VC blogs to follow:

• Both Sides of the Table Mark Suster
• A VC blog  Fred Wilson
• FeldThoughts Brad Feld
• Mendelson’s Musing Jason Mendelson
• Seth Levine ‘s VC Adventure Seth Levine
• BRYCE DOT VC Bryce Roberts
• Ask the VC Foundry Group

Some interesting links to follow for whom is interested inVenture Capital and Entrepreneurship.

• Raising Venture Capital, from the Both Sides of the Table blog Mark Suster
• MBA Mondays,  from A VC blog by Fred Wilson
• Term Sheet series , from  FeldThoughts by Brad Feld

The Big Idea: Before You Make That Big Decision… is a very interesting article appeared in HBR, issue June 2011. Authors are Daniel Kahneman, Dan Lovallo, and Olivier Sibony. Daniel Kahneman was awarded the Nobel Prize in Economic Sciences in 2002 for his work (with Amos Tversky) on cognitive biases. Dan Lovallo is a professor of business strategy at the University of Sydney and a senior adviser to McKinsey & Company.  Olivier Sibony is a director in the Paris office of McKinsey & Company.

The article is well written and describes different cognitive biases that influence and “biases” our decisions. The objective is to make us aware that cognitive biases exist and to provide help to recognize,  and eventually avoid them.

The authors provide a quick list of questions that we should ask ourselves before making big strategic decisions:

Excellent article, read more at The Big Idea: Before You Make That Big Decision…

And Daniel Kahneman latest book is forthcoming, October 25 Thinking, Fast and Slow

creating a startup is not an easy task, that’s why it is important to learn from people that have already experiences.
A good blog post is from Evan Williams, creator of Blogger (acquired by Google) and Twitter.
His Ten Rules for Web Startups is a must read.

The ten rules are (with short excerpts):

1. Be Narrow. Focus on the smallest possible problem you could solve that would potentially be useful.  If you get to be #1 in your category, but your category is too small, then you can broaden your scope—and you can do so with leverage.
2. Be Different. There are lots of people thinking about—and probably working on—the same thing you are. And one of them is Google.  Second, see #1—the specialist will almost always kick the generalist’s ass.
3. Be Casual. If you want to hit the really big home runs, create services that fit in with—and, indeed, help—people’s everyday lives without requiring lots of commitment or identity change.
4. Be Picky. Another perennial business rule, and it applies to everything you do: features, employees, investors, partners, press opportunities.
5. Be User-Centric.  User experience is everything.
6. Be Self-Centered.  Create something you want to exist in the world.
7. Be Greedy It’s always good to have options. One of the best ways to do that is to have income.
8. Be Tiny.
9. Be Agile. Many dot-com bubble companies that died could have eventually been successful had they been able to adjust and change their plans instead of running as fast as they could until they burned out, based on their initial assumptions. Initial assumptions are almost always wrong. That’s why the waterfall approach to building software is obsolete in favor agile techniques. The same philosophy should be applied to building a company.
10. Be Balanced. Nature requires balance for health—as do the bodies and minds who work for you and, without which, your company will be worthless.
11. (bonus!): Be Wary. Overgeneralized lists of business “rules” are not to be taken too literally. There are exceptions to everything.

Other good learnings come from Guilhem Bertholet, a serial entrepreneur, who founded and ran the startup incubator at HEC Paris, a top-ranked European business school for three years. You can read more from the Business Insider article What I Learned After 3 Years Mentoring Over 80 Startups or from his post in French.

The advises with short excerpts are below:

1. Develop a vision. it’s important to be able to look to a bigger horizon, to have a “mojo” which gives personality to the company.
2. Know (and love) your key metrics. You can’t win if you don’t measure. From day one, even if your numbers are flat, it’s incredibly important to understand what are the important metrics for your business.
3. Run fast (for a long time). If you think you can be “successful” in 6, 12 or even 18 months, you’re wrong. In reality, it’s likely that the first 12 to 18 months will only be laying the foundations.
4. Always be positive. Always.
5. Stay focused and avoid distractions. Show some willpower and cut out anything unnecessary.
6. F—ing do something! Instead of spending your time thinking, test a bunch of things out, always be doing something.
7. It’s all about people. It’s hard to really be by yourself to start a company. Whether it’s co-founders, employees, freelancers, partners, peers…
8. Learn to fail. Failing is good.
9. Celebrate (even small) victories.
10. Sell your project to your relatives. It’s fundamentally important that your close friends, family and loved ones be behind you 100%.
11. (Do not) listen. This is what’s most paradoxal. You’re going to have to learn to listen, to open your ears, and to draw deep from the experience of others. But you also need to learn to not let others influence you too much.
12. Know when to pull the plug. Life is long! ..sometimes, you need to just end it, figure out what went wrong, and get back in the saddle and do better.

