What Agile is NOT

Agile Will NOT Make People Work Faster

People will work just as slow or fast as before. It is not a miracle drug. Agile DOES ensure people are working on the stuff that matters at that particular moment. Which leads to the next point…

Agile Does NOT Mean You Can Change Your Mind All Day Long and Still Ship on Time

If you change your mind that the product should do X instead of Y, you may have to throw away code. This is a fact of life. Agile DOES encourage making key decisions at the last possible moment so that the cost of change is minimized. Agile (a la retrospectives) exposes why or how the deadline was missed and how costly bad decisions were.

Agile is NOT a Better Way to Manage Down

Yes, there are lots of little tasks now. And yes, they are all prioritized and bite-sized so it’s easier to micromanage, right? But you’ve missed the point. Agile let’s the engineers tell the managers what is going on. Agile IS a way to manage expectations (e.g., “managing up”).

Bonus Non-Issue: “We Need to Focus on How It Will Scale”

I’ve heard this a lot. It doesn’t matter (and if you disagree, then you probably aren’t ready for Agile). Agile is about making stuff that works – right now – so you can see if what you’ve made has any value. If it has value, then you worry about scaling. If it’s garbage, nobody will care how it was architected. Get it to work first; scale second. Getting stuff in the customers’ hands and then making decisions based on the feedback is your top priority. If you aren’t focusing on that, you’re probably on your way to creating your very own crappy product that nobody uses.

Today we learned that “agile” is a loaded word.

Microsoft to Buy 5% of Facebook? I Call Bogus.

Here we go again.

Microsoft is now supposedly in talks to buy a 5% stake in Facebook for $300M-$500M. That puts the value of Facebook at between $6B and $10B. It’s funny, only six months ago, Facebook’s minimum offer (that nobody would pay) was $2B. Now, with their amazing(ly low) $150M a year revenue, they want $10B, a five fold increase. What’s changed since then? Facebook Applications? Don’t make me laugh.

Clearly, their “2 billion” dollar self-valuation was based on what they knew. There are two explanations: either they knew about Facebook Apps coming and felt it wasn’t worth that much, or they cooked up and implemented the $8 billion dollar Facebook Apps idea overnight. I call bogus. This rumor is bogus. Facebook can’t justify a five fold increase in their asking price in a mere half a year without a substantial (and I mean five fold) increase in their traffic, users, or revenue — none of which seems to be the case.

Facebook Apps may have been a lucky idea they stumbled into a few months back, but it certainly can’t be the reason they are going to ask for $10 billion dollars. It’s simply not proven yet. And on a price based purely on speculation, the timer is ticking, and Facebook has yet to see dazzling revenues that justify even a price tag of $2 billion.

That, or Microsoft is just that desperate.

Proof of a Bubble: Success of Myspace is Pretty Overrated

How much yearly profit would you expect from a $500 million purchase? How about a profit of just $10 million equating to a profit margin just under 2%. That’s right, the world’s largest social networking site, constantly in the top 10 web sites in the world, managed to make only $10 million on $550 million in revenue!

I’m not an expert, but a 1.9% margin is pretty low. For example, the average profit margin for a company in the technology sector is currently 14%. It’s insane to think Myspace is worth “20 billion.” Even at a billion dollar valuation and revenue increased five fold, it would take 20 years to repay the purchase price while assuming social networking stays hot the entire time!

The most important distinction to make is that Myspace is in the notoriously fickle and very untested social networking market. It must recruit a completely fresh batch of users every few years as people grow older and move on. It must fight against social stigmas that come from the younger generations that might sound something like, “Ew, Myspace? My mom is on there.” For all we know, social networking as we know it may fade out of prominence in the next three years. Or even more likely is that another new competitor will eat into Myspace and take away its page views.

I have been observing signs of a significant bubble re-emerging, and this is the straw the breaks the camel’s back. Worse yet, when professional analysts throw out insane multi-billion dollar valuations on Myspace without sound financial reasoning, it’s time to be scared. Valuations are always relative, but I disagree with this valuation without having access to some more impressive metrics. Myspace is already at the top of the web — it doesn’t have opportunities to grow 1000% in the next few years.

Let me frame this in a more understandable way, if I told you this blog makes $200 a year in profit, would you be willing to buy it for $10,000? That’s the same ratios used assuming Myspace’s original valuation ($580M). But if Myspace is worth a little more than $5 billion as some people seem to believe, it would be like selling this blog for $100,000 on the $200 a year profit. Granted, maybe you could improve the profit margins by a factor of ten to $2000 a year (20% margins) — good luck.

Doesn’t seem like such a sound investment now, does it? The top social networking site in the world is barely profitable and there’s talks of it being worth 20x its purchase price. There’s a bubble, folks.

Yahoo Wants to Buy Myspace for 25% of Itself?

