Saturday, October 30, 2004

IF YOU'RE IN INFORMATION TECHNOLOGY, PLEASE GET OUT



Over the past couple of years, I've read a lot of blogs, and a lot of books, from people who work in Information Technology (IT) or in Knowledge Management (KM). At a KM conference last year, I somewhat timidly suggested to the audience that KM has become the organizational ghetto for the most creative minds in business. I explained that almost everyone I knew in senior positions in KM was brighter and more inventive than their peers, and had self-selected or been hand-picked by management to lead their organizations' KM programs for that reason. There was a belief in the dot-com '90s that knowledge was the critical strategic asset of business, and the gateway to innovation. KM was going to make a difference, and allow people enamoured with creativity and change to lead that change.

A decade later, most people left in KM are disillusioned. The culture of big business has shifted sharply back right, and cost reduction, not innovation, is Job One. There has not been much to show for all that promise and creative ambition. But those in KM should not blame themselves. They were unwittingly set up for disappointment. Executives don't know what to do with creative thinkers, and putting them into KM was, at least in hindsight, a perfect way to 'institutionalize' them, keep them visible as innovation role models but marginalize them so they don't actually do anything, or spend much of the company's money. They are the corporation's lip service to diversity and creativity. The problem is, unless they want a life as starving artists or starving writers, they really have no place to go. They're trapped in this creative ghetto.

When I said this to the KM crowd I expected a lot of push-back, but I got a lot of nodding heads. I'd come to know many of them over the past decade and I knew them to be an exceptional group: Far more imaginative, more intelligent, more right-brained, more stimulated by ideas, more idealistic than their organizational peers. But a lot of them had also been misfits, non-conformists, constant questioners, thorns in the side of their managers, who had wished they would just shut up and do what they were told. KM provided a sanctuary for those driven by ideas, but it was a sanctuary that was starved and marginalized. It was a dead end. I've never met a Chief Knowledge Officer who made it any further up the organizational ladder.

The people who work in KM report to a variety of different bosses -- some of them report directly to a CEO or VP, but most report to a Director of IT, HR/Learning, Marketing or Sales. Those that report to Sales Directors are the unhappiest, because their bosses belong to a totally different culture, driven by short-term results. To many people in Sales and Marketing, KM is synonymous with research, and KM people are just overpaid librarians. Those KM people who report to HR, Learning or Marketing Directors tend to have more sympathetic bosses, but those bosses are going through an unprecedented crisis of their own: The prevailing view in many organizations is that almost everything in HR, Learning and Marketing can and should be outsourced, and if the load can be lightened by outsourcing most of those KM people as well, all the better.

Although the relationship between KM and IT was rocky from the start (they compete for increasingly scarce resources), it has turned out to be the healthiest, safest, and most logical and satisfying partnership for KM people. For a start, IT has a budget, and so much tied up in legacy systems that it's harder to outsource (and even when it's outsourced, it's often insourced again a couple of years later when outsourcing fails to deliver cost savings). IT also has a much greater appreciation than most other departments for what people in KM do, and for the value they provide. They're both parts of 'infrastructure', those back-office guys who are perceived to be eating up the profits that the real workers on the front lines produce.

But what I've come to realize is that one of the reasons for IT-KM kinship is that IT people, too, live in an organizational ghetto. Like people in KM, they are under-appreciated, starved for budget resources, and complete cultural misfits in most companies. It was the IT people in the 90's who, during their brief wave of popularity and scarcity, smashed the 200-year-old business dress code, and as suits and neckties are coming back, are most resistant to their return. If KM people are the most creative in the company, IT people are the sharpest analytical thinkers. They have a passion for their craft, and are the world's best collaborators, but they rarely have the opportunity or the budget to do more than a minuscule portion of what they know could be done, and which could bring real value to the organization. To senior executives (an echelon IT people rarely penetrate -- in most organizations IT is a career dead-end and a revolving door), IT are the menial technical people who make sure the clunky, horribly designed (by senior executive committees), outmoded, centralized information systems spit out their management reports. The revolutions in open source, desktop, connectivity, collaboration and personal content management technology that have been going on might as well be occurring in a parallel universe as far as senior executives are concerned. The only pleasure most IT people I know get from their jobs is working with wonderful, sympathetic IT colleagues. And perhaps they also get cold comfort knowing they're part of the minority in IT who aren't unemployed or working at McDonalds or Wal-Mart since the dot-com bust. Most of them tell me they do their best work outside the office, outside of working hours, online collaborating and conversing with people who appreciate what they can do.

That's fun, and intellectually rewarding, but, let's face it, it doesn't really accomplish much. Although IT people can create wonderful software, quickly, effectively, to accomplish almost any information processing need, it's all really just a hobby. It rarely makes the world a better place. Most of the world isn't online at all, and most of the people online are still struggling with simple things like e-mail. And I don't think that's going to change in another generation: As I've said before, unless a technology is dead easy to use, it will never catch on, will never become mainstream, will never be more than a passing fad. All the social software tools, blogs, and cleverly coded programs that have been and are being developed are just a recreational drug for us, a tiny minority of the population bored with the inanity of our 9-5 jobs. It's largely a hobby destined to be no more significant in historical terms than ham radio, CBing, or scrapbooking. The best that can be hoped is that all this software will ultimately be built into very simple, ubiquitous tools that will allow people to network better, find people and communicate with them more easily, and learn faster and more easily.

Stack those modest benefits up against the crises facing our world today: Poverty, violence and war, disease, inequality, crime, famine, overpopulation, pollution, waste, cruelty to children and to animals, addiction, mental illness, corporatism, lack of access to and poor quality of health care and education, fraud, political corruption, stress, oil shortages, water shortages, spousal abuse, consumerism, tyranny, ignorance, hate-mongering, social disintegration, abuse of power. There may well be answers to many of these problems, but they're not going to come from IT tools developed and used by a small minority separated from the rest of the planet by a vast and growing digital divide. In fact, no one is looking for solutions to these problems. The few people that care about these problems are busy treating their symptoms, mostly as volunteers, and have neither the time nor the resources to address the underlying causes.

Here's my point: For restless and dissatisfied IT people, unlike their KM counterparts, there is an alternative, a career path that could really make a difference: Science-Based Enterprises. Your bright, disciplined analytical minds are desperately needed to develop practical new technologies that can solve the global problems of our world. But instead the majority of you are marginalized in IT, one of the few branches of science and technology that really can't help solve these problems. And paradoxically this is happening at precisely the time when there is more knowledge about science and technology, more power of individual and collaborative enterprise to introduce new technologies at a modest cost than ever before.

Notice I said Science-Based Enterprises, not going to work for a science or technology company or a government or university research facility. Unemployment among science and engineering graduates is, while lower than that in IT or the population as a whole, still quite high. The Bush Administration does not believe in science. They have reduced government spending for scientific and technical research as a percentage of GDP to its lowest level in decades. And both government and private industry have reduced no-strings-attached support for universities, so universities can't afford to pay for more scientists or research either. And the private sector is only interested in profitable, commercial development, leeching off university research and content to produce 'me-too' copycat products. Go to work for a pharma company and instead of helping find a cure for AIDS you're more likely to be put to work developing a stronger version of Viagra.

If you're really interested in making a difference through scientific and technological development, you're going to have to become an entrepreneur. That's not as risky as it sounds: Just follow the advice I've laid out in Natural Enterprise, starting with identifying an unmet need. But I mean a fundamental human need, not a commercial need. We really don't need any more stuff. If the list three paragraphs back doesn't give you enough ideas, I can give you more.

The next step is to do some research, some homework into what really underlies these basic human problems, and talk to potential customers (that would be all of us) about root causes and possible solutions. Talk to other scientists and technologists (and us creative types in KM) about solutions, about what's possible. Ask us what we'd be willing to pay for the solution you have in mind. If it solves the problem, we'll find some way to pay for it. Do all of this before you spend one penny setting up your enterprise. The next step involves making sure you or your partners have the scientific and technical skills to develop the solution. Some of you may have to (or want to) go back to university to get what you need, but I bet you'll find you learn what you need a lot more effectively in the process of simply researching the problem. You know, "most of what I needed to know to cure AIDS I learned in kindergarten". Don't be intimidated by the mystique of higher education, or the complexity of big-business processes -- they're there for a reason, but it has nothing to do with the requirements of innovation or entrepreneurship. The knowledge to do almost anything technical is out there -- you only need to know enough to know where to look, and with your web savvy and your background in IT, that should be easy.

Now, at last, with the knowledge of the solution, and the assurance from 'customers' that there's a market for it, you're ready to set up your Science-Based Enterprise. If you've done it right, you'll probably have people lined up ready to invest. Don't give up control when you take their money.

Why haven't I taken my own advice? I'm one of those creative KM guys. I'm hopeless with the details, destined to come up with tons of good ideas (most of which won't work, but a few of which will) and watch the money and fame go to those who have the patience for, and know how to go about, the details of implementation.

I'm not saying this is easy. Entrepreneurship isn't for everyone. But if just a select few of the millions of under-employed IT professionals in the world found the courage to end-run the politicians only looking at the next election, the bureaucrats only looking at their job security, and the corporations only looking at their bottom line, and put their remarkable minds to analyzing and solving some of the world's neglected and critical problems through real science, the world would be a better place. And amazingly grateful. And you probably wouldn't be restless and bored in your job anymore.

Wednesday, October 27, 2004

How are databases used at big customers?

This day was focused on 'user' experiences with large database and services. The morning started with talks by people from Google, eBay and Amazon, about their architectures. The Google talk by Anurag Acharya gave an overview of the overall system as we are already know it, with some additional information about how they deal with reliability issues. For example each data structure they use has a checksum associated with it, to handle memory corruption, which is a issue they have to deal with. The Amazon talk Charlie Bell was mainly about how they expose their store through different web services to partners and the general public. There were interesting numbers about update rates and messages sizes between Amazon and partners such as Nordstrom.

The eBay talk James Barrrese was the most fascinating of the three. Lots of detail about the backend, about the software, about the development, etc. Equally interesting where the afternoon talks by people from Swab, NASDAQ and Merrill Lynch, which all gave a look into their backend systems.

I took a lot of notes on all of these talks, and have no time/desire to transcribe them into proper prose, so if you are interested in these raw nodes, read on ...

James Barrese - eBay

How many datacenters: 2 planned to be 5 datacenters.
Update the codebase every 2 weeks. 35K lines of code chances every week.
Rollback of a code update within 2 hours.
Scalability is in the growth 70% or more per year, every year. Hardware and software
Database in 1999 single cluster database on a Sun A3500.
Too much load : moved to no triggers, starting to partition account, feedback, archive, later categories.
Replication of user write and read, batch operations.
Current state: few triggers, denormalization of the schema
application enforced referential integrity, horizontal scale
application level sorting
compensating transactions,
application level join.
Database only used to durable storage, every else in application code
Ebay data access layer: partitioning, replication, control (logical hosts), gracefull degradation,
NO 2PC. 'avoid it like the plague'.
index always available: if one category out still show item, but unclickable.
online move of table if its getting hot.
Centralized Application log sevice. audit, problem tracking;
Search: their own index, real-time update (15 sec) homegrown,
V2: IIS driven with C++, V3: j2EE container environment.
4.5 M lines of code
Adam Richards - Swab

80% revenue goes through compute channels
no downtime allowed
real-time and stateful -> back-end become single point of failure.
High peaks at market open & close -> tremendous over provisioning peak load easy 10:1
Much of the data is not partitionable, multiple relationship between data elements
given the rate of change (1000/month) availability is 'pretty good'
Some technology need to be supported because of acquisitions (archeology)
lack of "desire to retire" anything - investment in new stuff -> complexity goes up
new technologies: organic IT
Isolated islands of data and compute (often religious, sometimes technological)
linkage of island through messaging
60% of project spent on mitigating complexity
lower availability due to complexity
slower time to market
Design: SOA with application bus, request/reply, pubsub and streams
Nobody wants distributed 2PC. Only when forced by legal reason. 2PC is the anti-availability product
Q: clients want datagrade access, but services want interfaces
Q: how to decouple platforms 1) compute - asynchronous but no 2pc 2) data - propagation & caching but no 2PC
Q: how to act when the system is not perfect.
More and more unneeded information on home page, peaks when logon (10's of transactions)
Ken Richmond - NASDAQ

High performance data feed
Top 5 levels of NASDAQ order book
near real-time, short development time
messages self-describing
windows gateway msmq 'channels' partitioned by alphabet of the symbol
SQL server clusters passive-active - failover in 1 minute
SAN storage (EMC)
Multicast fan-out
pipeline architecture, everything should do 'one thing', serialization through single threading (regulation requires FIFO)
sending blocks of messages to SQL server improves performance
biggest reason for app outage is overrun - flow control between the mainframe and intel boxes
entire DB in memory all the time
interface in C++, logging event to Tibco Hawk
Test bed investment is crucial
Saturdays functional testing, Sunday performance testing
10,800 msg/sec sustained in test, 30K database ops/sec in test, 1800 msg per second per channel production, 7800 overall in production
Bill Thompson - Merrill Lynch

