wireless carrier.

Apparently trying to steal the thunder of customer ire from Rogers Wireless’ ill-considered iPhone launch, Bell and Telus are trying to slip out the back door with an announcement that they’re going to be charging users extra for text messaging.

SMS costs in Canada are already disproportionately high versus the unrealistically high costs for SMS across the entire wireless industry. This article suggests that SMS costs are, in the aggregate, 4x higher than getting data from the Hubble space telescope. Global SMS revenues are larger than the Hollywood movie, music and video game industries combined.

The quote from the Telus spokesperson is hilarious:

“The growth in text messages has been nothing short of phenomenal,” wrote Telus spokeswoman Anne-Julie Gratton in an e-mail to The Globe and Mail, “This volume places tremendous demands on our network and we can’t afford to provide this service for free any more.”

The same article refers to the latest statistics from the Canadian Wireless Telecommunications Association that pegs the number of text messages sent in Canada at more than 45.3 million per day. According to recent reports from IEMR the number of wireless subscribers in Canada was 20.4 million in 2007, and wireless subscribers in the UK (which has roughly double the population of Canada) for the same year numbered 71.7 million. Sweden, with a third of the population of Canada’s has better than half as many subscribers. Canada is trending remarkably behind nearly every comparable western nation.

These stats are great, in that they illustrate the problem with subscriber growth that shareholders and analysts are presently appreciating. There’s clearly something wrong with the wireless business in Canada, and it’s not something that the recent spectrum auctions are likely to quickly address.

Allow me to translate Ms. Gratton’s TelecomSpeak in a way that more accurately reflects what went down in the boardroom:

“The growth in text messages has been nothing short of phenomenal,” said Telus’ Business Development Manager, “This is an unprecedented opportunity to exact greater revenue from the customer base without spending a penny on service development!”

The Canadian wireless market has been infantilised by the greed and short-sightedness of our wireless carriers and the mismanagement of our asleep-at-the-wheel regulators. Whereas (according to Wikipedia) the average user in the Philippines sends 10-12 text messages a day, doing some quick math from the stats above reveals that the average Canadian use of text messaging is far lower at 2-3 messages per day.

Still, this 45.3 million SMS messages per month business must be creating a stress on the Telus service network, you’d think. Right?

Well, if you send 45.3 million SMS messages all at the maximum size of 140 characters, you’ll get almost 6 Gigabytes in total storage volume - or, roughly the size of the hard drive I had on my IBM Thinkpad in 1999. That’s a lot of data to store (in 1972, that is). At the end of the day, this means that the entire Canadian SMS relay network has to be able to sustain about 453MB/s of data transfer (someone check my math here, I think this might actually be on the high side). My Mac Mini has a 1GB/s ethernet interface but since it’s ultimately connected to a (for Canada anyway) smokin’ 30MB/s internet pipe, I guess this means that 11 or 12 Mac Minis connected to Novus broadband in Yaletown could handle relay for all of Canada’s SMS traffic.

SMS uses the signaling overlay path of wireless carrier networks, and from the wireless perspective SMS messages ride in the carrier byte packet. As such it costs the network exactly nothing and uses no bandwidth that isn’t already in use — traffic load is the same on the network even if no SMS messages are being transferred. The networks themselves need to invest in this infrastructure anyway, so there is perhaps an added provisioning and data processing impact created by SMS for wireless carrier network planners, but it is not substantial.

For TELUS to suggest that this traffic is in any way meaningfully impactful to their operating costs suggests that either they’re lying, or perhaps they should go back to operating mechanical switches.

This is a cash grab. Pure and simple. But then, you knew that…

In a week, when Apple FanBoys are lined up outside the Rogers and Fido stores to purchase their iPhones and get locked into Rogers’ draconian service plan for the next three years, yours truly wil be cooling his heels waiting for a shipment from the UK to arrive at his door. In this package, likely a week after the launch, will be contained a couple of 3G iPhones from a friend in London.

This is a critical opportunity for you to vote against Rogers with the only ballot that counts: your wallet. You too will be able to purchase unlocked 3G iPhones from him on eBay about a week later.

