Vancouver is the scene of a wonderfully diverse and burgeoning technology economy.  One effort I am making to shepherd this along is with a film I’ve been producing in partnership with the Vancouver Film School, Microsoft Canada, BCTIA, VEDC, and BC Innovation Council.  Another is of course the entrepreneurial endeavour begun by Patrick and I last summer, AppSocial Media.  That said, I am quite excited about the arrival of Grow 2010.

Vancouver's new Convention Centre

Some have, in the past, argued that Vancouver’s large and growing technology talent pool is largely untapped.  That’s patently untrue.  Business Objects and SAP have made great hay from both the marketing/sales side and the engineering side.  BOBJ founder and chairman Bernard Liautaud is rumoured to have declared that Vancouver, which during Business Objects’ boom period employed 1,200 people, was far and away the “engine room” of the business.  Microsoft, Disney, Pixar (now a Disney subsidiary) and others are waking up to this reality as well… and of course Electronic Arts has long known that Vancouver possesses just the right mix of people to catalyze real market shifts.

So Vancouver’s tech wunderkind are delivering real, demonstrated value day-in and day-out in ways that affect us all.  What is different here from places like Silicon Valley is how we benefit, both individually and as a community.  Recently I sat down with the founders of two different local companies in the same day, and both had something in common.  They had sold their companies to larger entities and were still working on that same product.  One sold his company after a few months to a much larger organization, which gave his firm the capital and market reach to thrive and survive long development cycles.  The other built his company over years to sell to financiers who assumed management and graciously kept him on as an employee.  He takes a salary far below par and holds a single-digit percentage in his own creation.  In Silicon Valley this is referred to as a “bunt”.

Bunting rarely brings the batter home

In each of these scenarios, the companies have gone on to create hugely impactful products and services, garnering tens of millions a year, in high-margin businesses.  Neither of these founders, however, have profited substantially from these endeavours though.  This is because for these companies, selling to another company wasn’t an exit strategy… it was a financing strategy.  And in a city where capital flows on a pace that is best measured geologically, selling your company early is sometimes the only way to finance your vision.

Of course, any form of financing could be referred to as “selling your company”.  That’s the process.  You break a piece of your dream off in order to pull together other peoples’ money to fund its development.  However, when greedy financiers break too much of the company off, leaving founders in single-digit territory or worse, we starve them AND the ecosystem.

Wanna know why the Valley is such a great incubator?  Simple.

Girl goes to work for big company, learns proper business process and business rationale (this is called mentorship).  Big company awards stock options/bonuses commensurate with growth and success.  This has three main effects:  1)  girl’s dreams grow bigger, and 2)  girl is financially independent enough to start a new business, and 3)  girl has a track record of success and knows (mostly) what she’s doing.

So the girl starts a business, is able to make it into something fundable, and there is ample supply (and some would say an oversupply) of capital to fund good ideas.  Investors make sure that girl remains a large enough shareholder to remain engaged in the business, thereby nurturing part of what inspired her to do it in the first place.  Girl hangs in there, the company grows and begins mentoring its own generation of future entrepreneurs, and maybe the company’s successful and gets bought, and girl becomes a millionaire.

Now, the girl is an investor.  Maybe she’s an Angel with experience looking for proteges to mentor, and thereby further her own profit.  This is the makings of an ecosystem.  Lather, rinse, repeat.

Don’t think this works?  Consider the story of PayPal.  PayPal executives went on to found or grow LinkedIN, YouTube, Tesla Motors, SpaceX, Slide, and Yelp.. just off the top of my head.  That was just 8 of the original pre-eBay core team of 50 people and leaves out major investors like Peter Thiel and Roelof Botha.

In Vancouver we have historically had two obstacles, but these are obstacles that are breaking down quickly with some thanks due to the folks I am fortunate to be working with above.  As we attract larger companies we begin the cycle of mentorship.  Folks go to work at SAP or Microsoft and they learn how things get done in the big game.  As we begin to attract capital, then there are more opportunities for the bored, successful, experienced folks to break away from larger organizations and germinate new ideas.

Borrowed from the Georgia Straight

That’s what happend with Don Mattrick’s Distinctive Software beginning in 1991, when it was acquired by EA.  Like kicking a dandelion, the acquisition led over time to the spread of dozens of spores, laying the foundation for a vibrant and lasting Video Game industry in the city that is a must-join for any major player in the space and that opens doors for even the smallest of dev shops servicing that vertical.  Now, the video game industry and its derivatives employ more than 3,500 people in Vancouver, according to the Georgia Straight.