GLOSS - 2 tier architecture sybase/solaris PowerBuilder GUI
all business logic in stored procedures
uses tempdb as a key component
use: standing data maintenance, transaction management, interface to external clearing services (msgs), books & records
some of the topology: transaction manager front-office then to settlement engine and to the books & records, T+x updates from clearing house
70K trades and settlements 60K prices, 40K cash movements ... 250,000 transactions (=100's sql statements) / day
limits in 2001: transaction rates too high, overnight extracts over the window, DB 450 GB: unable to do maintenance tasks
Then move to SQL server
Challenges: migrate stored procedures, maintain the Unix code, migrate database in 48 hours
Unix - SQL server connectivity: use FreeTDS (open source) engine (Sybase ODBC and others didn't work or were a performance drag)
migrating the data was painfully slow using vendor tools. They wrote utilities themselves using bcp functionality from FreeDTS
SQl server 'bulk insert' rocks
performance increase transaction throughput 30%, database extracts from 235 mins to 25 minutes
Future: 50-100% increase of transaction expected in 2004
SQL Server issues: stored procedure recompilation
Redesign: distributed transaction processing, consolidate stock & cash ledgers, data archival
re-architect the queue-based processing.
database now 1T, backup: full in 3-4 hours, incremental 1 hour
David Patterson - Berkeley

Recovery Oriented Computing
margin of safety works for hardware, what does it mean for software?
tolerate human error in design, in construction and in use
Raid 5: operator removing wrong disks, vibration/temperature failure before repair
never take software raid
ROC philosophy: if a problem has no solutions, it may not be a problem but a fact - not to be solved but to be coped with over time - Shimon Peres
people HW SW fails is a fact
how can we improve repair
MTTF is difficult to measure, MTTR is better measurement
if MTTR is fast enough, it is not a failure
'Crash only software' Armando Fox
Recognize, Rewind & Repair, Replay
Application proxy records input & output, feeds into an undo manager, combined with a no-overwrite store.
Lesson learned: takes a long time to notice the error, longer than to fix it
Operators are conservative, difficult to win trust
Configuration errors a rich source of causes for errors
Automation may make the ops job harder - reduces ops understanding of the system
Paul Maglio - IBM

Studies about system administrators
important users, expensive, understudied
interface for system administrators are similar to regular users, but this may not be correct because they are different
field studies, long term videos
Talks about how misunderstanding play a major role, how admins control info while talking to others
All about saving face & establishing trust
Most of the time spent troubleshooting is spent on talking to other people (60%-90%)
20% time about who (else) to talk to? (collaboration)
typical day: 21% planning 25% meetings, 30% routine maintenance, half of all activities were involved in collaboration
DBAs always work in pairs or teams, meticulous rehearsal, attention to details, but easy to panic.
David Campbell - Microsoft

Supportability - Doing right in a Complex World
Emerging Technology: lots of knobs, high maintenance testing replacing, etc. Everybody needs to be the expert
Evolving Technology: some knobs, automation, good enough for the masses - some local gurus
Refined Technology: no knobs, goal directed input - it just works - user base explodes - small expert base
Design targets: non-cs diciplines have design targets, cs often not, certainly not supportability
Design for usability for common users: "virtual memory too low ..."
Limited design for test, no standard integrated online diagnostics
Techniques similar to those 20 years ago
Errors: don't be lazy make explicit what you want the user to do
Never throw away an error context
'Principle of least astonishment':
do reasonable user action yields reasonable results? Make it hard for people to hose themselves
With respect to reliability, how much of the complexity is spend on actually making the system more reliable
In automobiles today faults are recorded to help the mechanics.
Customers are willing to invest up to 20% to get to 'it just works'
in sql server introduced more closed feedback loops to reduce operator involvement
Automated, adaptive control based on 'expert systems knowledge'
result were surprising, results are better than the best expert could do.
example: memory allocated, statistics collection, read-ahead, system structures dynamic allocated
Memory: replacement cost for each page, utilities 'bid' on memory, feedback on cost of allocation.

Saturday, October 23, 2004

Psychohistory is Coming,: ; Scientists Learning to Take Society's Temperature

DALLAS - A little over half a century ago, Isaac Asimov created a new universe, home to a decaying galactic empire and a novel form of social order known as the "Foundation."

Asimov's "Foundation" novels - the most famous science-fiction trilogy between "Lord of the Rings" and "Star Wars" - described a new science of social behavior called psychohistory. Mixing psychology with math, psychohistory hijacked the methods of physics to precisely predict the future course of human events.

Today, Asimov's vision is no longer wholly fiction. His psychohistory exists in a loose confederation of research enterprises seeking equations that capture patterns in human behavior. These enterprises go by different names and treat different aspects of the issue. But they all share a goal of better understanding the present in order to foresee the future, and possibly help shape it.

Almost daily, research papers in this genre appear in scientific journals or on the Internet. Some examine voting patterns in diverse populations, how crowds behave when fleeing in panic, or why societies rise and fall. Others describe ways to forecast trends in the stock market or the likely effect of antiterrorist actions. Still others analyze how rumors, fads or new technologies spread.

Once the province of sociologists, political scientists, economists or philosophers, such issues are now routinely analyzed by physicists and mathematicians. At the same time, psychologists are learning more about what goes on in the brain when humans interact. And anthropologists have begun to study how economic activity influences behavior in different cultures.

Put it all together, and Asimov's idea for a predictive science of human history no longer seems unthinkable. It may be inevitable.

Universities and institutions around the world have seized versions of Asimov's vision for new research themes. At the Santa Fe Institute in New Mexico, a new behavioral sciences program focuses on economic behavior and cultural evolution. The National Science Foundation has identified "human and social dynamics" as a new funding priority area. At various schools, collaborators from diverse departments are creating new hybrid disciplines, with names like econophysics, socionomics, evolutionary economics, social cognitive neuroscience and experimental economic anthropology.

"It's become pretty obvious from 9/11, from terrorism, that we need to understand human behavior better," says Rita Colwell, former director of the National Science Foundation. "Not only for prediction, but also for prevention."

Sociophysics moves from slogan to science

Among the newest of the enterprises - and closest to the spirit of Asimov's psychohistory - is a discipline called sociophysics. The name has been around for decades, but only in the 21st century has it become more science than slogan.

Like Asimov's psychohistory, sociophysics is rooted in statistical mechanics, the math used by physicists to describe the big picture when lacking data about the details. Nobody can track the trillion trillion molecules of air floating around in a room, for instance, but statistical mechanics can tell you how an air conditioner will affect the overall temperature.

In a similar way, science cannot describe how any given individual will behave. But put enough people together, Asimov's psychohistorian Hari Seldon reasoned, and laws of human interaction will produce predictable patterns - just as the way molecules move and interact determines the temperature and pressure of a gas.

Statistical mechanics math is nowadays routinely recruited for problems far removed from its standard uses with gases or chemical reactions or magnetic materials. Everything from the flow of funds in the stock market to the flow of traffic on interstate highways has been the subject of statistical-physics study. And more and more, that math is used to describe people as though they were molecules, by physicists who are, in effect, taking the temperature of society.

Small-world networks may be key to the future

Physicists have invented many forms of social thermometers. Among the most fruitful are those that construe society as a mixture of many complex networks.

In general, networks are like gases in which molecules are somehow connected; the role of the molecules can be played by almost anything - local affiliates in a TV network, power plants in an electric grid, airports linked by direct flights, home pages on the World Wide Web. Connections can be as simple as wires linking computers or as intangible as sharing a common interest.

People, of course, belong to many different kinds of networks. There are networks of family, networks of friends, networks of professional collaborators. There are networks of people who share common investments, political views or sexual partners.

Networks offer scientists many temperatures to measure. For instance, you can calculate the average number of links between a network's members (called nodes). That tells you something about how connected the network is, just as a real temperature tells you how fast (on average) a gas's molecules are moving.

Networks have other quantifiable features. You can specify the average number of steps it takes to get from one node to another - how many flights, say, it takes to get from Fargo to Fayetteville. In a "small-world" network, it takes only a few steps to get from any one node of the network to any other.

As it turns out, when a network's nodes are people, small worlds are the rule. So discovering the rules governing small-world networks may be the key to forecasting the social future.

Network math offers obvious social uses. It's just what the doctor ordered for tracking the spread of an infectious disease, for instance, or plotting vaccination strategies. And because ideas can spread like epidemics, similar math may govern the spread of opinions and social trends.

Numerous versions of network- or other statistical-physics math have attempted to identify patterns of opinion flow. Serge Galam, of the French research institute CNRS, has studied the spread of terrorism, for instance, trying to identify what conditions drive the growth of terrorism networks. In other work, Galam has analyzed opinion transmission and voting behaviors, concluding that "hung election scenarios," like the 2000 U.S. presidential contest, "are predicted to become both inevitable and a common occurrence."

Other opinion-spreading papers try to explain whether an extreme minority view can eventually split a society into two polarized opposite camps, or even overwhelm the rest of the population. One analysis suggests that higher connectivity among the people in a population boosts the chances for social takeover by an extreme position.

'Contagion' theory applies to ideas, fads

Another new paper examines the idea of "contagion" in general - the spread of anything through a population, whether infectious disease or ideas, fads, technological innovations, or social unrest. As it turns out, fads need not always spread the same way as a disease, as different scenarios may guide the course of different contagions.

In some cases, a small starting "seed" (a literal virus, perhaps, or just a new idea) can eventually grow into an epidemic; in other cases a seed infects too few people and the disease or idea dies out, Peter Dodds and Duncan Watts of Columbia University write in a paper to be published in Physical Review Letters. What happens can depend on how much more likely a second exposure is to infect an individual than a first exposure.

"Our results suggest that relatively minor manipulations ... can have a dramatic impact on the ability of a small initial seed to trigger a global contagion event," Dodds and Watts declare.

In real life, of course, people don't necessarily transmit opinions or viruses in the simple ways that such analyses assume. So some experts question how useful the statistical mechanics approach to society will ultimately be.

"I think in some limited domains it might be pretty powerful," says Cornell University mathematician Steven Strogatz. "It really is the right language for discussing enormous systems of whatever it is, whether it's people or neurons or spins in a magnet. ... But I worry that a lot of these physicist-style models of social dynamics are based on a real dopey view of human psychology."

So to succeed, then, statistical-physics math may have to meet face to face with social cognitive neuroscience, a booming research field that is all about understanding face-to-face interactions between real people. Brain scans and experiments with brain-damaged patients reveal how people respond to or empathize with others they encounter, providing insights about behaviors people choose in different social situations.

Further help may come from neuroscientists, who study the brain activity underlying economic choices in the new field of neuroeconomics. An offshoot, neuromarketing, may use brain activity- analyses to plan advertising for political campaigns that enlist brain-based strategies for maneuvering the future in one direction or another.

Searching for laws that govern behavior

All these approaches still generate but a shadow of Asimov's full- scale psychohistory. Everybody knows there's much more work to be done to match the predictive power achieved by Hari Seldon. Ironically, some of that needed new work may come from scientists who are unwittingly following in Seldon's footsteps.

In later prequels to the "Foundation Trilogy," written decades after the original stories, Asimov described how Seldon gathered the data needed to perfect psychohistory - by visiting different cultures spread across the planet Trantor. By observing a variety of societies, Seldon discovered the common features of human social behavior needed to make sound predictions.

Much as Seldon traveled around Trantor, anthropologists have traveled around the Earth in the last few years, playing economic games in small-scale societies. Human nature, as gauged by the games, varies considerably from culture to culture - data that must be incorporated into any effort to forecast the social future.

It illustrates the need for today's psychohistoric collaborations to grapple with real people in the real world to find true laws governing human behavior.

"We have this weird, I think untenable, situation in the social sciences," says UCLA anthropologist Robert Boyd. A student learns one story about human behavior in an economics class, and then something quite different in sociology. Psychology class offers yet another version.

"And they come up here and we anthropologists tell them all kinds of different things because we don't agree about hardly anything," Boyd said. "This is not OK. It's not acceptable that the economists are happy with their world and the sociologists are happy with their world, and that this persists in an institution which is supposed to be about getting at the truth."

But as various enterprises mix economic experiments with math and psychology, evolution and culture, a new understanding of human nature and human behavior does seem to be emerging.

"I see a lot of progress happening right now," Boyd said. "But I don't think we're very close, myself, right now, to offering policy recommendations."

Earlier efforts not misguided, just premature

In the end, better-informed public policy is what human science is all about. It's an old dream, predating Asimov's psychohistory by centuries. Many philosophers have envisioned laws of human behavior analogous to Isaac Newton's laws of motion. Early sociologists discovered mathematical regularities in birth and death rates and height and weight and even in crime rates. (In fact, such statistical analysis of human affairs influenced the development of statistical mechanics in the 19th century by the British physicist James Clerk Maxwell.)

But past efforts have been, to put it charitably, far from perfect. Science today has much more to work with - the mathematics of statistical physics, economic game theory and networks merged with modern neurobiology, brain scanning and anthropological experiments. All these tools and the new scientific fields built with them suggest that the efforts of earlier centuries were not misguided, just premature.

It's becoming clear that Asimov's psychohistory reflects an undoubtable truth that all the world's different social networks interact in multiple ways to generate a single future. From people to corporations, cities to governments, all the pieces of society must mesh. What appears to be the madness of crowds must ultimately have a method, a method that science can discover.