There is a rumor flying around that News Corp. is exploring the sale of Myspace to Yahoo — for 25% of Yahoo. Yahoo’s market cap is at $37.57 billion, putting the proposed sale at around $10 billion. Seeing as News Corp. bought Myspace for $560 million only a few years ago, this would be the most visible and largest return on investment of this era.

This is an awesome deal for News Corp — remember the saying: buy low, sell high. Myspace is #1 in social networking with no immediate signs of losing its crown, but this is the best time to sell. If Myspace begins to slip, its price will fall dramatically. Nobody can really expect more than $10 billion for a website in the short or mid term future — this is about as sweet as it gets.

Even if they did buy Myspace, the purchase only makes sense if it continues to grow. Even if Yahoo could kill that deal between News Corp. and Google, it wouldn’t do much to pay back the purchase price. Not to mention that Google deal is inked for another 2 years.

Yahoo is struggling. But they are still the single most visited site on the web. They might be sucking in search, but they have diversified their business across multiple fronts. If they sold a part of themselves, they’d be trading that enormous diversification of business units and web properties for one giant gamble.

For $10 billion, I’d like to think Yahoo would rather invest in one giant search gamble rather than on hype. For $10 billion, Yahoo could buy 500 startups for $20 million each and probably fair better in the long run. Let’s say Myspace grows another 20% over the next two years — that equates to Yahoo growing 5% because of this purchase over two years. 2.5% a year growth for 20% of your company sounds pretty stupid to me seeing as 20% sounds pretty ambitious from my point of view.

This is why this sale will never happen. But it’s an interesting rumor, nonetheless.

Why a Digg Review Section is a Dumb Idea

A few weeks ago, Digg announced its intentions to move into restaurant and product reviews. Cashmore was optimistic about Digg changing its demographic, citing Facebook as an example of how that is possible. But I would first point at Netscape. Netscape, under the leadership of ex-CEO Calacanis, tried to take mainstream people and throw them into social media. The (terrible) results speak for themselves.

Check out the graph to the right. Netscape getting ownedIf you take that graph and go back another six months (when the switch was made), Netscape has lost nearly half of its daily page views and has dropped 200 points in the site rankings.

Netscape’s experiment shows that regular people may not be interested in interactive news in the way geeks are. I think it makes sense: how many times have you heard someone gloss over your explanation of something and say, “I don’t care, I just want to use it.” Regular consumers want to consume, not contribute, even if it is as little as clicking a button. This means that even with more readers, Digg’s stories would stay heavily technology oriented, eventually pushing mainstream readers away again.

Also, Digg isn’t Facebook. Facebook can introduce stuff nobody likes and get away with it because hey have the stickiness of a social network. Just look at Myspace and its garbage user interface, friend spamming, and ugly profiles. It doesn’t matter. Besides, Facebook expanded its audience in such a way as to not impact the current core functionality or site experience – another key reason why the expansion was a success.

There are other factors that worry me about Digg’s model being applied to products and restaurants:

  1. Digg is highly anti-commercial. Articles are buried (rejected) for merely being blogs due to suspected “blog spam” (making money from the ads). How would that mix with reviews?
  2. Restaurants are extremely local in nature. Digg is global. Even 20 miles is too far to make a review relevant most of the time.
  3. Fanaticism would run rampant. Anybody could vote up a product review without actually having or used the product. This means simple fan-boy-ism could boost an otherwise crappy product to the top spot without a single person ever even seeing the item in person.
  4. Who is qualified to vote up a review on a restaurant they’ve never been to? Maybe the entire staff at the place? (see next point)
  5. The system introduces a huge incentive for commercial postings. 
  6. The surge of commercial postings creates an reason for users to bury reviews very defensively.
  7. Defensive burying is a problem because genuine reviews require a lot of effort. Unlike news postings, a good review (commercial or not) would take hours to compile. It would be a strong deterrent for first time reviewers if their first submission was rejected for being “too commercial” simply for having ads on their blog.

I think Digg would be making a mistake by entering these markets. Review sites already exist for various products and are well indexed. Digg would, in the very best scenario, be spammed up with links to these sites. In the worst case, Digg would have wasted months trying to go “mainstream” only to further alienate users.

Digg already does social news well, and it needs to focus on doing that better. Digg should really focus on enhanced personalization so that each account gets its own customized list of “top” news items — this was another prong of the original announcement and I think they are dead on there.

Second Life – Cash Cow or Pipe Dream 2.0?

I found an article devoted to discussing the slow (but existent) virtual store economy in Second Life.

Second Life gains its appeal from its virtual economies and businesses. Since its meager days, Second Life has continued to draw attention from the mainstream media. Most people know Second Life from the virtual land grab that is taking place. Even the article I linked above talks about spending “millions” to “develop” a piece of virtual land. While it is unclear if they meant virtual millions, the current exchange rate would still put that past 10 thousand dollars.

