Google (GOOG) CEO Eric Schmidt said yesterday on CNN an interesting view on their business:

“Hopefully we won’t repeat the mistakes that Microsoft made 10 years ago that ultimately led to all these things that happened to them.”

Some of these mistakes include a lot of anti-trust and monopolic actions, profit ploys gone awry ending in lawsuits, privacy failures, and refusal to cooperate with competitors. These, along with some instances of not-so-great software (looking in your direction, Vista), have tarnished Microsoft’s (MSFT) business.

Eric Schmidt is trying to portray Google as a Good Business. They’re not going to make the same mistakes as Microsoft: they’re going to be truthful and follow Don’t be Evil. They’re going to aim for transparency. Are they truthful about that, though?

Many businesses in the world, without lies and fraud, would be well out of business. This includes companies like Cash4Gold and MLM scams. So would a lot of financial institutions, if it weren’t for the bailout. I have a personal gripe on the bailout. Why? NASA 2009 budget is 17.2 billion. National Institutes of Health 2010 budget is $6 billion for cancer research. TARP: $700+ billion.

Good Business and Google

Good Business entails transparency. Mad, mad profits more likely than not entails some kind of fraud going on. Google says they’re going to forgo these mad profits—and fraud, for that matter—and focus on the customer. Making the customer the top priority is something that is—surprisingly, as well as irrationally—lost in some modern businesses.

And we’re seeing a lot of great strides from Google to this effect: Google Dashboard, a tool that allows Google Account users to see what kind of information is associated with their Google Account, was introduced on the Google Blog in an article called Transparency, choice and control — now complete with a Dashboard!

“Over the past 11 years, Google has focused on building innovative products for our users. Today, with hundreds of millions of people using those products around the world, we are very aware of the trust that you have placed in us, and our responsibility to protect your privacy and data.”

Or—Google’s Data Liberation Front: their homepage states their mission: “Users should be able to control the data they store in any of Google’s products. Our team’s goal is to make it easier to move data in and out.”

The risk is huge, too. It’s not just that Google participates in far fewer fraud than most businesses of similar influence. They take the risk of losing customers that realize how wide the gamut of knowledge Google knows about them. One notable example is Google Dashboard: many users responded with “wow—Google knows a lot about me. Should I be concerned?” And if they are—Google is making it that easy to check out of itself.

Others said that among the privacy issues and information issues Google has, the Google Dashboard is like British Prime Minister Neville Chamberlain’s 1937 appeasement towards Nazi Germany: Google gives us a bit of what we want to see to make us think that they’re serious about their responsibility of protecting privacy and transparency, but in the long run they really, really want the data.

The great part about Google and Good Business? Customers get it. Customers appreciate the transparency, which makes it hurt just a bit less for Google on their balance sheet. In the long run, hopefully Good Business drives the following profit inequality: Bad Business < Business < Good Business.

Fantastic. One of the most important technology businesses is promoting Good Business through transparency and not being Evil. Google has its problems, and many, many instances that they have acted in an evil way. And whether this will hold for the next ten years is still up in the air. However, they’re taking a positive direction, and for a 10-year-old technology company with massive market share and massive influence, and massive profits and market capitalization, it’s pretty damn impressive.

Gist: Android 2.0 SDK released, Motorola Droid and HTC Droid Eris to launch on Verizon on Nov 6, as rumored by Boy Genius Report. Hardware has always been the bottleneck on Android, among other problems. The marketing by Verizon making Droid a serious mobile device for the alternative iPhone market as well as the excellent hardware on the Motorola Droid, and the polished Android 2.0 Eclair OS, will allow Android to become more mainstream.

Google (GOOG) has made official the new Android 2.0 SDK, which allows the new 2.0 “Eclair” APIs to be used in Android applications, including improved bluetooth, multitouch, sync, account management, and, of course, support for new Android 2.0 devices such as the Motorola Droid. The new SDK update is downloadable immediately. Android 2.0 official video is at the bottom of this article.

Leading mobile industry news and insider source Boy Genius Report reports that the Motorola Droid (MOT) and HTC Droid Eris (2498.TW), two new Android 2.0 Eclair devices, will hit the stores on November 6 on the Verizon Wireless (VZ) network.