The same effect will be felt in other areas.  However, we need to (as a community) focus on three tasks:

• Lure the best talent in the world to Vancouver using our natural (literally) advantages, health care, and Canada’s relative economic stability
• Lure the technology industry’s leaders to the city and region by highlighting the advantages of R&D tax credit programs and the uniqueness of our existing talent pool, and
• Lure mature, responsible investment capital to the city by highlighting our more meritorious ideas and breakthrough technologies, and the people who created them

On all fronts the “Best in Vancouver” metric does not constructively apply.  We need to compete on a grander stage and we will be measured against a higher, almost insurmountable standard.  We will travel against the grain with regard to current groupthink.  And we don’t simply need to be better than comparable Silicon Valley companies, we need to find ways to trounce them — top tier investors will always favour teams nearer to them unless they see truly unique differentiators.

We must fight against popular assumptions about this city as a destination for slackers, the idle rich, and as “Canada’s largest retirement community”.  None of these prejudices is entirely false, but none are entirely true either.  What I have seen glimpses of in this city over the eight years that I have been comparing it to my own experience in Silicon Valley is a large number of very creative and intelligent people trying to operate without substantial mentorship or capital.  Some have succeeded, many have failed.  In the aggregate, we will all get there if we muster our resources and work hard together while chasing our independent dreams.

For that reason, we should all be welcoming of any hands that reach North from the Valley or elsewhere and offer to help, as opposed to taking petty potshots.  For her efforts to create a permanent bridge between here and Silicon Valley, in particular,  I am deeply grateful to Debbie Landa and Dealmaker for bringing us Grow2010.  This will go a long way toward reaching the above three objectives.

And here’s to the day coming soon when we will have more Club Penguins than we have flightless penguins here at the aviary.

hmmm.

Map Courtesy NPR

Map courtesy GigaOm

Thanks to generous support from the Vancouver Economic Development Commission, the BCTIA, the BC Innovation Council, Microsoft Canada, and others I have been quietly producing a film along with a team of digital designers from the internationally-acclaimed Vancouver Film School.  The goal of the film is to serve as a centrepiece in promoting our city and region by highlighting some of the incredible technology companies that have flowered here and generated worldwide impact.

Sample frame illustrates Verrus' Parking Payment System

As part of this film we’ll be representing the density of companies on an animated map… and that’s where you come in.  We’d like to use your logo and plot your company’s location on that map along with your peers.  This is an excellent way for you to promote your company to a worldwide business and investment audience, and to show your support for your peers and this community.  We are looking not only for companies founded and/or based in the Vancouver Area, but also development centres for global companies.  If you want to help skip to the form below or view it directly on Wufoo.

That said, there are some parameters.  Because we’re animating, zooming, and otherwise manipulating that logo for the purposes of the film we need your logo in vector format.  These generally come in the form of .EPS or .AI files.  If you’re unsure what I’m talking about, talk to that logo’s designer.   JPEGs, BMPs, GIFs, PNGs, and other raster-format files will not work.  Due to high volume, if you send us the wrong file we won’t be able to contact you to correct the situation.

We’re looking forward to working together to help fuel the fire of interest that is propelling our city, and contact me if you’re interested in supporting this project as it evolves.

Lots of hubbub and hype about “antennagate” and Apple’s attempts to quash it today with a hastily-prepared press conference.  But does Apple really need to apologize for a cataclysm which exists largely in the nubbins of traffic-hungry bloggers and journalists?  No.

I’m not an Apple apologist, but they are in this regard very clearly being held to a higher standard than their competitors.  It is a fact of life in the design of mobile devices that contact with our flesh and our electromagnetic energy  attenuates the signal.  On the plus side these lofty expectations are a (continued) sign that people still expect Apple to remedy the ills that befall wireless communications in general, however the down side is that in this case the laws of physics are tough to defeat.

Apple’s mistake was in hyping the antenna as newer/faster/better which in reality may be true (apparently not true enough), however that brings focus to bear on a technology that is weak in every mobile device, including the iPhone 4.  Reception quality is not something you use to market a mobile phone unless you’re suicidal or incredibly arrogant as they all tend to devolve to the similar orders of entropy.

And so no, they did not apologize.  They tried to use logic in explaining that it’s a problem common to any phone, not just those that errantly promise to be better.  But this is no longer a logical debate, it’s a semantic war… a classic case of Tall Poppy Syndrome.  Now that APPL is top dog, germinalists will try to make their bones knocking them off the pedestal.

