Archives For Innovation

Mark Spencer 1

Mark Spencer
Photo Credit: Digium, Inc.

Update: I originally published this essay in late-2012. My attention recently drifted back to the topic of disruption in the telecom industry, prompting me to revisit what Mark Spencer achieved with Digium and the Asterisk product. I’m no less impressed today than I was four years ago, and so I put this at the top of the blog list again. What Mark accomplished is impressive and a worthy model for other disruptors to consider.

Mark Spencer presents me with a philosophical conundrum. Before an interview earlier this month I text him to say I’m so excited about our conversation that I hardly slept the night before. (He is understandably cautious of my enthusiasm.) After we spoke, I’m so confounded by the way he chose to tell his tale that I don’t sleep well for several more nights as my mind grapples with what it’s heard.

Mark is chief technology officer and founder of a company called Digium in Huntsville, Alabama. It supports and develops for an open source telecom platform called Asterisk which Mark (for lack of a better term) invented. Digium is to Asterisk what Red Hat is to Linux. And much as Linux evolved into the open source alternative to proprietary operating systems offered by companies such as Microsoft, so has Asterisk become an alternative to closed technology from the likes of telecom giants Cisco and Avaya.

Not everyone likes the open source model, but enough do that Red Hat has made a thriving business out of providing software, support and consulting services to those that do choose Linux. Likewise with Digium. It has found a loyal and growing base of followers who align with Asterisk’s open source philosophy, its price and its flexibility. Some subset of those Asterisk users, mostly small- and medium-sized companies, find value in paying Mark’s company to help them use the platform.

I have little doubt that Mark bristles at my word selection in the paragraphs above.  That I call it “his” company and that he “invented” Asterisk. But those are accurate descriptions. Though he turned over day-to-day operations of the business to professional managers after raising a round of venture capital in 2007, he remains majority shareholder and has de facto voting control over board decisions. But Mark prefers inclusive language. Digium’s success is the result of the efforts of many, not just Mark, he points out several times in our interview. Asterisk’s adoption did not happen because of the code he originated, he adds, but because countless independent developers have committed their considerable energy and intellect to enhancing it and making it a better product for users.

Though its story is still being written, it’s not a stretch to call Digium a success at this point in its existence (which Mark characterizes as being in its late-adolescent or early-teenage years). The same applies to Mark. He has done more in his 35 years than most people could muster the ambition to even imagine accomplishing in their lifetimes. But he lets out a deep sigh when I ask him to tell the story in the context of this success.

Mark rejects my basic premise. “What is success?” he asks with implied disdain but unflinching politeness.

Call it success or call it something else, when he talks about where he is today and where Digium is, Mark has no interest in talking about the things he did. He takes me in a different direction altogether.

Let’s not tell a story about talent or skill leading to success, he intimates. Let’s talk about the importance of luck.

So it is this matter of luck, and its effects on outcomes – success or failure – that has kept me up more nights than I should admit since my last conversation with Mark.

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The Future Credit: James Vaughn via flickr

The Future
Credit: James Vaughn via flickr

Not so long ago I spent an afternoon listening to a half-dozen entrepreneurs hawk their ideas for new companies. The event was called a pitch day, and it had an American Idol feel. The presenters stood before massive power point displays in the cavernous auditorium of a converted warehouse, spinning their best stories of why their concepts would attract the most eyeballs, customer subscriptions, or advertising attention. Each wanted to launch a fast-growing business – the next tech rocket ship – and made their case to the judges, a collection of investors spread in front of the makeshift stage in neat rows of plastic chairs. Winning meant the entrepreneurs got a little extra cash, fuel for their rockets, and a chance to turn their concepts into real startups.

The presenters had been honing their pitches for weeks, seeking that right combination of words, images, and dramatic delivery that might persuade the investors to pick them. The event was glitzy. The pitches slick. But the substance?

