Monthly Archives: October 2002

Last week there was a

Last week there was a DDOS attack on the thirteen root Internet servers in Washington. Nine of them went down before it was detected. No one is talking about it, but terrorism is possible in cyberspace like anywhere else. It’s a good time to have Edgeos (http://www.edgeos.com/services/referral/referral.php?ref=69) test your network for vulnerability. Edgeos is a low-cost, high-efficiency way to make sure your network stays protected from all security threats — not just viruses. If you sign up and I get five bucks from the referral program, I’ll use it to buy you a frappacino at Starbucks 🙂

Businesses are stupid about energy, unless it vanishes completely, as happened in California during the summer of 2001. You would think that energy costs would be an item of interest to companies trying to generate some profits in a down economy. Almost every business, whether industrial or retail, uses energy — if only to cool those fitting rooms in August so Arizonans can imagine buying winter clothes, and heat them in December for New Yorkers buying cruisewear. And energy use can be planned and controlled, if you know what you are doing. Yet energy is the last thing on everybody’s mind, until they are staring directly at an unexpectedly 2x utility bill or participating in rolling blackouts.

Why? Because, as we have learned by watching the Enron hearings, there’s a conspiracy to keep us “in the dark” about energy –how much we are using, where we are using it, and how we can cut down and save money (and natural resources). Very few people feel competent to read a utility bill: most people don’t even know what they are being charged for. Several years ago, a school district in Arizona discovered by accident during a random bill audit that it had been paying the electricity for a golf course facility nearby. Another municipality saved $200,000 just by monitoring the times during which its water treatment plants used electricity.

In a business, you can often lower your costs by changing the rate plan you are on, but most people don’t know that either. Energy management companies have made fortunes by installing expensive control systems and sharing the cost savings with their customers. And all the control systems do is turn the lights and HVAC on and off. For small businesses who can’t afford to invest in the fancy hardware, it might be good to know whether changing out a few light bulbs for fluorescents could add to your bottom line.

In a deregulated environment, people are forced to know more, because they have to make choices about how to buy electricity. Although a few states have deregulated, causing confusion like California’s, others are still in an environment where the utility company has a virtual monopoly on the customer. Either way, the energy consumer is not a smart consumer, especially if he hasn’t got access to a multi-million dollar control system.

I predict that this is about to change. Web-based energy management applications can put power in the hands of the consumer and take it out of the hands of the utility. This isn’t any different from medical information or real estate listings –both of which used to be mysteries controlled by professionals, and are now open books for anyone who wants to be informed.

Some utility companies are already trying to be ahead of the power curve, allowing consumers to log on and see their bills. In Phoenix, Salt River Project is beta testing such a service for consumers. However, in SRP’s offering, there’s no way to see how changes might affect costs: no scenario-building capability.

And why not? Because at the beginning of the shift from supplier power to consumer power, where we are now, this is a tough sell, even to consumers. It��s a tougher sell to businesses. It’s as if no one wants to know, because knowledge might beget work. Or process change. Or retrofits. Or discarding old habits.

We have been associated with KnoWatt (www.knowatt.com), an energy management information service that provides a web-based “virtual submetering service”; it tells exactly when and how you are using electricity and helps you create scenarios to see what you’d save if, for instance, you shaded the west side of your store.

Every day I go to a west-facing Starbucks store in Phoenix, Arizona that is always too hot or too cold as the manager tries to operate the air conditioning without information. I asked her if I could “give” her the service on a trial basis. She thought it was a good idea, so I called the corporate offices of Starbucks to tell them I had an answer for her problem. That was six months ago. We’ve already been through the summer, and no one even called me back.

I did the same thing with Discount Tire Company, a local business that changes tires in outdoor bays. Not even enough interest to set up a meeting, although cool air leaks out of their facilities like it does out of a flat tire. They are in the middle of building a new corporate headquarters, so they don’t have time to talk about energy.

I wonder what it will take to make people sincerely care about energy conservation. In some states, it will be de-regulation, and prices that are market-based. In states like Arizona, which recently put de-regulation on hold, it will be the next utility rate increase — scheduled for 2004. Hold on to your hat! The utility companies have spent a pretty penny getting ready for de-regulation, and they’ll be passing that on to you and me.

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Crystal Ball

Last week was Gartner’s annual symposium and IT Expo. For those of you not in IT (information technology), this is a mutual admiration society of professionals in the field and their enterprise customers — the people who purchase technology research from Gartner. Although the IT market has been lousy, Gartner still retains its influence, and quite often it can make things happen simply by predicting them. (In fact, that’s one of the reasons its clients hire the firm to do research). In the past, the Gartner seal of approval has provided good butt cover for the CIO or CTO looking to buy some new gear or deploy expensive software.