And so obviously, giving away a few bumper cases and delving into the facts of the matter didn’t work.  I don’t think this is a situation where an apology is necessary, however it is a situation in which Apple must reassess where they will dig the trenchline.  And as with prior “scandals” Apple is learning the hard way what the pitfalls of marketing in the wireless industry truly are.

I am troubled by the heaping pile of dung, in the form of Canada’s Bill C-32, that is attempting to foist an American-style DMCA on unsuspecting and distracted Canadian consumers and, frankly, have been waiting to voice my opinion on said excrement.  Michael Geist, in his own kind and gentle manner, has today posited a truly worthy target for my rage in Loreena McKennitt.

Loreena, whom we in the mainstream don’t seem to have heard from since .. well, when did we hear from her last, exactly? has got herself all in a tither claiming that File Sharing is affecting everything from Tour Managers to Artists to Popcorn Vendors.  We’ve heard this rhetoric before.  Honestly I thought this line of logic so laughable when I first read it months ago that I assumed it would die… but apparently not so if you’re an obscure Canadian folk artist with high aspirations — and a soft spot for corn growers, of course.

But here’s the thing:  She seems quick to blame file sharers for her woes.  So I did a quick search of ThePirateBay for her music.  I found 250 sharers, and fewer than 100 downloaders.  These are numbers surely boosted by yesterday’s article but are not by any means earth-shattering.  Music Sharing site What.CD has more than 1000 sharers but only 5 downloaders.  Your results may vary, of course, but look around for a massively popular artist like Lady Gaga and you won’t have enough hours in the day to count the sources.  You’d think Gaga would be pissed!

On the other hand, McKennitt should be sending thank-you letters to all of those downloaders.  I happen to believe that file-sharing, as a microcosm of the broader consumer market, is an accurate measure of relevance.  And it reveals a possibility which Loreena McKennitt might be quick to overlook:  that she is an irrelevant artist playing largely irrelevant music, and not completely coincidentally holds irrelevant opinions on file sharing, downloading, fair use, and copyright.  This would explain the financial woes she seems to allude to, but also the supreme disconnect she seems to have with her audience, the market in general, and the music industry as a whole.

Her industry is suffering not because of the advent of this new technology, but instead because it has failed (consistently) to adapt to every emergent consumer technology since the 1960s.  That head-in-the-sand mentality has now caught up with them because the Interweb has brought something to the party that home taping never could before it:  Scale.  Within that broader failure it might just be possible that the interest and demand for the kind of music she enjoys creating and performing (some of it very good) is just not high enough to support a full-time professional career.

But then again, tell that to The Chieftains.  Or any among the other dozen or so globally famous and practically mainstream Celtic performers.  Irrespective of record sales, these artists make a healthy living by touring and licensing their music.  But that’s a problem for Loreena.  In her editorial she seems to want us to feel sorry that she has to go on tour to make a living because she will miss her kids.  This is a sincere argument?

If so, then my advice is simple:  get a desk job — music is clearly not for you, Loreena.  Lady Gaga doesn’t seem to have a problem with people sharing her music.  But then again, she’s an artist who likes to create and perform music; Gaga is lucky enough to be creating music that lots of people (excluding me) enjoy; and her fame and income are a convenient and welcome side-effect.

Loreena McKennitt’s real problem is not that people are stealing her music and thus not buying her music.  The problem is Loreena has lost the bead on (or never knew) how to connect with her audience.  And now, sadly, that audience is very small and rather far-flung.  Loreena seems to think that the internet’s contribution to the music industry is limited to static web sites, tweets scribed by underlings and boring Facebook accounts — and sees ghouls and ne’er-do-wells around every digital corner rather than looking upon social web technologies, as have so many other artists, as a life preserver and (dare I say) growth tool.

So you see, Loreena… your woes cannot be attributed to the fact that your fans are stealing your music — it’s quite possible, given the evidence at hand, that there simply are not enough people in the world that are interested in your music at all to support you professionally.

Sowhaddyagonnadoaboutit?

Hint: if you think writing Op/Ed pieces supporting unconstitutional and unenforceable legislation is a great way to connect with and expand your audience, my guess is you’re probably wrong.  Waiting for politicians to solve your problems, whatever they might be, is a pretty bad strategy — and your expectation that C-32 will somehow alleviate the woes affecting your industry are deeply misplaced.  Politicians don’t solve your problems, they solve their problems.

Is this the beginning of a rebellion that could turn the tide of goodwill that has nurtured Twitter to prominence against it?