Of the six proposals, each could be boiled down to “the next” (fill in the blank with Facebook, Twitter or Google) for (fill in the blank with a sliced-up market segment). Each was a derivative concept meant to piggyback in some way off the platforms created by more ambitious entrepreneurs who came before them. These ideas were less about originality than they were about exploiting market niches that were not yet the focus of the platform companies. There was not much stretching for greatness.

This is not necessarily a bad thing. Commerce has long thrived on tweaking others’ ideas, but at some point it seems someone has to push forward the vision thing. I believe it was frustration with a lack of startup imagination that prodded Bruce Gibney of the Founders Fund to pen this missive in April 2011. He called it What Happened to the Future? and attached this brilliant subtitle: We wanted flying cars, instead we got 140 characters. From that letter:

The future envisioned from the perspective of the 1960s was hard to get to, but not impossible, and people were willing to entertain the idea. We now laugh at the Nucleon [a nuclear-powered car] and Pan Am to the moon while applauding underpowered hybrid cars and Easyjet, and that’s sad. The future that people in the 1960s hoped to see is still the future we’re waiting for today, half a century later. Instead of Captain Kirk and the USS Enterprise, we got the Priceline Negotiator and a cheap flight to Cabo.

It’s not a huge surprise why the pitch day ideas were so ho-hum. The entrepreneurs are running towards the money. Venture capital as an industry is more interested in backing the thing that seems most likely to get acquired (and thereby provide quick returns on their capital) than in backing bold bets. That makes sense. We need it. But we also need capital that backs the bold ideas. We need capital for the bets that might take years and years before paying out. I applaud Bruce Gibney and his colleagues at the Founders Fund for attempting to play that role. I applaud Google’s X labs for working on their own initiatives to change the world. My hope is that they prod more investors to take a long-term perspective.

When capital makes itself available for bold ideas, I expect we’ll see entrepreneurs tap into their more creative impulses. I expect we’ll see pitches that will bring promise of this future we’ve been waiting for.

Victor Hugo. Credit: Unknown, Public Domain

Victor Hugo. Credit: Unknown, Public Domain

There’s nothing stronger than an idea whose time has come.

– Victor Hugo

In their 2006 book, The Starfish and the Spider, Ori Brafman and Rod Beckstrom chronicle the power of organizations with no central control, no structured leadership, oftentimes no budget, and that tend to be volunteer driven. The authors call them “starfish” because they thrive despite (or perhaps because of) having no central nervous system. You cut off a leg, and they regenerate another.

Starfish organizations include Alcoholics Anonymous, Wikipedia, the abolitionist movement in England 150 years ago, and the Apache resistance to Spanish conquest in the 17th and 18th century Southwest US. As I considered last week, the idea can spread far and wide to include less known organizations operating in our communities, such as the F3 workout group that meets early each morning in Raleigh.

We’re so biased towards models of command and control, that it’s counter-intuitive to think that a group without a leader can somehow be more powerful and more successful than one with a manager at its helm. So what’s the secret to starfish success? The authors outline several success factors, and the one that jumps out the most is ideology. Here they highlight how it works with Alcoholics Anonymous:

At AA, the ideology is that people can help each other out of addiction. The twelve steps reflect the implications of this ideology. People who don’t buy into the twelve steps aren’t likely to stay in AA. But those who do follow the twelve steps do so rigorously…we can expect AA and its offshoots to be around as long as there’s addiction.

The idea is straightforward, and it serves a real need (addiction). The structure of the groups is simple and easy to replicate. If someone wants to start a new group, it’s like a fractal pattern repeating itself as its reach expands further and further. The power lies in the simplicity that makes it repeatable. If the ideology becomes too complex or too convoluted, the expansion collapses on itself.

As Victor Hugo put it above, there’s nothing stronger than an idea whose time has come. People will rally around an idea that speaks to them; that resonates. And in organizations that don’t provide economic compensation or status or other forms of incentive, the idea must have power, be simple, and be cogent.