Why go to the trouble? Well, let’s just say I’m conflicted. I want the new iPhone (love my old one) but I don’t want Uncle Ted taking my purchase of one as an endorsement of his brutal pricing plan. The Globe & Mail makes the following comparison:
“For example, for $75 a month, Rogers provides 300 weekday voice minutes, 750 megabytes of data and 100 text messages. In the United States, a customer gets 450 weekday voice minutes, unlimited data and 200 text messages for the same price.”
750MB for a frequent iPhone user, particularly one who uses the navigation and web browsing tools, is nothing. But in particular it’s the three-year lock-in that requires the greatest consideration. At that end of the deal, Rogers has you by the short-and-curlies. And your obligation to them will almost certainly outlast your 3G iPhone. Needless to say, many of us are pissed.
So how does it work? Well, let’s just say that you can finally thank the French for something.
Thanks to French law, it is illegal for Apple (or any mobile phone handset maker or carrier) to sell a locked phone in the French marketplace without also making the same device available in the popular pay-as-you-go mode, fully unlocked and portable to any carrier.
This puts a stick in the mud for Apple’s lock-in plan and means that France will likely be selling a substantial number of 3G iPhones, until ZiPhone learns how to software unlock them, to eBay resellers like my friend.
So yes, please go and sign the petition at RuinediPhone.com but, since I know you’re going to buy one anyway, get the French iPhone instead of buckling under peer pressure to lock into Rogers’ data plan. It might cost you more in the short run (ironic) but in the long run you will force things to change.
Software unlocking has already forced several key changes in Apple’s strategy that favour the consumer. But a flop of Rogers’ package pricing on the Canadian market can send a clear signal to both companies, and their shareholders. Industry Canada, which should be paying attention, can and most definitely should censure Rogers, and its wireless competitors for a long history of market-limiting pricing (not limited to the iPhone launch in Canada) that has rendered our country a wireless backwater.

Despite the fact that I often find myself on the opposing end of the table on most of what Microsoft does, I was really hoping to be able to agree with Ballmer on his assertions regarding Microsoft’s rejuvenated focus on search as quoted in today’s Financial Times article. I was hoping that, on the heels of their disastrously failed hostile takeover effort of Yahoo! that MSFT had a plan for Search that extended beyond paying people to use its engine, which has led to some amusing arbitrage opportunities reminiscent of late bubble-era scams.

Of course, Microsoft can afford to write these cheques practically ad infinitum, but if your tools are so lacking in perceived utility that you need to bribe people to use them (even if the graft is partially subsidized by affiliate fees), perhaps this is not really the best you could hope for from your marketing team.

You can’t take on Google by trying to buy, or even out-feature, your way into the blank-text-box Search Engine arena. Except for some regional players, like Russia’s Yandex, they’ve won and will not soon be replaced.

What Ballmer, and lots of other people, are missing is that the Search marketplace as we know it is poised for a change. Much of this change emerges from the fact that Google fundamentally owns the global Search Market, but much of the opportunity extant in this space comes from the fact that the technology behind search, and how people will make use of search engines in the future, will be a whole lot different than what you see when you type in www.google.com today.

…. but, there is light at the end of the tunnel for folks who are on the outside looking in at Google’s substantial (and impossible to dislodge) market share:

For most people, web search is a kludge.

Think about how you use Google today. Think about why you type things into that blank text space beckoning to you on your Firefox browser, or why you surf over to Google.com and enter a few snippets of text into that empty area amidst the sea of clutter-free Google whiteness ten, twenty, or maybe many more times per day.

In some cases, you overheard something being discussed in a coffee shop. Or you saw a billboard ad. Something offline motivated you to head to the blank text box and ask it to do your bidding. That is Google’s fundamental market opportunity and has remained largely unchanged since the first search engines began emerging in 1995.

This is, however, just a fraction of the reasons why many of us head to search engines. Often the reasons are as much motivated by inadequate information at one site as by anything else. An example: You’re reading an article from a wire service like Reuters, which rarely include photos, about a car or a submarine or a mountain. You’d like to see what that looks like, so off to Google you go. Or you’re looking at a new LCD on eBay, but the seller hasn’t listed the number and type of inputs that come with it; so off to Google you go to try and find the specifications.