I thought, as I read Fred Wilson’s now infamous Inflection Point screed last week, that it foreshadowed something significant.  Turns out I was correct.  Turns out that Fred, who is an investor in and boardmember of Twitter, was speaking in veiled nuances of Twitter’s acquisition of Tweetie maker AteBits.  In this post, which appears now to have been a ham-fisted attempt to soft-pedal the traumatic news which was to follow, Fred says:

Much of the early work on the Twitter Platform has been filling holes in the Twitter product. It is the kind of work General Computer was doing in Cambridge in the early 80s. Some of the most popular third party services on Twitter are like that. Mobile clients come to mind. Photo sharing services come to mind. URL shorteners come to mind. Search comes to mind. Twitter really should have had all of that when it launched or it should have built those services right into the Twitter experience.

This assumes a lot, it seems to me.  As a relatively early user of Twitter, and an entrepreneur who was experimenting in the same space circa late 2006, I think it was pretty clear to me that no one knew precisely what Twitter was at the time of its launch (TechCrunch agrees).  No… as a totally wide-open platform with a simple API and syndication model, Twitter could have become anything.  As such, different people found different utility within the Twitter framework, until user behaviour congealed around a core set of ideas about what exactly Twitter is.

Twitter couldn’t have had all of these features prior to launch, because no one at Twitter was aware that it needed them.  The very definition of what Twitter was at the time — and is today — was and is entirely negotiated within the marketplace.

Many hands in Twitter’s success so far

In addition to the critically influential early users, what made Twitter a wider phenomenon (it’s still not a mass market phenomenon) was the growing number of third party developers extending the platform — publishing, subscribing and syndicating to and from everything from desktop clients to social networks to refrigerators.  In its early stages, Twitter couldn’t have afforded to hire more than one or two dozen staff to fulfill engineering and product management roles, and most of those were tasked with more mundane “keep things running” tasks, keeping up with scale.

This created a significant gap in evolving the platform and productizing the service.  This gap was rapidly filled by an ecosystem of third party developers functioning as an unpaid R&D department, which has grown and now crests on a scale that the company could not ever sustain on its own — even today.

Keeping the plates spinning while walking the tightrope

So maintaining that ecosystem in balance is a critical function, as it allows Twitter to evolve and grow at minimal cost and with highly limited risk.  It’s a dance which requires deftness, sensitivity, and subtlety; and most importantly a profound understanding of the co-dependence that the platform has with those who seek to extend it.  Companies that successfully navigate these waters maintain a strong internal dialogue — something akin to Star Trek’s Prime Directive – regarding partners which seeks, inasmuch as it can obtain, equanimity within the ecosystem.

Twitter “got away” with the acquisition of Summize in 2008 because that ecosystem was immature, Summize had no obvious competitors, and the platform itself had yet to establish its dominance on the tech scene.  But nowadays, moves by Twitter’s management are scrutinized, debunked, and analyzed — they are the pied piper of “realtime” media, and they have a difficult relationship with a roiling, rowdy group of developers, some of whom love to hate them.

What happens when you churn the waters of the ecosystem too much is pretty simple, and pretty catastrophic:  developers leave.  And what Twitter may have done on Friday is decrease exponentially the number of people who are dedicating their best effort toward plotting a course for Twitter’s future.  This is at a critical time when Twitter’s growth seems to be hitting plateaus and struggling to work its way into the mainstream.

Pick your battles

So when you walk straight into such a fray, and knowingly increase the turbulence in these waters, one would think that some consideration would be given to the worthiness of the battleground in question.  Is getting control over a Desktop and iPhone Twitter client a cause worth the down-side risk?  Is this really a critical choke point in Twitter’s growth that the company needs to take control over?

There are many different approaches to publishing and subscribing to and from Twitter on the Desktop and on iPhones and other mobile devices.  However I would suspect that many developers are considering either walking away completely from, or decreasing the prominence of Twitter within, their applications.  More succinctly — the business model for these apps as freestanding Twitter user agents using a paid model is now evaporated.

This means a far shorter list of UI paradigms and design approaches to interfacing with Twitter.  Probably not a good thing given that Twitter still has some difficulty explaining to Mom & Pop Trailer Park why or how it can be useful in their lives.  While Twitter likely believes it now has the reins on a critical component to breaking into the mass market, it has essentially insourced innovation and assigned it to a very small team, whereas the community’s growth to date was nurtured by a massively outsourced team.