Abe Maslow (Credit: Wikipedia)

Abe Maslow (Credit: Wikipedia)

50 years ago Abraham Maslow embedded himself in a Southern California tech factory to study its managers and culture. He kept copious notes and published his thoughts in 1962 in a sparsely-read tome called Eupsychian Management. The book was republished 37 years later, long after Maslow had passed, under the more accessible title, Maslow on Management. In it the great psychologist makes a distinction between the “doers” of the world and all those people who just talk, talk, talk.

After talking with various students and professors who “wanted to work with me” on self-actualization, I discovered that I was very suspicious of most of them and rather discouraging, tending to expect little from them. This is a consequence of long experience with multitudes of starry-eyed dilettantes – big talkers, great planners, tremendously enthusiastic – who came to nothing as soon as a little hard work is required.

We all know these types. I for one have to work hard to make sure there’s not one staring back at me each morning when I shave in front of the mirror. Someone recently told me I’m a great idea person. I think it was meant as a compliment, but my attention is piqued. I sure hope it’s not a euphemistic way of lopping me into that same category Maslow describes above.

Here’s Maslow’s technique from separating the talkers from the doers:

…I have tested people with these fancy aspirations simply by giving them a rather dull but important and worthwhile job to do. Nineteen out of twenty fail the test. I have learned not only to give this test but to brush them aside completely if they don’t pass it. I have preached to them about joining the “League of Responsible Citizens” and down with the free-loaders, hangers-on, mere talkers, the permanent passive students who study forever with no results. The test for any person is – that if you want to find out whether he’s an apple tree or not – Does He Bear Apples? Does He Bear Fruit? That’s the way you tell the difference between fruitfulness and sterility, between talkers and doers, between the people who change the world and the people who are helpless in it.

These are strong words from the father of Self-Actualization Theory. Here we assume Maslow must be this touchy-feely dude since his ideas are so often associated with kindness and making contributions to society. His views appear ironic even given that Maslow was first and foremost a thinker. I’ve never been quick to put theoretical psychologists into the “doer” category.

But he was also revolutionary. His bridge from talking to doing was constructed with rigorous testing, teaching, and writing. The hierarchy of needs thesis would have gone nowhere if he simply chatted with people about his novel concept. No, he had to go out and battle for respect in peer-reviewed journals. He had to promote it like crazy to earn acceptance and create his legacy. And his respect was not earned easily, nor did it come without wounds. It took years of grinding work that dilettantes are just not capable of.

What can we learn from Maslow’s view on doers versus talkers? My lesson is this: being an “idea person” brings little value to the world if you aren’t prepared to support the idea with all the grinding, thankless work it takes to fight through criticism and gain acceptance. This requires much more than brainstorming a few thoughts and patting yourself on the back because they feel so clever. The real value comes from transforming those thoughts from ideas to some kind of action. Even the tiniest action signals to the world that you’re serious, willing to work for your ideas, able to endure uncertainty, and not just another dilettante.

Starfish, Creative Commons License

Starfish, Creative Commons License

Several days a week, before dawn, middle-aged men congregate in small groups around Raleigh. They meet at parks, school playgrounds, and open fields and spend the better part of an hour running through fitness drills. When done exercising, they gather in a huddle for chatter and reflection before breaking and heading their separate ways.

I first heard about these groups a year ago. Over the span of a few weeks, I was approached by no less than six men suggesting I might enjoy the experience. None were pushy. Each seemed genuine and friendly. I sensed no alternative motive, but I demurred. I’m slow to accept new commitments.

If asked last year to wager on whether these groups would still exist today, I would have bet against them. I would have said they’d peter out. People are just too busy and have so many easier options for working out. At best, maybe they’d continue with a small core of devotees. Certainly nothing more.

Well, prognostication has never been my strong suit.

It’s breaking out like a virus. From simple beginnings not many years ago, it has somewhere around 200 participants today. It’s grown from Raleigh to neighboring communities, and there are hints of it expanding even further.

Yet it has no leadership structure. No money changes hands. And there are few hard and fast rules about when and where they meet or how they conduct the workouts. It’s all happening in an organic, self-organizing way.

How? Why?