"We're sort of working on little bits of it, trying to make connections," says Princeton University's Joshua Greene, a philosopher and neuroscientist.

"The idea is really to have, in the end, a seamless understanding of the universe, from the most basic physical elements, the chemistry, the biochemistry, the neurobiology, to individual human behavior, to macroeconomic behavior - the whole gamut seamlessly integrated," he says. "Not in my lifetime, though."

从国民党军队失败说人生

“注意你的思想,它会变成你的(言论)行动;注意你的(言论)行动,它会变成你的习惯;注意你的习惯,它会变成你的性格。 ”
    
    在解放战争期间,国民党军有很多败仗都是输得糊里糊涂,从战略战术上一开始,就注定了他们的败局。但1947年5月间的孟良崮战役,却是一场双方的战略意图及战术方案都已互相明明白白的硬仗,双方的主将也都是指挥高手,没有哪一方是糊涂虫;而从整体兵力上看,当时,国军有24个整编师(有的师相当于军建制)共45万人,比在山东的解放军多十几万人,且装备精良弹药充足,还有坦克与飞机助阵。但,孟良崮一役,国军却仍败于解放军,其精锐之师整编第七十四师遭全军覆没。
    
    1947年4、5月间,国民党45万大军,由陆军总司令顾祝同统率,一字儿摆开,步步为营,稳打稳扎,向山东的陈毅、粟裕指挥的华东解放军(九个纵队、一个地方军区共27万人)推进,意欲将陈、粟部逼至胶东海边,先予以包围,尔后相机剿灭。为了打破国军的进攻,避免被围歼的危险,并且打击一下因国军占椐了延安而生的嚣张气焰,华东解放军副司令、全权负责军事指挥的第一主将粟裕,策划了几次部队调动,以寻求战机。最后,决定了“在百万军中取上将首级”战略,即全力围歼敌之精锐、王牌的第七十四师,从而既能威震对方,又可消灭敌人有生力量,撕开敌人的合围圈。
    
    当解放军在正面以五个纵队即以十多万兵力对国军第七十四师施实围攻,以四个纵队分别从左、右隔开其与国军第八十三师、二十五师的接壤,再以一个纵队从后面堵住其退路时,第七十四师师长张灵甫很快就明白了粟裕要围歼自已的计谋。不过,此时解放军对其虽已有合围之势,但,张灵甫凭其七十四师32000人的兵力及该师丰富的作战经验,他只要向左或右方转进,便可与国军八十三师或二十五师靠近会合,因他与这二个师都只相距10多公里。一旦与其中一支会合,张灵甫的危险便会解除,粟裕指挥的解放军便不是那么容易能围歼七十四师了。更何况,国军45万兵力大部就都在周边100多公里范围内,随时都会开了过来。
    
    然而,对党国颇为忠心且尽职军旅的张灵甫不但没有迅速撤离,面对险情,他反而作出了“将计就计”的决策,将部队拉上了就近的孟良崮山麓,主动让解放军来包围自已,从而,使自已的七十四师做一个“钓饵”,在解放军十多万兵力围住他的同时,周边的40多万国军则有了从外面又反包围解放军的机会。张灵甫相信,周边几十万国军,近则只有10来公里,远也不过100多公里,他们开到这孟良崮,最多不过是半天、一天的时间。而凭七十四师的强大军事实力与孟良崮的险要山势,他张灵甫在此坚守一天二天都不成问题的。他认为,只要四面的国军一围过来,他的七十四师不但能解围,而更能实行“中心开花”的效果,使国军创造出在孟良崮围歼陈毅、粟裕的华东解放军的大捷奇迹。
    
    确实,张灵甫将部队一拉上孟良崮,国共双方的主帅主将便一下子明白了此时战役性质的重大变化及其意义。
    蒋介石立马知道了张灵甫的用意,看清了这个歼灭陈毅粟裕统率的华东解放军的机会(因为平日国军想找解放军决战,却往往找不到解放军主力),连忙飞到徐州,亲自敦促顾祝同赶紧指挥各路国军开往孟良崮,对解放军实施反包围。
    
    而陈毅、粟裕呢?原想在运动中歼灭七十四师,却没料到张灵甫主动受围,还上了孟良崮,坚守待援。
  
    危险与战机同时产生。
  
    摆在华东解放军面前便一下子只有两种结局了:不是赶紧消灭七十四师,就是被七十四师粘往,反遭周边围过来的40多万国军的重创。
    
    战况到了这个阶段,在孟良崮,虽说华东解放军对张灵甫的七十四师握有了绝对兵力优势,但从整个山东战局来看,40多万国军却正在获得一个战机优势。
    
    进攻张灵甫的战斗是在5月13日下午七时开始打响的。经过14、15日两天的生死激战,虽攻下了孟良崮一旁的几个小山头,但张灵甫的主力尚在顽守主峰,战斗仍进行得异常惨烈,方圆仅1·5平方公里的孟良崮,已躺下了数以万计血肉模糊的尸体。而攻山的解放军各纵队的伤亡也相当大了(此战役解放军共伤亡12000人),并且弹药补充都出现了困难。加之,周边国军向孟良崮进发的情况,也令军心很有些紧张。因此,华东解放军总部与下属纵队有些指挥员提出:久攻不下,又是如此境况了,是否忍痛从孟良崮撒退,以保大军不落入周边国军的包围圈?
    
    亲处前线指挥所进行指挥的粟裕,自然透彻明白当前战势的严峻:获胜与战败这两种可能,都已接近了胜负概率的临界线,此时,唯一能让战局偏向胜利或失败的因素,就是对战双方的军心了,而其中最重要的却又是指挥官们的决战信心与指挥效率。
  
    于是,粟裕下令:任何人不得言撤退!(陈毅也宣布了追究失职者责任的“撤职、查办、杀头”的三大战场纪律)并严令各纵队务必不顾一切牺牲,限在24小时内攻上孟良崮,歼灭七十四师;各纵队伤亡多少人,战役结束后,保证给予补足建制;同时,打破解放军历来只在夜里打大仗的传统(为躲藏敌飞机、坦克),16日白天也继续进攻,直至于16日下午三时完全攻占孟良崮主峰,击毙张灵甫。
    
    而向孟良崮进军的国军呢?
  
    只到16日下午七十四师被消灭、张灵甫阵亡之时,除了国军八十三师师长李天霞为着逃避蒋介石指责其援张不力,象征性的派了一个连,带着报话机躲在孟良崮附近一个山洞中,蒙骗张灵甫谎称他们“来援救”了外,整个孟良崮就再没有其他国军的影子了。张灵甫按常理推断,只要他坚守一、二天,周边国军是无论如何都能开进来的,他也的确死守了近三天。然而,可悲的是,就是他守到第三天,不说远处的国军磨磨赠赠而没有开到,就是近在咫尺(不到5公里)的“战友”八十三师与二十五师都没有赶到位,从而使解放军不仅有时间攻上孟良崮全歼七十四师主力,而且还有时间在已撤出战场后,因清点被歼的敌人人数不够32000人(七十四师兵员数),又重返战场,再抓获躲藏的敌散兵7000余人。然后,解放军才浩浩荡荡从容撤走。
    
    一场双方原本都有资格可能获胜、或都有危险可能战败,而在战机上双方又几近相同的战役,终于,以陈毅、粟裕赢得胜利、张灵甫则惨遭失败身亡而记入史册。
    
    历史已被铸就,人们不由自主创造自已新的历史画页的活动,却永不会停止。今天,从孟良崮战役那陈旧的往事中,我们是不是可以领悟些什么有益的东西呢?
    
    至少有这么三点吧:
    
    (一)真正去做一件大事,而不是仅仅说说而已的话,计谋、战略、策划类层次东西,常常并不是最重要的因素,而“做”或“实行”的效率才是第一位的。
    
    这里,并非否定计谋、战略、策划这一类高级智力活动及其成果的重要,相反,任何大的事业的成功,都要起始于计谋、战略、策划,都是离不开计谋、战略、策划。
    
    之所以说它们常常并不是最重要的因素,其有二层意思:
    
    第一,一般来讲,真正想干大事的人,基本上都属于高智商群体。对于高智商的人来讲,基本都会拥有干某大事所需的有关文化与知识。因而,在高智商群体中,谁拥有这些有关文化与知识,并不能构成他的一种特别优势。因此,这些高智商的人们之间的较量、比斗、竟争,都不会是在来源于有关文化与知识的计谋、战略、策划等方面,而只会是如何有效地实施这些计谋、战略、策划了。
    
    当张灵甫将他的部队拉上孟良崮之际,不仅陈毅、粟裕顿时明白了张的战略意图,就是远在南京的蒋委员长也一下子懂得了此举的深谋大计。然而,决定胜负结局的却不是张灵甫“将计”而来的妙策。
    
    当然,如果你面对的是一个弱智者,那么你的高智商派生出来的计谋、战略、策划,相当多的时侯则会起获胜的关健作用。不过,在能有成千百万的人(包括来自山沟里的青年人)受过高等教育的今天,在知识的传播快得令人目不暇接、信息量也如海如洋之际,尤其在已进入市场竟争机制社会的今天,你最好是认为:没有人的智商会比你低!这才会使你有可能立于不败之地。
    
    第二,任何聪明的计谋、战略、策划、理论,都不能孤立地来评价其正确与否,而必须将它放到它所要发挥作用的整体范围中去考察,才能决定其高明与否。
    
    有些计谋、战略、策划、理论在局部时、或在纯理论推断时、或在某一段时期时,是正确无比的。但若将它投放到某一个周期较长的很大的实践领域中,可能就显出了它的片面、甚至是错误。例如,高智力集中的电脑软件业的企业,常常能获得超常的暴利与超常的发展,这无疑是这些企业的CEO们,在其包括产品价格等企业决策上的正确。然而,这些CEO们的正确决策却绝不是可以照搬到所有企业、尤其是照搬到那些规模巨大的传统产业的企业中去的。若照搬,结果就只能是失败者为多。
    
    张灵甫在孟良崮将计就计而布下的“中心开花”战术,从军事理论上说,应该还是很不错的。只是他没有想想,他这一战术在当时国民党派系林立、各军师主官心目中都以保存实力为上、而蒋委员长的权威对战场上的将领常常鞭长莫及无可奈何的大环境下,会能有什么正确的获胜结局吗?
    
    前段,有些经济学家对深沪股市发表了很多指责性论述,仅从他们的论述本身来看,当然是正确无比。但,若想想中国目前的整体情况与深沪股市发展的历史,那么,他们的指责性论述是否正确,显然就得打上问号了。
    
    (二)一个人的性格,的的确确是决定他能否做成一件大事(或也包括不大不小的事?)的关健。
  
    “性格决定命运”一话是培根说的。说了几百年了,看来还真是颠补不破的大真理!
    
    对有些事情,尤其是对人们较大的社会活动中的某些问题,如仅在理论层面上来争争议议,不是往往分不清高下,或就是常常让能说会道善写的人占了便宜。这,在古代已有纸上谈兵的赵括与当代的各种大学生辩论会,做了此理的根椐。
    
    然而,事情若一进入到实践的层次,仅凭理论的武器,就往往会显出它的苍白与底气不足,而很大程度上会让“性格”高居行事的首位。很多的事,并非理论的错误,而实实在在是人们没有做好它。很多明明都懂得了的东西,在实践中,人们就是不能或不敢照“理论”行事。
    
    为什么不能或不敢按本认为是正确的理论行事了呢?
  
    害怕出错。
  
    因为,理论一进入实践,它就不再是孤立的一种“理论”了,而将有无数的其它因素伴随着它,去影响实施这种理论的人,从而使他会处于茫然之态,并再无纯执理论时的潇洒、坚定。
    
    所谓性格,其实,就是人们的人生经验被锻炼、凝变后成为的某种下意识的习惯行事本能。
    
    华东解放军总部及下属纵队的某些司令们,虽然都身经百战也各具特长,但是能象粟裕那样做到,面对泰山崩裂压顶而仍能沉着行事者,却不多有。连陈毅在战役结束后,都坦白地说:“打张灵甫这三天,我的脑子简直要被压碎了!以后儿子长大了,不能让他带兵,这不是人干的。”
  
    如果不是极具大将风度的粟裕,在最后一天以钢铁般意志指挥着战役的继续进行,孟良崮战史与张灵甫的命运,可能就会是另外的模样了。
  
    “性格决定了命运”的真理,在这里已被典型的诠释。
    
    在激烈博奕的股市,相信很多人都有过这样的体验:对某一只飚升猛涨了的股票,你明明早在其启动之时就已经分析得知其上涨的概率极大,但你却偏偏不敢买入它,而只留下日后的遗憾;对某一只你已赚了钱、而其走势已露“头部”之态时,你却往往仍对其依依不舍,不能果断卖出,导致结局反赢为亏。
  
    这是为什么?
  
    显然,不是股市知识的障碍所致,也不是操作技能的缺乏造成。
  
    有人说,是因为“怕”,因为“贪”。而这股市中的“怕”与“贪”又是人的什么东西呢?不就是性格吗!
    
