Congress Moves to Rein in Illegal Wiretaps

The JUSTICE Act, short for the Judicious Use of Surveillance Tools in Counterterrorism Efforts Act, was brought to my attention today. The JUSTICE Act seeks to put constraints on the Bush-era USA Patriot Act and FISA Act Amendment which drove national security efforts here at home post-9/11.

In the past, I have been a very vocal critic of the previous administration and their liberal assumption of power not explicitly granted to them by the Constitution. Namely, the use of these powers was, in my book, impeachable offenses. That Administration has come and gone, but the PATRIOT Act and FISA still haunt us to this day.

We in the technology community should be alarmed.

The JUSTICE Act, however, brings some sanity to this process. I’ve read a significant portion of the bill (embedded below) and it goes a long way in improving the current situation that allows the government, based on their say so, to direct communications companies (cable, satellite, phone, wireless carriers, ISPs, etc) to hand over data on American citizens without warrant, and in a far-reaching and unfetter fashion. By placing investigations behind a veil of opaquenes that is unable to be questioned even by other courts, the executive branch of government, under the Bush Administration and in the name of National Security, assumed an exclusive lock oninvestigatory powers without constraint.

3531416607_3e8e066127This bill does what should have been done with the previous bills – considerations for Due Process, First Amendment rights and checks and balances.

Notably, the JUSTICE Act attempts to place the limitation and focus of National Security Letters (directives issued from the Director of the FBI) back on foreign powers and places significant protectionary road blocks between the government and the citizen.

While I do not trust the government to actually be able to do the right thing, the fact that this bill is introduced tells me that there is a recognition that when checks and balances are in effect, as they were intended to be, it’s much harder to do the wrong thing. It’s called accountability and the more we have, the better we’ll be.

EFF is hosting a call to action, allowing folks to automatically send a note to their Senators.

Government as a Platform?

Data, data, data. This is the answer for government in this new world of Government 2.0. Making government available to the citizens by building platforms for change. These are the ideas bandied around when the Silicon Valley Warlords came to Washington, D.C. this week to put on the invitation only Gov 2.0 Summit and teach Beltway insiders how their successes in the Valley could be instituted in the center of government.

The center of government. The center of politics. The center of policy. Of course, if the warlords have their way, the center of technology.

The concept of government as a platform is a good one on the surface. The idea that making government a series of, for lack of a better words, APIs to help the citizen understand and access their government officials and services better is a noble one. However, it is naive, and this is where the native-understanding of Washington comes into play.

The rest of the country looks at Washington as a city that is always in-fighting. That the entire ecosystem is made of bureaucratic citadels of power that never accomplishes anything. Incompetent politicians who all lie, lie, lie.

For those of us inside the beltway, we recognize that partisanship is a means to an end. That policy takes a long time to change, policy makers remain embedded as established government for years and even decades, and that politicians come and go. This is part of the expectation in our Washington. The agencies exist, made up of rank and file – the foot soldiers, if you will – and the policies in place in those agencies come from decades of precedent in some cases.

Some of it needs to be changed, and to the extent that OpenGov and Gov 2.0 can open up the doors to this change, then it will. However, some of this will never change and it’s not necessary to try to change it. Precedent generally exists for very sound reason.
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What will fail, however, is the replacement of the Washington system made up of politics, policy and also data by a fraternity-style, easy-money lifestyle of the west coast. While they talk billion dollar valuations on startups, we talk about billion dollar annual budgets for Level C agencies. Two different worlds. We have a much bigger stake, and therefore, we’re less likely to change how we do things because they suggest we should.

My suggestion is to O’Reilly and Camp: Come back to Washington, D.C. I know you’ll be back for Gov 2.0 Expo in the spring, but come back for a Summit too. Instead of dictating how the event goes, however, open it up. Make sure 50% of tickets are available for free for any verifiable government employee. (General consensus is the attendace was around 70-30, Private-public, a guess since O’Reilly Media declined to comment on attendance figures). Double the price for the private sector tickets to compensate. Here’s a hint: The federal fiscal year doesn’t begin until Oct 1. Budget money isn’t available to pay for the agency employees to attend your event. This isn’t the private sector. Money needs to be accounted for, especially during a recession. If you want this to be about government, ensure that the Feds can go free of charge and charge the Private sector double.

