Category: Columns

Of course I’m the last to link to it, but here’s my interview with Eric Schmidt, up on B 2.0 (and not pay walled).

And here’s July (up soon is Bob Wright, CEO of NBC, then Omid Kordestani, of Google):

TITANS OF TECH

Turning the Page

Bit by bit, Xerox CEO Anne Mulcahy is digitizing the copier company she helped save.

By John Battelle, July 2005 Issue

She was not the obvious choice to lead Xerox through its darkest hour, but four years and one miraculous turnaround later, no one is questioning Anne Mulcahy’s leadership anymore. A nearly 30-year veteran of the company, Mulcahy doesn’t like to dwell on her much-lauded role in helping Xerox avert bankruptcy. She’s too busy trying to get the company growing again.

Long before any of us Googled anything, we all Xeroxed everything. The company’s iconic status came despite a scant presence in homes; although Mulcahy had established Xerox’s consumer printer business, she shut it down when the company was strapped for cash. (By making tough decisions like that, Mulcahy cut the company’s $14 billion debt load almost in half.) Xerox now mostly serves large businesses, not just selling them copiers but managing “information flow” by scanning and storing documents in digital form. And despite the spinoff of its fabled Palo Alto Research Center, Xerox has still managed to innovate: It now gets two-thirds of its $15.7 billion annual revenue from products and services that are less than two years old.

Having turned the company around, what will Mulcahy do next? Many people floated her name as a potential replacement for Carly Fiorina at Hewlett-Packard. A Xerox PR staffer told the New York Times that Mulcahy would “never, ever” consider leaving. “Why don’t you just put a fricking lock on the door!” Mulcahy says with a laugh. If she has more successes like the turnaround, Xerox’s board had better do just that. Business 2.0 sat down recently with Mulcahy to learn more about her plans.

Are you bored yet with being asked how you turned Xerox around?



Yes! It was interesting, but it only led up to the thing we really care about, which is succeeding, not just surviving.

How do you get a culture to move beyond survival and start innovating?



The most critical thing — even more critical than getting the company financially stable — was recognizing that nobody’s in this just to survive. You have to make sure there’s a compelling enough story that the great people will stick with you during the difficult times, that they will hang tight for the possibilities of the future.

Let’s talk about that future. What happens to the document on the Internet? Do you consider Google a competitor?

It would be terrific if Google’s model worked in larger enterprises, but the world those businesses live in has not only tons of digital technology but also vast amounts of manually intensive paper-based processes. Making information more accessible, more personalized, is a huge opportunity. Search as a utility is a wonderful thing, but it’s really about the journey from paper to digital for our customers.

So what does going from paper to digital involve? Are you just talking about scanning documents?

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I’m getting caught up on my B2.0 column posts, here’s June:

TITANS OF TECH

Reinventing Television

Silicon Valley veteran Mike Homer wants to move TV shows from the airwaves to the grid. If he succeeds, we’ll never look at video the same way again.

By John Battelle, June 2005 Issue

Editor’s note

In the Titans of Tech column in our June issue (“Reinventing Television”), we ran an interview with Mike Homer, CEO of Kontiki, conducted by contributing writer John Battelle. After the issue was sent to press, Battelle announced a small round of funding for his new business venture, FM Publishing, in which Homer is a minority investor. According to Battelle, Homer’s involvement in FM took place well after the interview and editing of the column were done.

(My post about my dumb mistake is here)

At every important turn in Silicon Valley’s recent history, Mike Homer has been there. He got his start as an engineer and later a marketer at Apple, then joined Go, a handheld device startup that, despite $100 million in funding, failed to find its market. From there Homer landed at Netscape, just in time to see the company’s spectacular success and equally spectacular slaughter at the hands of Microsoft. After Netscape was sold to AOL, Homer jumped ship to launch Kontiki, a Net-based video-serving business, where he is still chairman, and invested in a slew of technology startups, including TiVo and Google.

For years Kontiki has labored in obscurity, perfecting a video-delivery service for corporate clients. But all along, Homer had his eye on the consumer market. He now believes that the time has finally come to put video on the Net — and he’s betting his money and his reputation on it. In April he and former Netscape cohort Marc Andreessen launched the Open Media Network, an audacious nonprofit that intends to host video files and create an Internet TV guide. Business 2.0 caught up with Homer on the day the network launched.

