Ellison Buys Hawaiian Island

Lanai

Yes, it's true, Oracle CEO Larry Ellison has bought 98% of the Hawaiian Island of Lanai for $500m.  The island was previously owned by David Murdock who bought Dole in 1985.  The island has 3,200 residents, two luxury resorts, two golf courses and is 88,000 acres (141 square miles) in size. 

Here are some alternate headlines & subheads

Ellison Buys Island of Lanai
Declares Bill & Melinda Gates Marriage to be in Violation of Oracle Terms of Service

Says "What Island?  I only wanted a closed off veranda.  Doesn't anyone listen to me?"

Thanks Safra Catz for Really Screwing Customers in Q4

Praises Gates & Buffet for Curing that Malaria Thing

Cost less than Buddy Media Anyways

Plans on Burying 3 Tons of Obsolete Sun Hardware

SAP Announces Intent to Acquire Alcatraz for $600m

Tells 3,200 Residents to Get Cracking on Oracle 12i

Bans Open Source Software

Still Angry About Getting Outbid on Yammer 

To be Renamed LarryLand

Reminds Facebook Millionaires Not To Be Too Flashy

Passes Law Banning Rival Marc Benioff From Ever Wearing Hawaiian Shirts Again

Expresses Enthusiasm for Pineapples and Local Super Skunk


Forbes: Customer Satisfaction

Forbes

A few weeks back, Forbes published a guest editorial I wrote called "Customer Satisfaction by the Numbers" which describes the Zendesk customer satisfaction benchmark we've developed drawing on a survey of 65 million consumers in 137 countries.  Here's a brief excerpt from the article.

As drawn from the survey, the following are global averages across all companies in all industries:

  • Customer Satisfaction rating of 86%
  • 630 inquiries per month requiring human interaction
  • 2,600 customers per month who found answers in self-service forums
  • First response times of 23.6 hours

Generalities may be somewhat interesting, but what companies really care about is how they are doing compared to their peers.

The Best and Worst
Examining customer satisfaction by industry, the survey revealed the top three industries are:

  • Real Estate: 96%
  • IT Services & Consultancy: 95%
  • Healthcare: 94%

The bottom three are:

  • Retail & Wholesale: 82%
  • Social Media: 78%
  • Entertainment & Arts: 77%

...

It may seem surprising to see social media at the bottom of the ranking since social media is truly revolutionizing the way customer service is being delivered. Smart companies are monitoring Twitter and Facebook where customer service fiascos can quickly spin out of control as we’ve seen with such companies as Netflix, Bank of America and Verizon.

Yet, social media companies themselves only have a customer satisfaction rating of 78%. One reason is that they get a huge number of customer service inquiries each month – more than 1,600 on average – and likely are not staffed to handle them. Another reason is that many social media companies use ONLY social media for customer service. Consumers find it frustrating because for some types of problems, live chat, email or even phone, may be more effective for the customer.

You can read the full story "Customer Satisfaction by the Numbers" at Forbes. For those interested in learnign more about the customer satisfaction results, you can get more information at Zendesk.


Fake O'Reilly Covers

Fake bigdata

Here are some of the fake O'Reilly book covers I mentioned in a prior post.  These have been optimized for use as black & white Kindle screensaver wallpaper images.  If you haven't done so already, you can install a Kindle screensaver hack with a couple of downloads. 

Update: I've embedded a slideshow from PicasaWeb, but it requires Flash.  If you don't see it you can click on the links below to go directly to PicasaWeb.


Kindle Screensavers

Kindle slaughterhouse
I picked up a Kindle 3 (aka Kindle Keyboard) a while back and have been thoroughly impressed with it.  I love the fact that I can take half a dozen or more books with me when I travel without taking up a lot of weight or space in my luggage.  While I wish the Kindle used an open standard like ePub rather than Mobi file format, given the large variety of books and reasonable prices, I can live with it.  The only thing I don't like is that the Kindle is essentially a closed system and not very customizable.  Nonetheless, there's a healthy community of open source hacks out there.

If you have a Kindle and are tired of the standard screensaver images of authors, you can install a Kindle screensaver hack with a couple of downloads.  Just make sure you install the right version for your particular Kindle device.

I've posted some Kindle screensaver wallpapers on PicasaWeb of various novelsMad Magazine covers and Infocom game covers.  I couldn't find a good source of O'Reilly book covers, so I created some fake ones.  And there are plenty of other Kindle screensaver wallpapers out there to chose from. 

Enjoy!


Customer Service Revolution?

I posted a guest editorial over at CRM Buyer called "Managing the Customer Service Revolution."  Here's a brief excerpt.

