Learning from ARM

Long time no blogging, right? Here is the new stuff. I am writing in the conference room at Goldman Sachs Private Internet Conference at Bellagio Hotel in Las Vegas.

I just finished a great talk with Tom Lantzsch, from ARM. It was a 1:1 – that type of session you register and spend about 30 minutes with people you want to meet alone. I regret a little bit to request that session when it is approaching because I suddenly realized that I don’t have any intersection between my business and chip design business, and I worried that it may end up with nothing essential and waste both party’s time, and it turned out to be exactly the opposite. Here is a brief note about what we can learn from ARM.

1. Long Term

ARM is a 22 year company. In its first 20 years, 20 billion chips was using ARM architect, and they got 6 billion on the 19th years, and about 10 billion after that. It was then ARM become widely known. They charge license fee, and royalty fee, and in the first many many years, they only run the company to be covered by the immediate license fee. Royalty fee is the big part (0.07 USD per chip) but that came much later. This is not common even in semi-conductor field, and their success is really postponed by focusing on long term.

2. Keep Small

ARM is a 17 billion USD company now. However, it only has 2000 full time employees. They intentionally keep the company small.

3. Run it Cheaply.

ARM is about cheap. They build a culture of cost. As executive committee members, Tom still travels on economic class, and most of ARM’s clients sitting in the section before in flights. Although it does not impact the company financially for CEO to fly business, it does affect the culture. We talked about Google, and talked about the expansion in people, and the luxurious travel package. We all agreed that it is one way road, and cannot come back. ARM charges 0.07 USD per chip (this includes the more expensive chips), and that is the core of its business.

4. Run it Different.

ARM is not a design firm. They feel lucky that several of their principles worked so well in the last 20 years. Thanks to the slow advancement of battery technology, ARM’s core competence around low power consumption chips are stronger over time. I assumed a senario that battery life goes 10x, whatever ARM does not matter that much. Tom agreed.

ARM is also about partnership. Since they don’t design chips, they set standard, and create the architect, so they have few thousand partners, and they used that as a big network effect component: More partners on the equipment side, the more partners on the chip designer side. They played it in a really big and long term way.

Inspiration for me

I was impressed. Many great companies share some common ground. That is very different from the majority. “Luke 13:24: Strive to enter the strait gate”. Follow what most companies are doing and suggesting, and you are doomed.

By talking with great leaders, I can understand how to keep the peace inside, and keep doing what we believe to be true.

Different View on New Technology Adoption

In Silicon Valley, obviously there are a lot different views on technology. Although generally they are on the same direction, the minor difference are huge enough. I had conversation with three different people, and their view comes from aggressive, neutral and conservative. Here is the story (without revealing the name, while sorry for not giving the credit).

New Technology! Always! As Fast As You Can!

I visited a startup, and they are not officially launching their product yet. They are using the latest technology. Here are some:

  • Meteor.com
  • Underscore.js
  • Backbone.js
  • MongoDB
  • Node.js
  • Python & Ruby

Although some of them are not that new, they claim PHP is dead many years ago, and don’t tell interviewer that you are using PHP. MySQL is dead…

They claim that most silicon valley startsup are not afraid of leveraging the latest technology. And they even doing their best to keep up with the latest builds of the technology. They update the servers every several days to patch it and upgrade it to the latest version, with the risk of something broken. If it does, fix it. They found out that consistent integration is easier to do than holding for a long time.

With the new technology, every is fast. Most of the frameworks claim to do what people are doing at fraction of the time. They does!

Technology is the Layer in the Stack that does not Matter That Mach

I had another conversation with a technical CEO who just sold out his company at great valuation. He mentioned that 5-10 years ago, the core of a technical startup is technology. There is a clear line about what can be done, and what can’t. For example, the variety of drivers of Microsoft Windows system, and the file system Google built. They have to build their own servers, their own storage, and their own almost everything to handle the challenges of the huge volume of traffic and data. The 5 mil-second counts.

Currently, however, shift to a new model. The technology on Internet has developed that storage, and coding is not the hard part. Technology is more hybrided with art. Just as Apple demonstrated, a lot of new startup CEOs are not technical background but can control the messaging, the vision, the valuation proposition so well. Instagram and Foursquare are those type of company.