It is not really defined whether the vertical or modular approach is the winning strategy for the latest smartphones war.

In the video below you can find an authoritative point of view for the vertical approach, Steve Jobs keynote MacWorld Expo 2000:

other great videos from Jobs are at the FastCompany website: How Steve Jobs’s Early Vision For Apple Inspired A Decade Of Innovation

a great speech by Chris Anderson on how the ubiquity of sensors are going to change our lives.
The Hawthorne effect:

• People change their behevior, often for the better, when they are being observed.
• Now we can observe ourselves.

The New Cybernetics:

• Observations change behavior
• Sensor make them automatic, real time
• Connecting people and data increases statistical power, add competitive/game dynamics

Chris Anderson speaks at TEDx Silicon Valley 2011 from TEDx Silicon Valley on Vimeo.

The platform-based smartphone competition is moving at a fast pace and a lot of recent events are changing and shaping the competitive environment. We have seen several platform victims: Symbian,  MeeGo (maybe),  Windows Mobile, Kin.

The latest victim is WebOS, in the Third Quarter 2011 Results, HP press release states:

• “..shutting down operations for webOS devices and exploring strategic alternatives for webOS software”

Adding: HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward.

It was April 28 2010, when HP acquired Palm for $1.2 Billion and this is the press release:

The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

And just a few days ago, August 15 2011 Larry Page, Google’s CEO writes Supercharging Android: Google to Acquire Motorola Mobility. Google, an Internet company acquires a smartphone HW company. The article on the NYT Google to Buy Motorola Mobility for $12.5 Billion.

There are some interesting questions. Is the modular platform approach offered by Google with Android inferior to the integrated approach used by Apple? Android has been a great success story and it is basically dominating the smartphone space in terms of market share. It is hard to argue that is not successful. However, Horace Dediu in one of his articles (appeared on HBR Google’s Strategic Mistakes Drove Motorola Buy) writes that some cracks started to appear in the Android strategy.

The mistakes mentioned in the article are:

• Issues with intellectual property in Android caused some licensees to have to pay royalties to patent holders, increasing the cost.
• Fragmentation took hold where some versions of the software were used by some licensees on some products without the option or incentive to upgrade
• Finally, some vendors modified the software resulting in missing features or inconsistent user experiences — even to the extent that Google’s own services were omitted.

At the moment is not really clear Google’s motivations behind the acquisition. Is Google entering the HW business, or is just interested in Motorola’s patents, or maybe a combination of both?  Certainly, being a licensor and a licensee is not really a good thing, and if we can learn from history, this was one of the problems with Symbian.

Horace Dediu at asymco.com comments the acquisition in the HBR article and in a podcast , The Critical Path Acquisitions Episode #4.

Another well written piece on the acquisition is Michael Mace Google and Motorola: What the #@!*%?

So, is vertical integration the way to go in the mobile industry? GigaOM writes Now common in 5 of 6 mobile platforms: total control “The mobile market is shifting away from the platform licensing model as the top companies are instead looking to replicate Apple’s business model”.

At the moment 3 mobile platforms come from a single company controlling the full integration of HW and SW. Apple iOS, RIM BlackBerryOS  (and later with QNX), Samsung (Bada). Nokia  will replace Symbian with Windows Phone.  HP  with WebOS has just given up the battle.  And 2 other mobile platforms are modular, and are Android and Windows Phone.

The FT writes Vertical Success requires more than just Motorola:

““Verticalisation” is an ungainly word for what has become a highly fashionable trend in the tech world. With Google slapping down $12.5bn in cash this week to buy Motorola Mobility, the idea just received another big boost. But like many business fashions, there is a risk that this one is about to become an uncontrollable bandwagon – with unhappy consequences.