Why are you calling the Open Media Network “the future of public broadcasting”?

OMN is a free public service that enables consumers to view and publish legal content on the Internet. Digital distribution technology is now capable of doing a good job with video on the Internet, but there are still a lot of factors within the industry that keep producers from putting a wide variety of content online. We wanted to find a segment of the broadcasting industry that was willing to move first — and that’s the Public Broadcasting System.

So what’s holding back the rest?

First is concern over cannibalizing their current channels of distribution. Second is concern over piracy. And the third is the lack of a demonstrated business model.

How does OMN differ from other recent offerings, such as Google’s planned video service?

(continued in extended entry…)

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I wrote a piece for AdAge (reg required) which ran this week. It’s here, and I’m told that soon I can link to it outside of registration. I’d love your feedback.

ARE YOU BECOMING IRRELEVANT TO YOUR CUSTOMERS?

Why Marketers, Agencies and Media Execs Need to Understand Disintermediation

July 12, 2005

By John Battelle

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I personally can’t wait till full 3G nets hit the US. I spent some time with Sky talking this and other stuff over recently, and the result is my current column in B 2.0.

TITANS OF TECH

Surfing the Virtual Wave

EarthLink founder Sky Dayton helped connect our PCs to the Net. Now he wants to put Korea’s version of wireless broadband on our cell phones.

By John Battelle, May 2005 Issue

For more than a decade, no matter how you’ve wanted to connect, Sky Dayton has been there with the hookup. The coffee shop owner turned Net entrepreneur started EarthLink and built the Internet service provider into a billion-dollar business. Then he wove a patchwork of Wi-Fi hotspots into a nationwide network, Boingo. Now he wants to reboot the cell-phone business.

All along he’s been guided by two ideas: You don’t have to own infrastructure to sell service, and customers care about applications, not technology. That’s why EarthLink and Boingo thrived while rivals spent hundreds of millions of dollars on Internet backbones and Wi-Fi routers, only to go out of business.

For his latest venture, true to form, he’s renting out space on cell-phone networks to give American customers something that South Korea has had for years: high-speed Internet access over a 3G (third-generation) wireless network and sophisticated handsets packed with the latest technologies. While DSL is fast and Wi-Fi is fun, both tether you to a limited area. 3G truly puts the Internet “in the air,” as Dayton likes to say. EarthLink, where he is still a board member, and Korea’s SK Telecom are putting $440 million into the new venture, SK-EarthLink, for which Dayton will serve as CEO while it prepares for a launch of service this year. Business 2.0 sat down with Dayton in his Santa Monica, Calif., office to get a preview of the wireless future.

How did South Korea get so far ahead of us in wireless?



Part of it is technical. They bet on Qualcomm (QCOM) technology, which is now the basis of all 3G networks. Lately they’ve even overtaken Japan as the hothouse of wireless development. Sprint and Verizon (VZ) and Cingular are just now rolling out the high-speed technology that SK Telecom deployed more than three years ago. We’ve been living in the past. The other part is cultural. Koreans study and work a lot harder. It’s no wonder they got so far ahead.

So what do they have that we don’t?



The applications that SK has built are a glimpse into the future — live video on a handset, multiplayer games, and location-based services. To provide those kinds of services, it created a huge infrastructure: billing, video streaming systems, gaming, mapping systems, all that stuff. We’re bringing that over lock, stock, and barrel and plugging it into the U.S. cellular infrastructure.

Why aren’t you building your own network?



I have a lot of respect for the capital and focus it takes to be successful at building infrastructure. It’s just not my core competency. EarthLink already had mobile virtual network operator agreements with Verizon and Sprint, and we contributed them to the joint venture. We have a foundation to build a house on now.

Which applications will draw users to the service first?



There are many I’m not ready to talk about yet. But there’s music and video and location-based services. On my first trip to Korea last summer, I was at a restaurant, and one of the guys was late. I asked his colleague, “Can you call him and see if he’s close so we can get on with lunch?” He said, “Just hold on a second.” So he flips open his phone, pokes around a bit, shows me a little dot moving on a map on his screen, and says, “He’s almost here.”

(continued in extended entry)

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TITANS OF TECH

Screen Test

Reuters CEO Tom Glocer wants to build an online broadcast network. Can the venerable newswire take on Fox and CNN?