Secondly, allow questions from the audience. There was extremely little interaction with the audience by speakers. This needs to change if it’s going to be a learning environment.

I’d also suggest the need for a competitive event. With everyone who has dipped their feet into the Government 2.0 kool-aid, precious few have kept their noses clean from federating around this very failed event. I said in November that few of anyone has this industry figured out yet, yet the money flowing in from the Valley has caused almost everyone to sacrifice their independence and free-thinking (How many of you on that Gov 2.0 Summit Advisory Board are free to do a competitive event?)

I’d encourage some of the historically free-thinkers who have given up their independence to think about how government can really be assisted (let’s not talk about fixing government – they innovate much better than we do, actually) in different ways. I think there is room for events that will avoid the thumbprint of previous event and will federate around real ideas, not just inspiration speeches.

* Photo Credit: Big Berto

FriendFeed is now In a Relationship with Facebook

In a move that surprised many in the tech world, Facebook and FriendFeed today announced that FriendFeed has been acquired by Facebook. This announcement came as a surprise to those who see FriendFeed as an annoying, yet open approach to the web whereas Facebook has a history of being a walled garden, often only opening up their data streams in limited or crippled fashions.

More surprisingly, the acquisition was something like Sixth Sense where you watched the movie trying to figure out what the ending would be just to be totally blindsided as the credits rolled. Yeah, it was that sort of satisfactory “ah, you got me” moment.

friendfeed-facebookI have had a torrid relationship with FriendFeed culminating with a termination of my account, causing much angst and name-calling from the puppets who have pushed FriendFeed as the only way to have legitimate conversations on the web. From my perspective, and others, it was a noisy, troll-filled social platform that, though having good technical features like real time feeds, also provided an almost cliché approach to communication.

Where the web has become increasingly fragmented and dispersed, fans of FriendFeed often touted it’s aggregation platform as the end of disbursement, a concept that I disagree with. Such end of disbursement also marks an end to competition, if allowed, and a navel-gazing mentality that assumes nothing can be better. Competition in the market place is good, and I chose Twitter.

What this means to consumers is unknown yet. Facebook has a historic closed stance and, though opening up certain APIs such as Facebook Connect, and allowing developers to develop applications for Facebook, it still stands as a relatively closed system. In order to really engage with Facebook, you really have to be using Facebook itself or the mobile apps built for Facebook.

FriendFeed has a robust API that developers can access to distribute or repurpose the content within. It has failed in many ways by not providing a really great application ecosystem, but on paper, it is much more robust of an open system than Facebook.

Facebook has certainly taken pages from the FriendFeed book, however, making their newsfeeds real time, and integrating their “Like” feature. However, it still is not as quick or reliable, much less intuitive for the user.

In an ideal world, Facebook takes almost all of the real time, and “Group” functionality of FriendFeed and integrates it into Facebook. Lose the walled garden, and keep the API open for developers. Time will tell, however, as these two companies figure out how to be “In a Relationship” with each other.

More on this acquisition from other sources:

Space: The Final Frontier

Today is July 20th and it signifies a very important day in the history of mankind. It is the day we celebrate the 40th anniversary of the moon landing and, in many ways, the culmination of the advent of the technology age. 40 years ago today, we began a journey into space that has not receded (though we have not recently returned to the surface of the moon).

Much is being made of this anniversary today. WeChooseTheMoon.org, a fascinating real time re-enactment of the mission, including the days leading up to the pivotal moment, is a project of the John F. Kennedy Presidential Library.

It was Kennedy, in an address to a joint session of Congress in 1961, that called on Americans, with a specific mandate to NASA, to put a man on the moon by the end of that decade. An excerpt of this speech:

Finally, if we are to win the battle that is now going on around the world between freedom and tyranny, the dramatic achievements in space which occurred in recent weeks should have made clear to us all, as did the Sputnik in 1957, the impact of this adventure on the minds of men everywhere, who are attempting to make a determination of which road they should take. Since early in my term, our efforts in space have been under review. With the advice of the Vice President, who is Chairman of the National Space Council, we have examined where we are strong and where we are not, where we may succeed and where we may not. Now it is time to take longer strides–time for a great new American enterprise–time for this nation to take a clearly leading role in space achievement, which in many ways may hold the key to our future on earth.