    所以,我们切切要听从培根的告戒:注意你的性格,它将决定你的命运。
    
    虽然古人云:江山易改,本性难移。但,这只是说它“改”的艰难罢了,人的性格并非绝对一成也不变的。因为,除了人体内的某些物质能先天的决定人的某种程度的个人性格之外,大量的后天因素更决定了人的独特性格。
  
    对此,请参考培根关于性格的另一段论述:注意你的思想,它会变成你的(言论)行动;注意你的(言论)行动,它会变成你的习惯;注意你的习惯,它会变成你的性格。
    
    (三)千万不要将自已的命运,寄托于那些自已无法控制、而其变数又很大的因素。
  
    一个人工作生活在这个世界上,当然不可能只单枪匹马闯天下,真当一个孤家寡人,你总得有自已的朋友、同事、亲人,还有上级。你要做成一件稍大点的事,虽然自力更生是你的主要基调,但也不可能不依靠他人与外界的帮助。此条,完全是不言而喻的公理。
    
    但,依靠旁人的帮助来发展自已的事业,那“依靠”的范围实际是有个“度”的。
  
    这“度”就是:
  
    第一,要么你能控制住那主观或客观在帮助你的因素,使其不能随意中断你对它的依靠与信赖;
  
    第二,要么那些能帮助你的因素,本来就具有很强的全面长期的稳定性,并不会因你没有掌握它而发生改变。
    
    上述第二个“度”,我们都经常感受而且还永远能感受到。例如,氧气,是我们生命不可缺少的东西,不依赖它,生命就无法维持。但除了你爬上了几千米的高原,在平日,我们是不需另备氧气,而完全可以依赖大气中天然存在的氧的。对于这个“依靠”,我们不用控制它,它也会帮助我们的。
    
    对上述这第一个“度”,我们可就要注意、重视与警惕了。
  
    张灵甫没有想清这一点,他也就栽倒在这一点上了。
    
    张灵甫以自我牺牲之态主动让其32000人马受解放军来围攻,他那战术的整个核心要求,就是寄希望于其他40多万国军能迅速也围攻过来,从而不仅使他的七十四师可轻易解围,更能使国军获得一次消灭解放军的大捷。因此,张灵甫此役的成功与否,主要不在于他及其七十四师奋斗得如何,而在于他那些不受他控制的因素能不能实现,即那40些多万国军会不会开过来。结果,一旦用于反包围的“自已的国军兄弟”不到位,张灵甫本人及其战术便只有死路一条。
    
    平常,我们经常听到有人气愤万分地抱怨,他被或朋友或同事或同学或亲戚、甚至被上级“给出卖”了,他帮人家过了河,人家过河后却将桥给拆了。出卖他、过河后拆了桥的人,并不一定就是人品大有问题,而往往是或自私些,或因某种急情而只顾及自已去了。但,无论是哪种动机的出卖、拆桥,对他的工作事业命运都已造成打击与损失。
  
    经常有些企业家与人联手进行某项目时,中途,合作者突然退出,结果导致不仅所合作的项目半途而废,更使这些企业家损失惨重。
    
    这一类经常出现的痛心之事,虽然责任大都在对方,但从举措方面来讲,你将自已的工作事业命运的成功,系于那不受你或事业本身控制的对方因素身上,不就是从一开始,你便立于了危墙之下吗?
    
    为什么任何合作,不论对方是多么好的朋友同学亲戚,都要事先莶定法律性的合同、协议?
  
    为什么你借钱给别人,不论对方是多么好的朋友同学亲戚,都必须要硬着头皮让他给你出具借款条?
  
    为什么你做的很多重大事情,在事前,必须连对自已最好的朋友同学亲戚都应该保密?
  
    。。。。。。
  
    这一切,都是为了使你的工作事业命运不致被那些你无法控制的因素搞坏,或者使你能通过法律等手段的压力相对稳定那些有可能出变数的因素啊!
    
    如果我们的工作事业命运是因为自已的努力不够,或是因为某一大环境条件太差,而导致了失败,对此,我们应该认栽,并吸取教训总结经验,以后努力再战就是。
  
    但,如果我们的工作事业命运是因为别人的错误,而造成了悲惨结局,那么,我们则要先煽自已几个大耳光,再说下文。

Saturday, October 16, 2004

卖掉公司

找到最想买自己的人 专访东方高圣董事总经理林仁兴
  -采访·撰文/张一水 摄影/王钊

  Q:传统做企业的观点和目标可能是把自己做大做强,然后瞄准全国全球多少强什么的,但现在做企业的思路这可能不是惟一的选择,越来越多的企业会考虑把自己卖出去。

  A:是,这是和企业自身发展战略,和企业自身发展现状决定的。因为企业不见得非得做大企业,看企业自身的定位,企业想干什么。企业可以希望自己成为世界五百强的企业,但更多的企业都是中小企业。一般来说,企业急于发展,需要资金,靠自身积累又得不到,那要靠引进投资者。

  找对买家

  Q:根据你的经验,企业一般会在什么情况下更倾向于把自己的股权卖出去?

  A:一是外部环境的竞争导致它必须上一个台阶,上一个平台,而这种规模靠自己的积累完成不了,或者他不愿意去追加投入,希望由别人来承担风险;更多的是企业自身的需求,一般来自企业自身需求的交易比较容易成功。当然也有可能是企业股东想套现走人了,资本市场行情比较好,他不愿意自己再当股东了。

  Q:如果用一句话来概括,你认为企业把自己卖个好价钱的关键要素是什么?

  A:什么样的企业都能卖出去,关键是价格。企业把自己卖出高价的关键是找对买家。

  定个好价

  Q:如果企业有出售自己股权的需求,那么应如何考虑和着手来做这件事才能让自己卖的价钱最高呢?

  A:第一还是要取决于企业的基本面,企业的产品、业务、市场、盈利能力、现金流是不是有吸引力,这是企业交易成功的基础;第二,发现自己的价值,可以请一些专业机构帮助推荐,发现企业的价值,帮助企业判断究竟哪些投资人会对这个企业感兴趣;三是需要专业深入的报告分析,定位、特长、竞争战略是什么,对投资人来讲,这些东西有什么价值,帮企业和投资人去沟通谈判。

  当然,如果企业非常好卖,买家都找上门,自己去谈当然也很好,但通常企业更多需要交流和选择,找到门当户对的投资者,才能卖出高价或者说是合理的价钱。

  Q:发现价值应当是实现成功交易重要而又基础性的步骤?

  A:对。发现价值就是要找准,你对谁有价值,一个苹果对不爱吃苹果的人是没有价值的,你必须找到最爱吃苹果而且现在就要苹果的人。怎么找到既符合他的战略投资风格,然后他这个时候又非投不可,这个企业才能拿到高价。企业的亮点、特点、卖点,都是针对投资人的,特定的,不是泛泛的。

  Q:那么专业机构的推荐报告在一个并购交易中会起到什么作用,能锦上添花吗?

  A:这个推荐报告由谁来做,做得好不好也是很重要的,这是和投资人对话的基础。找一个非常有信用的专业机构,让他给你做非常专业非常深入的招股说明书、商业计划书,让投资人对你有一个深度的分析,看懂你的公司和价值、长处,并奠定信任基础。一般国际上都由专业机构来谈。总的来说,专业机构有两方面的价值,一是中间的技术工作,像推荐报告、谈判;二是通过他们的工作能给企业带来一个增量,或者卖出更好的价钱,或者帮你更迅速的达成交易,因为专业机构有专家、市场信用和资源。

被收购:股东利益最大化的选择

  访科尔尼有限公司管理咨询顾问马吉吉人

  -采访.撰文/张含

  企业股权被收购常常源于经济动机的驱使,企业的创业者和投资者都认为能够把企业价值变现,卖掉企业是一个很好的方式。

  不难理解企业创业者既希望自己的企业能够有稳定的利润,也希望有更好的价值。就像企业希望能够上市一样,上市的目的有两个,一个是希望筹措资金,另一个就是希望股权真正有市场流动价值。从这个意义上,作为创业者被收购和上市都是不错的选择。

  “收购是个不错的选择”

  除恶意收购之外,收购是一种双赢。拿易趣为例,外方是为了市场扩张,看重在中国的平台资源,客户群,对这块业务是有信心的;站在易趣的角度,对拥有者来讲是实现价值的最好方式。

  高成长型的产业中一个有吸引力的企业,早期会有各种风险基金的介入。作为投资者,他们需要利用退出机制来赚钱,这个目的性比创业者还要明确,那么卖掉自己的股权是除了上市之外最好的一条途径。eBay收购了易趣后,风险投资IDG得以成功退出,回报为初期投资的19.4倍。

  实际上,一个企业发展到易趣现在的阶段可以有几种对未来的选择:一种是自己继续发展下去。企业现在不缺钱,经营状况良好,筹得到资金,能够进一步发展壮大,几年后再选择上市或是出售,会有更好的回报;另外一些处于产业发展成熟阶段的企业,如汽车配件行业,出版业等行业中的家族企业,虽然没有上市,但私有股权的流通性很好,有市场的认可,这种情况下,也不会轻易选择出卖自己的股权,也不愿意轻易上市。但自我投资的企业往往要保证家族的控制力,更利于企业的发展。这种情况在中国较少,但是十到十五年后,中国的产权交易制度比较健全的时候,也可以考虑不出售。

  企业之所以没有选择出售股权,是认为其他的选择道路漫长,中间经历的变数比较多,速度不够快;被收购的股东如果看不到更好的方式,被收购就是一个积极的获取股东价值的方式。

  卖掉企业有时候就像卖房子,有人来买时,房主往往会用未来租金的收益来权衡。股东跟房主一样,都会选择实现利润最大化的行为。

  国外企业对中国企业的收购也并不是多发生在互联网企业,对于中国拥有独特资源的行业如啤酒、奶业等行业,还有是一些分销企业的并购时有发生。互联网企业之所以被关注多,是因为企业知明度高,是媒体关注的热点,被收购的股权比例高,收购溢价也比较高,主要创业者大都有留洋背景,熟悉各种规范的程序。这种题材的操作,做出来大都很漂亮。更多的被收购不一定是要百分之百的收购,采取了多种多样的方式。

  能卖好价的特征

  收购行为通常会导致控制权的变化,而企业潜在的成长能力是收购中的关键因素。我们今天已经看到了中国企业比较成功的出售案例,大都卖了个不错的好价钱,是因为他们或多或少的具备了三个特征:

  ●企业已经是行业的领先者。比如像通信领域的华为和港湾公司,虽然没有整体出售,但吸纳新的投资,就是意味着部分股权的一种出售。产业整合在即,或是迫在眉睫时,企业需要借助一个外部投资者来进一步强化自己的定位,在竞争风险进一步加剧前让自己的企业价值变现。在前一段时间以至于延续至今的啤酒行业如火如荼的收购运动,也都集中反映了这个特征。

  ●还有一个特征是因为这个企业本身具有高成长性,或者所在的行业具有高成长性。一些互联网企业表现最为突出,易趣是个最好的例子,在中国它处于高成长行业,并且带来了C2C这样的商业模式。

  ●另外一个因素是企业可能拥有独特的资源和技术。比如一些啤酒类企业,蒙牛上市前的奶业资源,还有互联网企业中的3721,它的客户资源是雅虎最为看重的,而思科在全球范围频繁进行收购的企业大多是看重了对方在某一个领域的技术。

  根据科尔尼的了解,当被收购企业一部分或全部产权被收购之后,收购方的股东或投资者希望通过收购,使企业能够找到一定的市场,获得新的技术,或者能够同原有企业形成一个协同效应,股东价值进一步得到提升,但也不排除把收购来的企业进行分拆整理后单独去上市。

  卖好价也有技巧 一次成功的出售从技巧和方法而言,并没有什么特殊性。

  如同对很多创业企业的要求一样,任何企业都需要一个好的成长性,能够让别人看到利润或者具有产生利润模式的希望。一个有这样想法的企业要在法律方面早做准备,在ICP(互联网内容商)行业,分销行业中,境外公司来收购都会涉及到控股权比例的问题。中国的这些企业都选择了在海外设立一个对应的公司,持有相同的股份,相互之间产生技术服务的交易,那么外商就可以通过收购这家境外公司达到收购的目的,产权交易产生的法律限制就几乎不存在了。这种安排是希望出售的公司预先就要准备好的。

  当然,公司本身的形象,管理层的形象,企业的包装,清晰的历史记录,都很重要。出售本身来讲,不管比例是多少,都是一个尽可能提高自己溢价,讨价还价的过程。最近一个有影响的例子是小股东质疑光明和统一合作案。在光明果汁公司中持有5%股权的涂颂华担心,这场冷藏饮料盛宴可能会将他排除在外,而忽视股东的利益将会是件很麻烦的事情。涂颂华用发公开信这种方式抨击了台湾统一企业和上海光明乳业之间的谈判,这一行为可能有两种解释,表达自己愤怒的心情,或者在将来光明和统一的合作中不被忽视,甚至得到更好的份额。

  在我们听到的很多案例中,为了争得更好的价位,很多人是“无所不用其极”,这也反衬出谈判过程中各种方式的重要性。

  在股权收购过程中要尽量保证自己的股权不被过分稀释,也就是用相同的价码交换最小的股权比例,保证在将来企业中的还有一定控制的地位;而上市,或者被多个股东收购,面临的都是股权的进一步分散。为了保证企业朝着你希望的方向发展,要想办法通过建立一种巧妙的股权结构来尽量避免防止恶意收购。

