Monday, July 27, 2009
The story of King Canute ( or more correctly Cnut) is one every English schoolchild learns as a lesson against the unstoppable tide (and often incorrectly retold as a warning against undue pride).
King Canute was a Viking king of England, Denmark, Norway and parts of Sweden in the early 11th century. The tale goes that his courtiers would flatter him every day, telling him how great and powerful he was. In order to teach them a lesson he took his throne down to the shore and ordered the tide not to come and and wet his robes. Well of course it did, his feet got wet, and he proved his point to his courtiers that he was not all powerful so they should lay off the meaningless praise.
The story is one not only about humility, but it is also about the unstoppable nature of the tide.
The Associated Press' latest move to declare that they are going to single handedly change fair-use laws looks like a similarly futile position. While they are not openly declaring "we're going to change fair-use laws" that is the implication of the statements they have been making.
Their plan is like this - DRM the news (put in markers so they can see where it is syndicated) and then everyone that uses it - even as little as a title and a link - will have to sign a licence with the AP. They are understandably trying to stop the practise of wholesale copies of their content - this is a reasonable thing to fight. But what they say is much more aggressive - they want to stop aggregators like Google even using just a title and login.
This goes to the heart of fair use. I am no lawyer but so far, across a number of cases, reusing the title of an article - and a brief summary - is not considered a breach of copyright.
Linking is the water in the tide. It's at the very heart of how the internet works. Trying to stop linking of content is effectively trying to get the definition of fair use changed in a field where the genie is already out of the bottle. It's a King Canute like move - challenging the internet to not wet the APs robes.
The AP may make some web sites lives a headache for a while. The Huffington Post licenses AP content because it was easier to do it than to fight it as their traffic grew so enormously in the election year. I am sure a number of other major sites will also sign licenses because it will be cheaper than hiring lawyers. But I believe in the end the AP lose the battle ground they are staking out. As TechDirt says:
This has been said before (multiple times) but you don't rescue your business model by "protecting" against what people want to do. You don't rescue your business model by wasting resources trying to hold back what people want to do. You rescue your business by providing more value and figuring out a way to monetize that value. Putting bogus DRM on news does none of that. It only hastens failure.
Thursday, July 16, 2009
I was sent a briefing recently that outlines the Executive Compensation Principles the administration is espousing - see the description below.
While I am as disgusted as the next shareholder at obscene executive pay packages for failed executives I see two major difficulties with these principles.
The first is the implication that current compensation programs are not set up for the long term. Most good public companies absolutely require their executives (and board members) to hold stock minimums for the long term and many set up objectives to measure long term strategic program investment, not just short term performance.
It's easy to say "reward long term value-creation", but it's an incredibly hard thing to do in a measurable way - and compensation objectives have to be measurable or they are open to manipulation. Compensation tied to revenue is short term, when tied to strategic objectives it's very hard to know which objectives will really have impact in the long term - and yet they are easy to judge in hindsight. Using stock options as the reward works well because they vest over time and they only have value if the stock appreciates - but options have been under attack from the regulators and institutional shareholders for a while now which I think it very short sighted.
This leads to my second concern. Only the CEO and the executive team really know what the critical issues are in a company in depth. Boards do their absolute best to stay on top of the issues, to get briefed, to talk with customers and employees, but as a sitting CEO I know that only I have all the information being processed in one brain. My companies spend a great deal of time to keep me up to speed but it's a continuous, intense investment especially when things are changing fast.
This makes it a significant task for a board to set and review objectives and we spend a great deal of time on this at the compensation committee level. If it's hard for boards - who have all the information not just the publicly filed information, how much harder will it be for shareholders to make a realistic assessment of what are appropriate compensation measures?
Transparency is good. It's essential to build trust with shareholders. But while "Say on pay" is a great solution to the obscene packages, does it makes sense in 99% of the cases which are not obscene? Does it make sense in the cases of highly competitive industries where great CEOs are hard to find, and when you find them you need to pay them well to attract them and compensate them for the hard work and risk they take on as they strive to be a great company CEO?
It seems a crime to me that a handful of bad actors could cause regulatory changes which will hurt good companies ability to pay for performance - to pay significant pay packages for excellent performance. Institutional shareholders understand great CEOs earn their pay packages, and that bad ones should be fired. I worry that retail shareholders (that's you and me not the mutual funds) won't ever think a great CEO is worth $20M+ a year - and yet they may well be based on their future performance - but it can only be measured in hindsight (which means board judgment in advance) and not at the time the shareholders will be asked for approval.