What Twitter doesn’t need, in my opinion, is absolute control over the User Agent.  What it needs is an App Store — a directory, if you will, which provides navigable routes to the wealth of clients and solutions available in the wild.  Furthermore Twitter needs someone who has some success managing an ecosystem of this size in balance over the course of years; who knows how to speak to developers and to encourage them; and who will act as an internal conscience for the developer community that is increasingly fearful of Twitter’s aggression.

Twitter’s challenge is so great and its opportunity is so broad that it is impossible to conceive that it can be properly stickhandled by a small group of visionaries.  Its strength in the past was its ambivalence to 3rd Party developers; but now that ambivalence has taken a dangerous turn.  I certainly hope that the company and its investors do not suffer for this decision, as many of its developers clearly are.

Matt Cooke, who like most NHL players is actually a nice guy off the ice, seems to suffer from a disorder that makes his on-ice personality the target of the ire of not only his opponents, but even his team-mates.  And now, like ripples through a still pond, a backlash is growing that may ultimately lead to his blacklisting from the NHL.

First, here’s the elbow to the head of Savard (for those few who haven’t seen it) that started it all on Sunday Night:

You’d expect me to quote the Bruins’ Captain now, after we’ve learned that Savard is out indefinitely with a Grade 2 concussion… likely for the remainder of the season.  But no… instead one of the most vocal critics of the hit calling for Cooke’s suspension is his own teammate, NHL veteran Bill Guerin:

“If a guy gets hurt like that with a shot to the head, there’s got to be something,” Guerin said. “Actions happen. Guys don’t mean to hurt each other, but they do. You got to pay a price for that.”

Guerin said players must know they can play the game with protection against hits to the head, especially those that a player can’t see coming.

“We’re all under the same umbrella, whether the guy’s on my team and I’m sitting right next to him or he’s playing in California,” Guerin said. “It doesn’t matter. We’re all playing in the same league. We all want the same safety. We all want to be looked after the same way. I understand he [Cooke] is on my team but, hey, he’s in a tough spot.”

This says a lot about this situation.  Always known as a gritty player since he joined the Canucks, since being traded to the Capitals and later picked up as a free agent by Pittsburgh, he has become known around the league as something of a cheap shot artist.  He’s picked up two suspensions for dubious hits and has been expected to receive more, but the NHL is doing nothing in this case.  Other players are chiming in to see that these kind of hits aren’t overlooked again.  According to TSN, Lecavalier and St Louis have joined in the chorus, too:

“He’s got no respect for the players,” said Tampa Bay Lightning captain Vincent Lecavalier.  “Matt Cooke, he’s been doing that for a long time.”

Like much of the league, Lecavalier wants to see a change in the way that headshots are penalized, but he realizes that the majority of the onus remains on the players themselves to do the right thing.  Something Lecavalier believes that Cooke ignored.

“He knew exactly what he was doing when he came with his shoulder,” Lecavalier stated.  “He knew exactly that he was going to hit his head and that’s how guys get hurt.”

Lecavalier was not alone in his criticism, Lightning teammate Martin St. Louis was also vocal about his displeasure at the lack of suspension for a repeat offender like Cooke.

“There are certain players in this league, that you tend to see on the highlights with hits like that,” said St. Louis.  “I don’t think it’s a coincidence that it was given by Matt Cooke.  He’s a hard working player, I don’t want to take anything away from the way he plays the game but I think that there are times when guys are vulnerable and he still follows through.  If that hit is not a suspension, I don’t know what is.”

Locker rooms and social occasions within and around the NHL community are about to become very frosty places for Matt Cooke, according to Sheldon Souray:

“Two guys punch each other’s lights out, then you go to bar and you have a couple of beers together.  When you’re Matt Cooke, you go to the bar that night and there is no camaraderie. There are no friends.

“When you fight, there is something honourable in that. But you flip that switch — you start hurting guys — there is noting honourable in that.”

Unfortunately, there’s a rematch in store for the Bruins and the Penguins next week.  It’s likely Matt Cooke will dress for the game.  And because the league has not enforced a penalty in this blatant case of endangerment, it will be up to Boston’s enforcers Shawn Thornton and Milan Lucic to exact a penalty.  Will there be a repeat of the dreaded Bertuzzi-Moore revenge incident?

Six years hence, the NHL continues to prove itself thoroughly incapable of protecting the players.

For the sake of the game, I hope that Penguins’ coach Dan Bylsma finds a reason to scratch Cookie from the lineup March 18th.

"Vesting over what period, you say?"