  不过,有人担心大量中国优秀的互联网企业因为并购,纳入到了全球大公司的控制体系中。这个担心也不是没有道理,但这不应该让创业者承担,这是不公平的。就像现在国退民进一样,经验已经证明:只有在最充分的市场竞争环境下,企业才能最好的发展。就像家电和通信设备类的企业,都已经通过了大浪淘沙的过程。当有一天中国的竞争力逐渐增强之后,也不排除我们在进行反收购的可能性。现在被收购的企业将来也可能会成为某一个大的中国企业的一部分。

比上市更快成为千万富豪的捷径卖掉 更好地让你套现

  -特约撰文/盛富资本国际有限公司并购部

  (该公司曾任新浪收购网兴的售方财务顾问)

  新浪收购网兴和讯龙、搜狐收购17173和焦点网、EBAY收购易趣、亚马逊收购卓越、YAHOO!收购3721,盛大收购数位红,人们忽然发现两年前还在寒冬中瑟瑟发抖的互联网企业,突然之间迸发出巨大的热情和活力。这不论是对互联网寒冬中的幸存者,还是纷纷因投资网络企业损手烂脚的创投老总们,都是日夜盼望的福音。

  从2003年开始,在中国的互联网市场上,无论是门户、B2C、搜索,还是游戏的公司,只要是上了市,手头上有现金的,忽然间都组成了饥饿的收购大军,无一例外地怀揣钞票在神州大地上进行着近似疯狂的收购之旅。

  值得注意的是,在过去两年的收购案例中,几乎所有的收购时点都是被购方处于业务高速增长的阶段,而且是有正现金流的小型公司,而且几乎所有的个案都是收购对象将股权全部出售给买家,原股东套现后要么留在公司继续为当初承诺的利润打拼,要么出局。正是巨大的回报促使这些“盈利正高速增长”的公司管理层放弃自己的企业理想而选怀抱现金出局。在协助企业到海外上市多年后,我们也不得不承认,部分公司股东在当中所获得的回报,甚至远远超出把企业直接上市所能给股东带来的直接利益。

  事实上,所有这些收购的出现,与2003年底出现在纳斯达克市场的新一轮网络热不无关系,甚至可以说是始作俑者。这些交易之所以能出现天价,与收购方对某种业务需求的迫切性不无关系,这当中有业务战略的需求,也有资本运作的需求。

  股东为什么要出售公司?

  股份全数出售在投资银行收购兼并的范畴中难度较高,在操作上要比私募要难。因为这对于公司的买家来说,从此他们就必须承担以后的风险,所以必须更加谨慎而行。公司股东决定尽售股份与私募融资不同之处在于,收购者所收购的是控制性股权(有时往往是100%)而出售方拿到了现金或股票。中国由于金融市场不发达,更重要的是信息不透明,股权出售在活跃度方面比不上美国和欧洲,因为敢于进行这种收购的非行业投资者不多。原股东决定把股权套现的原因很多,有的是因为退休或者健康原因。当然股东也可以把股份出让给公司的管理层,这样就成了管理层收购。由于熟悉公司的情况,管理层(MBO)收购被证明是收购后业务成功可能性最高的收购方式。

  另一种模式,买家在没有管理层持有股权的情况下全面收购股权。在中国想全面出售股权的企业不少,但因为买家往往缺乏接盘的能力,而被购方也无法留下具有很强的管理能力的职业经理人和不需依赖某种社会资源的独立生存能力,所以导致一般的投资者望而却步。

  许多中国企业在引入新股东时都表示他们需要的并不仅仅是钱,更重要的是有一个战略合作伙伴帮助他们提升管理和战略执行能力。现在在中国市场上奔走的许多创投公司,往往会向企业宣扬他们的投资能为企业带来许多战略性的价值。尽管他们从主观意识上的确希望实现创投的最高理想,但事实上要在中国实现他们的承诺,还是有许多障碍。

  具有较多资本运作经验的基金的确能在一定程度上帮助企业做好资本运作工作,但事实上创投能投入到这方面帮助企业的资源很有限。这是因为创投基金经理人员数目非常少(他们的日常运作费用来自于每年有限的资金管理费)。一般大的创投公司也只有几个专业人员,要不断地去分析新项目和管理许多不同的已投项目。但投行和创投所需要的知识有很大的差别,要形成帮助企业的资本运营必须要有完整的投行服务团队。否则创投根本无法做到细致。至于战略规划和执行,如果公司管理层不具备进行战略思维和业务规划的基础,以创投的人手难以对公司起到重要的提升作用,事实上战略规划是一项相当专业的工作,并非创投所长。

  当然他们可以外聘管理咨询公司和聘请一个CEO来帮助公司实现该目标。建立和发展能有效监控公司每一项业务表现的系统和流程属于公司CEO的工作,这个工作量非常巨大,他们只能推荐人或者要求外聘管理咨询公司来实现。所以事实上能够在业务上给与企业实质帮助的还是从事同一行业的投资者。

  谁会购买你的公司

  一朝能够成为千万富翁甚至是亿万富翁固然是许多企业家的目标和梦想,但事实上这梦想的实现并不困难,只要擅长把握时机和寻求专家的协助,就有可能抓住最佳的时机而从此坐拥千万身家。要实现出售公司的致富之路,第一步就需要做到知己知彼,也就是需要了解谁会买你的公司,他们要从你处得到些什么,谁会是出价最高的买家。要成功找到买家,抓住他们的需求把股份卖个最佳的值,就需要了解买家的类别和动机,买家一般又分为财务买家和战略买家。

  ●财务买家

  财务买家指的是收购方购买一家公司股权的目的是希望通过最终的出售公司的股权而获利的投资者。这些投资者往往不是依靠从事实业来获利,也不会花大量精力在被购公司的日常管理上。

  ●战略性投资者

  企业股东要实现高价出售股份,通过引入财务投资者实现的可能性不大。因为财务投资者所计算回报的方式与企业家计算退出获利的方式是一样的。所以买家只有在尽量压低收购价的前提下,才能使自己的利益最大化,这跟企业股东的需求是对立的。

  所谓的战略投资者指的是买家收购的目的可能并不单纯地从被购公司中获得财务回报,而是为了实现被购业务和买家自己业务之间的战略协同价值。协同价值有专门的方法和公式计算。

  吸引财务投资者的成功要素

  相对而言,寻找战略投资者的难度要比找到财务投资者难得多。如果要成功地出售股权给财务型投资者,企业就应该具备以下两个基本要素:高质量的管理团队,具独立生存能力的优质业务。

  ●高质量的管理团队

  懂得如何经营企业的投资者很难找到,所以如果不是对公司管理团队有信心,财务投资者进入的可能性就很低。因为他们根本不是要自己经营企业,而是希望卖一个更高的价值获利。所以如果没有一个优秀的团队维护公司价值,就根本不敢进来。出售方必须令投资者信服公司管理团队具有独立的、在新的股东架构下全面地管理公司运作的能力,并且可以在收购后使公司业务能快速增长。

  ●具有独立生存能力的优质业务

  企业必须拥有可作为独立实体运作的业务,这一点对于收购国有产业集团中的分支机构时显得特别重要。如果该业务处于一个集团产品价值链中难以独立存在的环节,或者其业务和原料供应不可避免地必须依靠原有的集团,那么被收购的可能性就会大幅下降。

  吸引战略投资者的要素

  前面提到,战略投资者之所以要进行一项战略收购是因为出售方能够为买家带来战略协同价值,甚至是资本运作上的获益。

  战略性投资者在做出收购兼并决策时基本上基于以下五种购并交易的战略需求:①主动性投资;②规模性收购;③邻近性收购;④领域性收购;⑤产业转型等。

  出售公司的时机选择

  能够成功找到合适战略投资者的机会是可遇而不可求的,但是如果寻找专业的顾问成功率就会高得多。公司股东不可能在收购兼并方面具有丰富的经验,所以聘请经验丰富财务顾问就非常重要。这是一项复杂而高难度的交易,企业家会面对巨大的压力和时间限制,同时还要履行日常的管理职责。财务顾问可以在相当大的程度上担任教练的职能,并可担任更多的角色。最重要的是,他们可以在交易的开始协助评估成功率,就企业家在何时、如何与买家打交道提供合适的建议。

  如何选择最佳的出售时机?选择在不同的阶段出售公司,会对出售策略、公司估值和买家的选择等造成一系列的复杂影响,正确的选择出售时机将会使企业获得更高的估值和发展前景、可行性研究的目标是考虑目前交易的时机是否成熟,财务顾问通过与企业家谈话和问题对目前的情况作出判断。

  以上因素的考虑是成败的关键,需要在一开始就考虑,如果这方面的工作到位,企业就可以将出售价最大化。

  案例:新浪收购网兴科技

  网兴科技,全称深圳市网兴科技有限公司,成立于2001年,是一个以无线增值业务为主营业务的民营企业。公司目前是中国移动和中国联通的全网合作伙伴,是一家专业的移动增值服务运营商和提供商。该公司在2002年还是一家规模相当小而且亏损的科技公司,直到2003年中期业绩才突然实现喷井式增长。值得注意的是公司的管理层同时也是股东。

  网兴科技的业务定位于移动增值服务领域的应用,主要是为个人消费者提供以短信形式为主的移动增值服务,目前已经推出多项应用产品。拥有四个产品服务网站——驿动酒吧(www.cm98.com),移动情缘网( www.cmlove.net),移动人才网(www.cmjob.com),彩铃网(www.cmrings.com),为用户提供聊天交友、人才招聘、彩铃下载、短信游戏、姓名测试、生日运程等丰富的移动娱乐信息。

  这样一家公司却能以总数为1.25亿美元的成交价出售给新浪,的确有其值得借鉴的地方。

  理解新浪收购网兴的收购逻辑

  中国的互联网业自2000年下半年起进入艰难时期,中国的门户网站先后试过了网络广告和跨媒体战略,但都没有达到理想效果。在尝试了种种可能的收费途径后,突然发现过去最不起眼的短信,能够使他们获得高速的盈利增长,一时之间短讯业务成了中国互联网业走出低谷的救命稻草。最先得益的是网易,在2002年第二财季率先实现了净利润。随后,新浪和搜狐也走在同样的复苏之路上。

  而2003年起中国无线数据服务的开放式管理,使短信和网络游戏高潮创造了中国互联网和通讯行业概念在美国资本市场的狂潮。从2003年初起,SINA和SOHU的股票一度攀高至40美元以上,直到2003年11月其股票估价进入盘整期。而在这个时候新浪对网兴的收购是支撑新浪业绩增长的关键举措。

  网兴的出售正是抓住了这一千载难逢的时机,因为收购网兴对新浪的重要性在于投资者已经意识到,点击率并不能带来利润,新浪急需从寻找商业模式变成寻找盈利模式。新浪当然也有自己的短信业务,但要靠自身业务的拓展实现迅速的盈利增长显然太慢,只有通过收购增加盈利增长速度才能维持自身的高股价和不断集资。

  在这里我们来分析一下新浪的逻辑,新浪收购网兴前在2004年1月23日的市盈率是92.30倍,而2003年前3个月的盈利只有1900万美元左右,而公司市值却为22.77亿美元,所以如果网兴能够为新浪带来1000万美元的盈利,如果市盈率维持不变,就可以为新浪带来9.23亿美元的市值,即使市盈率降低到40倍,也能为新浪带来4亿美元的额外市值。新浪2003年财政年度最终税后利润为5499万美元,相对于2002年度增长了33倍,要支撑高增长才会有高的市值,所以只要能购获得能使公司利润大幅增长,能够与公司向资本市场所宣扬的卖点相符的公司,价格高一些也值得。

  在充分了解了新浪这一需求后,网兴就在财务公司的帮助下,很好地利用新浪急需能够提供盈利增长业务的心思,在最佳的时机完成了出售,为股东带来总共1.25亿美元收入的股权出售。

  设计能令双方放心的交易架构

  深圳市网兴科技有限公司的注册地为深圳市,注册资本原来为200万人民币,后来注册资本增为1000万人民币。新浪是一家外资企业,收购网兴时需要作特殊的架构设计。作为一家互联网业务和移动通信业务增值服务商牵扯到两种牌照,一种是互联网内容提供商牌照,另外一种是电信增值业务牌照。其中互联网内容提供商牌照不可以由外商所持有,而关于外资经营电信增值业务的政策法规规定任何经营增值电信业务的公司,如有外资介入,必须在符合相关规定的基础上,再经国家相关部门严格审批通过后方可运营,同时规定经营增值电信业务的合资公司外资所占比例不得超过50%。国家在发牌制度上的限制使交易架构的设计成为了交易成功的关键前提。

