India IT a Limited Supply


Before founding my current company, I was on the technical staff for a large telecom provider.  In the early 1990’s about half of our tech team were hired on the H-1 visa’s  from India, all very sharp and good engineers.  As the tech economy heated up, the quality of our Engineers from India dropped off significantly, to the point where many were actually let go after trial periods, at a time when we desperately needed technical help.

The unlimited supply of offshore engineering talent evidently had its limits.  To illustrate I share the following experience.

Around the year 2000, in the height of the tech boom, my manager, also from India, sent me on a recruiting trip to look for grad students at a US job fair hosted for UCLA students.

In my pre-trip briefing we went over a list of ten technology universities in India, as he handed me the list he said,  “Don’t worry about a candidates technical ability, if they come from any one of these ten universities they are already vetted for competency, just make sure they have a good attitude, and can think out-of-the-box.”

He also said if they did not attend one of the 10 schools on the list then don’t even consider them, as there is a big drop off in talent at the second tier schools in India.

Upon some further conversations I learned that India’s top tech schools are on par with the  best US undergrad engineering schools.  In India there is extreme competition and vetting to get into these schools.  The dirty little secret was that there were only a limited number of graduates from these universities.  Initially, US companies were only seeing the cream of the Indian Education system.  As the tech demand grew, the second tier engineers were well-enough trained to “talk the talk” in an interview, but in the real world they often did not have that extra gear to do demanding engineering work and so projects suffered.

In the following years, many US-based engineers in the trenches saw some of this incompetence and were able to convince their management to put a halt to offshoring R&D projects when the warning signs were evident.  These companies seemed to be in the minority.  Since many large companies treated their IT staff, and to some extent their R&D staff, like commodities, they continued to offshore based on lower costs and the false stereotype that these Indian companies could perform on par with their in-house R&D teams.  The old adage you get what you pay for held true here once again.

This is not to say there were not some very successful cost savings made possible by Inidan engineers,  but the companies that benefited were the ones that got in early and had strong local Indian management, like my boss, who knew the limits of Indian engineering resources.

The Exploitation of the American Tech Worker


Screen Shot 2016-04-05 at 10.07.59 AM

By Art Reisman
CTO http://www.netequalizer.com
I know what you might be thinking ,”Really? High tech workers being exploited?” And my answer is yes.  I’ll concede that this exploitation is not like the indentured servitude of the rubber barons of the late 19th century.  The players are more sophisticated, but the motives are the same.  Get a bunch of naive, young, impressionable people and waive a carrot with the possibility of riches and game on. Here is how it works.

Many top tech companies of today have started as more or less small unfunded garage shops, such as Google, Facebook, etc.  Venture capitalists have taken note of this, and they have also noticed how some of these young engineers will work day and night once they get sucked into thinking that their idea is the next Facebook.

The odds of any company growing into a valuation of a billion or more is quite small. What products will take off, what idea will get picked up on social media?  You just can’t predict this, but you can improve your odds by spreading your investment across a large number of infant startups.

From the investor standpoint, the equation makes sense. If you have a million dollars, you could perhaps fund one marginal existing company and hope they blossom; or you could take 50k and waive it front of 20 early stage startups who have not accomplished anything yet and are most likely running on fumes.

I see the articles 2 or 3 times a year in the local papers.  Boston alone has 50 start up incubators.  A typical investment company trolls these incubators, often sponsoring them, looking for promising, hard-working tech people with an idea and a prototype.  They offer them a small amount of cash, perhaps a nicer work space, advice, and so forth in return for a percentage of the fledgling company. Is this evil or wrong?  No, of course not. But there is the concept of subtle but very real exploitation going on here.  I’ll get to that part shortly.

A typical deal works something like this. Come to our incubator for the summer, we will give you office space, advice, and 50k for the three month period.  You’ll also get your company featured in a few newspapers and journals.  Local newspapers love giving free publicity to these incubators, especially if some big name VC is behind them.

Most likely 18 of these startups are going to fail through no fault of their own, it’s just their idea/product will go nowhere. One out of twenty might struggle along and create a small viable company with a niche market. And perhaps, just one will return 1000 fold or more on their 50k investment. That is the game.  Even that is a long shot, and you may have to play this game for several years before you hit that jackpot.