The Droid devices, highly hyped by Verizon as the iPhone killer, has been the subject of quite a bit viral marketing and noise in the mobile industry. Earlier this month, Verizon launched a mysterious marketing page for the Motorola Droid at DroidDoes.com, a direct attack against the Apple (AAPL) iPhone device’s shortcomings.

I’ve recently moved from bearish to bullish on the Android platform. The first T-Mobile Android G1 device wasn’t polished and didn’t at the time seem like a viable competitor to the iPhone.

However, the Motorola Droid could be a huge development in the Android environment. Droid represents a serious advance in promoting Android as a serious device, built and supported by two serious mobile companies. The specs of the device (the same processor as the iPhone 3GS and the Palm Pre, large screen, full of memory, ready for backgrounding applications, and more delicious specs) will hold its claim to fame as the premier Android hardware.

The bottleneck to the proliferation of Android has partly been the hardware that it runs on. The G1’s hardware didn’t cut it, especially since Android and all Android applications operate on Java, which is a notoriously slow platform. (EDIT: No, it isn’t, I’m wrong; I had neglected to mention that the Android platform has a custom build of Java called Dalvik.) The other bottleneck is the App Store, which, although it will improve over time, the derivative of available applications needs to start getting better. And with the new SDK and excellent new Android 2.0 Eclair, we may be seeing real changes soon.

Very recently, Amazon (AMZN) subsidiary Amazon Web Services released the Relational Database Service (RDS), serving MySQL databases through their cloud system.

This is AWS’s second database service, the first being the schema-less SimpleDB service, a key-value data storage system. This new service mimics MySQL-like characteristics, and acts just like MySQL, allowing applications to move seamlessly between their current MySQL system to Amazon RDS. The valueadd of the service includes rock-solid reliability (as AWS is known for), high scalability to allow for extremely large datasets, patching of database software to keep up to date, and database backup.

Amazon RDS lists five instance classes available at this time, reproduced below:

  • Small DB Instance: 1.7 GB memory, 1 ECU (1 virtual core with 1 ECU), 64-bit platform.
  • Large DB Instance: 7.5 GB memory, 4 ECUs (2 virtual cores with 2 ECUs each), 64-bit platform
  • Extra Large DB Instance: 15 GB of memory, 8 ECUs (4 virtual cores with 2 ECUs each), 64-bit platform
  • Double Extra Large DB Instance: 34 GB of memory, 13 ECUs (4 virtual cores with 3,25 ECUs each), 64-bit platform
  • Quadruple Extra Large DB Instance: 68 GB of memory, 26 ECUs (8 virtual cores with 3.25 ECUs each), 64-bit platform

Like most Amazon Web Services offerings, it is on a pay-by-usage model, the lowest being $0.11 per hour of compute instances, plus $0.10/GB/mo of storage and $0.10/million I/O transfer requests.

Amazon Web Services’ current cloud service offerings include Simple Storage System (S3), a scalable cloud file storage system; Elastic Compute Cloud (EC2), scalable computational resources, among other services.

On the AWS RDS marketing page, there is a guide to convert from using one’s own hosted MySQL instance to using an RDS instance. The valueadd of AWS RDS over SimpleDB is clearly defined structured data (versus a schema-less key-value store), and with that comes RDBMS features such as JOIN. However, the rigid schema with RDBMS and RDS makes it less flexible to change.

This could be very disruptive. Hosting databases in the cloud wasn’t an extremely simple thing to do earlier, as the main players in moving a database in the cloud essentially was SimpleDB. Converting an application from using a relational store to using a schema-less system like SimpleDB isn’t a trivial task, especially when JOINs are associated.

Now, however, MySQL databases can now be stored reliably in the cloud, and they scale up in both compute power, storage size, and transfer volume. The bottlenecks surrounding scaling a database to be larger or to crunch more data, fenced in by pre-defined CPU, RAM, or disk limits, is now gone. (Though, of course, you’ll have to upgrade instance classes if you hit that limit.)

The market is very big for such a service: MySQL (now owned by Sun Microsystems, JAVA) powers industry-leading sites such as Google, Nokia, YouTube, Zappos, Yahoo!, among others, and is the database portion of the popular open-source web stack LAMP. It is the most popular open-source database, and holds a market share of 49% in database environments (source: Gartner, Enterprise Databases in an Open Source World). Amazon Web Services could repeat their disruption of files to the cloud with S3, or computing power in the cloud with EC2, again by taking databases into the cloud.