Tough issue, and not one where I think more regulation is the answer. I think the answer is tougher board process and greater and greater transparency into board process in response to shareholder demands - but don't tell boards how to set compensation. Make compensation committees be very very transparent but let them do their jobs.
The Administration's executive compensation principles:
1. Long‐Term Pay for Performance Link
- compensation plans should be designed to reward long‐term value creation for investors, as
opposed to the short‐term focus that doomed financial institutions in the market meltdown. The
administration also emphasized that a broad range of external and internal metrics should be used beyond just stock price, which is not always the best indicator of the long‐term strength of the company.
2. Long‐Term Risk Time Horizon
- that executives maintain strong company ownership through the holding of equity‐based
compensation is one of the best methods to link executive pay with company performance. Compensation plans for both executives and other employees should be designed to match the risk outcomes of their performance.
3. Risk Management
- Committees should include risk‐management in the pay setting process, and conduct the
risk assessment in a public manner.
4. Appropriateness of Golden Parachutes and Supplemental Retirement Packages
- should reevaluate the necessity for golden parachutes and supplemental retirement packages,
and should determine whether their existence will result in pay for non‐performance.
5. Transparency and Accountability in Pay Setting
- Treasury Department plans to require more transparency and accountability for Compensation Committees by legislating Say on Pay and Compensation Committee independence standards.
Friday, July 10, 2009
Sometimes it's hard to contain your enthusiasm when you have a new product to market and the temptation is to get carried away and over hype. It's this behavior that can give engineering a bad rap with marketing and marketing a bad rap with sales.
Here's the classic typical scenario
R&D truly believes the product is way ahead of where it really it. It's ready, it's fast, all the functionality is basically there, it's usable today etc. This comes from (often justifable) pride in the technology that's been developed. Note technology, not whole product.
Marketing, trying to bridge the gap and get revenue going on a new product presents the product to sales as ready to do. You can show it to customers and start them using it, it's got 80% of the functionality and the rest is coming in the next release, yes take it to your best customers and get them using it. Sell it now.
Sales lives with the ultimate reality - what the product actually does, how easy it is to use, how fast, and how much functionality is really ready for prime time. Often sales stubs their toe, has to work through who they can really take it to and who should wait for the next release? Seasoned sales team are naturally cautious.
Sometimes however, it works the other way around and hype can be used as a carefully orchestrated momentum builder - the Steve Jobs reality distortion field is a great example. If you say it enough with enough integrity and conviction it will become truth.
It's the tension between the normal experience sales and marketing teams have with new products, and the extreme of Apple's strong stance on every new product that makes this new video from Palm (below) so funny.
Roger McNamee (a wild and crazy guy - but a really good guy) is known for his hyperbole, especially about the new Pre coming from (his majority investment in) Palm. Jon Rubinstein is ultimate innovator and product designer - the brains behind the iPod - and a much more low key guy.
I'm happy to say that as we bring out our new research engine into the market my team, while human, is working hard to balance the process pretty well and manage our natural enthusiasm for what we think is really big. But it's tempting...
Thursday, July 9, 2009
I capped off my vacation with 3 days in Milan to catch the U2 concert - and it was well worth extending my stay.
Tuesday, July 7, 2009
I took the July 4th week off and went to Rome with a close friend. I wanted a break, my kids are teenagers and have their own travel plans this summer and my husband is training for the World Kiteboarding championship – perfect set up for a week away and Rome is my favorite city in the world.
If you have never been, find time before you die to explore the eternal city. Its 3000 years of history piled up and intermingled, its extraordinary art and architecture, its role in the creation of today’s world and our modern culture and language, its narrow streets, beautiful rooftops and delicious food. And people who kindly correct halting attempts at Italian.
Rome is perfect – dirty, hot, dusty, fragrant, glorious, inspiring, tiring, sweet and salty, did I say hot?, moving, educating, goosebump making and fills my soul.