Technical company is so strong in technical and they can build everything so fast, and they don’t need to think that carefully before what to built. The not-so-technical company has the constrain that they have to think more carefully and decide what to give their users. This value is higher in the value stack than technical value, just like the lightness of an electronic bulb is not that important to the massive audience as the Addison time.

Be Careful of Engineers who uses New Technology

Another senior technology guy suggested this. He said that most of the startups failed because of leveraging new technology to quickly, the most recent example being Digg, by jumping into Cassandra too quickly to kill the company.

He claimed that every framework is promising to look at surface, but it needs a lot time to validate the feasibility. There are HIVE, and PIG camp before, and Facebook and Yahoo! were at the back. Now, PIG is gone, and a whole batch of companies, and engineers were left there with a lot of codes that does not work.

Their philosophy is to choose a technology that is at least used by a bigger company for at least one year to adapt to it. There is a consistent technology framework in the company that everyone use, and not many. Any new technology adapted at production server needs to be reviewed by himself.

Me?

I believe it is completely another Horse Crossing River problem. The three point of view are all valid. They are just the pro and con of new technologies. I would say, the companies in China needs more mentality in the first bucket, not the third at the current stage. After technology is over-used, we need to remind us for the third one.

 

Spam Enters China

I am not talking about email spam, or comment spam. I am talking about Spam from Hormel – the lunch meat.

I am not sure if it has been in China market for a while or not. I just saw it on the table of my dining room few days ago.

I am happy that people are rich enough not to have to each spam every day.

Big Surprise: How Much Apple Product I Bought

One of the biggest surprise in 2011 was how many Apple product I bought. I had never imagined that before. Here is a list:

1. iMac as the main desktop computer in our reading room.

2. MacBook Air 13′ as my main laptop.

3. MacBook Air 11′ as Wendy’s main laptop

4. iPhone 4 for my main phone

5. iPhone 4 for Wendy’s main phone

6. iPad first generation for me

7. iPad 2 for Wendy

8. Time Capsule as main wireless router, and main NAS

Apple has a much higher revenue / employee in IT industry.

P.S. Corrected my typo – should be MacBook Air, not Pro.

P.S.2 Another surprise. I now have Apple friends, and have many friends joining Apple, in Beijing and Shanghai.

Pretotype – Inspired by Alberto Savoia

Yutong sent me the prototype book by Alberto Savoia. In the first page I saw this quote:

Reid Hoffman, founder of LinkedIn once said: “If you are not embar- rassed by the first version of your product, you’ve launched too late.”

Very nicely said. Thanks Yutong.

Obviously, anything that sounds right must be put into context, and the tough part is, the author often ignore that part, and only tell you the conclusion. Just as the “Little Horse Crossing the River” story, the Ox, and the squirrel told completely different idea but they forgot to tell the horse that the depth of the river was relative to THEIR heights.

Let me put a little context to what Reid Hoffman said.

That means, it has to be 1) very easy to release. 2) very easy to change, 3) free to try out.

You cannot use the philosophy on hardware product (Well, I am still thinking about the iPhone 1.0 case), and you cannot use it on something too expensive to try. Image you asked your user to buy a $1000 product that is really not ready, and you expect the customers to buy it again few months later. (Well, iPhone 1.0 case?)

I am still thinking about the other context Reid Hoffman didn’t tell in the simple sentence.

Here is the link:

Video Like: http://vimeo.com/19443634

Slide: http://www.slideshare.net/LuisFelipeFernandes/innovation-at-google

Try to be a Good CEO

Whenever I felt frustrated, and felt there were so many balls falling and so little time, my friend just smiled and told me: “Welcome to the world of a CEO”.

Yes. That is the experience to be a CEO. As an entrepreneur, you are facing the challenge that only the people who were in that position can understand – the loneliness, and the excitement – oh, boy, nothing in this world is comparable to that. I show my full respect to every CEO in this world – even my competitors, even former Apple CEO, former Yahoo! CEO, and former whatever company CEO who ended their career in a way of public failure – they have all the due respects, not to mention the greatest CEOs of this century – Steve Jobs, Bill Gates, and Jack Welch. We are just the same kind.