These are the sort of questions I’m pointing at Will (known in the groups as “Maize”) at the neighborhood pool over Memorial Day weekend. Since there are no leaders, I can best describe him as a champion of these groups. While we both keep an eye on our children splashing at the edge of the deep end, I ask him why this is taking off. What’s the secret?

“It’s the starfish principle, man,” he answers. “You want to understand, you gotta read The Starfish and the Spider.”

So I ordered the book and devoured it early this week.

But let’s step back for a moment. Why do I care?

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Last night Larry Page, Google’s CEO, posted this entry on his Google+ account, “Google Self-Driving Car Project,” with the video below.


“Just imagine,” begins the company’s description a future with self-driving cars,

You can take a trip downtown at lunchtime without a 20-minute buffer to find parking. Seniors can keep their freedom even if they can’t keep their car keys. And drunk and distracted driving? History.

This is bold. It’s exciting. And it’s just one of several projects Google is juggling that could actually change the world. The company calls these “moonshots” and runs them out of its Google X division, an R&D skunkworks charged with making such bold – though calculated – bets on the future.

But the story here is one part fanboy awe over Google’s investments in ground-breaking innovation and one part befuddlement over how  little other corporations are putting into long-term R&D bets. Continue Reading…

My September books brought so many amazing learning experiences, not to mention the discussions they generated with family, friends, colleagues and even one of the authors.

Financing Our Foodshed by Carol Peppe Hewitt

Let’s start with the winner of the prestigious Most Dog-Eared Book of the Month Award. Thank you Carol Peppe Hewitt for writing Financing Our Foodshed: Growing Local Food with Slow Money, a collection of 22 stories on North Carolina food entrepreneurs (farmers, bakers, restaurateurs and the like) to whom Slow Money NC has introduced local financiers eager to fund sustainable local eating ventures.

IMG_20130929_124805Mainstream investing has become overwhelmed by the opportunity cost heuristic, guided by the simplistic question, where can I make the most money as quickly as possible with the least risk? 

This is not entirely bad, and I’m not quick to cast moralistic aspersions on using capitalism in pursuit of profits. There’s a place for that, and there always will be. But it brings to mind the notion of hypertrophy, this glitch in evolution’s system by which nature allows (for example) a male ibix to grow horns so large, its neck cannot support the weight. Yet those large horns have become a proxy for virility, and the females are programmed to mate with him whose horns spread widest. And so this glitch propagates through the generations with the genes of big-horned ibix begetting even bigger-horned ibix until an entire species is handicapped with antlers with all appeal but no function. I can imagine the big cat mountain predator eager for this easy prey. Given enough generations of reproducing those big horns, the hypertrophy glitch will bring doom to that gene pool.

It’s not that big horns are bad, but there is such a thing as too big.

So it is with capitalism and opportunity cost. It’s not that it’s bad, but there can be too much.

In chasing the biggest-dollar, fastest-bang, lowest-risk return, we put all our resources into high-scale enterprise that promises crazy riches while we starve our local entrepreneurs of the capital they need to get off the ground or grow. Herein lies a hypertrophy risk in our investing system. We chase the promise of the next Facebook (that big-horned ibix) while ignoring the small-scale businesses that create happier, healthier, more sustainable local economies.

The weight of that imbalance threatens to topple us. Continue Reading…

Apparently my fascination with all things Zingerman’s knows no bounds as I explore this Enough Project. I’ve trolled a brilliant little video (by Daniel Seguin) featuring Zingerman’s co-founder, Paul Saginaw, that promotes a concept called “Localism.”

“There’s this idea of having enough” Paul narrates over beautiful pictures of the Zingerman’s businesses. “So when you believe that, when you’re not wanting more and more all the time, what’s driving you is wanting to create something of excellence. It’s liberating.

“What is this? Is it capitalism? Is it socialism? What do we have here? I don’t know if it’s capitalism. I know it’s not socialism. I don’t know what it is and it isn’t. But anybody can do it. It’s just a lot of work. But I would say try it. It’s also fun.”

(The video is here.)

