I started last week in a secret cabal, where moneymen, technologists, marketers and entrepreneurs plotted together to create something new and wonderful.
But talk quickly turned to a company that wasn't there, a major vendor, a gatekeeper no one else had succeeded in wooing but whom some of the plotters were depending on so they could differentiate themselves from the competition. What do they bring to the table, no one likes them, why are we waiting for them, let's move on without them, were the thoughts that predominated. Yes, I thought, screw the rat bastards.
The next morning found me hundreds of miles away, at an industry trade show. An editor came raging into the press room, complaining of a vendor whose "wall-eyed hissy fit" was now holding up a publication that was the key to his career, his crown jewel. "The rat bastard!" he exclaimed. "Who do they think they are?"
Well, rat bastards know who they are. They're the survivors, the bureaucrats, the corporate politicians. They're the institutions, the lifers, and the gatekeepers. They could be Bellheads, cable head-ends, old line service providers, even publishers. Any company that has successfully weathered some recessions and established itself as a long-term force in its market breeds rat bastards like crazy, often evolving to the point where they become rat bastards entirely. The rat bastard's favorite word is "no." Their second favorite is "wait."
There are lots of rat bastards out there, and one of the conceits of the Internet age in the 20th century was we could get along without them. But now bears are prowling the stock market, the VCs are getting nervous and watching money burn is no longer fun (since there's no more coming in).
In his ASPCON keynote Tuesday, Citrix Systems Inc. founder Edward Iacabucci said even ASPs can't get along in the long run without "rat bastards," if you define Bellheads and cable head-ends that way (and I usually do). The big networks, which he called Network Service Providers, are an essential part of the ASP food chain, Iacabucci said. They can define ASP services to reach all kinds of devices, then conduct marketing to reach these customers, justifying their own margins as well as private labeling rights, he said.
One of the depressing truths about a shakeout, pruning, bear market, or whatever-else-you-want-to-call-this is that the strengths of the rat bastards come to the fore. Rat bastards can survive downturns, thanks to their size, scale, and brand. They have the financial wherewithal to even get smart, by buying failing start-ups and offering jobs when jobs are hard to come by. While the pruning process will kill off some rat bastards (those are the stories that make the headlines in a recession) most of the casualties are smaller outfits that run out of money, lose their customers or simply fail operationally.
The strengths of a rat bastard can be defined simply - money and operational strength. What looks like a slow bureaucracy to a start-up is usually just a process, a mistake avoidance mechanism that's most useful in a downturn.
What should you do about rat bastards? You need extraordinary patience with them when markets are growing, because managers are always jumping ship. But if you have some firm, profitable relationships with some rat bastards before the downturn starts, you're less likely to get sunk in the stormy seas to come.
I'm not dead, but I was quoted last week at "Twisted History," , whose editor, Van Van Horn, says many of the people whose aphorisms he quotes are.
No, I'm quite lively, and still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.
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I write daily for ClickZ, and weekly at Andover.News. I write monthly for NetMarketing, Boardwatch, and Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.
Remember that it's journalism that keeps the Clues coming...
Takes on the News
Boo Hoo on Bobos
In the search for the next "soccer moms," the people who will decide the next election, "Weekly Standard" writer David Brooks has offered the "Bohemian Bourgeoisie," or the BOBOs.
You may be a BOBO if you're rich and don't live like it. Silicon Valley money is BOBO, Brooks wrote, combining an effort to live and think the 60s with the money hunger of the 80s. BOBOs prefer the work to the wealth, and may keep driving old cars even with 8-figure fortunes in the bank. BOBOs are non-ideological, even contemptuous of politics, Brooks added, capitalist but socially liberal.
Brooks thinks he's a BOBO, but he's not. He's the author who brought forward the Paula Jones story, then apologized when he came out of the closet. Yet he still works in shaping right-wing ideology. (If he's a BOBO, then Linda Tripp is "just like you.") What he's really describing is new money held by people who grew up in the middle class as the children of Depression kids. It's hard to get rich if that's your main aim - it's actually easier if the money is secondary.
In the end this book shows the disconnect between Washington and Silicon Valley. Politicians want to label people so they can either attract them or (failing that) ridicule them so others will resent and dismiss them. When BOBOs decide politicians are the problem, they'll mete out their own justice, and Brooks (for one) won't like it.
Lessons from ISPCON
I spent last week in Orlando, covering the efforts of 6,000 ISPs to evolve into something more stable .
I saw only one other reporter (from Internet.com) other than employees of Penton Media, the show's sponsor. (I was freelancing for Penton's Boardwatch and CLEC Magazines.) About 10,000 attendees crowded into sessions on "How to be an ASP," not realizing that the business only works for Web hosts. The backbone industry is already too capital-intensive for most small ISPs, and the local access business requires a real broadband strategy.
The show itself would please Goldilocks. The ISPCON floor was too big, dominated by huge noisy booths from Cisco, Lucent, Sun and IBM. CLECexpo was too small, with tiny booths offering squirrelly deals that made sense until you thought them through. ASPCON, on the other hand, was just right. Unique software keeps customers from bolting. Get their critical data on your server and they can't leave.
But the big lesson came at the end, from John Davies, vice president for e-business marketing with Intel Corp. Computer industry revenues will explode to $8 trillion by 2012, and ISPs will get 39% of that. (Consultants will get another 23%.) So yes, Intel, Cisco, Dell, Oracle and Microsoft are looking to take part in this space, but I really don't expect to be earning $2 trillion 10 years from now, either. Your Clue is - there's plenty of money to go around.
Clued-in is Artist Direct, which has found the middle ground between MP3 fans and the music industry. No one is suing them, and users like them.
Clueless is the Progressive Policy Institute (affiliated with the Democratic Leadership Council) for their "solution" to the Napster "problem." "The debate over Napster shows that the danger to artists and record companies comes not from innovation, but from companies and individuals using the technology in illegal ways," said Robert D. Atkinson, director of the PPI's Project on Technology and the New Economy. Wrong! (As they say on the McLaughlin Group.) The danger is the lack of an economic model. The law doesn't enter into it.
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