Silicon Valley Bubble

I went back home to the East Coast, Washington DC suburb, this past holiday season. I also went up to see my friends and cousins in NJ and NY. Having the first meaningful conversation with my friends and relatives in about two years made me realize one thing about Silicon Valley.

We (those of us living in the SF Bay Area) are living in a bubble. I am not talking about startup/options/hype kind of bubble, but a tech bubble. I was the one most knowledgeable about up-to-date information of facebook and its eco-system with apps and social games, twitter, google, etc. None of my friends and relatives seem to know nor even care about such information.

It’s just amazing and unbelievable when you think about such high concentration of technical knowledge, talent and money in one geographical area.

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Korea will be left behind

It’s okay to be patriotic. You should love your country, but it should not keep you from being objective.

In one way, Koreans are kind of Xenophobic. It’s not exactly it because they don’t hate foreigners, but because they think they are better than others. It was very clear when I lived in Korea for two years. It’s media’s fault, which is pretty much propaganda machine for everything to do with Korea. Come to think of it, this kind of blind loyalty is rampant in Korea.

When you are in the middle of it, it’s really hard to tell others about different things. But it becomes crystal clear when you are outside Korea. Whatever Koreans think they are best at, people in other parts of world simply don’t care.

Now, you may ask, “why do you care?” I shouldn’t. What Korea does or doesn’t do doesn’t affect me. So, why? I used to ask that myself, and I found an answer. Because I am a Korean, too (well, 1/2 of me is. Not that I am mixed, but I just happened to live 1/2 of my life in the US). I didn’t want to care, but I can’t help it.

Anyhow, I think Korea is in big trouble. They will be completely left behind in 10 years or so. Because they don’t invest in important technologies. But, you might say, “C’mon. Korea has the highest rate of Broadband penetration! Their mobile technology is way ahead of the Continue reading

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Bloglation – Translate, Save, and Share!

Last Thursday, I released private alpha version of Bloglation, which lets a user translate any web page, save and share. It’s supposed to be private, but I need to get some good feedback from real users. If you are bi-lingual (or not) and interested in translating cool ideas, concepts and/or knowledge, please go ahead. And don’t forget to send me any comments/feedback you have.

I also wanted to maintain a separate blog just for bloglation. You can find it here.

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Infinite possibilities and power of parents

Paul Graham, a successful serial entrepreneur and my biggest idol, just published another thought-provoking essay – After Credentials.

Interestingly, he was referring to a New York Times article on Korean education system. Having grown up in Korea till 16, I had experienced it myself and am in complete agreement with him. I was an odd kid in Korea. I didn’t like following those customary rules just because they had been practiced for many hundreds of years. I hated cramming and being judged by test scores. And it’s so true that a college degree plays a large role in one’s career and life in Korea. Since graduating from college is pretty much guaranteed, once you get in, you are set. Therefore, there is a lot of emphasis in GETTING in to a college, no matter what you major in. So, it’s safe to say that most kids do not major in what they wanted.
Korea is a country RULED by large companies: Samsung, Hyundai, etc. They employ 100’s of thousands of people and venture into all kinds of business, from cars to hospital, theme park, and consumer electronics. Working there means job security, so many college graduates want to work there. Thus, just like what Paul said, credential and pedigree matter A LOT. Also personal connections. It’s sickening. 
It’s one of the reasons why I like the US and the Silicon Valley. Like I mentioned about Obama, it’s the land of infinite possibilities. I’ve worked at many start-ups, and I know that all of them were filled with people from all different backgrounds, and that included educational background. Once you leave your first job, you are judged on your skills, not where you went to school. It’s so true for engineers and also sales folks. Even in the Silicon Valley, the larger a company is – like Intel and Cisco – the more your credential and pedigree matter. 
Raising two kids, I think about what values I bestow upon them. As an Asian, and perhaps the way I was raised, I highly value education and have been sending them to a private school. But as I also grow older, I wonder if it’s so necessary. Of course education is important, but I am not sure if sending them to a private school is necessary. Because, there is so much more important than just learning – creativity, positive attitude, ingenuity, etc. I really want my kids to understand that there are a lot more things valuable than good grades. I want to encourage my kids to be entrepreneurial, try new things, and not be afraid of failures. Do your best and don’t worry. I hope my parents could have taught me something different. I don’t blame my parents at all, but I can’t help but to imagine how things would have been different if I were taught different values. 