So now let’s take the 50k investment. Divide it by 3, for 3 months of summer and divide it again by 4, assuming the start up has four employees.  That breaks down to about 4k per person for three months, and most of these blokes are working 80+ hour weeks minimum, because they are chasing a dream. That is the culture of a tech startup.  Somehow, if you beat yourself into a tired frenzy, you are more likely to succeed, right?

Not really.  There are some people who do these insane hours, but the good ones are knocking off at 40 and are much more productive. But that is another article for another time.

Conservatively,  I can assign 300 hours a month per employee. That breaks down to about $4.50 an hour. Now granted, many of these tech startup people were working for free anyway before they struck a deal. So is this exploitation?

I don’t know, but take this into account – many of these investors are worth 100’s of millions or more and have multiple houses, boats, planes, etc. Essentially, when they buy a big stake in these start-ups, the engineers working for them now become their indentured servants.  Yes, the company employees are also driven by the potential of a big payout, but the odds are stacked against them.  Most will end up with a pile of credit card debt, and an old newspaper clipping for their resume.  I would hope that if I were the investor in this scheme I would make sure the people in the trenches made a living wage, perhaps $20 per hour?

How to Make Your Own Speed Test Tool


Most speed test sites measure the download speed of a large file from a server to your computer. There are two potential problems with using this metric.

  1. ISPs can design their networks so these tests show best case results
  2. Humans are much more sensitive to the load time of interactive sites.

A better test of your perceived speed is how long it takes to load up a new web page.

 

If you have a MAC/ Linux server in your house (or windows with Perl installed)  you can use this simple tool to measure and chart  the time it takes to load a random Web page.

The code below is a Perl script which samples the CNN home page every 5 seconds and records the time it takes to load. The data is stored away in a file called /tmp/xlog.

#! /usr/bin/perl -w
$julian=`date +\”%s\”`;
print $julian;
$verbose=0;
open ($LOGF , ‘>’, “/tmp/xlog”);
for ($i=0; $i < 60 ; $i=$i+1)
{
sleep 5;
$julian=`date +\”%s\”`;
print $julian;
system(“{ time -p curl -o output.txt http://www.cnn.com 2>/dev/null; } 2> x”);
system ( “cat x | grep real > x2″);
$line= `cat x2`;
chomp($line);
@specials=split(” “,$line);
print “$specials[0] $specials[1] “;
print $LOGF “$specials[1] , $julian”;
}

 

I then took the raw data from my file and charted it using google docs.

Note: I had to use another tool to get the link saturation , and match that up in the chart separately,  but even if you don’t have your raw link saturation metrics available, you can see the actual load time it takes to bring up the CNN page using the data generated by the script below.

Notice, my load time was pretty quick at first, but then I started a big download from Knoppix and with my link saturated you can see this severely degraded the CNN load time , peaking out at 9 seconds.

 

chart

An Entrepreneurs Guide to The Headwinds of Change


By Art Reisman

For anybody who has ever done something innovative you’ll find most technology advances require some sort of change in behavior on the part of the target customer  (consumer or business).  The larger the organization,  the less likely they are to embrace that change, many times they are downright hostile toward change.

I attended an entrepreneur group last month where a company is going to market with a smart Window that changes reflectivity with outside temperature. The demand and value for this product clearly distinguish it as cost-savings winner, and yet, because entrenched ideas about smart windows, it has been a 12 year battle of sacrifice and pain for founder Wil McCarthy to get his product to market.

Like eating an unknown berry when you have other food sources, the human resistance reflex is perhaps deep-seated and evolutionary.  On the other hand, people will react to perceived threats almost immediately, a topic I wrote about previously.

Here are some of the governing factors that limit the ability of  a new product to change or enhance a market space.

1) Cash. Most businesses have already spent their spare cash before they have accumulated it.  They don’t keep a kitty around for a new  idea. Typically they  have a long list of existing ideas politically competing for a limited amount of investment.

  • The sports bar could use new big screen TV’s
  • The factory needs new automated robots
  • The office building could save money with new thermal windows

Barring some rare financial good times, like the stock bubble of 2000, all new products must face the reality of “cash flow politics”.

