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Religious Wars
A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
March 5th, 2004


By Brent Holliday
Greenstone Venture Partners

"Now I'm a believer
Not a trace of doubt in my mind" - Neil Diamond, I'm A Believer

"For those who believe, no proof is necessary. For those who don't believe, no proof is possible" - Traditional Saying

Throughout civilized history, man has fought for beliefs that they hold to be true. The individual man has, for the past 3000 years, struggled with what it is that they believe because it gives them purpose… a reason to exist among so many others and amongst the vast, chaotic universe. If you believe nothing, then you achieve nothing and your life appears to have no meaning. So, we believe and we fight for those beliefs that we hold to be true. It has always been honourable to do so.

The downside of man's collective need to believe in certain truths is that wars have erupted and incredible suffering has been created because one group believed in something very different than the other group. In order to seize power and wealth, clever leaders created the "reason" for battle by playing to that difference in beliefs. It continues to this day and manifests itself most clearly in beliefs about religion.

Religious differences and holy wars are no stranger to the technology business. In fact, I would argue that there is no industry in which dogma plays a role as great as in technology. Think about it - mainframe vs. PC, Java/Linux/Apple vs. Microsoft, ATM vs. IP, DSL vs. Cable and many others. People in either camp, on either side of these great struggles for dominance in the minds of the buyers of technology, think that the other side is utterly and completely wrong. And stupid. And evil. And worthy of being exterminated by any means possible, so that they don't pollute the minds of the buyers with their corrupt view of the world.

"Every dogma has its day." - Abraham Rotstein, 1978

The stories of the struggle to bring a revolutionary technology to market are always steeped with religious overtones. David vs. Goliath is a very popular theme, but Moses singing "Let My People Go" is also a nice metaphor sometimes. Take the PC revolution (of course IBM called it a PC after they lost the battle and joined the revolutionaries. Initially, it was called a desktop computer) for example. Against incredible odds a group of uber-nerds started tinkering with the idea of shrinking a computer's parts into small, affordable and easily assembled machines. Not until the evangelist/prophet Steve Jobs came along, did any of the tinkerers realize that there was a huge business opportunity associated with their "belief" that a desktop computer was possible. Apple was the first to successfully mass produce the new computer and the behemoths of the industry engaged in the battle for the first time. Ken Olsen, CEO of Digital at the time, famously stated, "Why would anyone want a computer on their desk?". Remember that most computers in the 70's took up entire floors of buildings and DEC had thought they revolutionized the world with mini-computers (which were merely the size of three photocopiers stacked on top of one another). No, DEC had been "evolutionary" in their approach and they still wore pin-stripe suits like IBM. They were not different in their beliefs from IBM.

We all know that the PC won the war and the days of big iron religion were relegated to fringe markets. IBM changed their religion and started to wear khakis in the 90's, no doubt bringing a satisfied smile to the now 50 something nerd warriors of the 70's.

The story of ATM vs. IP still engenders fierce rhetoric and chest thumping among the various communications camps. In a way, ATM and its synchronous parent, SONET, are making a comeback after being nearly slaughtered by the world of IP and routers and their new shiny transport means, the all-optical network. In the early 90's, data communications was just beginning to have its day over wireline networks dominated by voice traffic. SONET had already emerged as an expensive, but 99.999% reliable new way to deliver voice traffic over the newly installed fiber-optic lines. This had the "Bellheads" from the SONET world thinking of new ways to use this reliable infrastructure to haul the rapidly emerging asynchronous data (the Internet) which was annoyingly un-reliable by its very nature. The "Bellheads" thought in terms of the phone network: Constant rate of traffic, reliable throughput, high quality of service. So they created ATM (Asynchronous transfer mode) to deal with sending Internet packets reliably over SONET. Meanwhile, back in California (home of the PC revolution), the nerds were back at it, fomenting a new religion based on the router. The "Netheads" raised gobs of money from the financiers of the rebellion, the venture capitalists, and proceeded to out market, out maneuver and out sell the "Bellheads".

ATM is still prevalent in the network, but what really peeves the "Bellheads" is that the "Netheads" co-opted their story of high quality throughput for voice, video and gaming and tried to make it work through the routers (an alphabet soup of failed and struggling technologies like RPR, RSVP, MPLS, etc.). IP routing was a revolution because the Internet evolved on it. The perfect storm of conditions existed in the mid to late 90's for the "Netheads" to win the war. Look at Ethernet, the original packet based technology that created local area networking, and its adoption in the wide are networks today. It's cheap and it works. Ethernet's evolution outside of the enterprise is showing the continuing dominance of the "Netheads" approach to networking.