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Mobile Security

From business to everyday users

In US, BlackBerry is often referred as CrackBerry, because of its addictive nature. The best way to gauge its popularity is by witnessing most business users checking their emails or sending messages on BlackBerry phones in airports or even in business meetings. Smartphone has been the weapon of choice for business users, who use it everyday including weekends to find contact information, check schedule, and read and send emails. Those functions were essential to conduct business on-the-go and enough to pay premium for the phone and the service. In addition, since most businesses use Microsoft Exchange for contact management, calendar and email, most smartphone vendors support integration with Microsoft Exchange. While Nokia has the highest market share (~39%) in worldwide smartphone market, US market is dominated by RIM (Research-In-Motion, manufacturer of BlackBerry phones) with about 40% market share followed by not so surprisingly Apple with about 30% market share. Market shares of Microsoft and Palm smartphones have been falling since early 2006, and the same trend continues.

Thanks to Apple’s iPhone, now the flood gate has opened. Prior to iPhone, a slick, trendy version of BlackBerry called Pearl and low-price PDA-type phones called Palm Centro had gained some popularity among non-business users. Introduction of slew of Google mobile applications – Gmail, Google Maps, Calendar, Google Search, and YouTube to name a few – also helped more and more everyday users to appreciate smartphones. Another catalyst was carrier’s introduction of unlimited data plan. But the real tsunami began with Apple iPhone. According to comScore’s report in October 2008, adoption of iPhone by low-income demographics increased 48% from June to August 2008. Interestingly enough, iPhone was a smartphone targeted for consumers, but with Microsoft Exchange integration support, more and more business users are adopting iPhone as welll. The following numbers regarding iPhone are quite staggering, considering that iPhone was introduced to the market only about one year ago.

  • Best selling phone (6.89 million phones) in the US during Q3 2008 – not just in smartphone category. (Source: The NPD Group)
  • Ranked number two in worldwide smartphone market with 17.3% market share and 523% Year-over-Year growth according to a report by Canalys.
  • 300 million apps downloaded through App Store. (Source: Apple)
  • Average of 2.2 million apps downloaded per day. (Source: Apple)
  • More than 10,000 apps have been uploaded to App Store. (Source: Apple)

Table 1 – Worldwide smartphone market share

Another new entrant to the smartphone market with much anticipation was Google’s Android-based G1 smartphone. These two phones, iPhones and Android-based phones will be the center of smartphone revolution now and in the near future.

Openness wins, again

The major reason for explosive growth of iPhone could be attributed to the App Store. Yes, it looks good and multi-touch screen is revolutionizing the whole intuitive user interface movement, but the real drive is its openness. Before iPhone, most phones manufacturers guarded their phones like a walled garden. It has happened over and over before, where too many restrictions hindered true innovations. Users received whatever phone manufacturers or carriers decided to allow. But, iPhone provided a platform for developers to offer their software – for a profit if they wish – and more importantly gave users choices. Users decide what they want to download and/or buy. Developers have motivation to write good programs, better than other developer, so that their software could be purchased more and thus make more money. It’s truly a beautiful system and ingenious business model. The numbers I described above are clear evidence. If the rumor that Apple may introduce $99 version of iPhones before Christmas is true, it would be truly game-changing plan.

The whole premise behind Google’s Android-base G1 phone was also the openness. It’s even more open than iPhone since its operating system (Android) is open source and it does not have as stringent software review process as Apple. Starting December 5, Google is offering a development version of the G1 phone that is both SIM and hardware unlocked. It only costs $25 registration fee to register as a developer on Android Market, and pay $399 for the hardware. Google also plans to expand the territories that it’s available in, but initially it can be purchased in the US, UK, Germany, Japan, India, Canada, France, Taiwan, Spain, Australia, Singapore, Switzerland, Netherlands, Austria, Sweden, Finland, Poland, and Hungary. It’s a shame that most mobile-phone advanced country like Korea is not on the list. Korean mobile phone manufacturer had better wake up to the new mobile world, otherwise they may end up losing a lot of their market shares.