I believe we possess all the resources and talents necessary. But the facts of the matter are that we have never made the national decisions or marshalled the national resources required for such leadership. We have never specified long-range goals on an urgent time schedule, or managed our resources and our time so as to insure their fulfillment.

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I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the earth. No single space project in this period will be more impressive to mankind, or more important for the long-range exploration of space; and none will be so difficult or expensive to accomplish. We propose to accelerate the development of the appropriate lunar space craft. We propose to develop alternate liquid and solid fuel boosters, much larger than any now being developed, until certain which is superior. We propose additional funds for other engine development and for unmanned explorations–explorations which are particularly important for one purpose which this nation will never overlook: the survival of the man who first makes this daring flight. But in a very real sense, it will not be one man going to the moon–if we make this judgment affirmatively, it will be an entire nation. For all of us must work to put him there.

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Since then, the United States and the world have gone through vast technological breakthroughs, often in greater haste than the 8 years it took to put a man on the moon. For instance, consumer electronics continue to progress at a staggering speed, particularly with the advent of the iPhone.

The internet burgeoned from a 5 hours monthly dial-up plan with AOL to saturation of broadband in many areas of the world.

Companies like Google continue to harness computing power to create vast databases of information.

Currently, NASA has the Lunar Reconnaisance Orbiter (LRO) circling the moon in advance of a new moon mission by the end of 2020. The LRO is trying to map the entire moon surface (including the notoriously unknown “dark side of the moon”) to determine resources and terrain for the construction of a manned lunar outpost.

Many companies, news sources and blogs (including this one), are commemorating the moon landing with special logos, graphics or other site modifications. It’s just our way of saying “Wow”.

Mobile Apps – Gold in Them There Hills?

For those of us waiting outside the Finnish Embassy earlier this week to get in for Mobile Monday (a.k.a. dcMOMO)””all that was missing was the velvet rope. “œOkay, we’re only going to let 20 more people in””to the rest of you, we’re sorry.” Me lucky.

Geez. You’d think it was a not new club. Well, to some, it is. Many attendants were prospectors with apps in their back pocket . . . and the prospect of generating hundreds of thousands of dollars in download revenue for an iPhone app is just too exciting to pass up. Forget Facebook and MySpace apps. This is real cheese.

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Cheese indeed. Everyone knows the story of iFart, and no doubt many were there Monday night to hear Ken Burge (president of InfoMedia, creator of said gaseous phenom) tell his story. Download revenue to date: $490,000. Yet Burge’s electronic alter-ego (he attended from Colorado via Skype) actually let some, er, wind out of the sails: “œThe days of throwing something into the AppStore and getting traction””if they ever existed””are over.” Even with iFart, he acknowledged, they shilled for Mashable and TechCrunch. “œPlan your costs based on a 50/50 mix of development and marketing.”

Ouch. Them windows of opportunity just seem to get smaller and smaller, don’t they? And what with development costs running a minimum of $10k to $20k per native app (according to panel moderator Viq Hussain, recently of Intridea, now launching his own media marketing effort at Kongruent), mobile launches start to get a little daunting. Panelist Isaac Mosquera of PointAbout, a DC firm that mobilizes sites, said it’s going to be a lot more, “œbecause your first version is probably not going to be successful.” Multiple platforms, too. And don’t forget the server component. As Burge pointed out, you not only going to want to know who downloaded the app, but analyze and capitalize on all that valuable data.

Okay””enough of that negativism . . . let’s put on the pink glasses.

According to another dcMOMO panelist, Jason Siegel of Qorvis Communications (they built WashPost’s popular Going Out Guide for the iPhone””get it, it’s free), revenue from mobile platforms is destined to explode. “œMobile ad revenue will grow 36% to $200M in 2009, and by 2011 it will double to $400M.” Okay, peanuts compared to the billions in TV and online . . . but that’s a helluva ramp. Siegel is psyched because he’s seeing first-hand the movement of traditional advertising to the third screen””Qorvis is currently developing apps for, among others, AAMCO (the transmission folks).