In some cases, Gartner’s predictions are so obvious that one wonders who the audience is for them: perhaps there is a community of sleeping beauties out there who are unaware that over the next decade, Moore’s Law will continue to hold, bandwidth will become more cost effective than computing, there will be a further consolidation of vendors, and most organizations will reap the benefits of applications that stretch across companies. Certainly *we* all knew that already. Who’s we? The people who make the information technology stuff; the people who buy the stuff; the people who write about the stuff. If we don’t know, we deserve to bring products to market that no one needs, pay too much for those software licenses, and draw the ire of our readers. The technology community is still very small (and uninteresting to the larger world outside) and probably doesn’t really need Gartner to make predictions at all. And the outside world is largely unaware of Gartner’s predictions.

However, there are some interesting social consequences that fall, either intended or unintended, out of those predictions. One is that we will finally reap the full benefits of technology through collaboration. Collaboration will make for more efficient supply chains, better customer service, greater transparency into earnings, and everything else its evangelists promise.

While the gains in productivity will undoubtedly increase profits ‘ finally–the down side is that we won’t need all the workers we currently employ. Thus, alongside productivity improvements, Gartner sees a shrinking workforce. As in agriculture, technology will reach a point where system automation substantially lowers labor requirements. Gartner’s strategic planning assumption is that enterprises transformed by the Internet are 70 percent likely to have 10 percent few workers by 2005 and 60 percent likely to have 30 percent fewer workers by 2010. This has been predicted by futurists and fought by unions for the past fifty years, but it looks like it’s about to happen. IT workers will not be needed in the future at the levels they are needed today; they will have obsoleted themselves. I don’t think parents who are forcing their daughters to take computer science know this.

Following on that consequence comes the next one: there will be tremendous merger activity over the next few years, as customers collaborate, forcing their vendors to consolidate. The weakest companies in every space will have to sell out to their stronger competitors as the number of clients decreases and each potential client gets bigger.

A friend of mine has owned an online clearing house for merger and acquisitions activity for the past few years. During the glory days of the Internet, when everyone dreamed of an IPO, M&A was looked down upon. However, because most entrepreneurs in the future will probably exit through a sale or merger rather than through an IPO, and because collaboration and productivity gains will force mergers, it’s now probably a good idea to invest in a subscription to The Tech DealMaker at http://www.webmergers.com and begin to understand how M&A works before you actually get there. (While WebMergers’ site is primarily devoted to research and information, it has just spun off a sister company to work the actual deal flow, which is expected to accelerate again shortly. This is an area in which I hope personally to become more involved.)

The last Gartner prediction that interests me is the one about bandwidth being less costly than computing. This means we can develop peer-to-peer networks and share unused cycles instead of buying supercomputers. So will we all be on grids, and will our unused computing cycles be employed to find cures for deadly diseases? You wish. More likely, we will be trading first run movies and music in defiance of the current copyright laws.

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Mind Bender

I am the consumer. I recently had the good fortune to receive a cash infusion from the karma gods. With it, I carefully and immediately paid off all my credit card and line of credit debt. I closed one of the cards, keeping only the one with the low interest rate. I am giving up my Platinum American Express card. I’m willing to sell my prized red Volvo convertible at a loss just to get the loan off my books. I am trying to sell a home I bought last year before it was built, as well as the home I live in now. What remaining investment I have is in a money market fund. This year, for the first time, I have bought no new fall clothing, and only one pair of new shoes.

You are the consumer. You are sending me your resume and contacting me through mutual acquaintances because you think I know something or someone that you do not. You were laid off by a failed dot-com or offered early retirement from your job of twenty years. You are writing me from other cities to network regarding technology opportunities in Phoenix. You are starting a business with a weak concept, just to keep yourself engaged. You are making low-ball offers on my house. You won’t buy my red Volvo convertible at the reserve price on Ebay. You are in front of me in the long line at Costco. You are listening to a talk show about what it’s like to occupy a foreign country, moderated by a writer who has interviewed American military who served in occupied Japan and Germany. You have both hands on the ends of your belt, pulling it in.

He is the consumer. He is testifying before a Congressional committee, telling them that as chairman of the company’s board, he talked to the CEO every day — but allowed him the autonomy to run the company as he saw fit. He never attended the management team meetings. He is offering to give back tens of millions to the employees whose 401(k) plans were destroyed. He’s always thought of himself as a nice guy, and he sure doesn’t want to go to jail. He didn’t mean for any of this to happen. His wife is watching their assets disappear and wondering who this guy is that she married.

We are the consumer. We are the content for endless panels called “what if the consumer stops spending?” on the news channels. We are offered 0% loans on cars and the lowest mortgage rates in 30 years. Unable to avoid such good deals, we refinance our homes and trade in our cars. We don’t visit retail stores, and we no longer buy things with designer logos on them. We don’t want to admit we’re afraid, but we’re trying to cut back, cut down, cut out.