These two phones are shifting entire paradigm in not just smartphone market, but overall mobile phone market. As “Internet” generation grows up and adopt mobile behavior similar to that of desktop and Internet, demand for “open” mobile phones will grow stronger and stronger. It would not be too surprising that most of mobile phones in the future will follow Apple and Google’s model.

Open with care

Today’s smartphones do not deserve to be called phones. They are small computers and mobile phone capability. iPhone’s specification is better than even Playstation Portable (PSP).

Table 2 – Specifications of iPhone and PSP

And this is only the beginning. Be it mobile WiMAX or LTE, carriers will keep upgrading their networks to meet the demand and support faster bandwidth. Apple, other manufacturers of Android-based phone and incumbents will continue to push the envelope, developing better, faster, lighter and more powerful mobile devices. Does this sound familiar? Continuous improvement is no stranger to high tech world, but specifically it parallels laptops. When laptops first came out, they were much inferior to the desktops, as desktop PCs were to mini-computers much earlier. Nowadays, most laptops have become as powerful as desktops. And the day smartphones will be as powerful as laptops is just around the corner. They are not going to replace them, as we still have mainframes, mini-computers, desktops and laptops. They will all co-exist and serve specific roles.

The Internet opened the door to the world, where one can reach anywhere for instant access to any information he or she desires. Also, we have seen some who try to take advantage of the openness. In the dawn of desktops, malware then was limited to virus, and it had very limited way to distribute itself. With open network, where you can reach anyone, anyone can reach back to you. It doesn’t help to have vulnerable operating system and communication tools in the most desktops. Also, as opposed to hobby-like nature of virus writing in the beginning, financial gain is the main purpose of today’s perpetrators, and motivation to write good (?) and tenacious malware is much higher. Open network/system and free market are encouraging creative innovations not only in productivity but also in cybercrimes.

Mobile world is the next frontier (for cybercriminals)

There is a new report just published by Information Security Center of Georgia Tech, which predicts that mobile phones will be next target for botnets. It’s inevitable, as mobile phones are getting more powerful, faster Internet connection is possible and thus user behavior on mobile phone is shifting from voice communications to online communications. Previously, carriers charged users by number of SMS messages or amount of data used, but nowadays most carriers offer unlimited SMS and data plan at very attractive pricing points. The new rate plan in addition to the fact that mobile phones tend to be always on and often security is poor will make them even more attractive target for cybercriminals. The shifting user behavior makes similar “drive-by download” in mobile phones as in desktop possible. Also, another large difference between desktops and mobile phones is the sheer volume. There are estimated to be around three (3) billion mobile phones used worldwide, as opposed to about 800 million desktops. Apple and Google review the uploaded applications before publishing them to the public, but there is no guarantee that they will catch all of the malware.

With relatively low bandwidth, it’s hard to imagine mobile botnets launching massive DDoS (distributed denial of service) attacks. At least not the bandwidth flooding attacks, but logical and protocol attacks are certainly possible since there are so many more mobile phones available than desktops. For example, SYN flooding is quite possible with mobile phones, since it works by sending many requests to a sever and depleting its “half-open” session table, which is able to handle only about 1024 entries. More than DDoS attacks, there is more possibility of fraud and privacy invasion. Malware on the mobile phone can access paid contents and charge to user’s mobile phone account. Since mobile phone stores phone numbers of owner’s contacts, SMS spamming or even personal data leaking is possible. In places like US and others where there is tighter integration between mobile phones and company’s internal resources, the possible damage of data leak is even greater. Also, since user’s location can be pin-pointed using GPS data, a cybercriminal can track certain users for stalking or other criminal purpose. I know certain some companies in Korea already do this, so it shouldn’t be completely inconceivable. There is already an application like FlexiSPY that is used to spy on user activity. After FlexiSPY is installed on a smartphone, it allows you to use the phone to read SMS, e-mail, and call logs from the smart phone from anywhere in the world. The Windows Mobile and Symbian versions even allow you to listen to actual phone calls being made with the smartphone and use the phone as a secret GPS tracker.