..

Nor has a vertically integrated approach proved to be a panacea in the smartphone business. Palm’s stumbles over the years, and the troubles of BlackBerry maker Research in Motion, point to the difficulty of mastering all the skills needed to create a hit product. Even Microsoft dabbled in going vertical as it struggled to catch up with the iPod, and later the iPhone – but all it could come up with were marginal products like the Zune music player and short lived Kin phone.”

And Nokia with Symbian..

It is not really clear what’s the successful path to smartphone platform competitive advantage. Vertical integration provides advantages, but as the industry mature, the theory says that the modular approach is the way to go.

For a theoretical back ground on vertical integration, see my the older posts:

• Vertical integration and vertical disintegration
• Vertical integration and vertical disintegration II

In this smartphone highly competitive environment, everything can happen and in a very short time. Nokia is exiting the software business, Google is (probably) entering hardware business and HP is exiting the hardware business. What’s the next?

Jeffrey Dyer, Hal Gregersen and Clayton Christensen have just published the book The Innovator’s DNA.  The book, based on several interviews with entrepreneurs and persons considered innovators in their field, comes out with 5 different skills and behaviors that make these people different from the rest.

The five discovery skills identified are:

• Associating—drawing connections between questions, problems, or ideas from unrelated fields
• Questioning—posing queries that challenge common wisdom. Innovators are consummate questioners who show a passion for inquiry. They frequently challenge the status quo, just as Jobs did when he asked, “Why does a computer need a fan?”. They love to ask, “if we tried this, what would happen?” Innovators, like Jobs, ask questions to understand how things really are today, why they are that way, and how they might be changed or disrupted.
• Observing—scrutinizing the behavior of customers, suppliers, and competitors to identify new ways of doing things
• Networking—meeting people with different ideas and perspectives- Rather than simply doing social networking, they actively search for new ideas by talking to people who may offer a radical different view of things.
• Experimenting— Innovators are constantly trying out new experiences and piloting new ideas. They visit new places, try new things, seek new information, and experiment to learn new things.

Why? The authors found two common themes. First, they actively desire to change the status quo. Second, they regularly take smart risks to make change happen.

The learning. Some people are more innovative than others, however, anybody can improve their skills by focusing on the identified behaviors.

Machines that sense the environment, thanks to sensors and components like Arduino, and transmit the information over the Internet are becoming increasingly popular. They can post their “status” on Facebook or Twitter. For example,  your scale can tweet your weight, you can get updates on the tide level in Cape Cod or the air pollution in Beijing or get tweets from your plants when they are thirsty.

Some people define this concept as Internet of Things, see a Google search for the different definitions.

McKinsey Quarterly writes in March 2010 More objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks.

Fred Wilson wrote on his blog a post titled Things That Tweet :

It got me thinking about things that tweet (like weather vanes, refridgerators, traffic lights, etc) and their role in the land of social media. I believe that devices and sensors that broadcast their data via social media channels are an important source of social data and engagement. And for some reason, they are way more common on Twitter than any other social platform.

These devices feel and communicate creating a social conversation around the data and the updates they convey. These machines can transmit data but they can also reply and communicate (M2M Machine to Machine communication). They can also create an environment that react, adapt and respond to us – and perhaps more importantly – each other.

Not only Fred’s post gave a good point of view, the comments in the post added a lot of value.

Gonzalo Garcia-Perate, writes in the comments (edited: I have added further links):

At a macro level you have people like IBM with their Smarter Planet initiativehttp://www.ibm.com/smarterplan… trying to build value out of data streams (potentially) coming out of cities to create new types of intelligent services for cities. GE, Philips, Cisco etc all have similar initiatives.

At a smaller scale you have lots of new companies innovating and creating new product and service propositions based on the idea of objects communicating. Some over twitter others over their own proprietary and open networks and protocols. In this space there are two main types of companies, middleware and appliances.

