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Something Ventured:
June 25th

Insight For BC Technology Entrepreneurs

By Brent Holliday

Did Java Good Time?

"I've got to admit it's getting better
(It couldn't get much worse)
It's getting better all the time "
- The Beatles, Getting Better

I went to the religious revival meeting in San Francisco last week called JavaOne. I have never been a religious zealot about any computer language. In fact, let me replay a conversation from April, 1997 at a VC Investment forum in Atlanta, GA. I sat at breakfast with a VC from the Valley. I was a VC for a grand total of 1 month. I started the conversation by observing that a great number of companies presenting were Java-related. The VC nodded and said it was the biggest change in software history. He was older and, presumably, wiser than me, so I humbly asked him why he thought that way. He said that it was blatantly clear that Java would enable the new desktop application environment, or more simply, would replace Windows. Thin clients and the Network Computer were all the rage and hype in early 1997. This guy clearly had a hook in his mouth and was flopping around spouting, "Java this, Java that". I asked him whether Microsoft would either co-opt Java or try to outperform its functionality on a desktop computer with Active X, both of which had just been announced. He looked at me as though I had three heads and said, "Java is the future. I suggest you pay attention to that fact today." He rolled his eyes and went back to his Wall Street Journal, wondering why his luck was to have some schmuck from Canada question his moral imperative at breakfast.

Well, I wonder how his investments are doing. I think that this guy and some other notable VCs (the Java Fund from Kleiner, Perkins being the biggest example) asked the wrong question in 1997 and 1998. They asked, "Do we invest in Java companies"? In fact, it should have been, "Do we invest in tools, applications or solutions providers that make customers want toreach for their wallets? Oh, and they happen to use Java." Fast forward to JavaOne last week. Ted Schlein, the guy who runs the Java Fund, said that he had indeed been a victim of the hype. But he went on to point out that his investments have done quite well. Eighteen companies are now worth a combined $8.5 B in market cap, in large part due to the successful IPOs of Marimba and Healtheon. In front of the religious masses he said that these companies are not doing well just because they helped pioneer Java’s use in the enterprise, but rather that they are doing well because they have executed well and have made applications that customers find valuable. Heresy? Not really. The Java crowd has mellowed a bit over its four year life.

The big story for me at JavaOne was that as I walked through the booths of companies from IBM to the garage start-ups, I noticed that Java had really come into its own. How do I know this? Easy. No company there was touting a Java-anything. They all had applications or tools or services that happened to use Java. I had entire conversations with companies describing their application without the J word coming up once. This is truly good news for Java. It is being used successfully and is just part of the fabric that makes a great software product or service or a new embedded device.

Here’s a report on Java that I am paraphrasing from Interactive Week and combining with comments I heard over and over again at JavaOne:

Programming Language: A Its ease of use results in higher productivity in the enterprise. Its small footprint is ideal for embedded devices (ironically, that’s what it was developed for… more on that later). It is taught at all universities and colleges, to the point where my brother learned it in 1st year computer science, before learning C++.

Java Enhancement of Web Content: D It was (is) too slow for web sites delivered via 14.4K and 28.8K modems. The initial prospect of no plug-ins for your browser was compelling. Imagine, no need for downloading Real Audio, Acrobat or Shockwave. The existence and success of these plug-ins is a testament to Java being too slow. But things are changing. Acrobat is now in Java. And I saw some very interesting Java based streaming technologies that don’t require Real Networks.

Network Computers and the Java OS: F Never happened. Larry Ellison of Oracle ate a lot of crow over this one.

Embedded Device System: B+ Several iterations of Javas have made it into Palm computers, set top TV boxes and now Jini, with its promise of any electronic device recognizing a network and joining it without programming. In my mind, this is the biggest future for Java.

Java Development: B- Most of the developers and companies relying heavily on Java are happy with its pseudo open source nature. After all, Sun still holds the palace keys. Java 2 is now coming out. But there are still lingering problems with the Application Programming Interfaces (APIs) that developers use to extend Java and make it integrate with other applications and the Virtual Machines which allow Java, at least in theory, to run on any machine. Basic problem: there are too many types and versions to keep up with.

JavaOne is a developer convention first and foremost. They had everything a Java developer could want: 1000’s of networked computers (called ‘hacker stations’ to be more hip), free pop and coffee, beanbag chairs splayed out in front of a wall of video games that you could play alone or deathmatch with a buddy, South Park re-runs all day long, plenty of code talk, lots of chances to speak to or actually touch one of the Java gods (James Gosling, Bill Joy, Alan Baratz) and the piece de resistance: deeply discounted, brand new Palm Vs that everyone bought in order to beam each other Kjava (new embedded Java for Palm devices) applications like puzzle pieces that, if you collected all of them, won you a prize. Sun has clearly figured out something that Microsoft figured out a long time ago: Keep your developers happy.

So, you are developing a new application for the enterprise or maybe you think that enabling devices like cell phones and PDAs (like the Palm V) to act like desktop computers continuously tethered to the server by wireless networks. What role does Java play in your new company? Obviously, you have to decide early on what the technology needs to do for the customer. How does it solve a problem that the customer is having? Then you go about finding out which technology is best for accomplishing that goal. It is ridiculous and suicidal to start making an application using Java, just because of Java’s capabilities. No one, least of all your customer, cares what it’s written in as long as it performs the stated objective. Here’s the big IF. If your customer needs to integrate your application with existing technology, then you better pay attention to the capabilities of your underlying software language. And in many cases, Java is the right answer. But please build something that the customer actually wants first.