However, RDS opens an important question while on the topic of database speed optimization: it scales up well, great: but how is the performance between webservers and the new RDS storage location? In many cases, webservers access the database on a local or nearby network, which improves performance; however, where is RDS located? Is it mirrored in multiple areas? It’ll work great for EC2, but who knows how well it’ll be for migrating MySQL users.

It’s an open question and we’ll see how it plays out when people mess around with it.

Y Combinator‘s Startup School 2009 was an incredible learning experience for new and experienced entrepreneurs alike. There are ten talks. Here are their key points.

  1. Paul Graham, Founder, Y Combinator: What Startups Are Really Like
  2. Greg McAdoo, Sequoia Capital
  3. Jason Fried, CEO, 37signals: Funding and Charging for Your Product
  4. Chris Anderson, Editor-in-Chief, Wired: Freemium
  5. Paul Buchheit, Creator of Gmail and Friendfeed: What I’ve Learned
  6. Twitter Founders Biz Stone and Ev Williams: Q&A with Jessica Livingston
  7. Mark Zuckerberg, Founder and CEO, Facebook: Q&A with Jessica Livingston
  8. Mitch Kapor, Founder, Lotus: Startup Culture
  9. Tony Hsieh, CEO, Zappos: Delivering Happiness
  10. Mark Pincus, CEO, Zynga: My Startup Experience

Paul Graham, Founder, Y Combinator: What Startups Are Really Like

Below are some key points about his talk, but there are a lot more great soundbites in his transcript of What Startups Are Really Like.

  • in his research, people have sometimes said that in a co-founder, character is more important than performance
  • expect failure with deals.
  • be optimistic about things you can control. you can’t control deals, so don’t be optimistic about them.
  • having a founder is like you’re married but not fucking.
  • luck is a big factor in startups. founders/programmers are more surprised than normal founders because programmers are used to concrete cause-and-effect
  • sorry, guys: being a startup founder does NOT make you more attractive to women.
  • quitting your job to start a startup depends on the age. harder at 35 with wife and kids. but at 21, your entry-level job is useless anyway, so go start a startup.

Greg McAdoo, Sequoia Capital

  • the 70s and 80s economies performed just like the current economy: recession, unemployment on the rise, etc. however, Apple, Oracle, and many others came from it too
  • likewise, the 2001 crash spawned companies like A123, Rackspace, and Aruba and Zappos
  • it’s definitely possible to start a startup in a down economy, as some of the best businesses still around today started in recessions
  • the demand environment in a recession: your competition is less irrational in their purchases and doings
  • recessions create a lot of discipline.
  • in startups, you have to start small, and stay focused, especially in a recession.
  • good recession-era startups “buy the cash register early,” — they execute their pay business model earlier to generate revenues earlier and bank earlier
  • Re: “RIP Good Times”: it didn’t say that everything was fucked, but rather that you have to run your startup like other past recession winners, and cut and be lean
  • enterprise sales tip: promote and talk about the HARD DOLLAR ROI. it’s the most important thing to talk about. make them scared to reject your product. make them think “if my boss ever found out we could have saved 50% on software X, he would be pissed.” make them fear that the competition get the product in their hands and beat you out.
  • startups that gain revenue early are disciplined earlier, and get used to being an actual business earlier, and generally are better and more recession-proof