  交易架构设计的关键在于使网兴所有业绩能够在深圳网兴在进入新浪的前提下,把深圳网兴的收入和利润注入新浪,因此专家们设计的方案是为由网兴的九个股东分别按照原来的持股比例在英属维京群岛(British Virgin Islands,“BVI”)成立Crillion公司,由Crillion公司在深圳全资成立飞科网络技术开发(深圳)有限公司注册地为广东省深圳市,注册资本为400万港币,由飞科和网兴科技签订的独家服务合同进行无线增值服务的运营,从而把业务和利润转移到飞科。双方约定在国家在牌照方面的限制放松后,新浪只要提出随时可以完成收购Crillion,而深圳网兴成为从法律上不从属于新浪,实质上为新浪而生存的公司。

  收购过程

  ●撰写投资计划书

  投资计划书是一个非常重要的文件,可以引导买家认同公司的价值,一个清晰的、简明的、逻辑和战略清晰的投资计划书是增强买家信心的重要因素,投资计划书也是决定融资架构和收购价格的基础。必须体现管理人对于业务和业务前景的判断和考虑,披露管理人在收购之后如何管理业务,如何为全体股东增值的战略和方针。投资计划书中也包含具体的财务预测,例如过去3年的损益表、资产负债表和现金流量表。财务顾问可以帮助对未来进行分析,提供关键性和建设性的预测,并协助撰写该文件。

  ●与投资者协商

  融资过程包括约见一定数量的投资者和投资机构。不同的投资者有不同的口味,在这时财务顾问在寻找、接触、吸引潜在投资者的过程中担当了重要的角色。在会议之前,投资者将会收到准备好的投资计划书,财务顾问也会准备一个简短的投资者演示。初步碰头会的重点在于促进相互了解和帮助投资者了解交易背景,然后开始讨论收购后的承诺和计划,以及买家对业务及前景的担心和疑虑等,经过几次初步讨论和会议后,企业将收到感兴趣的买家发来的书面意向书概要(包括“排他性协议”)。

  财务顾问将就这些条款与投资者协商,然后选出进入下一轮谈判的买家。对投资者关注的是管理团队的个人风格、收购、与自己的目标和商业战略相吻合等因素。买卖双方的协商将始终贯穿收购的全过程,财务顾问通过了解卖方出售的意图、期望价格、买家的偏好和卖主可以接受的事宜,比如说速度,参与方建立在过去盈利和现在账面价值的交易架构,使双方在见面前在一些问题上达到共识。作为一个外人,顾问更容易将难度大的目标放到桌面上谈,帮助卖方进行讨价还价,顾问的出现可以使双方聚焦在谈判过程,较好地处理谈判中的矛盾。例如让卖方保持公司少数股权,这有利于继续参与公司的运营和公司的顺利过渡。如果当业务发展顺利,在推出时卖方的股权也可以得到很大程度的增值,所以这是在收购中采用的双赢的战略。

  ●尽职调查

  投资者将会对公司提供的信息进行尽职调查验证,保证对公司现在情况和业务潜力理解的准确性。收购决策主要建立在这些信息和管理人陈述的基础上。尽职调查的范围可根据业务的不同而变化。调查可能包括财务、市场、法律、技术、税务、福利和环境审查。在确定尽职调查的范围方面,所有收购者的要求都要有所准备和尽量满足,否则会延误进程。

  ●收购的估值和对价

  价值谈判永远是收购中最敏感也是最关键的内容,最后双方能否对估值达成一致的价格,取决于财务顾问,设计一个有助于双方达成价格共识的估值框架。由于估值框架由管理层的许多假设所组成,但有时双方不一定能够对这些假设取得共识,这样就无法对成交价取得共识,这时一种叫Earn Out的订价结构可被用于帮助双方达成共识,这种架构是根据收购完成后被购公司的业绩来确定仍需支付的部分。

  在这种架构下新浪收购网兴科技的收购总代价不超过1.25亿美元,其中分成首期款和后续款。

  ●首期支付款项

  在收购交易完成时,新浪支付网兴收购的首期款为18,958,486美元,包括三部分:

  ●9,898,785美元以现金支付,其中8,691,056美元在交易完成时支付,其余部分在2004年4月13日支付;

  ●新浪将按照每股40.9美元的价格,向网兴发行195,593股普通股,折合为8,534,701美元;

  ●其余的约525,000美元为支付和此项收购有关的法律和专业费用。其余款项将根据网兴科技2004年和2005年的经营业绩决定。

  ●和2004年业绩相关的对价

  ●如果截至2004年12月31日的2004财年的收入大于或等于6,000,000美元,而少于11,000,000美元,新浪将支付相当于2004财年相关收入的1.5倍作为收购款项;

  ●如果截至2004年12月31日的2004财年的收入大于或等于11,000,000美元,新浪将支付相当于2004财年相关收入的2倍作为收购款项;

  ●如果截至2004年12月31日的2004财年的收入少于6,000,000美元,新浪将不需要支付任何收购款。

  ●和2005年业绩相关的对价

  ●如果截至2005年12月31日的2005财年的收入大于或等于12,000,000美元,而少于18,500,000美元,新浪将支付相当于2005财年收入的1.5倍作为收购款项;

  ●如果截至2005年12月31日的2005财年的收入大于或等于18,500,000美元,新浪将支付相当于2005财年相关收入的2倍作为收购款项;

  ●如果截至2005年12月31日的2005财年的收入少于12,000,000美元,新浪将不需要支付任何收购款项。

  以上收购价设计的主要优势在于管理层和股东都未完全套现,这为新浪提供了保障。由于只有网兴在2004年和2005年获得超过6,000,000美元和12,000,000美元的税前盈利时,网兴的股东才可以继续获得支付剩余的收购款。这种架构的好处包括:

  ●是鼓励公司原股东在2004年和2005年继续为新浪贡献利润;

  ●减少新浪因所购业务后续表现未如理想时的投资风险;

  ●使双方在对估值无法达成共识时达成交易价格共识。

  (注:以上关于网兴的收入均指公司及其子公司的税前收入的90%,并且该收入指全部来源于公司的业务运营,并且是由中国境内的移动运营商支付给网兴公司的业务所得。)

  买卖双方的限制和法律约定

  为了保护各自的权益,买卖双方会通过法律文件对交易的一些内容和双方的责任和义务作出约定,股东需自己的律师和财务顾问为与买家之间的协议把关,各自的律师和财务顾问的经验可以保障买方和卖方各自的利益,避免收购中的陷阱。常见的法律文件包括:

  ●股权收购协议;

  ●股东协议;

  ●新公司章程;

  ●管理层聘用合同。

  股权收购协议是交易合同,通常在意向性收购协议基础上起草的,谨慎调查也可能揭露一些关键的影响公司价值的因素,可以在起草协议时体现在当中,作为让卖方调整自己的期望理性手段。在协议确定后,提出这些可能产生卖方退出交易的风险。股东协议和新公司章程将规定收购后仍然担任管理人的出售方和投资者之间的关系,其影响的因素包括:

  ●公司治理结构;

  ●少数股东权益保护机制;

  ●投资者要求管理人做出的保证;

  ●股权转让;

  ●管理人锁定条款;

  ●股权架构

  ●后续资金融资安排和未来退出的分配。

  有出售方迫于时间压力,出售方未对这些重要文件引起重视,导致一些来保护出售方和买家合作关系的条款被放弃,这会引起以后的许多后遗症。每一个股东如何参与未来利润分配也在这里体现。员工合同则被调整以适应新的需求,出售方则要对非竞争性承诺多加注意,还要考虑董事责任问题。对于全体员工而言,最关键的则是福利和利益得到很好地解决和保护,出售方应该保证员工的福利没有因为收购或成为股东而被剥夺。

Saturday, October 09, 2004

Blogger.com and Trackback Technology

I really like Blogger.com! Not only was it one of the first (or was it THE first?) blogging platforms available, it is so darn easy to use. Three simple steps, and voila, you have your very own blog! And, it's FREE! It comes with several very attractive templates which can not only be customized to the look and feel of your website if so desired, but can even incorporated into your site!!

One of the few components Blogger does not incorporate natively is trackback technology. TrackBack is a system developed by Movable Type that allows a blogger to see who has seen the original post and has written another entry concerning it. The system works by sending a 'ping' between the blogs, and therefore providing the alert.

That has been Blogger's "Achille's Heel" where I'm concerned, that kept me from using it myself. However, that little techno-gaffe can now be circumvented by using a trackback plug-in developed by Haloscan.com. And guess what, it's also free!

The best part about the Haloscan plug-in is that it uses a simple two-step process that detects your Blogger blog and installs the trackback function automatically. All you have to do is have your comments turned on and, voila, you have trackbacks!

If you're a small businessperson who is interested in blogging, I can't think of an simpler, more easy-to-use system than Blogger. (And I use TypePad!) It's a great way to get your feet wet at least.

Thursday, October 07, 2004

The Other Road Ahead

Money

In the early 1990s I read an article in which someone said that software was a subscription business. At first this seemed a very cynical statement. But later I realized that it reflects reality: software development is an ongoing process. I think it's cleaner if you openly charge subscription fees, instead of forcing people to keep buying and installing new versions so that they'll keep paying you. And fortunately, subscriptions are the natural way to bill for Web-based applications.

When they can, companies like to do something called price discrimination, which means charging each customer as much as they can afford. [8] Software is particularly suitable for price discrimination, because the marginal cost is close to zero. This is why some software costs more to run on Suns than on Intel boxes: a company that uses Suns is not interested in saving money and can safely be charged more. Piracy is effectively the lowest tier of price discrimination. I think that software companies understand this and deliberately turn a blind eye to some kinds of piracy. [9] With server-based software they are going to have to come up with some other solution.

Web-based software sells well, especially in comparison to desktop software, because it's easy to buy. You might think that people decide to buy something, and then buy it, as two separate steps. That's what I thought before Viaweb, to the extent I thought about the question at all. In fact the second step can propagate back into the first: if something is hard to buy, people will change their mind about whether they wanted it. And vice versa: you'll sell more of something when it's easy to buy. I buy more books because Amazon exists. Web-based software is just about the easiest thing in the world to buy, especially if you have just done an online demo. Users should not have to do much more than enter a credit card number. (Make them do more at your peril.)

Sometimes Web-based software is offered through ISPs acting as resellers. This is a bad idea. You have to be administering the servers, because you need to be constantly improving both hardware and software. If you give up direct control of the servers, you give up most of the advantages of developing Web-based applications.

Several of our competitors shot themselves in the foot this way-- usually, I think, because they were overrun by suits who were excited about this huge potential channel, and didn't realize that it would ruin the product they hoped to sell through it. Selling Web-based software through ISPs is like selling sushi through vending machines.

Customers

Who will the customers be? At Viaweb they were initially individuals and smaller companies, and I think this will be the rule with Web-based applications. These are the users who are ready to try new things, partly because they're more flexible, and partly because they want the lower costs of new technology.

Web-based applications will often be the best thing for big companies too (though they'll be slow to realize it). The best intranet is the Internet. If a company uses true Web-based applications, the software will work better, the servers will be better administered, and employees will have access to the system from anywhere.

The argument against this approach usually hinges on security: if access is easier for employees, it will be for bad guys too. Some larger merchants were reluctant to use Viaweb because they thought customers' credit card information would be safer on their own servers. It was not easy to make this point diplomatically, but in fact the data was almost certainly safer in our hands than theirs. Who can hire better people to manage security, a technology startup whose whole business is running servers, or a clothing retailer? Not only did we have better people worrying about security, we worried more about it. If someone broke into the clothing retailer's servers, it would affect at most one merchant, could probably be hushed up, and in the worst case might get one person fired. If someone broke into ours, it could affect thousands of merchants, would probably end up as news on CNet, and could put us out of business.

If you want to keep your money safe, do you keep it under your mattress at home, or put it in a bank? This argument applies to every aspect of server administration: not just security, but uptime, bandwidth, load management, backups, etc. Our existence depended on doing these things right. Server problems were the big no-no for us, like a dangerous toy would be for a toy maker, or a salmonella outbreak for a food processor.

A big company that uses Web-based applications is to that extent outsourcing IT. Drastic as it sounds, I think this is generally a good idea. Companies are likely to get better service this way than they would from in-house system administrators. System administrators can become cranky and unresponsive because they're not directly exposed to competitive pressure: a salesman has to deal with customers, and a developer has to deal with competitors' software, but a system administrator, like an old bachelor, has few external forces to keep him in line. [10] At Viaweb we had external forces in plenty to keep us in line. The people calling us were customers, not just co-workers. If a server got wedged, we jumped; just thinking about it gives me a jolt of adrenaline, years later.

So Web-based applications will ordinarily be the right answer for big companies too. They will be the last to realize it, however, just as they were with desktop computers. And partly for the same reason: it will be worth a lot of money to convince big companies that they need something more expensive.

There is always a tendency for rich customers to buy expensive solutions, even when cheap solutions are better, because the people offering expensive solutions can spend more to sell them. At Viaweb we were always up against this. We lost several high-end merchants to Web consulting firms who convinced them they'd be better off if they paid half a million dollars for a custom-made online store on their own server. They were, as a rule, not better off, as more than one discovered when Christmas shopping season came around and loads rose on their server. Viaweb was a lot more sophisticated than what most of these merchants got, but we couldn't afford to tell them. At $300 a month, we couldn't afford to send a team of well-dressed and authoritative-sounding people to make presentations to customers.

