Laws and Sausages

I have been reading John Adams by David McCullough at the same time this debate in Congress over the debt ceiling and spending cuts has occurred. What strikes me is that democracy is messy. It is today and it was in 1789 when John Adams was Vice President and oversaw the Senate. The first act of Congress? Deciding how to address the President. It took the better part of the first month to decide the simple “President of the United States” was good enough and set the tone for Congress for the next 230 years. Why would we expect the current Congress to be any better than the original?

One of the problems, I believe, with modern society is we too often see how the sausage is made. 24 hour TV news and the rush of the Internet make this possible.

I think what we are experiencing in Congress today is probably more the norm over the past two hundred plus years than the exception. Maybe the positions have hardened and what qualifies for brinksmanship has changed, but generally making sausage is an ugly process. And that is exactly what the Founding Fathers wanted with this republic. Passing laws isn’t supposed to be easy. Putting over 600 people together and saying come up with a solution means 600 differing ideas that all have to be worked out.

When government moves quickly, that is the time we should be worried, not when it moves slowly, because when government moves quickly differing opinions are never heard, issues are never worked out, a solution (like TARP, wars in Afghanistan and Iraq) is railroaded through the process without consideration.

My Founder’s Buzz Interview

I was interviewed by Scott Olson over at Founder’s Buzz about how the mobile software world has changed in the last dozen years. This builds off my A New Year, A New Perspective: Web Economics in an App World post where I synthesize a number of thoughts on the fundamental P’s of marketing, hitting each on product, place, promotion and price in this never-ending quest to build a company.

I hope you will head on over to Founder’s Buzz to listen to the six minute interview.

Are You the Customer or the Product?

If you aren’t paying then you aren’t the customer, you are the product.

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A customer emailed me last evening and asked me to justify the price of powerOne for iPhone, iPod touch and iPad. At first, I have to admit, I was a little insulted but as I thought about it more I decided it was a legitimate question. In this day and age where every software product seems to be free, why should he pay?

And my answer was pretty straight forward: if you aren’t paying then you aren’t the customer, you are the product.

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The Wall Street Journal recently studied 101 iPhone and Android apps and found these apps were commonly relaying personal data about the user, in some cases current location and in others age, gender, even a user’s contact list, to third parties. In almost all of these cases the WSJ was looking at free apps.

Am I surprised? Of course not. Because if you didn’t pay then someone else did, and that someone else wants as much information as possible. My role as a developer is to satisfy my customer to get more of them to pay me money. If you aren’t my customer then someone else is, and then my job is to satisfy them. And that means providing them with what they need to make decisions, even if it isn’t in your, the users, best interest.

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Google, I think, thrives beautifully in this system. You get free stuff (hurray!) and they get money from advertisers. Google is in the business of collecting every scrap of information they can about you so they can do a better job of selling to advertisers.

There is another benefit to Google: since you aren’t paying for the software then Google doesn’t need to support you. Since you aren’t paying for the software than Google can cancel products at any time without worrying about what you think. After all their customers — advertisers — just shift their dollars to a different Google product.

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But wait, you say! If I don’t use these free products than they don’t have the customer base to sell to advertisers. I’m their customer, too.

Sure, you are. Kind of. But in reality you aren’t. It is in Facebook’s best interest, for example, to keep you engaged but they will only do this to the extent you leave their free service. This means that they will push the boundary of what they can get away with. It means they will, as the saying goes, implement today and ask for forgiveness later.

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There are lots of reasons to pay for software. You want to get support, you want to reward the developer, you want to make sure that the app keeps improving. But the most important one is that you want me, the developer, beholden to you and not to some third-party that doesn’t have your interests in mind.

Always remember: If you aren’t the customer, you are the product. And the customer is the one who pays for it.

Palm To Partners: Bend Over

Looks like Palm is up to their old tricks: screwing their partners.

I have a long history with Palm, for good and for bad. In about a one year period, Palm screwed Infinity Softworks three times, costing us millions in revenues.

The first time was when Palm dropped their education team. Palm had a very experienced, excellent team focused on the education market and handhelds as a a 1-to-1 solution. We made a bet-the-company decision and focused on graphing calculators in the 6-12 grades. In order for us to be successful, though, we needed acceptance on the College Board’s Advanced Placement Calculus exam. With that we had two states and lots of districts ready to put us on the approved list. We spent two years gaining acceptance on the exam, with Palm’s help, and just as we were approved for trials Palm fired their education team and the College Board backed out.

The second time was when Palm switched their backend software service from Handango to PalmGear, at that time the two primary leaders in mobile software sales. It wasn’t the switch but instead the terms: Palm + PalmGear started taking 65% of the MSRP for themselves and wanted us to develop a custom version of the software for their site without any urls, email address, etc., that could link back to our own web site. (When Apple entered the app market it was still like this. 30% margins felt like heaven!)

The third time is when Palm stopped bundling powerOne Personal. We had bundled an app with almost every Palm device for 7+ years, always giving them a product for free (we made our money on upsells). As we approached the release of a new device, Palm kept changing the requirements. Finally, with one week to final build, Palm asked us to localize our app into five languages. We lost 75% of our revenue within months, practically killing the company and any attempt to recover from the education bet.

I was hoping, with their downfall and the return of some great people from the early days of Palm, that the stripes had changed over there. But it looks like that is for naught. Palm had a deal with Motion Apps to provide a Palm OS simulator. While the simulator was not bundled it did require a ROM bundled with the device, which Palm has removed with webOS 2.0, apparently in breach of contract.

What a shame. Palm, in its early days, was an amazing company with incredible people. I know a number of those people are still there or returned but it is sad that the company DNA has been corrupted and destroyed. I have every right to be mad at Palm and wish for its demise, but instead I look back at that company and the work we did there and am just saddened that all that potential was tossed away.

The Economics of Fear

In my lifetime — at least in the part of my lifetime I can remember — there has never been such a big debate about what to do with the economy.

I believe very strongly that economic success is all about positive thought. I said quite some time ago on this very blog that fear drives the US economy like no other issue. When times are good, happiness drives the economy higher and every negative — wars, droughts, terrorist attacks, whatever — makes the economy dive. The inverse, I believe, is also true. In downturns it is the negatives that outweigh the positives.

A second belief is that the practice of economics is too complicated. Economists — and politicians — like to talk about the Fed and interest rates and inflation and deflation and spending money and tax cuts and all the stuff that goes along with it.

These are just levers and descriptors, though. To solve a downturn all we really need to do is to improve positive thinking.

So rather than a discussion of more government spending or tax cuts, we should be talking about American’s greatest fears, short-term and long-term, and our government should enact policies to fix that.

Personally, I am more concerned about US and state current and future debt obligations than anything else. I think we have spent like drunken sailors on shore leave for the past 25 years and it is time to pay the piper. I think it is time for a national discussion about what we should and can expect from our governments.

And for me I know getting our debt under control sure would improve my mood.