false precision

Become or embrace your inner Nerd

I read a good article yesterday called The Rise of Developeronomics. It brought together two concepts that I have thinking about for a long time.  The first is the incredible marketability of software developers and the second the encroaching job crisis that many people are faced with.

I started my real career as a software engineer.  I really enjoy writing software although I do very little of any longer.   I was really in my zone back in the late ninety’s when the entire Internet world was on fire.   Around 1996 or so I realized just how in-demand software developers were so I picked my bets carefully, meaning startups and founders, and essentially stopped worrying if I would have a job next week.  Even in the dark days of the Internet nuclear winter the fact is I could always get a job, could probably get that job in about 10 minutes, and ironically would probably be making more money not less.  It might not be the job I wanted, but I could – get a job – if things went bad.  Really the only risk was that I may work someplace that didn’t have upside potential, meaning I may risk only working for the salary.  Literally, for me to be happy I have to have plausible belief I am working toward a total homerun – or im out.  That does not mean job hopping – it means picking my bets and seeing them through.

If you juxtapose that thought process with the news every single night (yes I get my news old-school from the NBC nightly news), I’m astounded how so many people are seemingly out of work and giving up on finding work.  Of course, we all know these people are in a different position.  They worked hard, and were loyal employees and probably did concern themselves with selecting the safe jobs.  But, while they were doing that, the world made a slow and insidious shift out from under them like a slow moving glacier.  The world of software and technology slowly ate their existence.  We were all told it would happen very fast, starting with robots first eating our medications, but in reality it took about 20 years.  The fact is, if you are waiting for middle-management and clerical jobs to come back, they are not coming back.  If you are selling cars on a lot or books in a story, they are not coming back.  They were replaced with Amazon.com, Saleforce.com, personal computers, iphones and ubiquitous broadband connections.

The two worlds of technology enabled and not technology enabled are not colliding, in fact they are moving apart from each other at an accelerated pace.  I do not believe that government polity will help. Stimulus will not help because jobs that will be created will be for the technology enabled.  If you are not that person, you simply can not stand on the sides lines and proclaim you are not that person.  You will for all intents and purposes financially perish.  You must go educate yourself in something.   

If you are now a software developer or a technology-enabled person, my advice is NOT to hand wring about your career stability.  I honestly feel you have nothing to worry about IF you can handle being out of work and uncomfortable for a few weeks here and there.  YOU are the ones that will be making jobs for everyone that needs one.

Market Size and Velocity in Tech Startups

I was talking to a friend the other day that was contemplating doing a startup. He is a tech guy and tech guys tend to come at company building from a specific technology innovation and then look for a problem (market and product) to solve with it. It's not right or wrong but has its own challenges.

I was replaying my experience with Lijit and the old startup adage "Market Size fixes all problems". I had never really considered in great detail what that statement meant or all ramifications. The simple concept is if there is a huge market, you don't need to own a huge part of it to make a good size company. The Lijit experience however has given me new clarity around some of the dynamics of market size and tech company formation.

Lijit is in the AdTech space. AdTech has been a heavily funded sector by VC's in the last 5 years. This is due to two major things. First, online advertising is a huge macro market in the US, over $34 billion will be spent in 2012 trying to reach consumers online. Secondly, there is a huge discrepancy of advertising spend verses consumer time spent on the Internet.

Put another way, people are spending more time online but advertising dollars have not proportionally moved to online (yet). Hence this has created a huge opportunity for tech company's to facilitate advertising on the web. Not only is the market already huge, there is a forcing function of cash (like water pressure in a hose) that makes everyone complicit in spending advertising money as fast as possible and in ever increasing amounts. I have heard this referred to as "product pull" as well – meaning people want to buy, you don't need to convince them.

Interestingly however, there is a second dynamic of a frothy market that makes tech companies easier to build in very strong markets. They don't have to be that Innovative. After observing different AdTech companies over the last 18 months, I would classify most as reasonably successful and exhibiting a revenue growth rates that are healthy if not explosive. But when you look under the covers the innovation they have produced in term of products and intellectual property is marginal at best. Most developed a little trick here of there but nothing on the scale of market moving.

I have a theory that the larger and hotter the market a tech company lives in the, less disruptive or innovative the actual product needs to be. By contrast, my friends that live in more conventional markets need to have extremely innovative products that are major market disruptors. By definition that's a lot harder to do. And when you do finally find that product, you of course then need to own a huge portion of your market to make the company successful. If the market is too small, you may even have to enter a new market to keep growing the company. That's probably the worst of all worlds in my opinion. You have to effectively build two companies.

But, the benefits of market size and velocity don't end there. Naturally it's easier to get a company in a hot market funded but it's also easier to keep the company funded. Any startup takes a bit of experimenting to get the equation correct. In hot markets investors are more likely to stay with the vision. In smaller slower markets investors get concerned much quicker about the likelihood of success. Part of Lijit's success was that the investors stayed onboard and part of that was due to market size and velocity.

My advice to most people I meet with is do something in a market you absolutely love because you are going to be there a while. It's equally important to pick a market that is on-fire, or about to be on-fire. You're still going on a marathon run, but at least the wind will be at your back.