The list of productivity enhancements for any business is endless, so when an entrepreneur comes along with a newfangled idea to help a business, the newcomer must compete with cash needs within the organization. The new product/idea must be either superior to the existing list, or you must politically work your way to the top of the list.   Barring some rare financial good times, like the stock bubble of 2000, all new products must face the reality of “cash flow politics”.

2) Credibility

Perhaps this line item should have come before cash, but realistically none of these are optional.

I am normally not a big supporter of using your friends and relatives as market validators, (they will never give you honest feedback if your idea has a flaw) but you’ll need some friendly reviews of some kind to vouch for your product as a reference. So get a few people to try your product or service and write a review. Don’t be bashful about aggressively pursuing your references to say something. There are no rules here other than the references must be verifiable – as long as you know your product works and are willing to stand behind it.  Don’t worry about how prestigious your reviewers are – just get someone to agree, get a quote or two, and then set up a professional looking web page with the contact information for your references.

Note: When you set up a Web Page, you’ll likely use a template. Make sure to fill out every aspect of the template, there is nothing worse than going to a business web site and finding templates that have not been filled out with thoughtful content.

3) Market Research, will they buy?

This does tie back to the Cash question.

Most young, first-time entrepreneurs assume that since they like their idea, and all their friends like the idea, then people will buy their product or service.

The best thing you can do to get real honest feedback is to sell your product early based on a description. Call it a pre-order, or a promise to purchase. Figure out some way to find out if a real customer is willing to pay any amount for your product, before you spend 1000’s of hours building your product.

The level of commitment could be something as simple as a registration form for a discount on your website. If somebody takes the time to fill out a form on your web site, they are likely to buy later… I don’t have the cycles to explain all the ways to do this type of validation, but I can tell you the narrow audience of talking to your friends and family about your product as your conclusive market research is very misleading.  Sure, they may buy it, but you need to engage a stranger and get them to commit to something. The registration for a discount is just one simple way to confirm a higher level of commitment of interest before you invest too heavily in the idea.

4) Best if your product returns something $.

People and business like things that make money for them. This scheme is exploited to the hilt with vertical marketing, (e.g. Amway  Corporation and such…).  I am no fan of vertical marketing, but my point was that you need to offer your customer a way to make money and then you’ll get their attention. A better example would be the ATM business, banks pay convenience stores to place their ATMs in their stores. Another example is pay-per-view TV in hotels. Lodgenet grew to a multi-billion dollar company by offering small hotels a share of the revenue for their pay-per-view. What do you think works better when approaching a hotel operator? 1) selling pool cleaning supplies, or 2) a pay-per-view movie system that creates revenue to their bottom line.

Although these types of revenue generating ideas may require a change in your entrepreneurial thought process, they will greatly increase your chances of financial success.

Guest Article From a WISP Owner in the Trenches


Editors Note:  A great read if you are thinking of starting a WISP and need a little inspiration.  Re-posted with permission from Rory Conaway, Triad WirelessRory is president and CEO of Triad Wireless, an engineering and design firm in Phoenix. Triad Wireless specializes in unique RF data and network designs for municipalities, public safety and educational campuses. E-mail comments to rory@triadwireless.net.

Tales from the Towers – Chapter 50: CRY ‘HAVOC!’, AND LET SLIP THE DOGS OF WAR

Interesting fellow that Shakespeare because not only did he write plays, he also acted in them.  And although Tales from the Towers doesn’t hold a candle (pre-electric times, you can groan now) to Mr. William’s contributions to culture, I have a double life too.  If you haven’t guessed it yet, writing articles really isn’t my full-time job (my wife is giving me the look that says I should find another hobby), I actually run a WISP, do installs, and handle tech support calls.  After 10 years though, and many mistakes and successes, I’ve decided to rethink my network from the ground up as if I was starting tomorrow and share that.  The idea is to help lay out a simplified road map that will bring forth thousands of new WISPs into the market that can start breaking down the digital divide without taxpayer money and creating a new business.  Since a thousand bee stings can take out the biggest animal, the more companies that jump into the industry, the better the chances of competing against the incumbents.  It’s time to open the floodgates of small business entrepreneurs and begin the war for last mile bandwidth delivery everywhere.  And although few outside Star Trek fans will recognize one of Shakespeare’s most famous sayings, they will recognize this modern variation, “Who let the dogs out”!  Hopefully it’s the WISP industry.

