Starting March 3, 2000
Judith Hurwitz speech: B2B, Microsoft, and the Golden Calf
March 3, 2000
Judith Hurwitz speech: B2B, Microsoft, and the Golden Calf
Last Wednesday night I attended a dinner sponsored by the Boston Combined Jewish Philanthropies (CJP). The last such dinner I attended included a speech by Howard Anderson of the Yankee Group (a famous computer consulting firm) and I wrote it up in my December 2, 1999, log entry. Readers seemed to like that write up, so I decided to take notes so I could report on this one, too. (I used the same setup as with Howard: minidisc recorder, Palm with Stowaway keyboard, and digital camera. See the "More from November 30" entry in "Living with the Stowaway Keyboard".)
Judith Hurwitz; banner from the sponsor
The main speaker was Judith Hurwitz, President, CEO, and founder of the Hurwitz Group, another consulting firm, that specializes in strategic eBusiness applications. With her permission, here are excerpts from her speech:
She broke her talk into three pieces: About founding and building a company, what she's seen in the industry, and then tying it together using a Biblical perspective (after all, it was a meeting sponsored by a Jewish group...).
She got into the computer area in the 1970s by moving from regular journalism to computer journalism when she saw an ad in the paper thinking it might be "interesting". She also happened to do folk dancing at a local place, MIT, so she knew some computer people: Bob Frankston, Richard Stallman of GNU fame, and me. (When Richard was written up in the Wall Street Journal years back, as I recall, the illustration showed him in folk dancing attire -- he was very serious about it.)
If asked "When you started your business, if you could see into the future and know what you'd go through over the years, would you have started it?" she says the "...answer is probably 'No'". She says this not to "...discourage any of you who are doing Internet startups (who surely will all be very successful [laughter]), but when starting a company it's an excruciating process, it's really really hard, and just when you think nothing else can go wrong something does." She finds that she learns the most about building a company from the mistakes she makes. "Oh! I understand what cash flow is now..."
As a business person, she said, "...you can never relax, you can never take your eye off the ball...When you go through a crisis, you think, OK, when I get over this, everything is going to be OK. But what you don't know is that you are just at the top of the hill and all of the hordes are on the other side with your next challenge...But if you have courage, if you have a real goal that is bigger than you are, and that it is something you feel passionately about you can do it."
She then talked about the industry. She recalled seeing PowerBuilder early on and understanding how developers could use it to show the boss how an application could really be made to work. This way of developing (client/server) could be real successful. But...if it got too successful, you'd have to buy more PCs, bigger servers, and put more and more in the client, leading to what she called "Fat Client Syndrome". She was very early in pointing this out, getting into arguments with Bill Gates about the dangers of putting so much in the client. She talked about other problems she identified early which people didn't believe at first. This led to her comment about being a consultant: "How far ahead can you be and still make money?"
Commenting on interesting things she sees happening in the marketplace:
B2B: Business-to-business software consists of environments with "supply nets" with companies coming together to build interconnections between their partners, suppliers, and customers. "If I'm a large company, there may be five, six, seven thousand companies that come in and out of my supply chain...If there are weak links, you can't 'reboot' your supply chain. You can't reboot when you have customers and you have a supplier network all dependent on you." Our current way of developing for the Internet, where we "debug in realtime", will not work.
So, she's predicting "...the death of the dot-com that thinks it can go and do a quick spin and flip based on very little value, buggy software, things that don't add value to their customers, their suppliers...We're going to see a lot of blood on the street."
Wireless: This area will explode, but not the way it looks now. "It's not just your phone so you can make a reservation at your favorite hotel, or check to see if your airline is on time...[More important will be] companies that use this wireless technology to do business-to-business -- transactions -- to put these types of devices on manufacturing equipment to check on quality. There will be real industrial applications for wireless and sort of this idea of pervasive computing which is any device to any device connecting in realtime."
Microsoft: B2B is the biggest challenge. "Microsoft has been able to get away with 'good enough'." This stemmed from the IBM days when you had one hardware platform, one software platform, and you controlled all the pieces and could tweak until everything worked. "Microsoft is in the position where there are an unknown number of hardware, software, utilities, everything you can imagine under the planet. That works OK on an individual basis where you can have just so many permutations and combinations. When you start applying this technique of software to a B2B marketplace there are a lot of dangers and the risk to Microsoft has never been higher...If you are planning to ally directly with Microsoft and base your entire future, for example on Active Directory and the massive complexity of Windows 2000, you're going to want to hedge your bet, because it's not going to be a monolithic world...And Microsoft may be setting itself up because they want everything..."
Finally, she looked at the weekly reading from the Torah, Exodus 35-38, which talks about Shabbat [the Sabbath, a periodic day of rest] and the Tabernacle [built with great care by top craftspeople], and last week's reading about the Golden Calf [quickly thrown together to appease restless people awaiting Moses and his tablets with laws that have endured]. She said to herself, "Ah ha! I see why I was meant to talk about this. Because the Golden Calf is really what we are all going through in this massively fast frenetic Internet era, where our Golden Calf is this public market and IPOs and flipping software companies and getting massively rich or going out of business really quickly...But as human beings we have to take a step back and acknowledge that there is some sacred time both for Shabbat and...to take a step back and look where we want to go 2, 3, 5 years from now and take an incremental and humanistic view...[so you won't] destroy people [by going] too fast...This is just software...what is life and death is our families, is our children, is our community, and how we make this all valid to ourselves...Remember not to build Golden Calves but to build Tabernacles and build sacred places for ourselves and our community and our families and what's important."
Audience, including Jason Chudnofsky of Comdex, far left
After her speech, she took a few questions:
What area of the Internet is untapped and has the greatest potential? "How you manage all the interconnected pieces" in the supply chain, checking the integrity, etc.
What about high company valuations? If a company has long term value, it can keep the valuation high. If not, if it takes the money it can get today and uses it to build something of real sustainable value, it can do OK. "Too many companies don't understand that they are luckier than they are smart."
About Linux, and Microsoft: "You sort of have a food chain here. Microsoft did to IBM what Linux is doing to Microsoft now. So a lot of it actually has nothing to do with technology at all, it has to do with power and money. Any time a company in this industry, when there is so much power and money at stake, is too powerful and has too much money, there's always sort of a force that comes in and sort of shakes things up and gets other players involved...Where IBM would charge a thousand dollars...Microsoft would charge $99 for a database...What's cheaper than a Microsoft operating system? Free."
Are mergers happening too fast without looking at quality? Many companies just solve a piece of a problem. "In a sense, R&D labs have gone from inside companies to outside companies. Instead of spending $100 million or $500 million on R&D inside an IBM or a Cisco or one of these big companies they are actually outsourcing their R&D to these startups...because it's cheaper...Are they always picky? Well, no, I mean we've seen this for years where two companies merge and it looks great and they get under the covers and say 'Wow! We bought nothing!'"
To learn more about Judith's consulting group, check out their web site. If you are interested in attending other Boston CJP Computer Industry Group talks, see their web site.
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