There are a few people at work I enjoy having conversation with, and one of them is a software engineer with a lot of interest in marketing and starting a company.

One day he and I had a discussion about high-tech marketing strategies. I gave examples and principles from books I have read like Crossing the Chasm, Inside the Tornado, and Innovator’s Dilemma. But, he basically discarded them as garbage and they are all just after-the-facts, trying to explain what made companies successful. Hindsight is always 20-20, and it is easy to justify actions after success. I try very hard to make counter his points, but it didn’t fly.

The truth is that he was right. None of the authors – neither Geoffrey Moore and Clayton Christensen – has ever run a successful company. Also, so many successful companies in the valley have been accidental success. Look no further than Google. Larry Page and Sergey Brin never wanted to start a company. After successful prototype, they just wanted to sell the technology. Nobody including Yahoo wanted to buy the technology. Everyone thought search market was mature enough with no room for new player. They sat on a $100,000 check made out to “Google, Inc.” from Andy Bechtolsheim, mulling over whether to start a company or not. The same with Craig Newman from Craigslist.org, which is arguably one of the most visited websites in the world. He started out by managing a bunch of mailing lists, which was a pain and took a lot of his time. He wanted a better way to manage the mailing lists, and that’s how Craigslist.org was born. Mark Zuckerberg from Facebook never intended to create a company of current Facebook. He just wanted to find a way to see who’s who in his freshman class, and that’s how Facebook started. Similar stories exist for other companies like eBay and Paypal. Have they all followed the strategies and tactics laid out in marketing books? I am not sure. But, it is surely easy to tell the world – after such huge success – why certain actions taken at the time were so brilliant. But, who knows at the time it was motivated entirely differently?

In addition, most successful start-ups happened to be started by engineers, not marketing-types. From HP to Cisco, Sun Microsystems, Yahoo, and Google, all of them were founded by engineers.

Guy Kawasaki from Garage Technology Ventures said that one common mistake an entrepreneur makes is writing a business plan first. Instead, he or she should start building service or product and starting selling them first. It’s utmost important to get customer feedback as soon as possible. By incorporating customer feedback and improving service or product, the entrepreneur could build his/her business. If more capital is required for further growth, it’s much easier to raise funding with proven business model.

So, to my fellow entrepreneurs, JUST DO IT!

So, I am winding down on my pursuit of the startup. I had to. My saving level is dangerously low, and I have a family to support.

And, this outsourcing to an Indian software company was a BIG mistake, too. What it came down to is the heart and soul put into the work. They will do a job to meet the spec, but as any software engineer knows, there are million ways to write a code, and these guys will write the minimum or take the shortest path to meet the spec. That doesn’t mean they will think about efficiency or quality of the code. So, quality of the code is always questionable. But, again the biggest problem is that these guys will not go above and beyond. Just do the minimum to meet the spec and that’s it.

When I told many people that I was going to outsource the coding, they thought I was crazy. It’s core of my business, and you should never outsource something that’s core to one’s business. That’s so true, because I just learned it hard way and also it is clearly said in the book I am currently reading, Living on the fault line by Geoffrey Moore. Well, actually at first, I didn’t think the website was the core, but marketing strategy was, because writing a website is so trivial and anyone could do it. I wanted to do it cheaper and faster, and concentrate on good marketing so that I can attract critical mass of users. But, it was the core. In consumer website space, user experience is everything and the website that was built by this Indian outsourcing company – which by the way had developed other social networking sites before – had the worst user interface. So, I basically told them to stop the development since I want to cancel the project. Of course, they weren’t happy about it, but there was really no point in going on. The website developed by them was so inferior to current competitors.

Recently I had to research open-source social networking platforms, and I was surprised to find so many. And, they all looked really good. I remember distinctly that I searched for such platform in October of 2006, and there really weren’t much. I found a few that I’d have to buy, but no social networking…. Though, I am not sure if I would have time to develop the site myself even if I found a suitable open-source social networking platform. The learning curve would have been too steep. That was actually another reason I decided to use an outsourcing company….., but it turned out to be probably worse.

Ah, well…. You live and learn and move on.

Also, another thing that I learned was that most of the successful startups were founded by engineers and geeks, not by business or marketing people. I’d better go and hit programming books!

I wish someone had told me about it early, perhaps before going to college. I have been working for about 10 years now with most of experiences in data communications, and it’s been pretty obvious to me that real value of a system resides in software, not in hardware. In the communication systems, what determines reliability is usually their OS and software in general. Hardware matter, too, but only up to certain point. And, it’s relatively easy to reach a reasonably robust hardware product. The real art of creating value is really in software. I wish I have known this before. While I started my freshman year as a CS major, but later I changed to EE because I didn’t like to spend too much time in front of a computer.

Anyhow, the two pillars of data communications industry is Cisco and Juniper. When Juniper first came out, its software took much different path from Cisco. Cisco’s IOS used to be this humongous, non-modular piece of code and changes in the one part of IOS may easily break different part of IOS. It was somewhat synonymous to MS Windows OS, where the backward compatibility requirement has hindered it from introducing much better OS for a while. Also, their approach was similar where Cisco IOS would support any network protocols under the sun like DECnet and Appletalk, while Juniper only supported newer protocols. When a process within IOS fails or goes nuts, it would bring down the whole system, but not Juniper’s OS – JunOS. It was definitely smaller, faster, more reliable and more resilient. But now Cisco’s new OS called IOS XR is also modular SW, I think the playing field has leveled. Cisco is a big power house in networking which commands more than 60% market share in most of industries it has penetrated, and Juniper might forever remain as the number 2, niche player in the market (Crossing the Chasm).

Anyhow, when I look at new innovation or innovative companies popping up, it’s not in L1 to L4 of OSI layer. It’s usually in higher level. Look at all web 2.0, social networking and SaaS (software as a service) companies taking the market by storm. Some say it’s bubble 2.0, but this time I think everyone including investors is careful about business models and revenue history/projection. Also, anything related with proprietary hardware like building ASICs takes too long and too much capital. Building software takes much less time and capital, and there are literally thousands ways to implement a feature, so it’s really up to how well the software is structured for performance as well as scalability that would make a huge difference.

It also brings an interesting point, too. If you look at technology advancements in the last 100 years and last 20 years, the rate of advancement in last 20 years is very high. If this rate would continue, it’s mind boggling to imagine what the next 10, 20 years will bring. That’s also why benefits of proprietary and custom hardware such as ASIC or company like SUN might be in the big trouble. The system built with off-shelf components may run as fast and reliably as custom hardware. Again, the value will be on software. How well it is designed and written will make all the difference.

I have two kids of my own, and I don’t know if I would want them to become engineers like me…, but if they want to, I would definitely ask them to go into software industry, not hardware. I suppose hindsight is always 20/20. Life’s most valuable experiences are learned from mistakes.