Triad_WirelessWhy would anyone want to start a WISP you ask?  Although many of us in the industry would say because we don’t have a life, the reality is that it can be a profitable small business model.  How about this, a typical WISP gross profit margin is about 90% (this varies depending on where you live).  Yes, you have read that correctly.  In the U.S., bandwidth costs average about $5-$20 per Mbps to a tower or some other demarcation point.  In some areas, it’s as little as 40 cents and others as much as $300 but in the 90% of the country that I believe WISPs have the greatest opportunities, bandwidth is inexpensive.  Even if it’s $20 per Mbps, that’s still a profit margin of 80%.  Wal-Mart would go apoplectic if they get half that and they squeeze suppliers like ripe lemons.  And my razor has more margin between the blade and my face than Amazon has on their products.  For any small business operator to find a product that he can buy for $5-$20 and resell for $100, legally I might add, is like printing money if you have the technical and marketing skills.

Between the FCC and the federal government being in the pocket of the incumbent cellular operators, tax-payer subsidized DSL providers, and all the FTTH zealots whose business plans are more like a lobbyists guide to squeeze taxpayers instead of a real business plan based on profit, it seems like being a WISP would be a huge challenge.  Ubiquiti, Cambium, and a few other companies now have second generation 802.11N inexpensive and broad product lines that are simple enough for even beginners to install and manage.  Throw in Mimosa with new 802.11ac product lines  (Ubiquiti is already shipping UniFi with 802.11ac) in the near future, and the wireless providers will be able to deliver speeds that will make DSL operators cry.  With those resources and lower costs, a wireless provider can provide bandwidth at wireline speeds and undercut the pricing or provide faster bandwidth at the same price.  Either way it’s a win-win situation and a golden opportunity to jump on the bandwagon of an industry that is only going to grow.  I’m not going to get into the triple-play option even though right now it’s the best model to fund FTTH.  I personally believe it’s a dying model as Voice-over-IP and Video-on-Demand will force everyone to a pure IP play in the future.

If you don’t think a WISP business model is a good idea, let’s analyze what the government thinks it costs CenturyLink (or what CenturyLink tells them it costs, boy do I want to send that invoice.  Yea, yea, it costs me $775, that’s the ticket ) to deploy a single customer with DSL with a speed of 3Mbps down.  The Connect America Fund was paying $775 per customer for deployment for these pathetic speeds plus subsidizing the monthly bills.  A WISP can do it for about $250 on-site and another $100 for the backhaul infrastructure per customer and probably make a profit on the install (hey FTTH guys, it really can be done without subsidies).  And even better, a WISP can charge less.  Unfortunately, I wouldn’t expect anyone from the FCC to do the research necessary to save the taxpayers from this CAF boondoggle.  They are very, very, very, proud of it but hey, ignorance is bliss (here is where you should get sick to your stomach).  Private enterprise really can succeed without small business killing government intervention.

Before jumping into any business though, we need to analyze the competitive environment,   DSL and Cable, since they provide most of the population bandwidth.  What’s interesting here is that while DSL is on the decline due to limitations and age of copper wire, it’s not really being replaced by better DSL.  In some CenturyLink areas for example, they are pulling fiber closer to the homes to get their DSL speeds up to 40Mbps.  However, unless another wireless technology comes along though, that’s probably their swan song until they upgrade to FTTH (don’t hold your breath waiting for it though).

DSL providers have 2 basic areas, cruddy service in low-density areas where they are the only provider and reasonably decent service in areas where they probably compete against cable providers.  There are opportunities in both areas although the cruddy areas are where I would start first.  Those are typically pocket or peripheral areas but if you can get about 20 customers or more, it’s a profit center.  It’s also a place to build from and test the local zoning code in cases those are issues.

In areas where they are delivering far more bandwidth, they are also charging more.  And since they also try to bundle with either their service or satellite providers, they have to add taxes (another reason to avoid triple-play since it also adds more office infrastructure and accounting requirements).  In Arizona for example, a phone/internet bundle CenturyLink package delivering 1.5 to 40Mbps with bundle is about $30-$65 plus taxes (almost $10 worth if it’s bundled).  They also have a package with Direct TV and then the costs start climbing well about $100.  And all those packages come with contracts of at least 1-2 years.

