Entries from Sep 2004 ↓

The Wonders of a Stress Free Lunch

I just finished blogging about my mini-vacation weekend riding motorcycles in the north Georgia mountains with my father, but I decided to split it in to because this was logically seperate.

After we left Suches, Georgia on Sunday around 1pm, we traveled south to Dahlonega, Georgia to meet Kathleen Dollard who had scheduled to have lunch with me after she arrived in the Atlanta airport. Luck would have it that she wanted to go hiking in Clayton, Georgia for a short time as she had spent time there when she was younger, and you can get to Clayton by driving in the direction of Dahlonega from Atlanta. After that, she was headed to South Carolina for a consulting gig.

Whenever I’ve seen Kathleen in the past it has always been at conferences where she was speaking, and I have typically been running a trade show booth which meant we were both always stressed.

On Sunday when my dad and I met up with Kathleen, I wasn’t stressed at all (I had just had an awesome weekend) and she didn’t appear to be either. We had a great long lunch, discussing things that interested all three of us, and I got to know here even better.

Kathleen is a great and brilliant lady, and I am honored to count her as a friend. If you don’t already follow her blog, consider subscribing.

Getting into the Zone

1989 Honda NT 650 Hawk I don’t blog too much about my personal life but this weekend was too great to stay silent.

My dad is an avid motorcyclist. At 65, he still rides one of his several motorcycles whenever it’s not raining. Though he has a newer one, his favorite is his 1989 Honda NT650 Hawk, a V-twin.

Growing up with a father that loved motorcycles, I naturally gravitated towards them, and as a teenager I actually raced motocross for several years. And I have fonder memories of racing and all that went with it than of almost anything else in my past.

But with college and then starting a business I let motorcycles slip away for over 15 years. Then in early 2001 with some massive business uncertainties causing great distraction for me, my father talked me into attending the 2001 Atlanta bike show. There I fell in love with a KTM Duke, which I never purchased because it was too expensive, but I did soon get a Suzuki SV650. I kept the SV650 for a little over a year, then I sold to pay off debt to improve credit scores for a condo mortgage. The following January I went to the 2003 Atlanta bike show to see the new Suzuki SV1000. There instead I fell in love with an Italian; the Aprilia RSV Tuono 1000cc V-twin, which I purchased the next month:

What’s the Tuono like and why did I buy it? For those of you who know bikes, no need to explain. For those of you who don’t, you wouldn’t understand anyway. :-)

Back to my dad’s Honda Hawk: the Hawk is a bit of a "cult" bike, so much so there is (at least) one major Honda Hawk website, several mailing lists for Hawk "Listers," and they have rallies many times a year at different locations across the USA. For the past three years I’ve attended the Fall Eastern Hawk Rally with my dad which has been held at the T.W.O. Campground in Suches, Georgia which is located in the North Georgia mountains. This year’s Fall Eastern Hawk rally ran from Thursday September 23 through Sunday September 26.

The prior two years I had many worries related to my business, and though I went, I was far too keyed up, did not really get to know many people, and did not have the best time. I left late and returned early. Still, I went to spend time with my father. This year was different. I left with my father on Thursday at noon, and that evening we went for a short ride. The next two days we rode what those who attended the rally yet traveled from as far away as Maine and Wisconsin said are "the best motorcycle roads in the country" (meaning the roads in the Georgia/Tennessee/North Carolina triangle.)

The next two days my dad and I went on different rides; I with the faster group and he with the more laid back group. The leader of my group for both days was a road racer, but he is also very smooth and level headed. During those two days, what I learned from him improved my street riding skills immensely!

Did I break any speeding laws? Mums the word…

On Sunday we had breakfast, packed up, and said our goodbyes after the group photo:

As we drove south towards Atlanta, we pondered the question as to why we each enjoyed riding motorcycles. Other than the obvious; shared enjoyment of a common activity, his reason was he enjoyed getting away; it didn’t matter where he was going, just that he was riding.

