Optimism and enthusiasm in northern California

For the last two days of this week, I was in San Jose (Santa Clara, Palo Alto, etc.) to meet with old friends in the semiconductor business and to make new connections with investment banks and law firms to whom Parallel Semiconductor LLC may be of service.  I am always delighted by the optimism of the bay area, its entrepreneurs and those supporting their innovation and growth.  Just a few highlights from my trip:

• Santa Clara University School of Law Symposium on Shifting Strategies in Patent Law: How the ITC, Non-Practicing Entities and Inequitable Conduct are changing the Patent Arena.  A very well organized, educational and thought provoking day.  Nicely done!

• The good fortune to hear F. Scott Kieff address the topic of Non Practicing Entities.  If you ever have the opportunity to read or listen to Scott's views (easy to do with so much of his material available on the Hoover Institute web site) he will allow you to see IP and patents in a very new (possibly a very old) light.  Highly recommended! 

Strategy and the game of Battleship

So often we speak to "strategy" as a high level, time based, roadmap of technology and products forecasting years into the future.

Has anyone ever built a successful business implementing such plans?  Not I.  I prefer to craft my strategies using the game of Battleship method.  The original game rules (PDF) for those too young or too old to have played.

Here's my simplistic model:

1. You have to get in the game. You must field a prototype of your product and aggressively gather feedback and market intelligence.  
2. Apply the product feedback and intelligence to adapt your product plans.  Some shots will be misses, but the hits can blossom into entire product lines.

I have no fundamental argument against the traditional approach of mapping SAM, TAM, competitors, SWOT or even executives with "Strategic" in their title.....but please don't call the output of this method a strategy until you have waded into the market and started to map your hits and misses.

Irrational exuberance to fear, uncertainty and doubt

So, the transition is nearly complete.  In little over a decade we have experienced irrational exuberance AND fear, uncertainty and doubt (FUD) in the global economy.  While the Nobel Foundation recognizes the profound complexity of Economic Sciences by awarding an annual prize, will our generation of consumers, investors and business leaders finally acknowledge that it is not the beauty of gaming theory, but psychology, greed, institutionalized deception and hubris which are truly the most powerful factors in economics?  Fear, uncertainty and doubt and now consumes us all.  The FUD is so deep that even aggressive investors and entrepreneurial business leaders are unable to act.  At best we are all dealing with our personal and professional fears, at worst we have bona fide crises (fund losses, crashing sales, crippled personal portfolios, etc.) to be managed.

So, where from here?  If the traditional venture capital model is on hold for now, let's invest our time, expertise and small amounts of private capital to bootstrap the next wave of start-ups.  Great companies like 37signals and those emerging from TechStars depend on great people, a huge investment of time and relatively little money.  Let's stop staring into the headlights!

Phoenix real estate on sale

As highly publicized over the past 18-24 months, home prices in Phoenix metropolitan area have backed-up about six years in established neighborhoods.  The fundamental question is, "Where's the bottom?"  Might today's buyer reasonably expect another 20% decline (equivalent to an additional 2-4 year back-up)?  A new phenomena for me is the market splitting into two segments; wholesale (investors intending to "flip" properties and buying at auctions, short sales and foreclosures) and retail (end buyers intending to live in the home or rent out as a business).

Clearly the next crash will be in commercial properties.  Phoenix currently has more than 33 million square feet of empty commercial space with an additional 3.5M under construction.  Sale and lease asking prices have declined only slightly in the past 12 month, but in the past few weeks it seems as EVERYTHING has been posted for sale; established leased properties (including $150M in Penske automobile dealerships), vacant buildings and raw land....signs everywhere!  I wonder how much more TARP money will be needed to absorb these future bank losses?

Another leap from a perfectly good airplane

Every five to eight years I take my career in a different direction and depart from a perfectly good company.  Early in my career I was seeking greater technical challenges, but I have always had my fingers in both business and technology believing that engineers, as opposed to pure scientists, are judged by their ability to produce revenue and profit.

Early in December 2008, I publicly announced my February 28th, 2009 departure from Standard Microsystems (SMSC).  I've been VP of Corporate Engineering at SMSC since they acquired Gain Technology in June 2002.  In the past eight years, I've had the great privilege to work with some of the industry's best and brightest engineers and business leaders.  Together we have built engineering teams, design centers, great products and successful businesses which transformed a corporation.  I will always be grateful for the opportunities which were offered to me and the triumphs we enjoyed together

So, now what?  From today's global financial wreckage, corporate consolidation on a grand scale is inevitable and great new ventures and business models will emerge.  On March 1st, I will be joining Parallel Semiconductor LLC which provides engineering and management consulting services to semiconductor, financial and legal communities.  I will also be engaging organizations focused on identifying and helping young entrepreneurs succeed!

The next five years promise to be chaotic and fun!

Cheers!

An unusual start to a blog

Most business and technology blogs are pontifications of the author's wisdom and observations.

I'd like to start this blog recapping a few of my failed pontifications of the recent past:

October 2007 - "The market won't see a bottom for AT LEAST three more months!"  In reality, the bottom may be three, or more, years away.

Spring 2008 - "I'm afraid that Barack Obama may not be electable in 2008."  I could not be more proud of my Country's demonstration of color blindness.

Summer 2008 - "We'll never see crude oil below $100 a barrel again!"  Enough said.