More recently, the social network boom has created a new revolution in customer service. The reach and immediacy of Twitter, Facebook and, now, Google+ has made the voice of the customer an extremely powerful force. Bad customer experiences can quickly snowball into online customer uprisings leading to PR disasters...

As is often the case, tech-savvy startups are the first to embrace new technologies and communication channels. Larger, more traditional organizations are now finding that they need to develop new customer service strategies or else smaller, more nimble organizations may leave them in the dust and take their customers with them.

Interestingly enough, we see a lot of open source and SaaS startups embracing the new model of customer service.  This includes rapidly growing companies like AirBnB, Box.net, CloudEra, CustomWare, DataStax, DropBox, GoodData, GroupOn, Hulu, New Relic, ScribD, Strobe, Twilio, Yammer, Zoosk, Zuora and thousands of others who are using Zendesk to deliver awesome customer service.  I think the reason for this is that companies whose products and technologies are disruptive will often chose disrupt tools in other areas also. 

Check out the full story at CRM Buyer.


From Open Source to SaaS

I'm about to take a week off from my new gig as COO at Zendesk and it got me reflecting on the company and my decision to join.  I stayed with MySQL through the Sun acquisition and left when Oracle acquired Sun.  Although I have a lot of respect for Oracle, it seemed to me the only interesting jobs would be those that report directly to Larry Ellison.  So I took some time off to travel, worked as an EIR at Scale Ventures for a few months and began thinking about what I wanted to do next.

I turned down offers from companies and investors to come in and "repeat the MySQL playbook" in Big Data or NoSQL or apps or whatever.  I think Open Source can be a fantastic development approach and it provides good commercial possibilities when done at scale, but I also felt that it was time to do something new.  And as important as Open Source has been in powering the last ten years of Internet companies, I felt that there was an even bigger force that would play out over the next ten years: namely the cloud.  

While some are quick to dismiss the cloud as a new buzzword for an approach that's been around for a while, I think that's missing the forest for the trees.  I believe the transition to Software-as-a-Service, Platform-as-a-Service, Infrasctructure-as-a-Service will be as profound as the introduction of the PC, client/server or even the browser.  In other words, this is a huge platform shift that will have profound effect on businesses and individuals.  It may take some years to play out, but from my perspective, cloud is where the excitement is.

When I joined Zendesk back in December it was already a strong business.  The founders Mikkel, Alex, Morten had built a phenomenal business.  They got to over 7,000 customers worldwide without a sales team!  That's the kind of adoption that makes open source guys envious.  And I don't mean just free users; these are paying customers including the likes of Cloudera, DataStax, Dropbox, Groupon, Hulu, MSNBC, Neilsen, Rogers Communications, Rockstar games, SAP, SmugMug, Zappos Insights.  Equally importantly, the company has developed a customer-oriented culture.  Zendesk enables the fastest way to great customer service.  It's not just a motto, it's a way of life at Zendesk.  And we love our customers!

In the last six months, the company has delivered tremendous innovation and is now recognized as the leader in cloud-based help desk software.  Recent innovations include: integrations with Salesforce.com, SugarCRM and Atlassian JIRA, advanced reporting and analytics with GoodDataTwitter integration, mobile versions for iPad, iPhone, Android and Blackberry, and a new open API for sharing tickets.  The NetworkedHelpDesk API allows you to share support tickets across teams, organizations or applications with support from more than two dozen software companies.  

Zendesk now has more than 10,000 customers in more than 100 countries worldwide with revenues quadrupling last year.  The company also has funding from Benchmark capital, Matrix Partners and Charles River Ventures enabling us to develop a deep bench of technical talent and a superb management team.

I'm tremendously proud of what we've been able to do over the last couple of quarters.  And I'm even more excited about all the innovations planned in engineering over the next six months.  This is the most fun I've had since the early days of MySQL!  This is one heckuva exciting time to be in the software business.


Open Source & Interactive Fiction

One of the amazing things to me is that the Internet has enabled the development of very far-flung communities.  Social, media, music or other interests that might be of interest to only a handful of people can now attact a global audience and foster greater partcipation than ever before.

One of these odd-ball communities that I happen to be interested in is Interactive Fiction.  (Or for those who have been around for a long time, think of old-school text adventure games.)  Somehow the likes of old games like Infocom's Deadline or The Witness fill me with nostalgic memories from the 1980s.  

And oddly enough, there continues to be a thriving community developing new Interactive Fiction games.  This is largely due to open source efforts that reverse engineered and ported Infocom's Z-Machine interpreter architecture to modern machines.  Games written in the 1980s now run perfectly fine on the latest interpreters for Windows, Mac, Linux, iPhone, iPad and Android platforms.  And this in turn begat the development of newer virtual machines and domain specific programming languages like Inform and Tads, Adrift and Alan that enable the development of new games.  