Beep, beep . . . ring a bell? If it doesn’t, then you’re likely among the Millenials, who only register a 10% to 20% recall rate on the brand””vs. 90% for Boomers. Which is why all the panelists admonished “œChoose your platform . . . wisely.” Blackberry, not iPhone, might be the place to start. (To some, the iPhone is still not a business phone.)

Still, it’s hard not to get excited about the potential for mobile apps. First of all, the platform is . . . mobile. You got it with you, right? So geolocation has a lot of buzz. Qorvis has partnered with PointAbout to do the kind of cool stuff you’d expect from a computer that knows where you are. “œStep right into this Mall, son””and I’ll give you half off your second entrée at your favorite restaurant.” (And we know which is your favorite). Personal couponing, Siegel called it. Sweet. (Still, he creeped folks out a bit talking up Bluecasting“”drive by, and your [mandatory] Bluetooth headset chirps “œC’mon in, Ray . . . $10 off on an oil change for your Lexus today!”

Shades of Minority Report. Good afternoon, Mr. Takagawa . . .

Anyway, the future is bright through these glasses. Panelist Samuli Hanninen, the Director and Head of Ovi Product Marketing at Nokia (hey, it was the Finnish embassy, who’d you expect””Motorola?) got the geeks worked up a bit with visions of phones (sorry, mobile devices) supporting web runtime, and yes””Flash. “œWe currently have 300 million phones in the market that support Flash,” he noted, “œand we’re working closely with Adobe to do more.” (Stick that in your pipe, Steve.)

The iPhone AppStore has generated in the range of $100M in revenue, according to InfoMedia’s Ken Burge. (Lightspeed Ventures’ Jeremy Liew has an interesting take on Apple’s take here.) Not huge, but then it’s really a driver of hardware sales.

Burge and others expect Android to eventually eclipse the iPhone (Google was to be represented on the panel, but got waylaid in travel).

All in all, a great evening, upbeat discussion””and extremely well moderated by Hussain.

Here are some salient bullets, in my view. (For another view, see the Top 10 Tweets)

  • Stretch your dev dollars by developing in-house, and incentivize your stars by offering a revenue share.””KB
  • Cloud computing will play more and more into the architecture, taking over processing and storage once bandwidth (4G?) is sufficient, rendering mobile devices little more than thin clients.
  • Make sure your mobile app has “˜share’ functionality””help spread it, duh.
  • Try to figure out ways to be paid when your audience makes use of your content, as in couponing. “œBake revenue into your content.”””JS
  • Stay focused on the business model.””KB
  • Make sure you have the right people on your team. “œGreat thinkers, yes . . . but also flexible, and with a sense of humor.”””KB
  • Context is key. “œRemember to keep it personal.”””SH
  • Don’t put all your eggs in one basket. “œCreate several apps””if one takes off, your others can feed off its success.”””KB
  • Be ever mindful of privacy issues. “œIt has to be good for the consumer.”””SH
  • And stick with it. “Stay stubborn.”””SH

Not motivated enough? Check out Entrepreneur magazine’s roundup of iPhone moneymakers.

Great Missed Expectations

Several times in my career, I’ve excitedly joined up with a partner — usually technically adroit, often visionary, always inexperienced. Each time, it seemed a natural fit. We were complementary — I brought a wide variety of tech-marketing and business skills, and most important, experience. And we got along really well. So why didn’t it work out?

The simple answer is . . . missed expectations.

Rushing to the altar (startup/wedding analogies are cliché, but true), partners rarely take the time to share their vision, sort out their roles, and agree to a process. (What, you haven’t discussed your childrens religion? How about whether you even want to have children?)

Here are a few missed expectations I’ve experienced:

I had raised more than $30M over the course of several companies. Co-founder’s expectations: I would make a few calls, and funding would come flooding in.

It never works that way — even entrepreneurs that generate home-run returns to VCs will walk a hard path to funding their next idea. Money-raising takes dozens (if not hundreds) of pitches, six to twelve months at best, and more likely, years. Especially these days. But we never talked about it. I wrongly assumed that the founder understood the game. In fact, I thought we were cruising along just fine.

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The co-founder had several successful products under his belt. My expectations: He would deliver the product on time and under budget.