There is also no doubt that some cybercriminals will use these powerful smartphones as a tool to a cybercrime.

Seize the opportunity

So far, any serious, widespread malware has been unheard of. It’s because until just about a year ago before iPhone and Google’s Android phones, most phones operated in closed, walled-garden environment. But, as amazing success of iPhone shows, there is huge paradigm shift happening in the mobile phone market right now. I have mentioned several ways cybercriminals can benefit from compromised mobile phones, but if I can think of them, cybercriminals may already have thought of many more creative ways. It’s only a matter of time. There is a great opportunity for a security company to dominate mobile security market. There are already many anti-virus and SMS anti-spam programs are available for all popular mobile operating systems from companies like AirScanner, F-Secure Corp., McAfee Inc., Symantec Corp., SMobile Systems, Trend Micro Inc., and Sophos plc., but none of them is a clear leader yet. Many IT departments in US already have or are in the process of creating mobile security policy. Just as in desktops, they will require installation of security software (anti-virus, firewall, and/or encryption) on smartphnes and can restrict which software can be installed. So far, no major mobile security threats have been widely reported, so they are not on consumers’ radar yet. But, it will just take one outbreak for them to come to the realization. In addition to security software on smartphones, carriers or other 3rd-party vendor could also provide network-based, cloud security services by scanning all mobile data on network level.

For consumers and non-business users, they need to employ the same cautious behavior as in desktop environment. They should always be careful when downloading an application or clicking on a link. Just as in desktop, even with whatever mobile security software they have on the phone, they will not be able to catch everything. They should also create password to access the phones so that their information is relatively safe when stolen. But as in desktop, most users may choose convenience over security, which would be a great tragedy since they may become the source of a large outbreak.

In conclusion, it should come as no surprise that technology advance always comes with double-edged blade. While open smartphones promise another whole new level of productivity gain (or loss to some), they come with a quite strong warning label. But those who seize opportunity will reap great benefits.

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Now is the best time to start a company

It may sound strange, but many people have expressed the same opinion.

NOW is the best time to start a company.

I was reading an article from the latest Wired magazine, “Back to the Garage: How Economic Turmoil Breeds Innovation” which gives an example of Tom Siebel who started Siebel Systems in 1993 when economy was faltering then. He was able to hire good software engineers relatively easily and cheaply. He also got an office space quite cheaply as well. It also reminded me of a conversation I had with my friend who is a VC partner (I consider him a friend, but I am not sure if he does). He said this is best time for VC to invest in a company as well. VCs do have money from funds they had raised before the meltdown. Because of downturn, valuation of a company would be lower.

I had the same opinion during the first Internet bubble burst. Historically those companies that survive the economic downturn usually come out as the winner. During the bubble, it was very difficult to find good engineers and sometime companies hired people who could barely type. But when the bubble bursted and companies either closed or laid off many people, the pool of available engineers grew. VCs certainly still had money then. I was quite certain even then that economic downturn would be the best time to start a company.

Due to my unemployment, I frequently visit FuckedStartups.com a lot. There are certainly many layoffs going on. This was all prompted by Sequia Capital’s warning to their portfolio companies a few months ago. Where would all the laid off engineers go? I’ve been searching for a while, but no one is really hiring. Even those who are hiring are taking their sweet time interviewing many folks. However, Americans are quite ingenious. In these tough times, someone with a good idea will hook up with others in similar situation and start a company together.

It also reminds me of the notion of “Creative Destruction”. History of Silicon Valley is filled with successful companies born during the bust time following boom time.

Me? I have more pressing need to support my family, so I am going for a full-time employment. I can’t start a company when my family relies on me for financial needs. But, when my wife starts working, that would be a different story. Look out, world!

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Founders at Work – Part 2

I have finished the book. I skipped some chapters that I didn’t find interesting.