My reason was very different. When I raced motocross, I did so because I wanted to prove to myself I could accomplish something that was very difficult for me; to win the race. Though I got many 2nd through 5th place trophies over those years, I rarely won. Typically it was because I knew at least one of my competitors could beat me. At every prior race, I had been keenly aware of myself and my limitations. However, on this particular morning after practice my father asked how I thought I would do; I told him that I could beat everyone in my class, and I believed it.

A motocross race is comprised of two "heats" per class where class is usually engine size and skill level (i.e. 125cc A, B, and C; 205cc A, B, and C, etc.) The trophy winner is the one with the lower score. Ties are broken by the better scorer in the second heat. Thus a 3rd and a 1st would loose to a 1st and a 2nd, and a 1st and a 3rd would loose to a 3rd and a 1st.

My first heat on this day had my leaving the starting line 3rd. I slowly passed 2nd, and then 1st, and then I proceeded to add many bike lengths to my lead. I came in 1st that heat.

My second heat someone next to me on the start lost control and almost knocked me over. I entered the first corner with more than 20 racers ahead of me. That point forward until I crossed the finish line was lost to me; immediate after the race I didn’t remember a bit of it. My father had to tell me about that heat after it was over. He said I passed two or three bikes in a corner up until the checkered flag fell, and I was one bike length behind the leader; I came in 2nd that heat. Unfortunately because I started so badly, I didn’t win that heat.

But the winner of the second heat came in third the first heat. That gave me the win; I got the 1st place trophy. I had, for the first time in my life won a motocross race. And it was also the first time in my life I had been "in the zone."

Amateur racing is a community, and though you compete, you gain respect for the others and everyone I knew came up to congratulate me on what a great race I had run. Unlike any other time in my youth when I would have killed to be the center of attention, that day I didn’t need to be. I appreciated they acknowledged me, but it didn’t matter because I was completely at peace with myself. I had won the race, and I had done it with many odds against me given the lousy 2nd heat start.

That was also the first, and (by the way) the last, "perfect" day I have ever had.

So back the question: "Why do I enjoy riding motorcycles?" I ride because I want to get back in the zone. Last weekend in the mountain, after two full days of learning while riding behind a very good rider, I rode State Route 180 at full clip. I was riding at my edge and high on adrenaline, but I never felt out of control. I felt like I was back in the zone.

Well, I wasn’t completely in the zone, but I did get close. It was an awesome weekend.

Pricing, and the Economics of Value Creation

I’m not an Economist; during my high school and college, economics was for me in the category of “couldn’t be more boring.” But time has passed and both events of the world and my life have increasingly interested me in economics, especially as they relate to making business decisions. And I’ve read a lot about the topic econmics in recent years including books and magazines. I love to pick up the Economist from time to time, but since it takes me a week to read an weekly issue, I don’t subscribe to it for fear I’d get nothing else done! :)

Anyway, today I’m writing about a concept I’ve both witnessed and studied many times over the past several decades: the economics of value creation. I’m going to use examples, but am trying to keep it very short so I won’t be referencing other factors that might complicate the picture.

Clayton Christensen argued in Innovator’s Dilemma that good companies trend “Northeast” by which he meant companies typically strive to increase prices and margins (the direction Northeast refers to the trend of the graph of margin over time.) If you speak to any enthusiastic sales rep, you’ll see the same desire; to close as big a deal as possible.

So the tendancy to strive for higher prices is ingrained but often, doing so it counterproductive. What I believe people often fail to consider is the value provided to the potential customer. Yes there are value-based pricing models, but those are focused on convincing a prospect of the “value” to justify a higher price. Instead, I’m referring to the value that can be derived from each and every potential customer; the lower the price the more potential customers can derive value from the service or item sold. Further, I’m focusing specially on services and items used by businesses to create things of even greater value.

Let me explain by using a contrived example:

Let’s assume a small US town somewhere in the 1800s far away from any other town or city (i.e. essentially a closed system.) Let’s assume most inhabitants were farmers, and someone opened a fertilizer plant. Let’s consider two of the farmer’s crops: squash and tomatoes.

Each crop requires a certain amount of fertilizer; let’s assume one (1) unit to grow a squash and three (3) units to grow a tomato. Further, let’s assume that one (1) squash produced twice (2 times) as much food as a tomato, but the town’s people would buy twice as many tomatoes if price were no object.