Well, that would be great. Truth is, it hardly ever works that way. (Why am I always surprised by this?) In fairness, fashioning great technology that has never been done before is hard. Often, it depends on invention. Ever try to plan an invention? But even taking into consideration all the Laws of Software Development, things go wrong. They take longer. They need to be redone. Meanwhile, I’m making commitments to customers, or investors, or the media. And, I’m embarrassed.

But it became such a touchy subject, we couldn’t talk about it. (You know, just ignore it and pretend it doesn’t exist — like that Giant Squid in the Kitchen.) The lesson again: communicate. Doesn’t matter if your company is just two people, meet weekly — formally, same time each week — and revisit the schedules and goals. Above all, be honest.

I’ve served in Bus Dev, Marketing, and Corporate Development roles. Co-founder’s expectations: I would do all the things the co-founder didn’t want to do.

This actually wouldn’t be bad — I’m not the coder, or the chip designer, and it’s always better, IMO, when founders are sufficiently complementary that they stay out of each others’ sandboxes. But it can easily erode when there’s insufficient trust. In the course of going my about the “˜mundane’ business and corporate-development activities, co-founders invariably leapt into my sandbox. And when founders start to second-guess each other is when things can deteriorate.

Which is why I emphasize putting together a Business Plan. It’s not so much about crafting a document, as articulating exactly what we’re going to do. Technical founders are especially good at hand-waving how to make money, because “˜great products always do.’ But working on The Plan forces the conversation, and the drill-down.

Typical issues surround the business/revenue model, IP protection, partnering strategy, and the pyrophoric distribution of equity (Investors are going to get how much? Why are we giving this new hire 10%?). I’m not suggesting that my view was the only view — chances are, the founder knew his/her space well, and had some pre-conceived notions about go-to-market strategy, and what partnerships/alliances to forge. I only point out that it’s imperative to devote time — early on — to these potentially explosive topics, to avoid a breakdown in your relationship.

Much as I’ve sworn to avoid these and other missteps, it still gets down to a question of “˜fit.’ The right roles at the right times, a healthy, collaborative working partnership, shared passion and dedication to the project and the vision. Isn’t that what we all want out of entrepreneurial life?

Which is why I continue the quest — for the partner, gig, and team that needs me as much as I need them.

The Rules for Entrepreneurs

Venture Files founder and former curator, Steven Fisher, wrote a series last year that remains one of the best of its time. Even though he has moved on and is working with Network Solutions, I think it’s as important now (if not more so) than it was last year at this time. This is a consolidated (and updated) version of that series.

Pay Yourself First

Over the last 9 years and two startups I have learned many things and screwed up royally in some cases. This series is about providing you best practices of lessons learned and avoiding the mistakes I have already made.

In the past, I have had good years and bad years. When you have employees, they expect to be paid and when you mess with payroll (and payroll taxes, but that is a post for another time) you create such a negative culture that nothing will get done.

With that said, when you are starting your business regardless if it is a service or product company, you will have startup costs and probably forgo paying yourself for 6-12 months to keep growing the business. That is fine and to be expected. What you should not do (and what I did) is keep adding staff and sacrifice your own salary in the name of growth. If you keep going like that and have a bad quarter you will have nothing saved for a rainy day and if the business fails you will probably be in immense debt and got nothing out of the business.

Granted, the balance between growth and cash flow is a tenuous one but it is one thing you should never defer to someone else in beginning. Plus, there is a difference between creating a lifestyle business and an enterprise. A lifestyle business is really making enough money for yourself and having some contractors or 1-2 people that gives you a good salary but is more about freedom. An enterprise is a business that scales and gets big over time but you will be working intense amounts in the beginning but will need to hire those smarter than you with the intention that you are looking for an exit and will have time for freedom when you cash out.

So when you are growing the business you should work the first 6-12 months paying off the initial capital expenses and getting about 6 months of cashflow for yourself before you hire anyone else. Once you have that done, start paying yourself something, even if it is small and will ramp up over six months, pay yourself first. This will get you in the habit of being committed to making the business pay for itself and you so you are not worrying about living month to month and let you find some resources to help you deliver while you continue to sell and grow the business.

Once you are looking at hiring someone use these two rules as a starting basis:

– Have six months of payroll for that person in the bank on top of your salary

– Have 90 days of projects or sales committed for that person to deliver so they not only have something to do but are earning their keep.