Over the past way-too-many years I’ve had occasion to interview north of 250 individuals for dozens of positions at both startups and large companies on both sides of the border.  Having spent my teething years (professionally) in the maelstrom of Silicon Valley I have come to be able to recognize many different character types and motivational fulcrums when it comes to tech industry employees in marketing, engineering, business development, and customer support.

Based on that experience I am rather unsurprised but still a little disheartened to hear thru the grapevine that Thursday’s $38M+ acquisition of Verrus by a UK-based company netted big wins for the company’s management team, but sweet bubkus for their employees.  This is because Verrus did not widely incent their employees with stock options. Stock options may be the oxygen coursing through the bloodstream of Silicon Valley.  But up here?  They’re an afterthought.

Down South, when companies are successful and are acquired or achieve IPO (I still remember the nineties, yes) they very often create windfalls for their employees.  As an example, when I worked at Cisco one of my co-workers, a Product Manager who had been with the company for about 10 years, was vesting stock at the rate of about ~$210,000.00 per month.

This is a gross exception to the rule, but is a fun example.  He was a bit of a hockey nut, and once turned to me and asked whether I wanted to help him build a rink.  I said “in your back yard?” and he replied “No, like a two-rink complex as a business.”  These windfalls buy some degree of freedom, for sure, but more often than not are a few hundred thousand dollars in total.  Don’t call the architect just yet.

But a good exit of a few hundred grand is enough to leverage that hard-working employee into a more senior role at another startup, as often happens; or for a talented coder it buys a few years of freedom to pursue their own startup idea without the pressure of drawing a salary.  More often still the windfall buys the cushion so that employees can take riskier jobs with bigger upsides, cavalierly walk from companies that they are convinced will ultimately fail, or help smart folks make major life-changes and start small businesses in industries not reachable via the http protocol.

In many ways stock options, or rather the wealth they create, can be seen as antibodies to failure.

When I went to Cisco I failed to negotiate hard on my stock options (or rather, I did not negotiate at all).  This is a shame because during 15 months of working at Cisco my initial stock option grant grew in value from $12 to $84.  But I came by my ignorance honestly — I was after all from Vancouver, where I had barely heard of stock options, and where I knew not a single person who had materially benefited from them.

You can’t walk fifty feet in Palo Alto without tripping over someone who made a fortune on their PayPal stock options — in those days everyone from the caterer on up was granted them, and even commercial landlords took options on top of astronomical office rental fees.  There is a culture that recognizes their risk and upside and there are plenty of examples of folks who’ve done well by them.

I have been frustrated in hiring folks in Silicon Valley by savvy employees who negotiated stubbornly against their stock option packages, fretted about terms within the option grant such as accelerated vesting and cliffs, and who actually in a few cases pushed for lower salaries or bonuses in favour of more options.

Conversely, I have not once had an interviewee in Vancouver haggle over stock options.  In fact very few folks have an even remotely strong understanding of what they represent and how they work.  In the past it’s occasionally even been difficult to lure people to full-time employee status versus working as a contractor.

Vancouverites in the tech industry and Canadians in general, in my experience, still have a fairly Neo-Marxist view of the employee – employer relationship:  you sell me your labour for the negotiated price and, where surplus value is created, this is absorbed not by the company as a group but instead by its managers and investors.  The labour is unsually neither ineffectual nor is it inspired, and the employee has no fundamental interest in the company’s success beyond remaining employed because the company continues to exist.  If it fails nothing is lost by the employee, except for a few weeks of rest before they move on to sell their labour to the next buyer.

For a while when I started working with startups locally around 2004-2005 I used to offer equity (mostly as stock options) because I am a nice guy and because I understood how equity has always motivated me as a worker and as an entrepreneur.  Almost universally I found that these options were unappreciated and indeed oftentimes misunderstood.  More recently, recognizing that my prospective hires are more compelled by salary and flexibility (we all love the Vancouver lifestyle … many of us too much so) than by upside I have ceased to offer stock options at all.

After all, since those stock options are ultimately dilutive to my own benefit as a partial owner of the business in the event of a successful exit, I have grown much more stingy with them.   Why incur the paperwork hassle and decrement my own long-term financial benefit for someone who ascribes no real value to these options?

The mercenary culture of workers on the Vancouver tech scene — likely a product of some combination of the province’s dominant organized labour mentality, of the very fly-by-nite startups that emerged here in the mid-late-nineties, and of the relatively pithy (and thus very unstable) financing amounts received by practically every company in technology — is a real problem and an obstacle for success to these companies.  Employees who are materially invested in a company’s growth are necessarily harder working, more committed, and more thoughtful employees.  Those who aren’t are likely to flit away at the first whiff of trouble (and believe me, startups here and in general encounter plenty) or for dumb reasons like a few hundred more dollars in their pocket monthly from another job.