In short, most often we go to Google to search for things because our browsers aren’t good at building pathways between like objects on the web. These types of Searches are what I call context-driven. You shouldn’t need to do this. You shouldn’t need to interrupt your surfing to drop off to a third-party site in order to add flavour to the web objects which have already garnered your interest.

What if you could press a button and instantly be delivered relevant information that is contextual to that which you are/were looking at? What if sites displaying articles from wire services (notable for their sparseness) were able to draw in information - in realtime - which added relevant photos, videos, or related stories?

Some of this is already happening, albeit rather jerkily. One of the leaders which started doing this some time ago was Sphere, which was recently acquired by AOL. It took them some time to draw the same conclusions as I have, and they had a difficult time monetizing these services. But on a great enough scale the same technologies which make relevant content possible also make relevant advertising possible. And while click-thrus will be fewer in quantity they can be greater in quality and therefore infinitely more valuable, thanks to much more accurate targeting.

Being accurate in driving these sorts of searches is hard. Whereas Google relies on its users to sift through its top 30 or so recommendations to find the most relevant information, contextual search engines need to be able to do that with high accuracy on the first few matches with little to no meatware — sorry, Mahalo. Many of the current buzzwordy trends such as the Semantic Web initiatives, Social Search, the shift from RSS to Atom, and API-accessible semantic processing are key enablers to make this easier, but there’s still a considerable amount of R&D necessary to beat Google’s current level of accuracy in this regard.

As a result, you need a long lead to get there, and few of the companies dabbling in the Vertical Search space have raised enough capital or have investors who have committed to developing these opportunities. But in the long run, this will augment Web Search and replace much of the traffic that is today driven by Google’s simple, primitive, empty text box.

What’s clear is that Microsoft’s desperate attempts to lure users to its essentially equivalent service to Google’s can only cost its shareholders. A new paradigm is necessary and, fortunately, the opportunity is ripe for the picking, right in front of us all.

This is a rare opportunity where the solution lies in good, solid R&D and product realization — not in leveraging semi-monopolistic product integration or in brute force advertising spending. Is Microsoft bold enough to understand, and embrace, the fact that Search is shifting? Do they have the product and engineering people to make this happen?

My friend Daniel Gibbons is shopping for a CMS for his new project. He’s posted interesting and in my view fairly accurate comments regarding Drupal and Wordpress. I’m quite the fan of WordPress, have spent a little bit of time with Matt and the Automattic crew and think quite highly of them.. and of course I use it for a bunch of sites, both corporate and personal.

Still, a couple of years ago I recommended that we deploy a Drupal site for EQO, where I was the VP Marketing. As seems to be common with a lot of Drupal projects, there was much forking of code and a great deal of customization required to make the thing feel like a true web interface. As a result it’s been a challenge for EQO to keep their site up-to-date with the latest versions and to reconverge with the growing Drupal codebase.

(more…)

Via MARKETWIRE:

Read the rest or post a comment »

This afternoon I was interviewed by Chris Heuer at the Blogtropolus Lounge @ Web 2.0 … we talked about Pulse and Something Simpler’s market-leading Relevance Engine. This should help the confused to understand what it is that we do.

The essay that I refer to in the interview is here: Relevance Engines and the Friendly Shopkeeper.

I keep forgetting to blog about this, or perhaps it’s because I’m ashamed of my wardrobe and bad hair day, but FindFindr did a far-ranging video interview with me on a rooftop in Gastown. I did my best to be interesting. They did their best in the editing room later. Enjoy!

Something Simpler will be trawling the aisles of Web 2.0 in San Francisco, and we’ll also be in situ at the Blogtropol.us Blogger Lounge for the first two days of the Expo. We’re giving away an Apple 23″ Cinema HD Display, and there are plenty of other fabulous prizes available, including a Nikon D80 Digital Camera and (rumour has it) a MacBook Air.

It’d be great to see you there… you can pre-register to join us at http://blogtropolus.eventbrite.com. There’s also a Ustream Channel for those of you who won’t be here in San Francisco. More info below…

Read the rest or post a comment »