If you're at all curious, I encourage you to check out some of the games that are available at IFDB.  There's also a thriving community several annual game competitions.  IntroComp kicked off this week and there are more than a dozen games published there, including my own Infocom-tribute mystery story, The Z-Machine Matter.


Q&A with Nicolas Pujol on The Mind Share Market

Mind-share-market-book

Here's an interview with Nicolas Pujol who has written an excellent new book called "The Mind Share Market."  Nicolas and I were colleagues at MySQL for several years and we often discussed the role of our free open source product as a way to gain market share in the commercial sector.  In MySQL's case, our goal was to be the #1 choice for web developers worldwide both in the free and the commercial market.  Over the years, the notion of having a free product has transcended Open Source and now has many more applications in other markets.  It can be quite a challenge to figure out the right way to commercialize a free product.  Nicolas tackles the issue head on in his new book.


Q. What was your role at MySQL?

I joined in 2004 to develop partnerships for the company, which included two main activities. The first was the integration of MySQL (as a product) with third party technologies. The idea is that a piece of enterprise software needs to work with other popular components. This work is usually done by product management teams in each company. You need to be on people’s technical roadmaps and supply them the tools to do the integration. The second goal was Sales channels. We found relevant channels that distributed and resold the company’s commercial offerings. The idea there is to augment the direct sales force while avoiding channel conflicts. After 6 years, we had 1,200 active partners and one third of the company’s bookings coming from channels.

 

Q. What prompted you to write a book?

It is the concept of standalone value: being able to create value before a commercial transaction happens. It’s a fundamental shift in society and in business. Most entrepreneurs are capitalist at heart and believe in meritocracy. But unfortunately, the system generates inequalities that end up as a burden for governments and non-profits to deal with. The fascinating aspect of open source (and generally speaking, “free vs. paid” business models) is that they are both hyper competitive and generate social value. They make businesses stronger and generate incremental value to customers through productive marketing. Michael Porter has a related (but different) concept of Shared Value. If you look at existing literature, authors who tackled the subject of Free and scarcity are those who researched barter exchange, and recently, Chris Anderson. There are also scholars: Marshall Van Alstyne, Geoffrey Parker, Andrei Hagiu, Jean Charles Rochet in the field of economics. I wanted to tell the stories of these game changing businesses to a general audience and from the viewpoint of a practitioner. 

 

Q. Open source has a notion of "free" (gratis) and also "freedom" (liberty).  What elements of open source are applicable to other business models and what elements are not?

“Gratis” easily transfers outside of open source: a company can simply set a zero price. It can be done with a commercial license, a freemium upgrade path, a two-sided platform or more humoristic methods called tying (“it’s free if you pay”).  Freedom is more nuanced, because it relies on the contract between parties on what intellectual property can be shared. There are over 60 open source licenses, and other ways to grant rights to users under commercial rights. But if you want the freedom of open source, by necessity you’ll want to pick one of these licenses.    

 

Q. Is free really a viable business model?  It sounds so 1999.  Today there are companies trying to give away so much stuff for free just to get traction.  At what point does it just become a race to the bottom?

If you look at Free from a broad perspective, it’s a model that has been practiced for thousands of years as barter and non-monetary transactions. The expression “the free lunch” dates back from 1891, and was first documented by Rudyard Kipling one day he stopped at a bar in San Francisco. It’s in the late 1800s that newspapers pioneered ad-funded models and blazed the trail for the radio, the television, and 1999. Generally, when customers receive something at no cost, they give their mind share to the provider in exchange for value. Mind share is the currency used (hence the name of the book).  This initial transaction plants the seed for commercial ones. Races to the bottom happen when companies no longer have something unique to offer. Software has no marginal cost, so giving it away doesn’t hurt you as long as you have something complementary to sell. When you build with Free from the ground up, there is little risk of margin compression. The main risk is to not get traction. It’s trickier when an established business has to introduce an entry level product as a defensive move.  But it can be done. Your question raises a broad topic. To stop at a short answer, consider that the largest company by market value today is Exxon, which ironically, sells a commodity. 

 

Q. What are the top things a company should keep in mind as they try to build a high-volume business?

One is finding out a problem that many people will face in the future, and coming up with a solution that everyone can afford. People say that one should skate where the puck is going to be. There is some truth to that. The other consideration is that before high volume, there is a first step in acquiring low volume. It takes a lot of hard work but it’s critical to get initial traction. In my experience, high volume happens when customers tell their friends a product is great and word of mouth kicks in. Customer experience and service is very important as a result. But for this to happen, the product must fit the needs of the customer’s friends. That’s the crux of the matter. 