You may have to be conservative at first in your growth but in the end you will scale better and create a business that is focused on delivery and customer service without putting you and your employees on a cash flow roller coaster.

Getting Physical

“I love software,” my friend used to say, “But it’s soooo dehumanizing!” Perched 18 feet in the air atop a scissors lift the other day — I resisted the urge to shout, “I’m the king of the world!” — it occurred to me that variety in work not only makes work more enjoyable, it’s essential . . . especially, something physical to contrast and complement time spent at the computer.

Now, I’m not even a developer — most of my work on our social-networking app was wireframing and flowcharting with Adobe CS tools . . . when I wasn’t writing user agreements, business plans, and corporate docs. Still, I remember euphoric moments solving a UX problem, then excitedly assembling dozens of wireframes until 3am. World blocked out, mind starting to numb up, clicking command-O or command-shift-S and forgetting what it was I wanted to do. I can only imagine what it would be like to find oneself having similar brain-farts deep in the weeds of multiply nested subroutines. No wonder coders get cranky!
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But my hacker friend gets physical breaks. A lot of his code gets programmed into chips, so he’ll be at the “˜bench’ some days, sticking parts into sockets, occasionally breadboarding things up, soldering.

(An EE and inveterate tinkerer, I love the smell of rosin-core solder in the morning. If I weren’t so afraid of the time-sink it would become, I’d so join HacDC. Have you seen the creativity springing forth around Arduino microcontrollers in the pages of Make? Btw, it’s a bit late, but the kits make great stocking-stuffers!)arduino-serb1

There’s a lot to be said about mixing it up. Adobe actually instituted a program to get their programmers away from the screen for a few days at a time working on physical projects — soldering, even — to refresh weary neurons and foment new thinking. I love the ‘real photoshop’ photo above (hat-tip, Keith Casey). I imagined whoever built it was staring at the interface with bloodshot eyes, got the brilliant idea, and stayed up all night gathering the ingredients, cutting and folding cardboard, and lastly whipping out the camera for the glorious shot. (Turns out, it was actually some agency work — but we’ve all had these moments, when we jump out of our genres, driven by inspiration.

We humans need that variety. Even when we’re doing something we really, really enjoy, it goes stale. Few writers just write. Workout routines become drudgery without variety. Even eating, veritable survival, gets uninteresting when day after day, it’s same-old, same-old.

Which is why I was having the time of my life (well, a good day at work) on a scissors lift, checking out the HVAC in our warehouse space. We build next-generation components . . . but right now I’m supervising the buildout of a clean-room area where some macho processing equipment will be housed. I really enjoyed surfing the web for a used 408V to 380V transformer (50kVA, three-phase, of course). Anyone got one?

My Illustrator skills came in handy, doing electrical, plumbing, and other floorplan drawings. And after unloading boxes of ceiling tiles and HEPA filters arriving from trucks, it’s really comforting to return to the computer. (Even to update my Project file . . . or Sharepoint — I will not let it beat me!) And vice-versa.

One programming friend builds boats. Another does stand-up comedy. Many are great cooks. Tell me: what do you do to mix it up? (Drinking doesn’t count!)

Bail Out Entrepreneurs, Not Big Auto

So, the Auto Bailout bombed in the Senate. Good. (Never thought I’d be writing about it in Venture Files . . . but then, I never imagined it might affect entrepreneurs — including me — directly.) It’s an intriguing tale of desperation, fear tactics, and ironyLa-192-car-pileup2003.jpg.

Desperation because the auto industry leaders are out of options, and doing everything they can to avoid the only solution that makes sense: filing for Chapter 11 protection. (I used the word “˜protection,’ rather than “˜bankruptcy’ because it’s exactly that — a means of legally keeping at bay those who might otherwise come after you for moneys owed.) I’ve been through it with one of my startups, and I’ve written about it here.

Fear tactics because the auto industry leaders would have us believe that the world will end if they file for Ch. 11. In fact, it makes survival possible. It enabled the airline industry to survive. So why would the industry leaders oppose it? It wipes all the existing stakeholders clean — all stockholders, creditors, pension plans, and — most important of all, the unions. And it will wipe out industry leaders’ individual stockholdings . . . and probably cost many of them their jobs.