(h/t to Ron Maurer for this link via Twitter)

My Nagging Pile

My Nagging Pile

We gave up our subscription to the NY Times Sunday paper a couple years ago when our second daughter came around. To be honest, we should have canceled after having our first child. But we clung tight to the nostalgia of lounging decadent in bed deep into the weekend morning, sipping coffee to the crinkly rhythms of bending, folding, and straightening the newsprint. Even with one child our mornings began much earlier and never offered the leisure of settling into idle pleasures.

And so, as we chased little Clara around the house on Sunday mornings, those fat volumes of newspaper accumulated in an unread tower of information gathering dust in the corner of our bedroom. We wanted to read them. We yearned to read them! But the delight of lazy reading was turning into a nagging sense of obligation, seeming ever-taller each time we shuffled across our bedroom carpet. We might pound through a section late at night after putting our daughter to bed, but by then it felt like more of a clean-up chore than an act of relaxation. And the pile inevitably grew faster than we could shrink it.

So we canceled our subscription and tossed out all the back issues.

When my friend Josh offered me a complimentary copy of the NY Times Magazine this week, I shared it with my wife and we both confessed an immediate swell of envy. He has two kids like us, we thought, how does he keep up with the Sunday Times?! The universe seemed unjust. Continue Reading…

An article in which I explore skill acquisition, the beauty of practicing skills for the sheer appreciation of the craft, and announce that I’ve teamed up with software firm TransLoc…

Magical Thinking & Joshua Foer as Skill Acquisition Gonzo

In 2010 Joshua Foer burst onto the non-fiction literary scene with the book Moonwalking with Einstein (1). It’s a brilliantly conceived piece of gonzo writing in which Foer combs through the academic literature on skill acquisition theories and applies them in his own quest to improve his memory.

Joshua-Foer

Joshua Foer, Memory Champ

Foer is a good writer with a knack for unearthing compelling real-life stories to illustrate his points. In the case of this book, he is the story. The techniques he learned (and practiced religiously) carried him through to become U.S. memory champion – yes, there is such a thing – in about a year’s time.

He went from having an average memory to being a champion by approaching memory as a skill…something that can be developed and improved.

It’s a tremendous feat and an even better book. It should come as no surprise when it landed on many 2010 must-read lists, including that of Bill Gates. This interest in skill acquisition and development is a refreshing trend to watch. It once held a prominent place in our cultural discussions of success. Now we seem to focus more on inborn talent driving outcomes. Or we become sloppier yet, ditching our critical natures altogether when achieving an outcome we want. We neglect our post-mortems; eschewing the autopsy and contenting ourselves with the crudest explanations of why some activity turned out the way it did.

Joshua Foer didn’t become U.S. memory champion because he was endowed with a great memory. Nor was it because he was recipient of a gushing torrent of luck (though luck always plays a role). He achieved the outcome because he considered memory ability holistically, broke it down into a finite set of skills, found techniques for mastering those skills, and then practiced like crazy.

That same methodology can be applied to virtually any set of skills in which anyone wants to get better. It can also be applied to the complex combination of hard and soft skills that compose a craft.

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Demetri Martin SUCCESSWhat Standup Comedians Understand About Success That You and I Don’t

Demetri Martin, the 39-year old standup comedian and alumnus of The Daily Show, published the sketch above in his book, This Is a Book. It’s been making the meme rounds on Twitter for a few months now, finding a welcoming audience among the business illuminati. They are glad to have a champion who can convey the wisdom (with such brevity and clarity) that the path to success is a tangled and circuitous mess, not the simple story that we so often hear of ascension in a straight line.

With these few scribbles, Martin betrays an insight into the nature of success that seems to be best understood – strangely enough – by standup comedians. As we’ll explore below, they must all hone their craft through constant tinkering in the control setting of comedy clubs. The best of them never quit this testing mindset. They allow themselves plenty of little failures. They don’t wrap themselves in the success label, considering it something to strive for continuously rather than a status to defend.

In other words, they don’t get caught up in “being a success.” We’ll call that the success mindset. They keep experimenting, keep pressing the envelope, and keep finding new ways to make their customers laugh.