A large part of what big companies pay extra for is the cost of selling expensive things to them. (If the Defense Department pays a thousand dollars for toilet seats, it's partly because it costs a lot to sell toilet seats for a thousand dollars.) And this is one reason intranet (LAN) software will continue to thrive, even though it is probably a bad idea. It's simply more expensive. There is nothing you can do about this conundrum, so the best plan is to go for the smaller customers first. The rest will come in time.

Son of Server

Running software on the server is nothing new. In fact it's the old model: mainframe applications are all server-based. If server-based software is such a good idea, why did it lose last time? Why did desktop computers eclipse mainframes?

At first desktop computers didn't look like much of a threat. The first users were all hackers-- or hobbyists, as they were called then. They liked microcomputers because they were cheap. For the first time, you could have your own computer. The phrase "personal computer" is part of the language now, but when it was first used it had a deliberately audacious sound, like the phrase "personal satellite" would today.

Why did desktop computers take over? I think it was because they had better software. And I think the reason microcomputer software was better was that it could be written by small companies.

I don't think many people realize how fragile and tentative startups are in the earliest stage. Many startups begin almost by accident-- as a couple guys, either with day jobs or in school, writing a prototype of something that might, if it looks promising, turn into a company. At this larval stage, any significant obstacle will stop the startup dead in its tracks. Writing mainframe software required too much commitment up front. Development machines were expensive, and because the customers would be big companies, you'd need an impressive-looking sales force to sell it to them. Starting a startup to write mainframe software would be a much more serious undertaking than just hacking something together on your Apple II in the evenings. And so you didn't get a lot of startups writing mainframe applications.

The arrival of desktop computers inspired a lot of new software, because writing applications for them seemed an attainable goal to larval startups. Development was cheap, and the customers would be individual people that you could reach through computer stores or even by mail-order.

The application that pushed desktop computers out into the mainstream was VisiCalc, the first spreadsheet. It was written by two guys working in an attic, and yet did things no mainframe software could do. [11] VisiCalc was such an advance, in its time, that people bought Apple IIs just to run it. And this was the beginning of a trend: desktop computers won because startups wrote software for them.

It looks as if server-based software will be good this time around, because startups will write it. Computers are so cheap now that you can get started, as we did, using a desktop computer as a server. Inexpensive processors have eaten the workstation market (you rarely even hear the word now) and are most of the way through the server market; Yahoo's servers, which deal with loads as high as any on the Internet, all have the same inexpensive Intel processors that you have in your desktop machine. And once you've written the software, all you need to sell it is a Web site. Nearly all our users came direct to our site through word of mouth and references in the press. [12]

Viaweb was a typical larval startup. We were terrified of starting a company, and for the first few months comforted ourselves by treating the whole thing as an experiment that we might call off at any moment. Fortunately, there were few obstacles except technical ones. While we were writing the software, our Web server was the same desktop machine we used for development, connected to the outside world by a dialup line. Our only expenses in that phase were food and rent.

There is all the more reason for startups to write Web-based software now, because writing desktop software has become a lot less fun. If you want to write desktop software now you do it on Microsoft's terms, calling their APIs and working around their buggy OS. And if you manage to write something that takes off, you may find that you were merely doing market research for Microsoft.

If a company wants to make a platform that startups will build on, they have to make it something that hackers themselves will want to use. That means it has to be inexpensive and well-designed. The Mac was popular with hackers when it first came out, and a lot of them wrote software for it. [13] You see this less with Windows, because hackers don't use it. The kind of people who are good at writing software tend to be running Linux or FreeBSD now.

I don't think we would have started a startup to write desktop software, because desktop software has to run on Windows, and before we could write software for Windows we'd have to use it. The Web let us do an end-run around Windows, and deliver software running on Unix direct to users through the browser. That is a liberating prospect, a lot like the arrival of PCs twenty-five years ago.

Microsoft

Back when desktop computers arrived, IBM was the giant that everyone was afraid of. It's hard to imagine now, but I remember the feeling very well. Now the frightening giant is Microsoft, and I don't think they are as blind to the threat facing them as IBM was. After all, Microsoft deliberately built their business in IBM's blind spot.

I mentioned earlier that my mother doesn't really need a desktop computer. Most users probably don't. That's a problem for Microsoft, and they know it. If applications run on remote servers, no one needs Windows. What will Microsoft do? Will they be able to use their control of the desktop to prevent, or constrain, this new generation of software?

My guess is that Microsoft will develop some kind of server/desktop hybrid, where the operating system works together with servers they control. At a minimum, files will be centrally available for users who want that. I don't expect Microsoft to go all the way to the extreme of doing the computations on the server, with only a browser for a client, if they can avoid it. If you only need a browser for a client, you don't need Microsoft on the client, and if Microsoft doesn't control the client, they can't push users towards their server-based applications.

I think Microsoft will have a hard time keeping the genie in the bottle. There will be too many different types of clients for them to control them all. And if Microsoft's applications only work with some clients, competitors will be able to trump them by offering applications that work from any client. [14]

In a world of Web-based applications, there is no automatic place for Microsoft. They may succeed in making themselves a place, but I don't think they'll dominate this new world as they did the world of desktop applications.

It's not so much that a competitor will trip them up as that they will trip over themselves. With the rise of Web-based software, they will be facing not just technical problems but their own wishful thinking. What they need to do is cannibalize their existing business, and I can't see them facing that. The same single-mindedness that has brought them this far will now be working against them. IBM was in exactly the same situation, and they could not master it. IBM made a late and half-hearted entry into the microcomputer business because they were ambivalent about threatening their cash cow, mainframe computing. Microsoft will likewise be hampered by wanting to save the desktop. A cash cow can be a damned heavy monkey on your back.

I'm not saying that no one will dominate server-based applications. Someone probably will eventually. But I think that there will be a good long period of cheerful chaos, just as there was in the early days of microcomputers. That was a good time for startups. Lots of small companies flourished, and did it by making cool things.

Startups but More So

The classic startup is fast and informal, with few people and little money. Those few people work very hard, and technology magnifies the effect of the decisions they make. If they win, they win big.

In a startup writing Web-based applications, everything you associate with startups is taken to an extreme. You can write and launch a product with even fewer people and even less money. You have to be even faster, and you can get away with being more informal. You can literally launch your product as three guys sitting in the living room of an apartment, and a server collocated at an ISP. We did.

Over time the teams have gotten smaller, faster, and more informal. In 1960, software development meant a roomful of men with horn rimmed glasses and narrow black neckties, industriously writing ten lines of code a day on IBM coding forms. In 1980, it was a team of eight to ten people wearing jeans to the office and typing into vt100s. Now it's a couple of guys sitting in a living room with laptops. (And jeans turn out not to be the last word in informality.)

Startups are stressful, and this, unfortunately, is also taken to an extreme with Web-based applications. Many software companies, especially at the beginning, have periods where the developers slept under their desks and so on. The alarming thing about Web-based software is that there is nothing to prevent this becoming the default. The stories about sleeping under desks usually end: then at last we shipped it and we all went home and slept for a week. Web-based software never ships. You can work 16-hour days for as long as you want to. And because you can, and your competitors can, you tend to be forced to. You can, so you must. It's Parkinson's Law running in reverse.

The worst thing is not the hours but the responsibility. Programmers and system administrators traditionally each have their own separate worries. Programmers have to worry about bugs, and system administrators have to worry about infrastructure. Programmers may spend a long day up to their elbows in source code, but at some point they get to go home and forget about it. System administrators never quite leave the job behind, but when they do get paged at 4:00 AM, they don't usually have to do anything very complicated. With Web-based applications, these two kinds of stress get combined. The programmers become system administrators, but without the sharply defined limits that ordinarily make the job bearable.

At Viaweb we spent the first six months just writing software. We worked the usual long hours of an early startup. In a desktop software company, this would have been the part where we were working hard, but it felt like a vacation compared to the next phase, when we took users onto our server. The second biggest benefit of selling Viaweb to Yahoo (after the money) was to be able to dump ultimate responsibility for the whole thing onto the shoulders of a big company.

Desktop software forces users to become system administrators. Web-based software forces programmers to. There is less stress in total, but more for the programmers. That's not necessarily bad news. If you're a startup competing with a big company, it's good news. [15] Web-based applications offer a straightforward way to outwork your competitors. No startup asks for more.

Just Good Enough

One thing that might deter you from writing Web-based applications is the lameness of Web pages as a UI. That is a problem, I admit. There were a few things we would have really liked to add to HTML and HTTP. What matters, though, is that Web pages are just good enough.

There is a parallel here with the first microcomputers. The processors in those machines weren't actually intended to be the CPUs of computers. They were designed to be used in things like traffic lights. But guys like Ed Roberts, who designed the Altair, realized that they were just good enough. You could combine one of these chips with some memory (256 bytes in the first Altair), and front panel switches, and you'd have a working computer. Being able to have your own computer was so exciting that there were plenty of people who wanted to buy them, however limited.

Web pages weren't designed to be a UI for applications, but they're just good enough. And for a significant number of users, software that you can use from any browser will be enough of a win in itself to outweigh any awkwardness in the UI. Maybe you can't write the best-looking spreadsheet using HTML, but you can write a spreadsheet that several people can use simultaneously from different locations without special client software, or that can incorporate live data feeds, or that can page you when certain conditions are triggered. More importantly, you can write new kinds of applications that don't even have names yet. VisiCalc was not merely a microcomputer version of a mainframe application, after all-- it was a new type of application.

Of course, server-based applications don't have to be Web-based. You could have some other kind of client. But I'm pretty sure that's a bad idea. It would be very convenient if you could assume that everyone would install your client-- so convenient that you could easily convince yourself that they all would-- but if they don't, you're hosed. Because Web-based software assumes nothing about the client, it will work anywhere the Web works. That's a big advantage already, and the advantage will grow as new Web devices proliferate. Users will like you because your software just works, and your life will be easier because you won't have to tweak it for every new client. I would not even use Javascript, if I were you. Viaweb didn't. [16]

I feel like I've watched the evolution of the Web as closely as anyone, and I can't predict what's going to happen with clients. Convergence is probably coming, but where? I can't pick a winner. One thing I can predict is conflict between AOL and Microsoft. Whatever Microsoft's .NET turns out to be, it will probably involve connecting the desktop to servers. Unless AOL fights back, they will either be pushed aside or turned into a pipe between Microsoft client and server software. If Microsoft and AOL get into a client war, the only thing sure to work on both will be browsing the Web, meaning Web-based applications will be the only kind that work everywhere.

How will it all play out? I don't know. And you don't have to know if you bet on Web-based applications. No one can break that without breaking browsing. The Web may not be the only way to deliver software, but it's one that works now and will continue to work for a long time. Web-based applications are cheap to develop, and easy for even the smallest startup to deliver. They're a lot of work, and of a particularly stressful kind, but that only makes the odds better for startups.

Why Not?

E. B. White was amused to learn from a farmer friend that many electrified fences don't have any current running through them. The cows apparently learn to stay away from them, and after that you don't need the current. "Rise up, cows!" he wrote, "Take your liberty while despots snore!"

If you're a hacker who has thought of one day starting a startup, there are probably two things keeping you from doing it. One is that you don't know anything about business. The other is that you're afraid of competition. Neither of these fences have any current in them.

There are only two things you have to know about business: build something users love, and make more than you spend. If you get these two right, you'll be ahead of most startups. You can figure out the rest as you go.

You may not at first make more than you spend, but as long as the gap is closing fast enough you'll be ok. If you start out underfunded, it will at least encourage a habit of frugality. The less you spend, the easier it is to make more than you spend. Fortunately, it can be very cheap to launch a Web-based application. We launched on under $10,000, and it would be even cheaper today. We had to spend thousands on a server, and thousands more to get SSL. (The only company selling SSL software at the time was Netscape.) Now you can rent a much more powerful server, with SSL included, for less than we paid for bandwidth alone. You could launch a Web-based application now for less than the cost of a fancy office chair.

As for building something users love, here are some general tips. Start by making something clean and simple that you would want to use yourself. Get a version 1.0 out fast, then continue to improve the software, listening closely to the users as you do. The customer is always right, but different customers are right about different things; the least sophisticated users show you what you need to simplify and clarify, and the most sophisticated tell you what features you need to add. The best thing software can be is easy, but the way to do this is to get the defaults right, not to limit users' choices. Don't get complacent if your competitors' software is lame; the standard to compare your software to is what it could be, not what your current competitors happen to have. Use your software yourself, all the time. Viaweb was supposed to be an online store builder, but we used it to make our own site too. Don't listen to marketing people or designers or product managers just because of their job titles. If they have good ideas, use them, but it's up to you to decide; software has to be designed by hackers who understand design, not designers who know a little about software. If you can't design software as well as implement it, don't start a startup.

Now let's talk about competition. What you're afraid of is not presumably groups of hackers like you, but actual companies, with offices and business plans and salesmen and so on, right? Well, they are more afraid of you than you are of them, and they're right. It's a lot easier for a couple of hackers to figure out how to rent office space or hire sales people than it is for a company of any size to get software written. I've been on both sides, and I know. When Viaweb was bought by Yahoo, I suddenly found myself working for a big company, and it was like trying to run through waist-deep water.