 

Q. With so much content available free on the web, shouldn't your book be free?

The idea of “free vs. paid” is to have two versions of your work that are not equivalent. Many authors make their works available to everyone through a personal site, through conversations with journalists, and sometimes through academic and technical research documents. When looking at how others shared their work, it seemed like the way to go. I’m in the process of getting these resources out at the moment. There are currently 2 SSRN scholarly papers and a few interviews with experts like you. The book illustrates the concepts with experiments, philosophies, case studies and a short story. 

 

While I don't agree with all of Nicolas conclusions, it's an interesting take on how free products can help drive mindshare. If this is an area you're exploring in your company, whether via Open Source, Freemium or some other model, I encourage you to take a look at The Mind Share Market.


Zack Urlocker is Chief Operating Officer at Zendesk, a cloud-based help desk provider.  He was previously the Executive Vice President of Products at MySQL where he was responsible for Engineering and Marketing and helped grow the company to $100 million in revenue.  Urlocker is an investor, advisor and board member to several software companies. 


Q&A with Stephen Baker of "Final Jeopardy"

Final jeopardy

IBM's Watson natural language Question & Answer system made headlines recently with its primetime debut on Jeopardy.  Despite a few embarassing answers, Watson trounced top Jeopardy players Brad Rutter and Ken Jennings.  Watson is built from 90 IBM Power 750 IBM Linux servers with 16 terabytes of memory providing 80 Teraflops of processing power.  Watson is perhaps the most famous "Big Data" systems out there.  Watson's knowledge base consists of 200 million pages of text data that is pre-processed using Hadoop and uses 4 terabytes of on-disk storage.  What makes Watson unique is its ability to process questions in realtime assigning confidence levels to its answers.  While Watson's not necessarily true machine intelligence, Watson does a good job of demonstrating how computers can complement human intelligence.  

Stephen Baker, former writer at BusinessWeek, was on hand observing the team and has written Final Jeopardy to chronicle IBM's efforts.  The book was published before Watson's appearance on Jeopardy and then finished in the days that followed on.  I did a short Q&A interview with author Stephen Baker to get his take on this project.

Q. How did you get involved in Final Jeopardy

I had finished The Numerati and was back at BusinessWeek, looking for the next book project. BusinessWeek was in the process of dying,  (Bloomberg bought the remains) and I had requested to be let go in the transition. A few weeks before that came, I was having lunch at IBM and heard about the Watson project. It seemed like a dream for me: a story to tell with a championship match at the end, and really interesting computer issues to boot. My only fear was that some other writer must already be writing the book. I was enormously relieved when I found this wasn't true. 

Q. What was the biggest surprise in covering this story?  

That computer scientists can be so utterly captivated by language. You know, a lot of us divide the world into halves, the number people and the word people. I sometimes fall into this. But when you spend time with a team that's trying to train a machine to make sense of English, you see computer scientists dissecting the language with a precision that probably surpasses the most dedicated (and neurotic) English Phds at Ivy League schools. And what's especially interesting is that they cannot afford to focus on theory. They have to study the statistics of how we actually communicate--and then use them to program the computer.

Q. Given IBM's involvement were you able to tell the story you wanted to tell, or was there an approval process on what you wrote?  

I could write whatever I wanted. They didn't demand any pre-approval. (Jeopardy actually appeared more concerned about these issues, and I had to send them a long list of "facts" about Jeopardy that appeared in the book. No such issues with IBM. I think they had confidence in the machine, and even if it lost in the final match, which was always a concern, readers would see a team at IBM taking computing to a new level.

Q. Cynics might argue that Watson's ability to deal with Jeopardy questions is really little more than a parlor trick, akin to old school interactive fiction games like Infocom's Zork or Hitchhiker's Guide to the Galaxy and not a true measure of intelligence or perhaps not even useful.  What's your perspective on this?  

Look, the Jeopardy game was a contrivance, and IBM chose the game in part because it came with a national audience with millions of viewers. That much is given. What's more, you could argue that it is not a test of intelligence, since the machine doesn't really understand the answers it's bringing back, and cannot draw conclusions from them. But I'd say to look at the results. IBM's computers struggled four years ago to answer much more ordinary natural-language questions in annual competitions. Their machine got about one of three right, and they were among the top performers. Building a Jeopardy machine was a huge advance in the domain of question-answering. As far as the usefulness, having machines "read" millions of documents and bring back answers, each one scored for its level of confidence, will be extremely useful--and even disruptive--in a number of industries. Whether or not the technology comes from IBM or its competitors, or whether the Watson platform itself will play a role, is still open to question.