In the middleware camp you have people like the recently acquired Pachube https://pachube.com/ and many others like IOBridge and Thingspeak,http://iobridge.com/, http://www.thingspeak.com Twingz, http://www.twingz.com (not sure what is this) Open sense, http://open.sen.se/ Simplio,http://www.symplio.com/product… ThingWorx, http://www.thingworx.com/, http://yaler.net/, https://www.thingspeak.com/,http://twingz.com, etc etc etc

At the appliance level there are many small and not so small companies that are exploring the IoT (Internet of Thins) space. See Nike + http://www.apple.com/ipod/nike… Vitality Glowcaps http://www.vitality.net/ Wifi scale and body monitors by Withingshttp://www.withings.com/ fitbit http://www.fitbit.com/, greengoosehttp://www.greengoose.com/, www.plantsense.com, http://paraimpu.crs4.it/,  http://web.media.mit.edu/~tad/htm/tripwire.html, http://blogs.fluidinfo.com/fluidinfo/2010/11/23/watering-a-peace-lily-with-fluiddb/

Andy Stanford-Clark (@andysc ) of IBM has been doing a lot of work to use twitter with various devices and things (see the links about his twittering house or the Isle of Wight ferries off http://stanford-clark.com/).

Some reports from Q2 2011.

• IDC Worldwide Mobile Phone Market Grew More Than 11% in the Second Quarter; Feature Phones Decline for First Time in Almost 2 Years

Highlights from the report:

Vendors shipped 365.4 million units in 2Q11 compared to 328.4 million units in the second quarter of 2010. The feature phone market shrank 4% in 2Q11 when compared to 2Q10. The decline in shipments was most prominent in economically mature regions, such as the United States, Japan, and Western Europe, as users rapidly transition to smartphones.  ”Stalwarts such as Nokia are losing share in the feature phone category to low-cost suppliers such as Micromax, TCL-Alcatel, and Huawei.”

Top Five Mobile Phone Vendors, Shipments, and Market Share, Q2 2011 (Units in Millions)

• Strategy Analytics: Apple Becomes World’s Number One Smartphone Vendor in Q2 2011

Highlights:  According to the latest research from Strategy Analytics, global smartphone shipments grew an impressive 76 percent annually to reach a record 110 million units in the second quarter of 2011. Both Apple and Samsung overtook long-time volume leader Nokia for the top two spots in our rankings.

• Nielsen In U.S. Smartphone Market, Android is Top Operating System, Apple is Top Manufacturer

Highlights:  According to June data from Nielsen, Google’s Android operating system (OS) now claims the largest share of the U.S. consumer smartphone market with 39 percent. Apple’s iOS is in second place with 28 percent, while RIM Blackberry is down to 20 percent.

• Horace Dediu at Asymco.com Apple captured two thirds of available mobile phone profits in Q2

Highlights: The story remains largely unchanged from last quarter: Three companies which captured 11% of the profits before the modern smartphone era started (four years ago!) now capture 84% of the profits. Only one global brand phone vendor selling non-smart voice-oriented feature phones is still profitable however, as we shall see later, the only reason profits still exist for any vendor is due to the strength of their smartphone portfolio.

• Gartner: Sales of Mobile Devices in Second Quarter of 2011 Grew 16.5 Percent Year-on-Year; Smartphone Sales Grew 74 Percent

Highlights: ZTE Became Fifth-Largest Mobile Phone Manufacturer and RIM Dropped to No. 6to Gartner, Inc. (see Table 1). Sales of smartphones were up 74 percent year-on-year and accounted for 25 percent of overall sales in the second quarter of 2011, up from 17 percent in the second quarter of 2010.“Smartphone sales continued to rise at the expense of feature phones,” said Roberta Cozza, principal research analyst at Gartner.

Table 1

Worldwide Mobile Device Sales to End Users by Vendor in 2Q11 (Thousands of Units)

Source: Gartner (August 2011)

Google and Apple are the obvious winners in the smartphone ecosystem. The combined share of iOS and Android in the smartphone operating system (OS) market doubled to nearly 62 percent in the second quarter of 2011, up from just over 31 percent in the corresponding period of 2010 (see Table 2). Gartner analysts observed that these two OSs have the usability that consumers enjoy, the apps that consumers feel they need, and increasingly a portfolio of services delivered by the platform owner as well.

Table 2
Worldwide Smartphone Sales to End Users by Operating System in 2Q11 (Thousands of Units)

Source: Gartner (August 2011)