I had this belief before, but it was confirmed in the book. Most of successful startups are childrent of acccidental success. Most founders didn’t set out to build these big empires. Most of them were quite surprised at their own success. How amazing.
There is also something that I can’t let go. It’s the role of chances and luck. In any given circumstances, we can make any number of decisions. I remember Sliding Doors, less well known movie with Gwyneth Paltrow. It was a sappy movie about fate of love. The movie diverges when Gwyneth misses a train and when she catches the same train. It comes together in a hospital, where two parallel universes converge.
Anyhow, right now where I am is the result of sequence of decisions I had made. Some major, some very minor. We make decision all the time. I am writing this essay instead of getting ready for bed. There are external factors that affect me, and I may or may not have caused it…. Also a decision I make would affect others. I wonder what may have happened if admission committee of University of Pennsylvania rejected and I had gone to Virginia Tech instead. Or if I decided to stick around at Topspin instead of going to Korea and working for Samsung. Or more recently I put off looking for a job to help the bank sell assets and IP of the last company – GigaFin Networks – so that the business would continue. And now I find myself in worst time to be without a job. I made the decision not knowing what would lay ahead. Is it just bad luck? What about writing this essay at this moment? Would someone read it just by chance that may cause whole different chain of actions tomorrow and in the future?
Bottom line is that you don’t know. Just like many of the founders said that the reason why they were successful was because they didn’t know any better. They were too naive to know how hard running a startup would be. And they didn’t give up when perhaps they should have. Sometimes is ignorance is indeed bliss. You can’t be paralyzed by past and what-ifs. Make whatever best decision you can make at the moment, and go for it!
“A good plan, violently executed now, is better than a perfect plan next week.”

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Future of advertisement

I was watching “CSI” and “Eleventh Hour” today, and I was amazed at product placement of iPhone. It also reminded me of the first season of “24” where I saw clear product placement of Cisco and Dell.

Today was rare. I don’t watch much TV. I spend a lot of time online to watch TV shows (and video clips) on Hulu, Veoh, and YouTube. Why? It’s purely convenience. I can watch it anytime at anywhere whenever I want. I guess I could have TiVO, but I am cheap.

A few weeks ago, I attended Bay Area K group’s technical seminar on IPTV, and I am not quite convinced whether IPTV will be the future. Unless there are programs that clearly take advantage of two-way communications, I don’t see the need for IPTV.

I don’t know if video websites will ever take over cable or over-the-air market, but it’s getting clear that new business model for TV advertisement will be required. One of them is obviously product placement, and I can’t believe so many actors you see on TV are using iPhone! That’s one great strategy. 

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Founders at Work – Part 1

I’ve recently picked up a book called Founders at Work. I thought I’ve heard about it when I was trying out my start-up in 2006, but it has copyright date of 2007. It is a collection of interviews of founders at various (successful) start-ups.

There are definite similarities between all these successful founders.

  1. Most of them were singles when they started companies.
  2. They all started early, mostly around college period and sometimes in high school.
  3. Because they started early, they were all inexperienced and naive. Yet, most of them got funding from VCs. That seems to contradict conventional belief that VCs bet on a jockey, not on a horse. Big difference? Working prototype. They all had products and prototype already working.
  4. Most of them had gone through some tough times during the life of the start-up.
  5. Their first idea rarely worked. Many have gone through multiple iteration of ideas to get it right.
  6. Most had good partners and co-founders that supported each other in tough times. They all persevered, and made it at the end.
  7. They all attributed a lot of their successes to luck. It’s not that they didn’t work hard and only waited for Lady Luck to smile at them. They worked really hard, and while things could have gone many different ways, some things just fell into place….by chance.

I haven’t finished the book, but I have to wonder if I had given up my company way too early. There were many additional obstacles; like having to support the family and having no committed co-founder (my partner left in less than six months). Though, I don’t regret having started a company. It was once-in-a-lifetime experience. Another thing the book said was that start-ups tend to require more than professional commitment from employees. People say you don’t get in to business with friends, but start-ups do need friends because of its high emotional requirements.

Nevertheless, it’s very interesting book. I wish I had read this book before I started my company.