Cable providers aren’t much different though. They are not only all about bundling; they have constant price increases and fees along with higher prices to start with.  Although cable providers can provide some great speeds, up to 150Mbps, it’s still more expensive to deliver than wireless.  Triple play providers like cable are also under a huge amount of financial pressure from content providers.  When they have to pass that cost along to customers, the customers don’t differentiate the services, they just know their bills have gone berserk and start looking elsewhere.  I’ve had customers call me with cable bills that hit $200 and we just tell them about Ooma (don’t even mention MagicJack unless your idea of a good time is slamming your head in your refrigerator door), Roku, and local TV.  Amazing how much people will adjust their viewing and phone habits to save $100 per month.

Cable providers are getting hammered by the FTTH zealots who simply don’t understand that almost NOBODY really needs 100Mbps to their house today and NOBODY in the investment community is willing to fund it unless they also happen to own a Senator.  Just to make the FTTH subsidized fiber supporters have a conniption, the cable providers should publish the percentage of their users that have 10Mbps, 20Mbps, etc…  Then publish their average use and peak numbers.  Selling 50Mbps circuits and above is one of the biggest scams in our industry today.  It’s all about the latency, baby!

There is no FTTH business plan on this planet that was taxpayer subsidized that I’m aware of as a stand-alone business that is profitable that I’ve ever heard of.  I’m still waiting to see one, but please feel free to send your financials if you think you have one.  I’ll stand by and hold my breath.  LinkedIn is a great place to see examples of that. If you take the WISP position or even suggest that FTTH is not financially viable today to the “Experts” when the government gets involved, you learn that you should be committed because you dare to point that out.  Apparently stating facts is redefined as zealotry when you ask for the financial results of these projects.  The best excuse I have heard about getting me off a FTTH discussion when I kept insisting on actual facts was where I was banned from the group, not because of my view but because my picture wasn’t professional enough (apparently it wasn’t my good side).  What I really want to do is follow the money to see how much these consultants and companies are making from the taxpayers while fully knowing the plan will fail.  In this case, it’s all about the money baby!

The end result of this is if you start a WISP, don’t worry about the FTTH providers unless you think some clueless bureaucrat in California or the CAF/FCC gets the idea it’s a great place to waste more taxpayer money.  Even if they come into your area, they will be selling something that is more expensive that what a WISP can provide and few people will pay for.  The FTTH boys think everyone should pay at least $50 for 10Mbps or more if you want faster.  The good part is that they will provide middle –mile backhaul for you to undercut them and will probably get bought out by Google for $1 when it loses so much money, even the politicians get tired of funding it.

Privately funded FTTH systems that have triple play products are actually bigger threat to wireless systems and natural migration paths for triple-play WISPS although they are generally in more rural areas or urban areas.  Many of the companies currently doing fiber started out as WISPs meaning they are generally more efficient, and usually already profitable.  They are playing for the long-haul and have the resources and experience to do it the right way with little or no taxpayer subsidies.  The bad thing for them is as they get closer to higher density population centers, unless they are Google and the local government bends over to help them, government regulations make it difficult for them to expand into cities or suburbs.  It always amazes me that the local bureaucrats would rather ignore local business for years or just make life miserable for them to justify their jobs, rather than reach out and see how the can actually help them be successful.  Then when things aren’t going to so rosy for the municipality, they fall all over themselves looking for a savior like Google who doesn’t give flying donut about them.  Here’s a clue zoning department, cold call every WISP and ISP anywhere near your and see what you can do for them in terms of making the regulations easier to work with them instead of just writing new ones.   They you won’t have to sell your soul to a Google because you screwed up for years and are now trying to fix the mess you created.