But wait, what's that noise? The "Bellheads" have re-grouped and squashed the idea of new, intelligent all-optical networks, for now. It seems that the SONET infrastructure in the ground is too useful to swap out for all new networks. Next-generation SONET is evolving the infrastructure using the old reliability that the carriers so love about it. Stay tuned for the continuing battle, now that Cisco is the Goliath...

Everyone's favourite religious war is Microsoft technology vs. anyone else. Their continued hegemony of the operating system market and their equally dominant position in enterprise applications like Office, makes the "other" camp furious with envy. First Apple took shots at them and the Apple lovers are a fervent cult (of personality?) driven by the guru Steve Jobs (he was crucified, banished and then resurrected the company… Will Mel Gibson do his story next?). Apple owners love to taunt Windows users with the better, more stable system that they use.

Next up was Java (and cousin Jini), Sun's attempt to un-seat Windows development tools in an increasingly interconnected world of devices. The Java war is still on-going and little by little the Java point of view is winning more and more buyers. Put a room of Java developers and VB developers in a room. Add beer. Watch the fur fly.

But Microsoft's worst battle in the religious war, the one that bloodied it the most, was the browser war with Netscape. By giving away Explorer, Microsoft raised the ire of the governments of the world leading to seemingly endless legal battles. The chink in the armour was apparent and the Linux revolution stepped in at a very timely point. Now the war is Linux vs. Microsoft at the core of the Microsoft dominance, the operating system. Linux is stupidly fighting side battles among its own believers (a civil war?) with SCO suing everyone for royalties to an open source movement. But make no mistake, the world is dividing into camps and, although Microsoft has US$53B in its war chest, the barbarians are at the gate.

"Belief is a wise wager. Granted that faith cannot be proved, what harm will come to you if you gamble on its truth and it proves false? If you gain, you gain all; if you lose, you lose nothing. Wager, then, without hesitation." - Blaise Pascal, 1650

Since our human nature is to stand for something, you must eventually pick your camp and join a religion. Unless you are a venture capitalist. Investors should step back and place bets on revolutions and evolutions, with emphasis on the latter. Revolutions are the riskiest of risky bets. What I have not had time to get into here are the thousands and thousands of "cult" ideas that never gained the membership to be a true religion. Discarded in history, some of these ideas should have been truly great, but for one reason or another, they weren't. Evolutions are safer because the dogma is understood and the buyers are more likely to buy a better mousetrap that does not deviate from what they believe.

"Believe nothing merely because you have been told it. Do not believe what your teacher tells you merely out of respect for the teacher. But whatsoever, after due examination and analysis, you find to be kind, conducive to the good, the benefit, the welfare of all beings -- that doctrine believe and cling to, and take it as your guide." - Buddha, 500 BC

However, as Buddha exhorts, don't jump on the first bandwagon that comes along. And carefully assess the opportunity if it has two (or more) distinct camps that affect your decision. The software entrepreneur can choose Microsoft, Java or both. By adapting to both, you are almost certain to double your costs of development, so usually in a limited resource environment, you choose one or the other. Sometimes, the choice is easy because you are already a believer in one way over the other. Personally, I tend to doubt the fervent believers. I think they may be missing something if they dismiss all others as fools.

Religion is a sensitive subject, sure to cause debate and stir emotions. It is no different in the tech industry. I have one final quote, to whom I can't find the authour because I think I'm paraphrasing a bumper sticker, that sums up there technology religious wars nicely: You have to be careful because "those with karma can run over your dogma."

Random Thoughts –

- Lightning Strikes Twice - As all of you no doubt heard last week, the trio of Paul Terry, Adam Lorant and John Seminerio (with a very good group of unsung engineers led by Pat Ogmundson) struck gold for a second time. Cray Computing bought OctigaBay Systems for US$115M after just 2 ½ years in business and only 15 months since raising US$15M in venture funding. Cray took a big bet in OctigaBay as their market capitalization was just US$528M before the acquisition. This means that after issuing US$100M more in stock to the shareholders of the Burnaby company, they have added nearly 1/6 more stock for no meaningful addition to earnings until well into 2005. In speaking to the analyst that did downgrade Cray immediately after the acquisition, he did like the deal in the long term for them. And we all like the deal locally because it shows what a big idea and great execution can create, even at the tail end of a rough time for the technology industry.

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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