It is possible to make money selling characters on World of Warcraft. It is possible to make money selling items in Lineage II. But to hear someone (in this case, a company) investing several thousand dollars into a game is insane. If their goal is product exposure to a highly targeted demographic, they may have an argument, but they are interested in e-sales of regular products.

When I shop on Amazon, I can compare prices, lookup other retailers using Google, and see pictures and reviews from hundreds of sources. And I feel safer knowing my credit card is being securely transferred. This is a good consumer experience, which is why Internet sales have been skyrocketing in recent years.

But what about in Second Life? None of that is guaranteed. On the merchant’s side, you have all of the overhead in creating an online store front, plus the need to have “trained staff” on-site and ready to make sales… via chat. What a waste of resources. The barriers to entry are higher than a regular website, the audience is smaller, and the experience is confined to a game.

I’ve never fully understood why Second Life gets so much press. It currently has just over 4 million accounts, but nobody (except Linden Research, Inc., the creators) is able to verify how many of those come from repeat users. Meanwhile, World of Warcraft has over 8 million unique users. When is the last time you saw them in the mainstream press?

I wanted to close this by dismissing the value of “limited” resources in Second Life. This stuff is obvious to people like you and I, but there are clearly a few million people who think otherwise:

  1. In real-life real estate, there is only a certain amount of land. Even then, land is not always a guaranteed bet.
  2. Domain names on the Internet are unlimited. However, all English dictionary words are registered for the .com extension – these are clearly limited by the English languish itself. However, all other extensions (.biz, .name, .info, etc.) languish in popularity. The only way domains LOSE value is if the Internet ceases to exist (or they were over valued to begin with).
  3. Real estate in Second Life disappears if the company goes bankrupt. You will not get a refund on your purchase.

It’s Official: eBay Plans to Ruin StumbleUpon

StumbleUpon The rumors are over: eBay bought StumbleUpon for $75 million. Seeing as the two companies don’t exactly scream “similar” to me, I scoured the press release to find this explanation:

StumbleUpon is a great fit within our goal of pioneering new communities based on commerce and sustained by trust,” said Michael Buhr, senior director, eBay. “StumbleUpon’s downloadable toolbar provides an engaging and unique experience to its users, but it is the similarities in our approaches to the concept of community that make it such a compelling addition to eBay.”

No mention of its incredible quality-sorted index. No mention of its new video stumbling service. Only the toolbar and its “community.” Wow.

eBay doesn’t get StumbleUpon. They just see eyeballs and a toolbar. This purchase is going to ruin an otherwise great product.

So in other words, while you and I might see StumbleUpon as a vehicle for wasting time at work, eBay sees it as a “community based on commerce.” Furthermore, eBay’s eyes are locked squarely on StumbleUpon’s toolbar, making for certain the rumors that it plans to add its own stuff into it.

StumbleUpon’s toolbar is already pretty cluttered in its default installation. I certainly don’t look forward to eBay’s backwards mentality when it comes to UI design (try visiting their website and count how many inches down the content starts). This is a hot company about to get doused by eBay’s lame understanding of Web 1.0.

How to Get on Techcrunch – Step 1, Steal a Trademark, Step 2: Spam…

Techcrunch is a major IT news blog. It is increasingly difficult to get your startup covered in it because of its popularity. But a funny thing happened today. The owner of Techcrunch wrote an article about the most bogus stealth start up I’ve read about all year:

The only word that describes what happened to our inbox tonight was “spammed” – no less than eleven links were sent to this Australian article which talks about new stealth startup MyLiveSearch.

 

MyLiveSearch? It’ll be fun times when Microsoft sues for trademark infringement over MSN’s own Live Search. That alone should be reason for concern, but apparently not today.

We’ve heard of countless Google killing startups over the past five years, and none have come even close. In fact, its two biggest competitors in the market – Yahoo and Microsoft – are losing market share every day. And yet Arrington, a veteran in the industry, took the bait.

He wrote up an article about this start up, eating up the press release “news article” as if it were a juicy steak:

and goes on to quote founder Rob Gabriel as saying his startup “gives better, more relevant results” than Google and “this technology could be snapped onto any of the major search engines and improve them.

If they are so great, why are they already talking about being bought out? Nevermind the trademark issues! This is exactly the mentality of companies in the dot-bomb era: make a company that someone else will buy out — who cares about a product! If I discovered a technology that could unseat the current reigning 100 billion dollar champion, the last thing I’d do is sell out for a few million dollars. I mean, if my technology could be 1/100th of Google, that’s still 1.27 billion dollars.