Now that we know the general competitive landscape, the next question is where to start your business.  Although our country is wonderfully diverse in terms of density, intelligent guys like Brian Webster have analyzed some states down to how many driveway basketball nets per square mile.  Other resources like www.wispa.org, the FCC, and www.goubiquiti.com, have coverage maps of WISP service areas among many other services that we will cover later.  Without getting overlay complicated, I define the areas into rural, suburban, and city areas.  Most rural areas already have at least 1 WISP covering them and some rural areas have multiple WISPS.  My personal preference and where the articles will be focused on (Okay, I detour when it comes to government intervention in the private industry), is between suburban fringes through to the city fringes.  This is the most opportune areas for WISPS that have the biggest investment bang for the buck.  It’s also the easiest way to get inexpensive bandwidth. Next article we will focus on the RF environment, planning, and budgeting since those are going to be very closely tied together (and I’ll probably make some other political comment there also).  Time to go, the Big Dog is scratching at the back door to get out and he’s got some business to take care of, as do we all.

How much on-line advertising revenue is fraudulent ?


Today the Wall Street Journal broke an article describing how professionals are scamming on-line advertising revenue.  The scam is pretty simple.

  • First create a web site of some kind.
  • Second hijack personal computers all over the world, or contract with a third party that does this for you.
  • Third have those computers visit your site en mass to drive up the popularity
  • Fourth sell advertisement space on your Website based on the fake heavy traffic

The big loser in this game is the advertising sponsor.

Our Experience

I have been scratching my head for years about the patterns and hit ratios of our own pay-per-click advertisements that we have placed through third parties such as Google  . The Google advertising network for Content Ad placement is a black hole of blind faith.  No matter how hard you examine your results, you cannot figure out who is clicking our advertisements and why.  I do know that Google on one hand takes fraud seriously, but I also know in the past we have been scammed.

Early on in our business, before we had any Web presence, we were putting a large portion of our very limited advertising budget into on-line advertising. Initially we did see a very strong correlation of clicks to inquiries. It was on the order of 100 to 1. One hundred paid clicks per one follow through inquiry. And then one day, we jumped to 1500 clicks. A whopping 15 fold increase in clicks, but there was no increase in corresponding inquiries, not even a tiny blip.  What are the chances of that ?  As you can imagine we had very little re-course other than to pay our bill for the phony clicks. We then removed our content placement advertisements and switched over to search engine only . Search engine clicks  are not likely scammed as Google does not split this revenue with third parties.

I honestly have no idea how big the scamming business on content advertisement is, but I do suspect it is enormous.  In the wall street journal article , the companies that have investigated and prosecuted scammers are large companies with resources to detect and do something about the fraud, the average small business placing content advertisements is running blind.

Who is Your Customer?


By Art Reisman

CTO – netequalizer.com

My morning ritual involves stopping in at my Local Grocery Store for  a cup of coffee at their branded coffee stand. Sometimes I also pick up a few grocery items before heading into the office. At this particular King Soopers, before 7:00 am, they don’t have any checkout lanes open. My only option is the automated line. The automated lanes are great when you have  one or two standard coded items, but every once in a while I forget the rules, and make the mistake. Never buy an un-coded bakery item, or some produce that the scanner does not know how to handle, doing so can make you the laughing stock of the store. The employees will huddle in the back room giggling at you on the security camera as you paw through endless menu options for a muffin that does not exist in the system.

This morning my first clue that something was amiss was that there were two check lanes open with attendants and baggers. All this at 6:45 in the morning. I also noticed somebody under the fresh flowers scrubbing the crud off the wood floor where the moisture seeps, two people organizing carts, and some strange men in suits huddling around the demo food vendors. Wait a second, demo food vendors at 6:45 in the morning?

“So is the CEO coming into the store today”, I asked the attendant who was dressed in some newly printed shirt, scrawled with a Dilbert slogan about customer service.” No not the CEO – he was here last week – today, we have the Vice President of sales visiting,” she replied.

I guess the VP of sales must bring them a ton of business because they were rolling out the red carpet like he was a Vegas high roller.

This reminded me of my early days as an engineer in Eagan Minnesota, at Sperry Corporation, when I had to break down all my experimental circuit boards in my Lab, and sit there, politely acting intelligent for two full days, because the VP of engineering was coming for a visit and might tour our lab at some point.

Sperry went under shortly after that incident. King Sooper’s parent company is healthy right now, and perhaps my experience is isolated and unfair.

I still ask the question, who is your customer?

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