Jason Fried, CEO, 37signals: Funding and Charging for Your Product

  • the difference between a boostrapped and funded company is easy to understand.
  • the bootstrapped company starts off thinking: we need to make money.
  • the funded company starts of thinking: we need to spend money. these investors have given us x million dollars—we should spend it!
  • the funded company detracts away from doing final execution of the product and making revenues.
  • start as early as you can. you don’t become fantastic at piano by starting at 20 or 25. you do become fantastic at piano if you started at age 5.
  • price forces you to be good and better than the rest. the pressure of price is very, very good.
  • pricing your product will give an avenue for the people buying your software to give you feedback on it.
  • if a product is free, you don’t get that feedback.
  • if a product is free, it’s just “good enough.” people will take it and say it’s just “good enough” to use for free.
  • the most intimate transaction between people: money. I’m giving you this money earned by hard work because you offer something that I want.
  • funding is like crack. it’s an addiction with names like Series C. Don’t keep going back for more and more funding; it’ll make your addiction worse.
  • planning is GUESSING. figure out stuff as you go, because you never really know. plan some, but improvise a lot.
  • I promise you’ll still be using post-it notes in 20 years. Usefulness trumps innovativeness; usefulness stays while coolness deteriorates over time.
  • all the art in the world in one room won’t make a museum. the fact that it rejects 99% of art makes it a museum. apply this to software features.
  • 37signals’ byproducts include Getting Real, the job board, and more. they have generated 37signals more than $1M in revenue. the job board itself has made $1.5 million.
  • “we apologize for any inconvenience we may have caused you” is the worst way to say “I’m sorry”
  • the best are everywhere, even outside Silicon Valley, don’t think you HAVE to be here. 37signals is based in Chicago.
  • sorry, failure is not a rite of passage. you don’t have to fail. failing once doesn’t prevent another. Fried thinks the idea of “you have to fail once” and having to “learn about failure” is ridiculous.
  • learning a lesson from failure is learning what not to do. learning what to do is a lot better than learning what not to do.
  • other peoples’ failures are other peoples’ failures. don’t worry about them.
  • anyone know how to sell things for free? you can’t. you can only sell things for money.

Chris Anderson, Editor-in-Chief, Wired: Freemium

  • freemium is a great way of marketing. 90% try 10% buy. digital freeloaders are affordable, too. the freeloaders are paid for by the paid users.
  • conversion from free to paid means loyalty. freemium conversions hold the lowest churn rates.
  • Club Penguin was free to play. children USE the service and SEE VALUE in it, and subsequently purchase the premium options. sold for $700 mil to Disney.
  • types of freemium: feature limited freemium. people already familiarized. ex. iPhone apps.
  • Anderson hates 30-day trials. ticking clocks discourage uptake. hmm.
  • capacity limited freemium. like Google or Flickr, for file storage limits. unfortunately doesn’t work for all products.
  • when Gmail launched, the Gmail free was more than Yahoo! Plus. Yahoo! shat themselves, but it turned out that they had experienced low churn in that period: subscribers tend to stay. not the least of which reasons is that your email is on the provider still.
  • Bill Gates didn’t crack down much on Chinese piracy because they were a developing country. they much rather would have people pirate their software than other peoples’ software, and Gates believed that they would pay later because of the then-majority of software being Microsoft. and—they did pay later and is now a huge market for Microsoft
  • (btw!) Jason Fried isn’t against Chris Anderson. 37signals products are all based on freemium. the idea is to charge $!
  • make sure you articulate the free deal clearly to the customer. communication is the risk.

Paul Buchheit, Creator of Gmail and Friendfeed: What I’ve Learned

  • “limited life experience + overgeneralization = advice”
  • Buchheit started working on Friendfeed at 30 years old
  • He worked at Google since 1999ish, after Intel, and did internships at Microsoft and Sun in college
  • working at Google was his best education he received from anywhere
  • after Google, he took a one-year retirement period to chill
  • however, he “wanted to do things that mattered” – and started friendfeed
  • it’s toxic to think that when you’re done with school, you’re done learning
  • are you in startups for the money? if so, when (that’s a when, not an if) the startup feels hopeless and the rollercoaster is at the low, you’ll give up easily.
  • if you’re into startups not just for the money, you’ll focus on external rewards and harder to give up
  • “if you really care about something, do it now.”

Twitter Founders Biz Stone and Ev Williams: Q&A with Jessica Livingston

  • Obvious was bored of Odeo and wanted to do something new. they weren’t passionately engaged in the product and rarely used it
  • motivation behind Twitter: two week hackweek at Obvious. they built, used it over the weekend, and they were passionately engaged
  • Twitter was incubated in Odeo, then spun out. Fred Wilson was first investor. they were lucky: they were able to choose investors
  • SXSW 07 was big: people started using it for afterparties
  • one guy said that one bar was crowded and to go to another one and posted it. before he got there, the line was out the door
  • they realized WOW – this product actually had users, people loved to use it too
  • some people said, it’s fun but it’s not useful. Ev responded: well, so is ice cream.
  • going public with Twitter a possibility, they’d like to go big