There is something here to be learned by entrepreneurs and business leaders.

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lucyThe Case for Conscious Capitalism

Next week Austin will play host to a group of executives that label themselves “conscious capitalists.” [See consciouscapitalism.org.] John Mackey, founder and CEO of Whole Foods, will provide the keynote address and suitably so. In 2007 he loaned his influential voice to this movement by penning the missive “Conscious Capitalism: Creating a New Paradigm for Business.”

It’s worth the read, and you can download it here. [pdf] The gist is this:

There is a longstanding prejudice that businesses exist for the enrichment of shareholders. While this is technically true, the notion has been interpreted to mean that corporate managers have the fiduciary responsibility to grab profits whenever they are available for the taking, all other constituencies be damned. It is the investor dominated viewpoint, often ignores the other stakeholders in a business, and it can be obscenely myopic. (See my related article, Whom Does Management Serve?)

It also creates, Mackey argues, a zero-sum game that pits investors against managers, employees, customers, vendors and all other stakeholders. By spending more on employee pay and benefits than absolutely necessary, for example, you’re taking earnings off the table that are the rightful property of investors. If employees win, investors lose.

The Conscious Capitalist movement argues for a different framework for understanding the game of business. Rather than a zero-sum dynamic, it suggests viewing it as a system of interconnected parts. By investing more in employee benefits, Mackey says, you get happier employees who better serve the customer…who then buys more products…which leads to higher profits…which can be shared with investors. Treat all stakeholders in a fair manner and the whole system is hoisted ever higher in a virtuous cycle. The sum of the parts, working in unison, become much more valuable than the individual components.

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Tom Pirelli ESI Baby

I caught Tom Pirelli on his mobile phone one morning last week. He was near his house in Jupiter, Florida preparing his thoughts for an afternoon meeting about his latest venture, (something to do with using therapeutic lasers to manage chronic pain). He immediately strikes me as a man overflowing with energy, though he is not so young anymore.

I learn that he made a noble attempt at a leisurely retirement after selling his software company, Enterprise Systems, 15 years ago. But it would seem retirement did not fit his constitution. He has since started an ambitious foundation to provide better affordable housing options to impoverished communities in Mexico and Haiti. He has worked with USA Rugby, and took great pride in seeing his favorite sport included on the roster for the 2016 Olympics in Rio. And, of course, he has involved himself deeply in this new laser therapy business.

Tom is a success through and through with the sort of bona fides that might just turn a less humble man into a braggart. Yet despite his litany of accomplishments, this is the picture for which Tom is best remembered:

We’ll return to that later…

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Exceptional Business Pic

I’m testing a theory here, the driving question of which is What are the cardinal traits of exceptional software and technology businesses?

The term “exceptional” is as qualitative as it gets. Perhaps we’ll give it more definition as we proceed, but for the time let’s be comfortable with former U.S. Supreme Court Justice Potter Stewart’s threshold test for obscenity: I know it when I see it.

I’m suggesting four criteria and using them as a framework for evaluating various businesses in different stages of development, as early as start-ups and as late as technology that has been retired from companies that have long since moved on. The application for what we learn will resonate most, I think, with young businesses either in their fledgling stages or otherwise still able to mold their cultures and their values.

My early thesis is that the exceptional software and technology companies share some combination of the following traits summarized below in very rough form:

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There are two forms of pricing power: the ability to raise prices and the ability to lower prices. The following is the first of a (two part? three part) series on pricing power as a competitive business advantage.

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The ability to raise prices for your offerings, or demanding a premium over competitive products based on some perceived superiority of your offering, is an excellent indication that your business offers some form of competitive advantage. If you sell clothing, you must be appealing to some fashion sensibility. If you peddle electronic devices, your technology must address some consumer want.

Having the ability to charge high prices can be very nice. Of course you must ask WHY you can charge the high price and whether the cause is defensible and durable for the long-term…or whether it’s fleeting and likely to dissipate with time.

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