By John Battelle, January/February 2005 Issue

During its formative days, Reuters was a relentlessly innovative company, using the best tech it could get its hands on to carry the news. Before the telegraph came along, it beat competitors by using carrier pigeons to send information about stock trades. But back in the 1980s, Reuters decided to wholesale its newsfeeds to Ted Turner — and watched CNN become a billion-dollar business. As broadband video blossoms on the Web, Reuters CEO Tom Glocer doesn’t want his London-based company to make the same mistake twice.

In 2003, 10 years after joining Reuters’s U.S. law department, Glocer worked his way to the corner office — the first American and first nonjournalist to helm the venerable company. He immediately restructured it into four customer-focused divisions, a move that’s saving a billion dollars over five years and has sent the stock price up nearly 50 percent in the past year. What’s more, he’s managed to pull this off while sending hundreds of journalists to Iraq and losing some in the line of fire.

Now Glocer is shaking up Reuters’s highly respected newswire business. Think of the newswire as wholesale; Glocer, in essence, is using the disruptive power of the Internet to get into retail. The move would have been unthinkable 20 years ago for reasons of both cost and culture. But Glocer has learned the hard way that you don’t make much money selling your content to others. Successful media companies, he says, make their money either by creating branded products or by controlling distribution. Glocer recently sat down with Business 2.0 to explain how he plans to do both.

Despite the costs of the ongoing conflict in Iraq, your stock went on a tear in 2004.



The market sees Reuters as a classic recovery story. By the end of 2006, we will have taken $1.7 billion out of our costs since we started restructuring in 2000. Our core subscription revenues are still declining, but the Street is increasingly confident that we can return these to growth next year.

Last summer you pulled your news off Yahoo. Why?



For 153 years Reuters has run a wholesale media strategy. We produce raw text, video, and pictures and make it available to the world’s publishers, who in turn slap their brand on it, develop brand loyalty, and aggregate an audience. Go back to 1980 and ask yourself, as I often do: Between Reuters and CNN, who had the greater assets and likelihood to launch an international news network?

Did Reuters consider competing with CNN back then?



I don’t know. I wasn’t there. But I do know that Ted Turner has said that they kept looking over their shoulder because they couldn’t believe their luck. When they were starting out, they really were the Chicken Noodle Network. Reuters had bureaus in 200 places and a hell of a brand name. Who had ever heard of CNN? More recently, Reuters repeated the mistake — we were the wholesaler to Yahoo and others.

But this time you pulled out.



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I am breaking my holiday silence as a few readers have reminded me that I forgot to post a link to a column I wrote up for Technology Review magazine. It’s basically a rewrite of my Sell Side Advertising post, but to make the concept a bit more approachable (or perhaps to ruin it) I changed the name to Publisher Driven Advertising. In any case, as always I owe a debt to Ross Mayfield and many others for the ideas contained within. And it’s my hope that in 2005 we can take this idea and see where it might run.

Dave Dorman is a hoot to talk with. Who else would call his competitors a “leper colony”?
This interview is in this month’s Business 2.0.

TITANS OF TECH
Dorman’s Calling
The CEO of AT&T is on a mission to restore his company to greatness. His plan: Use the Internet to unplug the competition.

By John Battelle, November 2004 Issue

Is David Dorman a telecom lifer or a startup survivor? In truth, he’s both. He started out working at Sprint, then became CEO of Pacific Bell, where he created the first regional-phone-company Internet service provider. He then took a detour into the dotcom world, where he led PointCast, a much-hyped “push” technology company, until shortly before it went under. Chastened, he returned to the business he knew best: telecom.

But as it turned out, someone who’d tried out an untested new business model was exactly who Ma Bell would need. When Dorman joined AT&T (T) in late 2000, then-CEO Michael Armstrong held a grand vision for integrating what Dorman calls the “magic five” — local, long distance, high-speed data, wireless, and video. But things didn’t turn out as planned. Instead of reigning over a vast telecom empire, Dorman ended up leading AT&T through the most perilous period in its 127-year history. Teetering finances forced Armstrong to divest wireless and cable. Factor in a recent regulatory decision that Dorman claims left him no choice but to abandon AT&T’s residential phone business — which represents about 25 percent of the company’s revenue — and it’s no wonder Wall Street is tepid about AT&T’s prospects.