Mark Zuckerberg, Founder and CEO, Facebook: Q&A with Jessica Livingston

  • addressed the audience as “my people”
  • first social hack: making an online study tool that had people fill in notes for him to pass a final
  • first version of Facebook was about 10,000 LOC, release early release often worked really well for Facebook (employees push a lot)
  • definitely build something people want. Facebook wasn’t a business at start, was a tool and project
  • moving to Silicon Valley provided a lot of infrastructure for an early entrepreneur like himself
  • launched Facebook at the least receptive schools and they still caught on
  • Facebook is by definition is a naturally viral product: your friends are there. Lots of organic word-of-mouth happened at campuses.
  • Half of Dartmouth College joined in one night, probably due to an email that went out from the student government.
  • he says he never pitched Facebook a lot. Just got introduced to people because already had x00,000 users
  • “we used register.com, which was a mistake”
  • have to go through a lot of steps and iterate, no problem with mistakes, like being too perfect
  • Facebook was very focused on keeping the management technical, vs. nontech folks running the company
  • if a ‘technology’ company has a management that isn’t really technical, it’s not a tech company
  • keeping a smaller team means leverage. 300 mil users and 300 engineers. FB: a company composed of hackers. look elsewhere, and the ratio of engineers to users is incredibly different
  • cognizant of the fact that engineers tend to move around companies. Facebook is a place to learn; he’s cool with moves.
  • he talked with classmates about big industry trends. One was more data and interaction.
  • sometimes you shouldn’t listen to other people. Lots of people told him he had no experience etc
  • we’re trying to get the world to be more open. openness and transparency is going to be important in the future
  • not taking any risks is the riskiest thing you can do.
  • Values are worthless if they’re not controversial. What are you willing to give up for them?

Mitch Kapor, Founder, Lotus: Startup Culture

  • what kind of legacy do you want to leave? It’s about having impact.
  • startups see themselves as more open, less politicky, but they aren’t actually better in some ways
  • startups have more public humiliation and bullying than regular companies, says research
  • some startups value face-time more than productivity, and some value rumors as the best source of info
  • lots of tech startups see themselves as meritocracies. Research : “diverse teams are better”
  • inaction is an action, too. Both what you do and don’t do affects your startup’s culture
  • in startups, hold people accountable. Be serious about keeping a tight leash.
  • Angel investors are really disruptive. Characteristics: smaller chunks of money, more favorable terms, often entrepreneurs themselves

Tony Hsieh, CEO, Zappos: Delivering Happiness

  • sold LinkExchange because the culture with employees wasn’t good.
  • the list of core values of Zappos was really important to culture and the co. Wish they did it at first
  • “people tell us we should start an airline… or run the IRS”
  • Zappos has three C’s: Clothing, Customer Service (what they experience), Culture (and core values)
  • recommend Good to Great (Jim Collins) and Tribal Leadership (avail online at zappos.com)
  • “chase the vision, not the money–and the money will end up following you”
  • “what would you be passionate about doing for 10 years regardless of money made?”
  • Inspire employees: culture and greater visions. Came up with Committable (!) Core Values.
  • Zappos’ Committable Core Values are grounds for hiring and firing, very serious about it
  • one hire that goes against the core values is fine, but making a habit of letting it slide all the time is detrimental
  • more important to have core values and committing to them, rather than the specific values.
  • “vision and culture can inspire passion and performance” (yes!)
  • Zappos aims to deliver happiness to customers AND employees AND vendors
  • When Zappos employees leave, they often go and hang out with other Zappos employees.
  • Zappos recommends that 10%-20% of time outside of office w/ coworkers, and Tony said that it improves communication and happiness by 20-100%!
  • what is your goal in life? then ask why? then ask why again? and again? it all leads to HAPPINESS
  • happiness components: perceived control, perceived progress, connectedness, and higher vision/meaning
  • give bonuses every 6 months vs every 18. Equivalent but happiness higher
  • 3 types of happiness: pleasure/rockstar, passion/flow (time flies), meaning/higher purpose (long lasting)

Mark Pincus, CEO, Zynga: My Startup Experience

Check out this writeup on VentureBeat too.