Q. As I read "Final Jeopardy" I'm reminded occasionally of Tracy Kidder's 1981 book "Soul of a new machine."  Of course that's quite a long time ago now and the computer they build has less power to it than my iPhone 4.  But Data General was an underdog at that time and the Eagle project was essential for the company to survive.  In the case of "Final Jeopardy" how do you create drama around a company as established and successful as IBM? 

Most of the drama centered around whether the IBM team could take a dumb machine that played Jeoaprdy at the level of a fifth grader and turn it into a champion--and then whether or not it could actually win. So while Soul of a New Machine was a corporate drama, this was a little closer to sports. There was also some drama in the conflicts between IBM and Jeopardy, which was basically a tug of war between science and Hollywood.

Q. What was your schedule like to finish the book?

I got contract for the book on January 26, 2010. I agreed to deliver the first third to my editor by the end of June, the second third by the end of September, and the rest--minus the final chapter--by Nov. 7. During much of the time I was rewriting the beginning and reporting the end at the same time. All of those chapters went into production in early December. I reported on the final match on Jan. 14 and wrote the final chapter over the following weekend. The partial ebook came out on Jan 26, 2011, one year to the day after receiving the contract. So it was a quick turnaround. I would expect that schedules like that will become the norm. The book industry has to speed up. 

Q. How did you feel about releasing the eBook version on Amazon before the final chapter was finished?  

I was happy to release the ebook early. It was new, and it wasn't seamless. Some of the people who bought the partial ebook didn't get the final chapter until a few days after the match. But I would imagine that those who read through Chapter 10 before the match might have enjoyed the show more, since they knew the cast of characters--including the computer. What's more, I think more books are going to be published this way, in dribs and drabs. So it was nice to be the first.  

Zack Urlocker is Chief Operating Officer at Zendesk, a cloud-based help desk provider.  He was previously the Executive Vice President of Products at MySQL where he was responsible for Engineering and Marketing and helped grow the company to $100 million in revenue.  Urlocker is an investor, advisor and board member to several software companies. 


Behind the Scenes at a Venture Capital Firm

Ventures

Last fall, before I joined Zendesk, I took a role as an Executive-in-Residence at Scale Venture Partners. A lot of people asked me about this, so I've written an article at GigaOm that describes my thought process and what I ended up working on.

While there are as many variations on the EIR position as there are venture firms, there are two flavors, generally speaking: Entrepreneur-in-Residence and Executive-in-Residence. Most firms have some experience with Entrepreneur-in-Residence programs. Essentially, they give office space, coffee and food to a proven entrepreneur so he or she can spend a few months researching or prototyping a new product or service...

I’m not the inventor type, and I didn’t want to just “hang out” at a venture firm to look at their portfolio companies, so I proposed doing a specific research assignment with Scale Venture Partners. Scale typically invests in late-stage Series B or Series C companies, which made it a good fit. I am good at scaling companies, but I don’t know that I’m any better at predicting which Series A investments will thrive than anyone else.

The key area of my research was to analyze some specific developments around Software-as-a-Service (SaaS), big data and NoSQL. This entailed studying the technologies in this area, understanding the optimal use cases and speaking to a broad range of customers and prospects to see what was actually happening in the marketplace and what patterns were starting to emerge. I also worked with the senior partners at Scale to determine how to keep them up-to-date with my findings and how the results would fit into their overall software investment strategy. The important takeaway was that a venture firm is not a research house. At the end of the day, they would measure the success of this effort by whether it helped them make better investments.

While I could have done my research on my own, it was helpful to have an office to go to, access to research materials and introductions from the Venture partners to companies that were using some of the new technologies. While I was primarily focused on pursuing my research, I also gave the investors my perspective on a couple of portfolio companies.

Working as an EIR was one of the most interesting projects I've done.  While it was a short, concentrated time, it exposed me to some new ways of thinking about managing the growth of a software company and how to think like an investor.  The contacts I made were also invaluable.

You can read the full article over at GigaOm or a slightly expanded version at Scale Venture Partners' site.  The full version also includes some tips for those who are thinking about an EIR role and how to determine the best match with your own needs.  

Zack Urlocker is Chief Operating Officer at Zendesk, a cloud-based help desk provider.  He was previously the Executive Vice President of Products at MySQL where he was responsible for Engineering and Marketing and helped grow the company to $100 million in revenue.  Urlocker is an investor, advisor and board member to several software companies.  He's also an occasional marathon runner and blues guitarist.