But it’s the only solution. Lending the big automakers money to make payrolls is a short-term fix at best. There’s nothing they can do in the next six or even 12 months to turn their battleships around. I get as sentimental as anyone about GTOs of the past, but the model is broken, and dead. It’s time to clean house, start over. I feel for the folks who will lose jobs, but sorry — your management screwed up . . . and they’ve been doing it for decades. Instead of spending on R&D for new technologies, Big Auto spent on lobbyists to get relaxed efficiency and emissions standards.

It’s not about casting blame, or punishing anyone. It’s about survival. The crushing debt burden, inflated wages, and inefficient manufacturing infrastructure will never enable a US auto maker to return to profitability, even if it had a next-generation car ready to go. Unions are an antiquated and unnecessary burden, a throwback to times when bosses literally beat employees to make them more productive. The tech industry works fine without them (although there were several attempts to unionize them over the decades). More to the point: Foreign automakers have set up shop in the US without them.

I wonder if auto workers were given a choice of losing their jobs or taking a comparable job at two-thirds of their current salary at an electric-vehicle plant, which would they choose?

Ironic. Because there’s already a fully approved $25,000,000,000 in loans available to car makers. That’s right — $25B in direct low-interest loans (the Federal Funds Target Rate, currently at 1.0%). It’s the Department of Energy’s ATVM Loan Program (for Advanced Technology Vehicle Manufacturing), and it’s fully approved by Congress, under Section 136 of the Energy Independence and Security Act of 2007. So why aren’t they taking advantage of it?

Because they’d rather keep operating as they’ve been for the past 50 years, than do what they should be doing. And they’re woefully unprepared to shift manufacturing to projects that meet the ATVM criteria.

So, despite the fact that, it’s all there, fully approved by the House and the Senate, with applications due by the end of this month, and decisions to be rendered by March 31, 2009, there’s that hitch: applicants have to have bona fide projects that meet the criteria of an Advanced Technology Vehicle. That could be anything from new high-efficiency gas-sippers to plug-in electrics. (You can read all about it in the Interim Final Rule.) The funding is not designed to resurrect Oldsmobiles.

For decades, Big Auto chose to avoid the transition to alternatives. Not that they didn’t do some work on them. (If you haven’t already, be sure and rent the documentary, “˜Who Killed the Electric Car?’ GM built one — the EV1 — people loved it, and every last one of them was destroyed . . . by GM.)

The automakers should be forced into bankruptcy. And rebuilt. Federal funding should be provided — but only to fund the new businesses emerging from Ch. 11.

If I seem personally peeved, I am. On behalf of my new company, I attended the DOE public meeting for the ATVM Loan Program in Washington DC last week. See, the loans are also available to makers of components for ATVs, which is what we are. I’m fairly confident we’d qualify for the program (although not in time for the year-end deadline, but no problem — there will be rolling application deadlines — and 90-day decisions — every quarter.)

But there are a couple of gotchas: 1) the bailout that just failed (thank God) was going to “˜steal’ $15B from the program (since the money was already approved); and 2) even though it will go forward, a subtle point came up in the DOE public meeting — once a ‘magic number’ of $7.5B targeted for bad debt (based on the committee’s analysis of aggregate applicants), after which the loan program is ended. That means, say, GM receives a $4B loan to set up a plug-in hybrid plant, but the committee calculates a 50% probability that GM won’t be able to repay the loan. Then $5.5B is left for the others. You get the picture: the DOE might only end up lending a total of $15B — mostly to the big guys — based on a 50/50 chance that they won’t make good on the loans.

And us little guys — the entrepreneurs who should be getting the money for new technology — will be squeezed out. We were all there (at two separate meetings) at the DOE meeting last week — lots of technology companies developing radical new engine designs, patent-pending alloys with greater strength at a fraction of the weight, energy-efficient components, electric alternatives (including Tesla Motors). Oh, and a few representatives of Ford, GM, and Daimler, and the Japanese car contingent.

And although the Interim Final Rule makes no provision for ensuring that small companies get a piece of the pie, there is still hope: Section 136 also provides for grants, but the lawmakers haven’t gotten around to defining that part. Let’s hope the new Administration sees the wisdom in targeting that money for those who will put it to best use — the entrepreneurs. (They’re ahead of us in the UK on this one.)