I don't mean to disparage Yahoo. They had some good hackers, and the top management were real butt-kickers. For a big company, they were exceptional. But they were still only about a tenth as productive as a small startup. No big company can do much better than that. What's scary about Microsoft is that a company so big can develop software at all. They're like a mountain that can walk.

Don't be intimidated. You can do as much that Microsoft can't as they can do that you can't. And no one can stop you. You don't have to ask anyone's permission to develop Web-based applications. You don't have to do licensing deals, or get shelf space in retail stores, or grovel to have your application bundled with the OS. You can deliver software right to the browser, and no one can get between you and potential users without preventing them from browsing the Web.

You may not believe it, but I promise you, Microsoft is scared of you. The complacent middle managers may not be, but Bill is, because he was you once, back in 1975, the last time a new way of delivering software appeared.

Following the Value

Following the Value

Tim began by asking what it means that Google, eBay, and Amazon.com are the new killer apps. He updated a quote from his 1997 speech Hardware, Software, and Infoware that "Free and open source software is the Intel inside of the next generation of software applications" by adding "--or is it?" He explored the implications of Clayton Christensen's law of conservation of attractive profits, the value simply migrates to adjacent levels.

To put this in historical context, Tim said that as building computer hardware became a commodity business with lower margins, the value went up the stack to proprietary software. At the same time, Intel showed that there was an opportunity to push value down the stack as long as you build a critical component that the next layer depends on. So the value was pushed out of the middle layer of building computers to the adjacent layers of software such as the Windows operating systems, Office, and to hardware components such as Intel chips.

Looking at that dynamic, people imagined that with the rise of Linux and open source we would replace Windows with Linux and Office with an open source solution. This was the dream of having inexpensive commodity hardware coupled with free software. For now, they reasoned, open source would leave the Intel layer alone because it is a hard project that has many technical requirements.

O'Reilly argues that instead of a stack that is capped by Linux and Open Office, we have another stack to consider with LAMP and similar open source software components occupying the middle. The value has once again moved to adjacent layers. Looking up the stack, eBay, Google, Amazon.com, and Mapquest are all building proprietary software on top of open source foundations.

Several of these applications have found a way to get users to create data that is used on their sites, which leads to lock-in by network effects and not by API. There are more than ten million user reviews on Amazon. That's not really software but the added value here is the data. Tim asked, once there's a critical mass of buyers and sellers why go somewhere else? In this grouping, the "Intel inside" position is occupied by Network Solutions, which controls domain names. All of the mapping applications are built on top of Navteq.

The platform is the Internet and not the PC. These applications are built on top of open source but are not themselves open source. Tim says that's OK because they have built tremendous value. More importantly, if we want to move open source forward, we have to understand that the whole model of what constitutes open source doesn't work. For example, you could give away the Google code and still not be able to implement Google. If we're thinking of openness we have to ask what openness means in that context: a world where an app runs on 100K servers and Richard Stallman cannot run it on his personal machine.

As you create your web-based applications, ask how you might build a participatory level around the data in the same way that eBay and Amazon.com have done. Tim left this topic asking who is going to control the key namespaces and who will integrate the entire open source stack. He suggests we think beyond Linux and ask who is going to be the Dell of open source and make sure that evrything works well together.

Reinventing the Address Book

Tim next turned his attention to social software and asked how many people in the audience had tried Orkut. Most of the audience raised their hands. He followed by asking how many people kept using Orkut and very few left their hand in the air. He said that all the social software services are a hack because we haven't really reinvented the address book.

Tim showed screen shots from a Microsoft Research project that could answer questions such as who you communicate with around this particular topic. The question that follows is how we build tools for creating networks and managing our contacts. These tools could end up as part of Outlook and proprietary software, or they could become a connection between Orkut and GMail. "We have to Napsterize the address book and the calendar so that we own the data about our social network but we are able to query our friends about who they know."

There are benefits of thinking of software, as Dave Stutz suggested, above the level of a single device. Tim offered the iPod and iTunes for lessons for open source. This is the first application that has done seamless application from server to handheld device. The handheld is not just a bad copy of the web or PC interface. When you build an application, consider what the changes may be when you assume that it runs from a handheld all the way to the server.

For VCs, Blogging is the Next New Thing

Wi-Fi is old news, and social networks are fully funded. So what’s next for Silicon Valley venture capitalists? How about Blogsphere? Expect a spate of announcements in coming months, and of course I have some juicy scoops here. Read on.... Silicon Valley venture capitalists believe in one thing - herd mentality. Never the ones to go out on a limb, they tend to flock for deals which others are doing. This herd mentality is what brought to us four online pet stores, half a dozen toy shops, and nearly three dozen wireless LAN switch makers. If Friendster was good investment for Kleiner Perkins Caufield & Byers, then Sequoia could not be left behind and invest in Linked-In. And if all the rumors I am hearing from Silicon Valley sources are correct, then the next new thing for the capitalist fools is web logging! Which is not such a bad thing, after all there are many very smart people who I admire, who will get funding from some venture capitalist or the other. Call this trend Blogging For Dollars! (A couple of weeks ago, the November issue of Business 2.0 magazine hit the stands, and it featured a mini-profile on SixApart, a company co-founder by high school sweet hearts, Ben and Mena Trott, the power houses behind MoveableType software and the TypePad web log service. The story was titled, Blogging for Dollars.) A lot has happened since then, and I have a couple of micro-scoops for you. My sources tell me that David Sifry’s Technorati is about to receive a substantial bit of funding, most likely from August Capital soon. No confirmation, and this could be a rumor of course! (And talking about rumors, Tribe.Net is also close to getting a big round of funding from one of the Valley big guns, though it has nothing to do blogging!) Elsewhere I have heard Scott Rafer, co-founder of Wi-Finder and newly appointed chief executive officer of FeedSter is beating down the bushes for funds and will get them shortly. His model of combining ad words with RSS feeds is an attractive business proposition. Chris Alden, the co-founder of the vintage Red Herring magazine is working on a start-up that will be a combination of blog-directory and a publication. (Details pending!) Many start-ups have cropped up and are copying the hosted web logging business model of TypePad, and others are in the works. This market is getting fiercely competitive and over crowded. These are all interesting developments, and hopefully will help some of the blogging start-ups we love so dearly. (My big question is who are the people most likely to get funded next?) Having seen the blogging evolve from its early days, I find it amusing that venture capitalists have suddenly discovered this new trend. Herds! or Un-Smart Mobs! While funding tool makers or service providers such as Six Apart and FeedSter makes sense, I am not so sanguine on the prospects of weblog-pubs etc. I think Nick Denton hits it right when he says this and this. By the way Jason Calacanis thinks I hate him. And to that I say NOT! Recommended reading * Jason Calacanis * Dawn of The Micro Pubs * Return of the Boom time hype merchants * Social Networking Companes Garner Venture Capital

Tuesday, October 05, 2004

On social software consultancy

With Jack Schulze, I've been doing a little consultancy at TimeBank recently on how thinking in social software, adaptive design and associated areas can improve a couple of their projects, and tie into their strategic thinking.

I'm not going to say anything about the projects or the outcome of the seminar day at the moment, just say what social software looks like, deploying in anger, a year in. This is what consulting and teaching non-expects in this area looks like.

Definition

Defining sosowa was the source of many posts this time last year. Having to compress it to be useful was a useful process. We're using something like this:

Social software's purpose is dealing with with groups, or interactions between people. This is as opposed to conventional software like Microsoft Word, which although it may have collaborative features ("track changes") isn't primarily social. (Those features could learn a lot from social software however.) The primary constraint of social software is in the design process: Human factors and group dynamics introduce design difficulties that aren't obvious without considering psychology and human nature.

This ties nicely with adaptive design, in that social software encourages you to fulfil latent needs first, then embark on not a development cycle but a dialogue with user concerns in which you listen to their emerging needs and implement them in code -- but you have to give users the ability to stretch the system otherwise you'll never even notice those new needs.

Areas of interest

To design effective social software, you should have some awareness in a number of areas.

So one of the things Jack and I are doing is producing a Primer in these areas to provide an overview but also a bibliography so the TimeBank team can dig deeper themselves. We've spent quite a lot of time running through their projects and these ideas to learn what's appropriate, where they need extra knowledge and so on.

Clay Shirky's essays (these in particular) over 2003 figure pretty big when the areas of concern to social software are summarised. That's not a surprise, they're great essays. But also, looking back, they're the only standalone, well-written essays there are. Outside the context of the early 2003 discussion, most of the weblogs posts just don't make any sense.

Mechanisms

So already we're got a way to put the sosowa ideas into practice. I use this example:

We might consider the way, in groups of three or more, how there's always the possibility of two people being disloyal to the gathering, and how to moderate that behaviour. In the physical world, disloyalty is visible because all interactions within the same context are visible to all local group members, and the disloyalty is moderated through politeness and social pressure. There is a different mechanism to exert social pressure in a peer-to-peer small group (of 6 people, say) than a broadcast larger group (a classroom type situation). Contrast this with online small groups and we see misunderstandings by email, people being left off cc lists and so on.

Now that's become a solveable scenario. We need mechanisms in the online software to bring in a similar incentive structure to the offline world.

The single most useful piece of thinking I've been using is Stewart Butterfield's March 2003 post on the devices in social software, mechanisms successful pieces of social software tend to have.

Identity
Presence
Relationships
Conversations
Groups
Reputation
Sharing

I'll describe each of these, as I see them, critiquing AOL Instant Messanger (just as an exmaple), and then describe how we put them into use.

Identity Your identity is shown by a screenname, which remains persistent through time. There are incentives not to change this, like having your list of friends stored on the server and only accessible through your screenname. This acts as a pressure to not change identity. Having a persistent identity is more important than having one brought in from the physical world.
Presence Presence is awareness of sharing the same space, and this is implemented as seeing when your friends are online, or busy. AIM isn't particularly good at group presence and visibility of communication, although other chat systems (such as IRC and early Talkers) use the concept of "rooms" and whispers.
Relationships AIM lets you add people as buddies. From that moment, their presence is visible on your screen. This is a relationship, you're allowed them to have an effect on your environment. Not terribly nuanced however.
Conversations Conversations are implemented as synchronous messaging. There's a difference between messaging and conversations. Messaging is just an exchange of text with no obligation, but conversations have their own presence and want to be continued. AIM does this by having a window for a conversation. It's difficult to drift out of it, it hangs there, requesting you continue. Contrast this with email which often is just messaging, and conversations die easily.
Groups AIM isn't great at groups. Although you can have group chats, the group is transient. People have more loyalty to a group when there's some kind of joining step, when they've made some investment in it. Entering a window just doesn't do that, and there's no property of the group that exists outside the individual user's accounts.
Reputation Reputation is used more in systems which allow meeting new individuals. AIM's simple version of this is "warning". Any user may "warn" any other user. A users total "warn" level (a figure up to 100) is shown to everyone they communicate with. Unfortunately, it's not a trustworthy reputation system, and reputation is notoriously difficult -- but humans are great at dealing with it themselves, given certain affordances: persistence identities, and being able to discuss those identities with other people. AIM's simplistic relationship system makes reputation not so important though.
Sharing People like to share. With AIM, sharing is often as simple as giving a friend a link to follow. Other systems, such as Flikr, are about sharing photographs. These act as small transactions that build genuine group feeling.

Clay's essay A Group Is Its Own Worst Enemy provides a great overview of many important concepts here, especially on having a cost to join (which provides the feeling of membership). Incidentally, knowing this is a fantastic rule of thumb: Forums which require a joining step are better that forums that feel like window-shopping. It's a more social design decision on the same level as not putting the reply box at the top (so the user has to read the whole conversation).

Putting this into practice

These seven items act as a tremendously useful framework to critique and comment on social software. We combined them with a further process:


  • Define the goals of your software (the strategic goals, and the user goals)

  • Consider incentives: For goal-oriented systems, why do people take part? Why do they come back?

  • Consider moderation: If you have a disloyal user, how do you stop them starting fights and poisoning the community? If you block them, you might enter an arms race.

We took a dynamic approach to this. It's very simple-minded design which only gets a person to use the site once, because it's easy to operate or whatever. A more dynamic approach is to consider the consequences, and use mechanisms such as people like sharing to design in the appropriate incentive and moderation feedback loops.

And dynamic's the key. We've attempted to understand user flows, and apply the ideas above to different types of user within the system, using one or two of Matt Jones' UCD tricks (they're handy to use and easy to teach). We've been teaching the technical and other project team members to use these tools and ideas to develop a common vocabulary, and to use social software ideas to make simple social tools more likely to succeed.

(So, for example, we can see that some users aren't going to be comfortable approaching people online - they're educated, highly intelligent folk who aren't good with computers - then we can use mechanisms such as slowly building relationships (making use of presence) and reputation to build an approach with a gradual gradient.)

And then of course it all gets into adaptive design and development processes, and also onto the specific small touches we recommended for the individual projects, but I'll get onto those another time.

I've put many of the social software links we'll be using in the Primer in my links directory.

Of course half-way through gathering these, the Many-to-Many Social Software Reader (and Timeline) launched. Handy, but unfortunately not completely appropriate -- I think they're aimed at providing a history and resource for practitioners, and not a quick way in to pick the most appropriate ideas for people in other fields. The latter is what Jack and I are providing.