Few weeks ago, I had breakfast with Sun Cheng-Yaw, and Jack Gao (one was the former HP Greater China GM, and the other was former Microsoft China GM). They shared their experience of running a company as the real CEO and a big country subsidiary. Basically the difference is, you know you can screw up a company single-handedly while screwing up China does not kill HP or Microsoft. Pressure really comes from responsibility.

I am just trying to be a better CEO – a journey that needs a lot of work, and needs a lot help. The most important thing is to surround yourself with the right group of people, and share the same dream. That is so important, and I will name it as the third learning in my startup, besides the two I already shared with Stanford students few weeks ago (focus and cost).

Soul Searching – The Deep Trace of the Reason

The term soul searching comes from the book The Facebook Effect, on page 180 of the chapter 9, 2006.

The astonishing success of Facebook’s photos application led to a bout of soul-searching at the company. What was it, Zuckerberg and his colleagues asked themselves, that made photos so successful?

Soul Searching

Soul searching means the deep trace of the reason why something worked. It is easy to be happy about a great feature, and a successful campaign, but it is way to easy to just stop tracing the deeper reason of the product. Just like the photos application of Facebook. It is a simple application without most of the features other photo sites have, but it is soon becoming the most successful photo application on the Internet. What is the driver for that? Why is that? Why, Why and Why?

With the deep trace of the whys, they learnt the secret of social graph, and how application can be built on top of social graph, and that leads to the iconic Facebook homepage – the News Feed (a feature that was originally called Timesorting).

That is what soul searching is about.

Asking more Why’s

If something happens, and it is a good one, don’t let it go. Push ourselves to do a deep soul searching and understand the deeper reason behind it. Thank God we are in Internet space, and we have all the data needed to understand the reason. Just like Facebook can dig into the data and understand every photo change leads to 25 new page views, there must be some link between the reason and the result. Go get it.

10 Years Later

So many things dramatically changes over 10 years, but it happens so gradually that we didn’t pay any attention to it when it happens. Here are some examples.

  • The IT support in my office was gray haired. When I just started my career, IT support is a profession of young people. Now, when the outsourced IT person appeared in my office, I realized that he is also in his 30-40s. That changed.
  • Credit card processing is so quick. Now, I don’t bother to use cash since most of the time, the credit card processing is as quick as the same time as swiping card – it is supposed to work that way, but when I just started to use credit card, it easily takes few minutes, waiting for the printing machine to start printing. Sometimes, I have to make some phone calls to the bank and let the bank call center person to teach the cashier how to swipe the card.
  • The business meal in the Xujiahui area gradually raised to a level higher than Hong Kong, and most places in U.S. The set dish has reached to 58 RMB (8-9 USD) or higher. The 10 RMB box meal completely disappeared from this area.
  • The CPI has raised to a level that people in Shenzhen started to buy home supplies in Hong Kong, and more people discuss about pork price these days than 10 years ago.

10 Years. Many things changed.

People Matters

People are always the core of any company. Enough focus on its people is the essential to the success.

Keep the talent density high enough is to the key.

Be sensitive to the environment and act quick enough.

Always find the right people to do the right thing.

How Startups Enter China?

My friend asked me a question:

It is stupid to ignore China market for any startup. What is your suggest for startups to enter China market?

My quick answer is: Don’t.

My alternative suggestion is, enter China market by putting your headquarter in China.

I have many successful entrepreneur friends in the Silicon Valley, who don’t have China presence yet (and I suggested them not to do it), and I also know some great American in Shanghai who have amazing business in China. In contrary, I also know many of my local friends who were laid off after working for the Shanghai branch offices for startups in US, or Europe.

Why is that?

Startups are constrained by resources. With resources, I mean in terms of people and money. It is NOT constrained by market size. Either US or China is big enough, way to big for a startup to explore. Concentrate in one market, and setup the model before expansion.

The more important question to ask is, whether you want to start up the company in US, or in China.