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Open, Closed and Whole Product

In previous entries, I have covered the rate of change in technology advances, peril of attempting to predict the future, and current trend in developments of cloud computing, data centers, and smart phones. A report by NPD says that iPhone 3G is now the best-selling smart phone (past BlackBerry’s and Palm Treo’s) and 2nd-best selling phone after Motorola Razr in US. The proliferation of new smart phones and the birth of whole new eco-system of applications developed by any programmers and available to all users present interesting security problems.

Mobile phones in general are now considered an essential item in one’s life. It’s hard to imagine what the world was like without them, not being able to connect to anyone at anytime from anywhere (even interrupting us at anytime). Most people nowadays cannot imagine what it was like before the Internet and mobile phones. Because of its portability and must-have status, the number of mobile phones vastly outnumbers any devices that connect to the Internet.

I can’t say for any other countries, but in US, smart phones are absolutely necessary in business because of its ability to access corporate emails and calendar. In fact, they are two major functions why millions of business users buy smart phones, which have become mandatory communications device for business users.

In addition to the vast volume of general mobile phones, smart phones are becoming more and more like small computers. With wide variety of applications available to download and install, new smart phone users enjoy the same freedom of choosing whichever application they’d like to use as those desktop users. As a rule of thumb, the technology advancement will continue and they may become as powerful as some laptops, as today’s laptops are as fast and powerful as desktop. It’s inevitable and just matter of time.

So, if you think about billions of laptop-like mobile devices with wide variety of Internet applications, any security professional will cringe. Infecting mobile devices with malicious code could result in devastating results. All the personal information stored on the laptop including address book and emails could be leaked. Someone could also tap into user’s location information through GPS and keep tracking the user for criminal purpose. Since they will become as powerful as some laptops, it’s entirely conceivable that some sort of P2P applications (good or bad) might be developed for mobile phones. As more advanced botnet uses encrypted P2P network rather than traditional IRC channels, the mobile botnet can be certainly created with P2P network as well.

Apple keeps tight control over applications developed for iPhone, but when the number of applications is increasing faster and faster, they won’t be able to keep the full control. However, restriction and control are not the answer. They will only limit innovations and may even kill the very technology and/or product it is trying to protect. Internet was able to flourish because it was open. While there are some parasites, the benefits of openness vastly outweigh negatives. There are numerous cases when open system/architecture triumphed over closed counterpart. Open system encourages competition, which in turn fosters innovations in the market. Then, how does one make money in such environment? It may not be easy, but it’s possible. Good example is Cisco. Most Cisco products are based on open standards, yet they command highest market share in most markets. Worse yet, they do not build the best or the fastest products in the industry. Slightly different, but similarly, Apple was able to come in to crowded MP3 player market and dominate in short period of time. There is no secret to make a MP3 player, as you can see in high number of MP3 manufacturers. How did Apple do it? Is it because it looks beautiful? Americans are quite practical folks. Knowledge of America might be limited to what they see on TV or movies for some, but most Americans are definitely not frivolous. It wasn’t because of its looks. Then, how did Apple succeed?

In marketing there is a concept of “Whole Product.” It’s not enough to win in the market with just main product. In order to complete user’s experience, you have to consider what user would go through from before the purchase to what afterwards. Apple iPod was successful because of iTune software and iTune store. In order to complete MP3 experience, a user would have to find a way to manage his music collection and a way to add more songs (either by ripping a CD or buying online). iTune software and store completed that, and they worked flawlessly with iPod. How about Cisco? Cisco’s “Whole Product” is Cisco product plus millions of professional service and technical support professionals either from Cisco or 3rd-party vendors. Cisco made it legitimate with its certification program so that their customers, if chose to seek outside help, can find quality professionals by checking their certificates. It’s this auxiliary knowledge base that is keeping Cisco in the top place. Because they are market leaders and have most customers, their position is reinforced by many other companies that build and offer additional auxiliary items/accessories and service for them such as cases, boom boxes, adapters for iPod or training centers, system/network integrators for Cisco.

So which way is right for mobile security? It’s a million dollar question, and also where incredibly attractive opportunity could be.

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