And the claims they make are completely unsubstantiated. Faster than Google? More relevant? Supposedly it will be indexing 4/5 of the web that Google currently misses (so Google is only indexing 20% of the web, supposedly), which when I hear that, I think “spam blogs” or “banned from Google for a reason.” And the whole “live” thing is bogus now that Google does smart indexing, where it indexes dynamic content – such as news sites – more frequently.

Clearly, this company is full of crap and Techcrunch didn’t smell it. Why didn’t Arrington ask critical questions in his post? Why did he simply regurgitate the article without further research? Why did he just tip his hat to this obvious PR ploy? I don’t know, but it’s a shame he did.

So when you want your start up covered by a high-traffic blog, just get ten of your friends to send an email with a link to an article about your vaporware. It worked for MyLiveSearch.

Here’s a Dumb Idea: Sell Yahoo! to Microsoft

The rumor mills are going crazy with the news that Microsoft might buy Yahoo!. Depending on how you measure Yahoo!’s valuation based on its last year of poor results, it’s probably a great time to buy Yahoo!. Unfortunately, Microsoft is probably the worst possible buyer. The entire reason for this is summarized in two points:

  1. Microsoft web division employees be demoralized
  2. Top Yahoo! employees in general would be leave

Pretend you just spent the last three years of your life trying to build a reputable Internet division. You got the IE division to default to MSN.com. You got the Office division to work with you on a new Live product offering. You convinced someone up high that Hotmail needed to use AJAX and up the capacity limits. You even copied Google’s map, local, search, advertising, and images searches. Three years, wasted. And to make matters worse, your job is at risk since there’s a bunch of Yahoo! folks who do exactly what you do, possibly better.

But what’s worse is the fall out of Yahoo! employees. Yahoo! has been making big steps in recent years in producing open, free (as in speech) APIs for the web. They have been a friend to the open source world. In summary, this is a the culture at Yahoo!. Microsoft represents the very opposite developer culture of Yahoo!.

This is because Yahoo!, unlike Microsoft, likes things like open web standards that decrease their costs and development time. They prefer information exchange and open collaboration since they use and appreciate the open source model. In all honesty, they probably hate IE as much as any other web developer for its absolutely horrible web standards support (makes it really hard to make cool web pages). Microsoft, on the other hand, sees the entire web as a threat to its Office and operating system monopoly. Thus, Microsoft sticks to its proprietary guns in an effort to keep the web standards splintered. By keeping web standards in limbo, they are able to keep the web “IE vs everybody else”, A.K.A., “Buy Microsoft or get screwed.” Many of their web properties have only mediocre support for non-IE browsers – a direct result of this closed source culture.

This is a direct clash of interests and, consequently, employee culture. Of course, in any buyout, you will always have people cashing out, but what I’m speculating here is a general demoralization of employees on both ends. But when Yahoo!’s top minds leave, where do you think they are going to go? Straight to Google.

This would be beyond dumb. For $50 Billion, this is suicidal. Microsoft would be shooting itself in the face, and Google would be picking up the insurance money. They would incur huge overhead in integrating Yahoo!’s operations, giving significant advantages to Google while Microsoft tries to get its vision unified. And in a time when both Yahoo! and Microsoft are bleeding market share to Google, is the investment even sound? Microsoft might be big, but they aren’t big enough not to feel a $50 Billion purchase that doesn’t pan out.

Something I’ve come to realize is that a company is about the people in it. If all of the employees left a company, the company is worth practically nothing. Yahoo!’s talent is what keeps it consistently #2. When those people bleed over to Google, we can expect Google to pull even further ahead and Yahoo! to keep slipping.

Alright, Digg’s Corrupt. This is the Nail in the Coffin.

Now, I don’t mean corrupt as in politicians, but, tonight, Digg has certainly crossed some lines they shouldn’t have. What constitutes “corrupt” activity on a vote-based news site? Spiking the vote, of course.

Observe these time lapsed screenshots (source):

(Taken over a 5 minute period)

Notice how the last screen shot has a comment and yet has only 5 votes.

I’m shocked that Digg has sunk to this low. As a company founded on community contributions, I cant believe they would sabotage their own loyal users like that.

It is reported that the counts on these stories were being automatically reset every minute. Judging by the speed that all these censorship “features” are being rolled out, this may not be the first time Digg has done this. It raises serious concerns about whether or not Digg admins (i.e., employees) have skewed the content that hits the front page in the past. Essentially, it destroys the entire point of voting. Why vote if your vote doesn’t count unless it’s what they want?

Idiots. Whoever made these decisions needs to be fired. These were some of the dumbest business decisions they could have made in response to this crisis. They’ve never had a problem with posts in the past that could have aided in far more potentially illegal activity, but when an article hits their precious Diggnation sponsor, they start censoring. They just destroyed months of hard earned positive PR and user loyalty. It will be interesting to watch the fallout and watch if Reddit‘s traffic goes up as a direct result of this.