  • you probably have to have a screw loose if you want to be an entrepreneur
  • at one point he was funded and the funder wanted the company to be “independently controlled” (disaster)
  • they brought on an independent person on the board (would become CEO, independent person, and VC.) however, they realized that in a decision the independent person basically pointed to the VC and says, it’s their money.
  • what really matters is that YOU CONTROL YOUR BOARD. Mark Zuckerberg claps.
  • “Who gives a shit what your valuation us? Only your ego!”
  • A lot of the time, the people that are dealing with your startup on the board of directors are junior VCs.
  • if you go to the senior VCs, they’ll understand what you’re saying.
  • however, the junior VCs aren’t very smart, and they’ll want to control your board a lot
  • to first-time entrepreneurs, they’ll mark you as an investment risk and you lose more control. ironically, this is probably a first-time VC/board member as well.
  • at some point, you’ll have to hire someone to be COO. however, you’ll then find that the COO that you may find will look at you saying: you’re a first-time entrepreneur. I don’t want you managing me. I want to be CEO.
  • Fake CEO days: speaking at conferences, etc: he almost took one by speaking at Harvard Business School but instead went to Facebook and worked with his team to fix Zynga’s problems

google_appsGist: Google gives campuses free, branded, ad-free usage of Google Apps, their cloud offering, familiarizing the students with the product, which will result in workplace purchases (which do generate revenue for Google.) They hold almost a 60% market share in campuses that recently migrated to cloud email and services options. Google’s smart in targeting campuses: they are also the perfect adoption point for Google Chrome OS.

Advertising Age recently profiled Google’s brilliant Cloud conversion plan targeting college campuses. It’s a fantastic article documenting how Google is going for wide adoption of their OS.

For more than two years, Google has approached colleges and universities with a near-unbeatable offer: provide unlimited hosted e-mail and other applications, all branded by the institution and delivered free of charge.

The colleges take the hook of using Google (GOOG) for replacing their IT infrastructure, and it gives an immense cost-benefit. AdAge says that Google signs up 70 to 75 campuses per quarter (!), an astounding rate, given how large of a market they have. With a total United States number of two-year and four-year colleges of approximately 4,000, Google’s cloud offering is gaining 2% market share each quarter (not to mention word-of-mouth marketing for a perhaps increasing derivative of market share gain.)

Indeed, Google already holds incredible market share in the campus cloud market, as the article quotes: “On campus, Google is making inroads. In its annual study of the role of technology on campus, the Campus Computing Project found that two-fifths of participating campuses had either migrated to outsourced e-mail and services or planned to. Of those, 56.5% opted for Google, 38.4% for Microsoft (MSFT) and 4.8% for Zimbra, an open-source software maker owned by Yahoo (YHOO).”

Not only does the campus receive free, branded, and ad-free email, calendar, and various other services from Google through the cloud, Google also gains three things. One, familiarity of students to the service. Two, and connected to one, future use of the Google cloud offerings on their own after college. Three, knowledge of this cloud service, and with a positive experience, this may transfer into the workplace which will allow Google to convert more business (profit-making) customers for their Google Apps cloud offering. (Interestingly, this is similar to why the piracy of Photoshop is beneficial for the application: users of Photoshop make their workplace aware of the positives of the software package, and the workplace purchase the application, generating revenue for Adobe (ADBE).)

Furthermore, these campuses are the perfect place to target for the adoption of Google Chrome OS. The cloud-only, thin-client offering (discussed here in Google Chrome OS: Google’s Master Plan) to run on netbooks is a perfect offering for college students running on the cheap: cheap netbooks, open-source software, Google Apps cloud including Google Docs, Google Calendar, Gmail, and all other university-branded solutions that are already available to them, and Amazon one-click delivery of ramen. Google is undoubtedly aware of campuses as the perfect adopter of Google Chrome OS, and they’re smart to target the campus at first for a can’t-say-no adoption offer for Google Apps.

Startup Takeaway: Although Google presents itself as an immovable market leader (and offering these services for free, even), take away the power of other methods of marketing. Google’s marketing play here is brilliant: target users from the ground up, by offering an exceptional service for a price that can’t be argued against (free). Find other sources of marketing that can be used to bring, primarily, awareness, and let the product follow through for a positive experience.