We know it is a moment to make only the best decisions, and we try to think carefully about what we should do. We create scenarios in our heads: “What if a terrorist attacks again?” “What if I get laid off?” “What if we go to war against Iraq?” We make plans for all these eventualities. All the while we are watching CNBC and the programs about consumer spending. Even if we have money to spend, we don’t want to be the last consumer out there roaming around a department store, so we cut back just to be in step.

We have just heard that it will be a short shopping season before Christmas, and probably an unsuccessful one. Good. We have our excuses. We don’t have to go out there and brave the crowds, trying to get gifts for everyone on our list. Justifiably, in a period of belt-tightening we can cut the list down and wait for markdowns. We can cancel the company’s Christmas Party: we never liked it anyway.

We’re in a world we haven’t experienced before. Even the pundits say so.

But every day of life is a day we haven’t experienced before. Why are we so frightened? America has no debtor’s prisons. The bankruptcy law changes are stalled in Congress, taking a back seat to homeland security. Interest rates are low. There has never been a better time to spend. And by not spending, we are furthering the economy’s downward spiral.

There. I’ve done it. I’ve convinced myself. I will be sitting down to make a shopping list. After all, I don’t even have to make the first payments on anything until after the first of the year. I am the consumer. I rule!

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Follow the Leader

As some of you know, I�ve had one foot out the door of Arizona since early summer, when I stumbled on the t-Mobile hotspots in the Bay Area Starbucks. I’ve even gone so far as to put both my homes up for sale (the one I live in now and the one I�m scheduled to move into after the New Year) and look at houses in California. This despite the fact that I have spent thirty-four years putting roots down in Phoenix, where I am widely known, if not so widely admired. And despite the fact that there isn�t any more seed capital for entrepreneurs in San Jose these days than there is in Scottsdale.

Why was I planning to leave? Because my grown children have settled in the Bay Area, having gone there in search of the intellectual stimulation I forewent when I gave birth to them and decided to take up permanent residence in the desert? (At the time, it seemed like heaven because you didn�t have to put snowsuits on children.) Not really. They�re knowledge workers, and they will move on. In fact, as I write this on an airplane on the way to San Jose, one�s in Dallas on business and one�s in New Jersey, and I will probably stay at a hotel tonight.

No, I was making my escape because nothing was happening. It wasn�t where I was going to that was so compelling � it was where I was coming from that was so apparently inert. Do nothing has never been my response to any situation. But for years, Arizona has been doing nothing: nothing about health care, nothing about education, nothing about immigration, nothing about tax policy, and certainly nothing about technology entrepreneurship, my pet issue.

And then I made a dutiful appearance at a Chamber of Commerce breakfast that featured Michael Crow, the new president of Arizona State University, in one of his first local public appearances since taking office. I could tell by the tone of his voice (forceful) and his body language (knowledgeable and casual) that he was going to stand the state on its ear. This will be fun to watch. I might stay for a while.

It�s been thirty years since I�ve seen an educator take a leadership position. Crow, after telling Arizona that the state was behind in the five most important aspects of 21st century economic development, politely told the business community that whatever they wanted to do, they weren�t going to be able to do it without him, since all the things to do depended on knowledge. You might have been able to be a coal and steel town without a major research university, but you can�t be a bioscience center. A university is both the manufacturer and the transporter of 21st century knowledge.

I�ve heard many university presidents speak (I went to three and taught at two others), but none so likely to herd the business community behind his agenda, using the electric shock of shame to prod the laggards. In thirty minutes, he got equal amounts of applause for saying he had met with the president of Stanford to prepare him for his loss in football this week-end and that we would soon end a fifty-year-old controversy about how many medical schools Arizona should support. The most exciting part of his talk was when he answered a reporter�s question about how he was going to get money out of our notoriously broke, anti-education legislature to fund his big dreams: �the money we need will come from out of state — from the National Institutes of Health, the National Science Foundation, and the federal government�s commitment to fund basic science.� Basically, he gave the legislature the finger, while teaching the audience a lesson in broader perspectives.. For a guy who took up the post officially in July, he already knows plenty about Arizona.

I�ll bet he already knows that we were late to take federal money for freeways, and that our delegation won�t go to bat for light rail. The only thing we have accepted federal dollars for is water –the Central Arizona Project and the various dams. Well, water is necessary, but it�s not sufficient. The lobbying paradigm is about to shift.

None of this can happen overnight. However, another feature of Crow�s speech was his ridicule of the unit of time known as the semester: the shortest unit of time he could find at ASU upon his arrival. As someone who teaches an entrepreneurship class that is compressed into less than a semester now and soon to be compressed even further as an online offering, I was delighted to hear that. (We only did that twenty years ago in the community colleges and in the major corporations, who were forced to start their own universities by the unresponsive higher education establishment with its ossified semesters.) It tells me he plans to work fast.

Yes, I�m a Pollyanna. Yes, I get easily excited. Yes, I tend to see the glass as half full. No, we won�t be Stanford in my lifetime. But at least this gives me a chance to delay purchasing that 900sq.ft, $900,000 fix-up in Palo Alto.

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