At first the fertilizer plant owner charged 0.2 cents per unit of fertilizer, and the market set the prices for squash and tomatoes at 5 cents each prior to adding the cost of fertilizer. The town’s average monthly purchases for squash and tomatoes were 10,000 and 20,000, resectively. The fertilizer plant owner made $370 per month, and the farmers made $1640 per month in aggregate for those two crops.

Later, the fertilizer plant owner decided he could raise his prices since he had a local monopoly. He increased by 0.3 cents per unit to 0.5 cents. This forced the farmers to raise their prices to six (6) cents for squash and seven (7) cents for tomatoes. Times being hard, that extra cent for the tomatoes caused the townspeople to rethink their spending habits. Consumption changed to 17,500 squash and only 5000 tomatoes (remember that a squash provided twice as much food as a tomato.)

Guess the net result? The fertilizer plant owner lost $101 per month in sales, and what’s far more tragic, the farmers lost $352.50 per month in aggregate because of a decision they could not control. Well the squash farmers were dancing a jig while the tomato farmers were devastated, but that’s not the point. :) Here’s a table showing the details:

Prices Description Squash Tomatoes Totals
Units of Fertilizer Req’d 1 3
Food Units Produced 2 1
Fertilizer Unit/Food Unit 0.5 3
Original Price of Fertilizer = 5 units for 1 cent
0.002 Original Fertilizer Price/Food Unit 0.002 0.006
0.05 Original Food Unit Price as Farmed 0.052 0.056
Original Food Items Consumed 10,000 20,000
Original Fertilizer Units Needed 5000 60000
Original Food Units Consumed 20,000 20,000 40,000
Original Fertilizer Revenue $10 $360 $370
Original Aggregate Farmer’s Revenue $520 $1120 $1640
New Price of Fertilizer = 2 units for 1 cent
0.005 New Fertilizer Price/Food Unit 0.005 0.015
0.05 New Food Price as Farmed 0.055 0.065
New Food Units Consumed 17,500 5,000
New Fertilizer Units Needed 8750 15000
New Food Units Consumed 35,000 5,000 40,000
New Fertilizer Revenue $43.75 $225 $269
New Aggregate Farmer’s Revenue $963 $325 $1288
Lost Revenue Totals
Lost Fertilizer Revenue ($33.75) $135 $101.00
Aggregate Lost Farmer Revenue ($442.50) $795 $352.50

Real life is not as clear cut as my example so the fertilizer plant owner would probably not realize the direct cause and effect. Of course in the world today someone would notice that the fertilizer plant owner was raping the farmers, build a second fertilizer plant, and possibly put the first out of business. Hopefully you can see from my example that raising prices doesn’t automatically increase revenue. Sure you might bring up the well known supply and demand curve as evidence this is a no-brainer, the most discussions of supply and demand don’t contemplate the effect of value creation downstream such as the value created by the fertilizer in producing tomatoes. At a reasonable price consumers would buy the tomatoes even though they provided less food. Once the price got too high, their consumption dropped, and so did the fortunes of the fertilizer plant owner and the farmers who grew those specific crops.

Let me bring it back to the real world and give more direct examples:

  • Imagine if a business having a toll free telephone number cost $10,000 per year and $1 per minute. How many business would never have started using them, and imagine how much business based on toll free access just would not happen?
  • What if the least expensive computer cost $5000 each, like the first PCs used to? Think about how many businesses that offer services today using computers couldn’t offer those services because they couldn’t afford those computers.
  • What if there had been no free browser software; if browser software was sold for $199 each, for example? Do you think the world-wide web would have developed?

I could go on and on with examples, but they all boil down to the following:

Items and services used to create added-value items and services follow a different economics model than pure supply and demand. If the price it too high for those initial items and services, overall value creation will be retarded. Conversely, if the price of those initial items and services is lowered, it can empower greater value creation, and the demand for the original items and services may increase exponentially. This definition assumes the value ultimately created supplies an existing demand, or empowers creation of new goods or services for which demand evolves.