Let’s look at some of the exhibitors at Java One to illustrate the concept of how Java is secondary to the customer focused product:

Digital Think is a company that delivers on-line training. Think of it as an on-line technology school, where you can upgrade skills or learn new ones. They wanted to build an on-line environment that any customer at any modem speed would find intuitive and useful. It is a highly personalized experience because it tracks your progress and feeds your metrics back to instructors or moderators. Digital Think was at JavaOne because they offer Java, Java2 and Jini training, not because they use Java. In fact, in the beginning they didn’t use it at all. It was too slow. They thought that client side Java was how they would deploy some of their material. They pitched that idea early on. They are now using Java application servers with their Oracle database back end. But they only did that after they saw that the second generation of these worked on large sites.

TrueSpectra is a Toronto company that has created an image server for e-tailers. The problem: Web developers take too long manipulating photos in Photoshop before deploying them on web sites, especially if they are large TIF files from catalogs. Truespectra created algorithms that automatically crop, resize, colour correct, position and deliver images. All of this done at the server end. They also developed a technology that allows a user to change parts of the image and have the image rendered in real time. In other words, I can select a tie and shirt combination and change it through clicking on an image. That image is not pre-done and sucked from a database of all possible combinations. It is rebuilt and served instantly. In order to accommodate as many customers as possible, they have enabled this technology for Java-based web servers and for proprietary web servers like Microsoft and Cold Fusion. Standing in JavaOne, they weren’t afraid to show you how well and quickly it worked using Microsoft IIS and Active X. Privately, they’ll tell you that the Java solution is more flexible and technically elegant. That and $2.85 will buy you a latte at Starbucks!

There were dozens of examples, but I won’t bore you any more. The take home message is that Java is real and thankfully has pretty much outlived the hype.

Random Thoughts

- The Feds went golfing before finishing with Bill C-54. Oh-oh. This is a bad omen for a vital piece of legislation. Canadians are not reaching for their ewallets as often as in the US. And when they do, they tend to spend in the US and eat the huge shipping costs. Bill C-54 is all about consumer protection on the Net. The publicity of enacting this legislation and the comfort that most Canadians should get from it being a law will have to wait. John Manley says it will be passed by the end of the year. Message to Manley: when is the busiest shopping season? Better get this puppy enacted in plenty of time for Xmas rush or more dollars will not be spent by Canadians.

- From the Harvard Technologies French Fry Scam files: Light Management Group is a former laser light show system provider (you know, at the planetarium or rock concerts) in Toronto that has claimed to have made a 30 fold increase in fiber capacity over the existing fast standard Dense Wavelength Division Multiplexing. They say that they have perfected Acoustic Modulation of light waves which they derived from Alexander Graham Bell’s tinkerings after he invented the phone 100 years ago. The CEO said that they are in "advanced stages of negotiations" with telecom companies and "defer in talking about it, since so much is at stake here." Uh-huh. Any company that lists three on-line brokerage links directly from their front page, inviting you to check the price and volume of their stock is suspect beyond belief. I don’t buy it, but apparently some people do.

- The Wall Street Journal reported on June 15th that Canadian workers may be the next target of US high-tech companies. As reported here (and everywhere else, but heck, I like saying that) last September, the US Senate approved an increase of the so-called H-1B visas for 1999 from 65,000 to 110,000 which are used primarily for bringing in foreign technology workers from Asia and Europe. Well, guess when they hit the cap for 1999? June 15th. But the Canadian border remains open. Why? NAFTA, baby. So guess where the recruiting gets hot and heavy for the next 6 months. It is probably time to hand out the Christmas bonuses a little early if you want to keep your top talent. We are now the only source for trained technology workers in the US. Hmmmm. Do you think anyone in Ottawa even knows about this?

Response From Last Week's Column:

Hi Brent:

I find your articles very informative. Keep writing and I'll keep learning.

I read with great interest your reply to David Ing and am 100% with you when you say "...it comes down to who gives the entrepreneur advice... the wrong type of investor will kill you every time".

To my observation this is due to a combination of 2 factors. First, these "investors" are not in the business of building companies; their sole objective is to jockey stocks. Second, very few of them have the expertise, capability and skills to build a company. Personally, I don't think they are even capable of managing a hot dog stand on a street corner. A good number of them are directors of public companies or shells or VCs; they like to refer to themselves as venture capitalists, or merchant bankers, or investment bankers. It surely sounds and looks better than stock promoter on a business card. Most of them don't know how to read a business plan, but it doesn't matter. Their only concern is how much stock they can move and at what price. When it comes to taking companies public and promoting stocks, these guys are simply unbeatable. No wonder that a large number of companies on the VSE enter a state of walking dead shortly after being listed (the OTC is hardly any better). These companies'stocks are recycled periodically.

Don't you find it funny Brent, that those who used to promote mining stocks two years ago are promoting Internet stocks today? A zebra doesn't change his stripes. Same banditos but different shingles! The sad part though, is that this species is predominant in Vancouver.

Sam Kassem

- Well, Sam, look back up to Random Thoughts and see what still happens out there. In the interest of not painting them all with a brush and/or alienating them from my valuable readership, I will toss the olive branch. Some of these guys put in a hard days work promoting real companies with real products and smart management. I know of at least a couple dozen that I would work with any day. Unfortunately, as you pointed out, a few of them are scammers and we all pay for it when the only publicity to come out of the VSE is bad.

What Do You Think? Talk Back To Brent Holliday

Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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