Here’s our close to perfect itinerary – and only 20% of what you should see when you go:
Sat on the Spanish steps. Absorbed and relaxed before bed
St Peter’s Basilica – waited for the service to end (Monday was an important Saint’s day) – got blessed by the Pope from the papal balcony (prayed my suitcase would eventually show up) – remembered to cover shoulders and knees this time so we could get in – teared up in front of Michaelangelo’s Pieta – wandered slowly and in awe throughout the Basilica. (Read Basilica if you’re interested in the history and building.) St Peter’s was the start of my horror of and fascination with the wealth and power of the Papacy.
Colosseum – walked every pathway – marveled at the design
Walked home through Circus Maximus
(Found pharmacy – bought toothbrush etc. – no ETA for suitcase at this point)
Gallery Borghese – started Penny’s guided tour of Rome’s Carrevagios for her friend. Fell in love with Bernini all over again. Started our close examination of ceiling frescos from the 16th century. Visited my favorite Titian – so glad the Italian government didn’t allow the painting to be sold when the family needed money. Saddened by how prevalent rape is in Roman mythology.
Trajan’s Markets – Augustus’ forum – we were shopkeepers for an hour.
Trevi Fountain (kept hand on backpack at all times)
Walked to Palazzo Barberini but the gallery’s closed – walked up and down glorious staircases imagining we are ladies of the court in long gowns leaving an all night ball.
Looked for the carved Barberini bees around the neighbourhood.
(Shop for a dress and underwear – needed a change of clothes – suitcase finally arrives late at night – robbed of all valuables)
Vatican Museum – learn about the connection between ancient Greek and Roman sculptures and the inspiration of Michaelangelo and Bernini. Particularly taken with Roman floor mosaics. Cried in the Sistine Chapel. (Was also infuriated that I had to use my sunglasses b/c thieves took my glasses – learned to put them on to see detail and take them off to see color – weird)
Walked miles to find an Italian iPhone cable.
Pantheon to study the engineering of the roof (so we can better understand the basilica ruins when we see them)
Palazzao Barberini – lay on our backs for a long time in each room studying the ceiling frescoes – almost fell asleep. Found the Caravaggio – another one of my favorites.
Morning trip to Tivoli
Hadrian’s Villa – learned the sad story of his lover who committed suicide – yet another example of where money doesn’t buy happiness.
Villa D’Este – how many different fountains can make you draw your breath? Many for me that day.
San Clemente to see the 2500 year old Mithraen temple… buried a floor below a 4th century church… buried a floor below a 12th century church. Damp, dark and fascinating.
Museum of the Wall on the Appian way. Made friends with the docent Bruno – he speaks no English – my Italian is sparse but we managed a wonderful conversation at the top of the tower about what we were looking at – I longed to run away from life and hike the Appian way to Brindisi
Walked up the Appian way into Rome – my imagination was on fire at this point.
Baths of Caracalla – so very, very big even in ruin
St Maria in Trastevere – admired the mosaics in the apse – we could see the direct connection to the art of the Roman mosaics – listened to the choir for a while
Palazzio Corsini – hunted for the Caravaggio but it was disappointing – found the whole gallery underwhelming – and Villa Farnesina (which was why we had come over here) was closed.
Capitoline Museum – another one of my favorites – particularly loved Marcus Aurelius on his horse and bronze Hercules. Ran into Bruno – turned out he also works in Capitoline. He led us to the air conditioned room to cool off – very sweet. Found our last Caravaggios – one early and one late in his career.
Roman Forum and Palantine – started early because it was going to be a scorcher and it was! Took half the day because we left no stone unturned. I got goosebumps standing in the Roman senate – I swear Julius Caesar is still there. Loved the palace ruins on the Palantine.
Museum of Rome to see the room frescoes from the Roman palaces right after seeing the palaces themselves – stunningly beautiful but I was again enraptured and fascinated by the floor mosaics. (Watch the HBO series Rome to see a realistic view of what the palaces were like 2000 years ago).
Fun tips from our trip:
We ate breakfast early to get a jump on the day because of the heat – retreated for lunch during the worst heat of the day – and ate dinner late.
We rented the audio tours wherever we could – soaking up the information – synchronized our starts so we were in sync together and could compare notes on our impressions
Gelato time late afternoon – needed the cool down and the pickmeup
2 hours of work before dinner - important to stay connected.
And ate marvelous food for every single meal – walk, eat, walk, eat – hopefully it balances out.
Monday, July 6, 2009
I took the week before July 4th off in Rome - and posted about it on my personal blog - How to spend a perfect week in Rome - if you are curious or thinking of travelling to the Eternal City.