So, it may be a chicken and an egg thing.  Employers do not have an obligation to offer stock options.  Qualified candidates will benefit from understanding them and recognizing their true value.  And if folks aren’t buying ferraris with their options, or pivoting into their own startups with lots of runway, we have few examples to point to as encouragement.

I strongly believe that the long-term health of our technology community depends on more people benefiting from successful companies via stock option payouts; and that we need to talk more openly with employees and prospects about how they work and what they mean.  The community needs to see more rich guys slacking at coffee shops who were simply low-level workers at hugely successful companies.  Believe me… when you see gardeners living large on the stock options they earned for mowing the lawns at the corporate offices of flotsam.com, you’ll get religion too.

On the other hand, you’ll have to really impress me these days to convince me to hack off a few thousand pieces of paper from my dream business and give them to you.  I have learned through hard experience that, even after options having been granted to local workers, their value has little additional motivational effect on employees.  And these days, even my unabashed generosity has its limits.

Dear Fred — I think your statement:

“In the early days of the Internet, when dial-up was king, the telco companies were in the driver’s seat. They had the customer relationships. They had the on-ramp to the Internet. But they did not create Google, Skype, Facebook, or even TCP/IP.”

… is misleading.  It assumes that the telcos and ISPs have at one time ever had a good grip on their internet customers.  As a former manager with just such a company, in fact one of the most profitable ones in the world, I can tell you most confidently that this has never really been the case.  And since the advent of the consumer internet, Big Telco has never had the opportunity to successfully inflict their business model on the Internet … until now.

In the earliest days of consumer and internet, before SLIP and later PPP, BBSes and ISPs offering gateways to the internet did indeed control users’ access to the internet which, back then, was mostly email and newsgroups and mediated at the command line by their terminal server — and they took advantage of the limitations of TCP/IP and fully-mediated the experience.

But SLIP/PPP, and more notably the web browser, changed all of that.  With the browser you could establish your IP connection automatically and you could set your homepage to any site you liked with a click of a button.  This instantly killed the “on-ramp” opportunity for ISPs, particularly as the technology became easier and those “Internet Access Kits” were no longer filling store shelves and being mailed to consumers when they signed up by phone for their ISP.  This one attribute is what built Yahoo!

And in the mid-1990s, AOL subverted the major telcos by leasing dialup ports from them in the hundreds of thousands and provided an online experience that was, in its darkest moments, almost completely proprietary and provided zero upsell opportunities to the carrier.  This was as it should be.  It’s a model, by the way, that Apple and RIM have now largely copied for the iPhone and Blackberry.

But Big Telco was never really in the drivers’ seat.  Customers clamored for broadband, and in fact for Big Telco ADSL was a defensive strategy that optimized the cost impact of dialup customers holding up circuits and purchasing extra phone lines that way exceeded the design parameters of those big ol’ neighbourhood switching centres.

In 1997, I joined up with BC TEL, Canada’s 2nd largest Telco, with much the same belief that you stated today — but I was incorrect.  In fact, one of the first things I did when I joined the team was to kill an expensive project which would have forced all of Western Canada’s residential ADSL customers to LOGIN via a carrier web portal to activate their IP connection … it was like Wayport writ large.  This would indeed have catalyzed the carrier’s opportunity to more fully-mediate the users’ experience online, but it would also have driven a lot of customers to Cable Broadband.  While broadband is indeed faster than dialup, its most convenient attribute is that it’s always on.

With Hotmail, carriers soon lost that other conduit to their customer — email.  For a number of years the prospect of a customer losing their email address by switching providers was a concerning one — and it was indeed considered a major retention tool, and this defined the budgets allocated toward maintaining email infrastructure.  Nowadays, it’s different.  I probably have an email address with my current broadband provider, Novus, but I couldn’t tell you what it is.  Hotmail (and Gmail and everything else) represent the second penny dropping, and ISPs no longer have meaningful communication with their customers except via billing statements and costly telephone calls.

So having been relegated to dumb pipe providers, particularly since the advent of broadband, the Carriers are taking a third run at it, having been thwarted by progress at every other turn.  Telcos like to make their money by bundling and rate-scaling — in fact, it’s really the only thing they’re good at.  “Marketing” departments exist to dissect their userbase and lock them into increasingly costly plans and rate groups while baffling customers through the chicanery of their service statements and packages.