I’ll finish with this final example and follow it with a few parting rhetorical questions:

Imagine you invented a process to create an alternative for oil that did not pollute, only cost you one (1) dollar per barrel to produce, and you had no limits on the quantity you could produce. Let’s also imagine you were able to secure exclusive worldwide rights to this process. You could price your oil alternative competitively with the current price of oil or even higher because it did not pollute. If you were a modern day oil company, you would probably do that. Since you controlled the process, you’d probably maintain your high price indefinitely. However, imagine if instead you priced it at half the cost of a barrel of oil? You’d quickly become the leading supplier of fuel in the world (and you would devastate the Middle Eastern economy, but I digress.) And then imagine you continued to slowly lower your price, approaching “essentially free” over time. In this scenario, if fuel were essentially free and it did not pollute, how many entrepreneurs do you think would find ways to create value in new and previously unconsidered ways? How much of your fuel do you think would ultimately be consumed?

Just Say NO to Extending the “My” Classes in VB 2005, Redux

Last month I wrote a really long blog about the “My” Classes in VB 2005 with two hypothetical scenarios regarding the future of .NET and development because of the introduction of the “My” classes. I had a lot of fun writing it, but afterward realized it was far too long to get across my key points. That is why I am revisiting the subject today.

The “My” classes is a beautiful and incredibly useful addition to Visual Basic, and I applaud Microsoft for thinking of it. In hindsight, it is obvious, but isn’t that true of all the best innovations?

However, because the “My” classes can be extended, I believe there will be thousands of competing, incompatible implementions all crammed into that one single namespace path. The concept and implementation of namespaces in .NET was incredibly elegant and solved many problems, but “My” class extensions will do the exact opposite.

However, when I wrote blogged last month there was one thing about “My” class extensions I did not know. Joe Binder, the program manager at Microsoft for the “My” classes whom I video interviewed several months ago, was gracious enough to provide a detailed comment regarding my post explaining that thing I did not know, and I quote:

With regard to conflicting names, it is important to note that My extensions must be added manually to each project; they will not show up by simply referencing an assembly. (My is actually a namespace nested under the root namespace of the project.) This point is especially compelling from the perspective of third-parties looking to extend My and the scenario you describe above: In order for any name conflicts to occur, users must not only reference the third-party assembly, but manually add the My extension to their project. If there is a name conflict, the user can back out the My extension and still use the third-party component living in the referenced .dll directly; or they can rename the My extension. The point is that all My extensions exist as source in the project; they cannot be pre-compiled.
Whew! That calms my fears greatly! It means .NET components with conflicting “My” extensions, especially from 3rd parties, will still be able to be used together albeit in reduced usability form.

However, Joe’s comment still doesn’t address the biggest reason I felt “My” class extensions will create a problem. If not somehow constrained, I believe the thousands of competiting and incompatible “My” class extensions will effectively shackle Microsoft and keep them from evolving the “My” class “standard” in future versions of VB for fear of breaking too many people working code. If I’m right, that will be a huge loss.

Let’s hope I’m wrong.

How does one define a “Quality .NET Developer?”

I was having a brainstorming session the other day with a member of my staff and the following question came up “How does one define a ‘Quality .NET Developer‘?” After discussion we realized it was a lot like one of the US Supreme Court Justice’s definition of pornography; when asked he stammered and said “Well, I can’t define it, but I know it when I see it!

I’d like to put it out there for you to answer: How do you define a ‘Quality .NET Developer’? I’d give you what we came up with but that might be too leading, though I will give you some hints.

Assuming you needed one of the following:

  • A developer for a .NET project
  • A consultant to develop a .NET application
  • A software architect to design an architecture for a .NET project
  • A trainer to deliver a training course about .NET
  • An author to write a book about .NET
  • A blogger to pontificate about .NET
  • A mentor to teach you about .NET
  • A newgroup or forum participant to help others .NET developers
  • A technology evangelist to promote a tool for .NET developers
  • A standards committee member for selecting tools for developing in .NET
  • A user group leader to manage a .NET user group
  • The leading person in your own personal network of .NET developers

What traits would you most want in such a person?