Dorman responds by pointing out that AT&T is the clear leader in providing networking to Fortune 500 companies, and, he says, his competitors are in shambles. More intriguing, he has a strategy to put AT&T back on top.

It’s clear that Dorman grasps the disruptive nature of the Internet. Right now the Net is changing voice — Dorman really lights up when you ask him about CallVantage, AT&T’s voice-over-IP service. But at some point, it could lead to video-over-IP, a potential competitor to cable. Add it all up — the old long-distance and high-speed data businesses, CallVantage, a new wireless play, maybe even video — and Dorman may be rebuilding AT&T into the company he once thought he would lead, one magic-five application at a time.

When you announced you were leaving the residential telephone business, your share price dropped. Why do you think the markets reacted negatively?

We don’t have to have residential telephone business to be a successful company. So many of the stories I’ve seen say, “They’re going to go away. It’s over.”

That question’s on my list here …

This is a $30 billion company, and consumer is $8 billion of that. I’ve got the best business-services franchise in the world. And I’ve got a leper colony of competitors. We know what MCI’s been through. Sprint — they’re a wireless company, just ask them. And you look at the rest of the guys — Qwest (Q), XO Communications, Wiltel, Level 3. Is a major company like Citigroup (C) or J.P. Morgan Chase (JPM) going to bet on someone like that vs. going with us?

Your industry has not covered itself in glory these past five years — MCI, for starters.

You know something people didn’t understand? A big part of Tyco’s (TYC) value was TyCom — an optical network. And Enron had $30 billion-plus of its market cap based on its broadband-trading business. So the three biggest frauds in American history had a direct impact on telecom. Add Qwest and Global Crossing, and we had five major catastrophes in the industry. AT&T didn’t cause that; we just have to deal with the aftermath.

Must be fun to be a telecom CEO.

It was a great thing 10 years ago. We’re in a cycle. The most frustrating, gut-wrenching thing for me is, I can’t tell you how long the cycle’s going to last. But the overcapacity will get reconciled. If we didn’t have Qwest fighting for its life and MCI fighting for its life, prices would stabilize.

(more in extended entry…read on, it’s a fun one)

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TITANS OF TECH
A Man Who’s Going Places
Erik Blachford controls half of the online travel market — and Barry Diller’s Net ambitions are riding on his shoulders. So why is the CEO of IAC Travel so relaxed?

By John Battelle, October 2004 Issue

Within Barry Diller’s online empire, InterActiveCorp, there’s no business more vital than IAC Travel — which makes Erik Blachford his most important lieutenant. Overseeing Expedia, Hotels.com, Hotwire, and other travel properties, Blachford is responsible for 37 percent of IAC’s revenue and more than two-thirds of its profits. Still, even as IAC Travel’s growth has been extraordinary — it’s now the third-largest travel agency in the world — it’s feeling the pressure from any number of competitors, including its suppliers, competing online services, and even portals and search engines. To keep growth going, Blachford is expanding into Europe and Asia and has dived into the $100 billion corporate travel market. But what he’s really dreaming of is re-creating the perfect travel agent online.

Barry Diller was once asked about IAC Travel, and he replied by saying something to the effect of “You think this is the future of travel; I think it’s the future of everything.” Does he see what you’re doing in travel as indicative of the future of the entire Internet?

InterActiveCorp, at the highest level, is just a big bet on consumers using the Internet for more stuff. If you fundamentally believe that the Internet is going to provide people with richer and better information for making decisions, then you have to make bets across a pretty wide variety of things. We’ve got high airline ticket prices, and hotel rooms are expensive, so the dollar figures involved get pretty eye-popping pretty fast, and that’s one of the reasons people like to point to the travel category.

I understand that more than 20 percent of the travel business is now booked online.

It’s closer to 25 percent this year. It’s probably going to around 35 percent by 2006. By the time you get to 2010 or 2011, we think between one-half and three-quarters of leisure and unmanaged business travel — everything not handled by corporate travel agencies, that is — should be online.

With growth prospects like that, why did IAC take a hit in the last quarterly earnings? Why does Wall Street not give it the same earnings multiple as its peer group?

Well, you had a couple of different things going on. On the one hand, the whole category did get beaten up pretty badly. So there is something to be said for people just looking at the overall growth trends quarter over quarter in online travel and saying, “Boy, that didn’t seem quite as quick as we were expecting.”

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