Still, the (sitting) President is pushing the rescue, this time from the bank bailout fund. I reiterate: ‘Oh, Thank Heaven . . . for Chapter 11!’

Are You Captain of Your Destiny?

Returning to quickly skim my blog reader 1,000+ after two weeks’ head-in-the-sand, I see ‘Pownce acquired,’ and ‘Yahoo’s Chief of Insights Joins Bunchball.’ My spin radar immediately starts blipping, because I know that behind the ‘good news,’ guts are wrenching. Decisions are being made for people, and that never feels good. Yet another reminder that all the sacrifices may well be worth captaining your own destiny.

master-commander2

Sustaining yourself with a small business doesn’t make headlines. Money-raising has been the mainstay of startup news since venture capital exploded on the scene in the ’80s. ‘Huffington Post Nabs $25M.’ And why not? It was validation that the company ‘has arrived.’ It was the Big Show. But ask any CEO what changes when investors step in. Everything.

No, they’re not (necessarily) evil. They’re just bound and determined to turn your company into a successful exit. It’s their job, in fact. It’s not about you, or even your technology.

Chances are, your primary mission is not to achieve successful exit. (If it is, you’re probably going to fail.) For most of you, it is about you — your passion for your technology, or your customers, or what you do.

If it sounds like that’s at odds with investors, well it often is.

So when Bunchball (the Silicon Valley company that applies gaming mechanics to making sites stickier) announces its new ex-Yahoo CEO, I hear a founder’s gut wrenching. When crafts-aggregator Etsy announces former NPR Digital head Maria Thomas taking the helm, I hear a gut wrenching.

Often from the outside, the decisions seem right. Geeky founders often don’t make the transition to leadership — ubergeek Bill Gates is an exception — and Heidrick & Struggles and CTPartners (formerly Christian & Timbers) and the like make a lot of money plucking SVPs out of big companies and placing them in VC-funded startups. (The genealogy of silly titles can actually be traced back to CEOs being made to step down — where do you think Chief Product Officer, Chief Strategy Officer, Chief of Insights, and other staff titles came from?) But then, investors aren’t all-wise. Gross blunders are made at the highest levels. (Remember when Pepsi head Sculley was brought in to run Apple? Not to mention Gil Amelio . . .)

There’s really only one way to avoid decisions in your company being made for you: captain your own destiny.

That usually means going slow, growing customer by customer, often staying small. If you want to go ‘big’ — and not everyone does — you’re most likely to find yourself at the investment/management crossroads. As an ambitious technologist/hard-core developer, you might decide to bring in someone to run the business. (Hey, it happens — sometimes founders themselves honestly recognize the need for new leadership.) That bespeaks true wisdom on the part of tech founders. Eric Schmidt’s install at Google was a coup — not a coup d’etat.

In his blog post, ‘10 Tips for Building a Profitable Business,’ Dogster CEO Ted Rheingold’s entreated:

So constantly ask yourself, are we spending 50% of our time selling? I bet you’ll always realize you’re focusing too much on the product and not enough on finding customers that want it.

Any of us who’ve consulted know that hard truth: love doing the work, hate hustling to get it. If that’s you, and you find yourself running a company, you either need to embrace being the CEO (read: chief salesman) and quit coding, or find someone who’s a good complement to you to do that job and leave you to program (or design, or write, or do whatever it is that you really do best.)

Once you’ve piloted your ship (to belabor the metaphor) past the shoals into the smooth waters of profitability and solvency, and feel the need to raise cash, get big, and pull away from your competition, the dynamics of a deal with a VC changes radically — you get the money on your terms. Still el capitan!

I’ve observed a lot of folks in charge of their destiny lately. (In the month of November, 533,000 who were not, had their ships sunk for them — so much for job security.) Software, the Interwebs, automatic ads, SEO, and (yes) social networking have made it a greater possibility than ever — unlike the previous waves of semiconductors, PCs, and computer networking. It’s akin to the artisans of the Renaissance — with skills, there’s always work. Entrepreneurs today can be captains of their destiny.

And I truly admire you folks. The ones scrapping it out, making a living, while they build their business, serve their customers, and develop a following. Those of you who eat, drink, and sleep (not much) your startups.

Remind yourself this at the end of your crappiest days: You’re the one making the decisions. Go make some really tough ones.