So, then… what is the heart of the carrier, since time immemorial?  The Billing System.  It’s their core IP.  Their greatest investment.  The crown jewels.  And I’m sorry, but Isenberg’s theory of the “stupid network” sounds scary to them, even if the cost of metering and billing for a network service far exceeds the cost of supplying that network in the first place.

Now, with metering and traffic shaping and outright blocking, this is the carriers’ first real opportunity to realize their ancient business model in a way that cannot be taken away from them, except by the FCC and CRTC, and it’s easier than ever:  rather than compete with third-party applications and web services, they can use them to create bundles — without even having to do business with those third-party companies and startups themselves.

It requires a huge investment in equipment from Ellacoya and their competitors, but this is the kind of project a Telco has no problem allocating funds towards.  After all, this infrastructure is at its heart just a much more complex, glorified Billing System.  That’s a big thumbs-up in the carrier world.. no bother that if equivalent investment was made in pipe and routing there would be no need for concern regarding bandwidth constraints.

But the broadband metering opportunity is what those gentlemen, in their cigar-hazed and hundred-dollar Port-soaked backroom meetings, would call their finest hour.  For more than 15 years, Big Telco has struggled to find ways to attach their traditional business model to the internet, and in most respects has failed miserably.  Meanwhile, their cash cow (Voice) became just another internet application.  Profits have suffered and voice became too cheap to bill.  If your only tool, the Billing Systems, are your hammer, then every problem indeed looks like a nail.

And so while the entire rest of the technology world is trending away from billing for that which is too cheap to bill, our friends at the carriers continue to fight the realization that they do not need legions of employees doing customer segmentation analysis and engineering toll booths along their dumb pipes to be profitable, they don’t need to be 35,000 or 45,000 employees strong, they don’t require billing systems that cost tens of millions of dollars a year to build, modify, and maintain, and they don’t need to have decamillion-dollar CEOs at the helm.

They need to focus on building lots of pipe and keeping it running, and that takes neither of those things.  It also doesn’t require a very complicated billing system.   But none of these things does much to keep the good times rolling.

I’m not usually one to get excited about this sort of stuff, but living as I do at pretty-much the epicentre of the coming Olympics in Vancouver 2010 issues of security, terrorism, and other such hysteria have got my spider-senses tingling.  I’m fairly convinced that, given Canada’s very active participation in NATO’s Afghan adventure and numerous related transgressions, there will be some sort of attempt at terrorist action during the Games.

I’m doubly convinced that while the VANOC Gestapo is concerning itself on the front lawn with ebbing peaceful protests, sweeping our homelessness and drug problems under the rug, and thwarting any attempt by commercial enterprises to steal some Olympic mojo; they’ve left the back door open for morons who might claim some affiliation to the non-existent Al Qaeda to blow up a rented cube truck filled with god-knows-what in my neighbourhood.

Reinforcing my fear of their ineptitude, today it is revealed that Kinder Morgan, the company that has brought local residents a string of oil spills over the past few years, have .. um .. misplaced at least two tonnes of ammonium nitrate which was in a truck en route from Alberta to North Vancouver sometime over the December holidays.  Kinder Morgan is attempting to play this off as a “clerical error” however we’ve heard that from them before, as oil gushed into Burrard Inlet and drowned an entire Burnaby neighbourhood in a thick black film.

They lost two tonnes of ammonium nitrate.  In Vancouver.  You can’t be serious.

As Global Security reports, ammonium nitrate is used to make about 95% of the bombs in Afghanistan, and was also the medium of choice for the foiled efforts of the Toronto 18, who had themselves obtained 3 tonnes of ammonium nitrate.  The reason for this bomb-making method’s popularity is that the recipe for making such a device using ammonium nitrate is so simple an idiot could do it.

In 1995 Timothy McVeigh and Terry Nichols (two complete idiots if I’ve ever seen one) used a 600-pound ammonium nitrate bomb, mixed with a fuel oil called nitromethane, to attack and destroy the federal building in Oklahoma City.  The attack killed 168 people.  McVeigh and Nichols had purchased exactly two tonnes of ammonium nitrate prior to constructing their bomb, which they assembled in the back of a cube truck.

Ask yourself this: do you trust with your safety the very same public officials who will allow a couple of tonnes of high-explosives to disappear while simultaneously announcing that you are no longer able to take books on airplanes?

UPDATE: Bob Mackin points out that Kinder Morgan’s North Vancouver dock will also host a cruise ship providing visitor accomodations during the Olympics.  Good luck with that!