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Career Advice for the Internet Age

By Jim Morris

Jim Morris is the founding Dean of Carnegie Mellon West in Silicon Valley, and former Dean of Carnegie Mellon’s School of Computer Science. Over several decades in research and industry, Jim has been at the cutting edge of the field almost since the term “cutting edge” was coined. But his secret ambition is to be an advice columnist and here he summarizes the Sofcon 2007 proceedings in that literary form.

The cost of internet infrastructure is dropping to the China price:

Hardware — Moore’s Law and globalization have made computers a commodity.

Software — Millions of people around the world have learned how to program. Software is impervious to tariffs and is easier to outsource than hardware. The open source movement promises software for free, sort of.

Communication — The 1990s overbuilding of optic fiber across continents and oceans makes us indifferent to where the other end of the telephone line is.

This is great news for internet consumers, but the people with the skills that support the internet are in a buyers’ market. Herewith is some advice to the various professions.

Software Developer

If you are a programmer, move to China. There you will find the cost of living matches what programmers will be paid. If you want to stay in the US elevate yourself to a profession like Software Engineer or Product Manager and outsource someone else’s job. There’s still profit in the software business, but 75% goes to the Gang of Three — Microsoft, Oracle, and SAP — who have their corporate clients locked in for the moment. For the future find a job in an internet service company because they have a better cost structure.

Delivering the value of software as part of a service rather than as a product makes it easier to maintain. The Four Survivors of the internet bubble, Google, eBay, Amazon, and Yahoo!, create software but don’t sell it. These kinds of businesses go under the buzzword SaaS, for Software as a Service.

A strong case for SaaS stems from the nature of software itself: it’s easy to change and easy to copy.

The Gang of Three releases products that can’t be changed once shipped. A programming bug might irritate customers until they buy an update years later, if they ever do. A nice improvement to the software must also wait. In the meantime, vendors must support an expensive system of help desks, work-arounds, and patches sent over the network. In contrast SaaS companies can change the software whenever convenient. Diagnosis and improvement are much easier because the provider controls all the hardware and software.

The other bugaboo of software is piracy. When you sell people the code as a product, they can give their friends copies of it or reverse engineer it. There are huge factories in China that duplicate pirated software. The internet exacerbates the problem by enabling free distribution. The Gang uses countermeasures like required registration and lawsuits to stem piracy.

SaaS eliminates both these problems in a single stroke: the company can update software easily because it’s the only one running the software, and there is no piracy because there is no code to copy. This is not a new idea. Eric von Hippel and Steven Klepper have shown that manufacturers innovate more in their production processes than in their products so that their clever ideas remain secrets.

However, be advised that software engineering for SaaS is different. Your software will be in Perpetual Beta —never actually finished. Google News spent three years in Beta release and gmail is still in Beta. The development teams get the software running, release it, and keep enhancing it for its lifetime, fixing bugs and adding features with no particular schedule.

The method for testing will change since the entire user community will be an involuntary test organization. The software will contain elaborate monitoring facilities that log every difficulty that people encounter. The development team will come in every day, address the most important issues, and put out a new release. User interface experts needn’t puzzle over alternative presentations and interactive styles; they can test them daily.

If this sounds like hackers’ heaven, beware. The playing field is both flatter and faster. The pace of testing, fixing, and enhancing will become relentless with competitors struggling to match each others’ offerings on a daily basis. It will seem like an endless programming contest.

The quick feedback one gets from running an internet service makes the product manager’s job —matching the offering to the market — easier but more demanding in the same way. In fact, the software developer can become the product manager.

Librarians

If your main talent is whispering “Shhh!” get a job in a church. The only reason to enter a library will be to meet people. However, if you are an expert on some useful information source — or, better yet, own one — you can flourish on the internet. Since software is either free or can be duplicated, the only thing that can give a business a proprietary edge is access to data no one else has. If you own detailed street maps of a country, all the new location-based services will pay you. Bloomberg exploits access to financial data.

The best way to get access to market data is to run the market as eBay does. One of the reasons the Four Survivors might have a long, profitable history is their ability to exploit data exhaust, the information they collect as a side effect of their service. One of the hidden ways you pay for free internet services is revealing your desires to them.

Chief Information Officers (CIOs)

While you are the person the CEO yells at whenever there’s a computer screw up, the pleasant part of your job is being endlessly courted by vendors. Those courtships often end in marriage with some of the Gang. To save money from the China pricing of infrastructure, you need to divorce these guys and outsource a big piece of your operation to the SaaS companies. This will be painful for two reasons. First, the new services don’t offer all the bells and whistles of the Gang’s products, and your users get cranky when anything they depend upon goes away. Second, your budget for people and equipment will go down. You have to look at yourself in the mirror and ask whether you want to halve your empire.

CIOs often say that they should get away from being a computer wrangler and reshape the enterprise’s business around the strategic use of information. Now is your chance!

Entrepreneurs

It is too late for a straightforward SaaS play, attacking an existing software product with a web service as Salesforce.com did to Siebel Systems. There have been successful IPO’s for many such companies: WebEx (teleconferencing), Concur (expense tracking), Taleo (recruiting), RightNow (sales), WebSideStory (web marketing), Kenexa (HR), DealerTrack (auto financing), and Vocus (PR).

Assume you are going to deliver your software as a service, but you now have to dig deeper for service ideas. Consider a service like Facebook or YouTube that starts with a typical twenty-something’s itch that can be scratched by an internet service. All you need to start beyond the itch are the three A’s:

Ajax (Asynchronous JavaScript and XML) is a way of developing zippy web interfaces.
AdSense is a service that places ads on your pages and pays you when viewers click on them.
Arrogance is what you need to think you can make money this way.

Specialize. You can get started and test your idea and market on a small community. CraigsList started as a free community want-ad service in San Francisco. If you do it right, you don’t need much capital, and growth will be organic. Craigslist is threatening the entire local want-ad business, but recently it still had only about 20 employees.

As for a long-term, sustainable advantage, think of data exhaust. If you can collect a lot of user data as your service grows, you can use it to improve the service or provide market intelligence to others.

Newspaper Editors

The printing-press-to-paper-boy distribution system is going away fast; get out while you can. Google and Craigslist are taking away your publisher’s want-ad business while they distribute your news stories for free. Your skill at discerning what is newsworthy will be valuable in the internet age, but you have to find a way to monetize it as the existing system disintegrates.

Start a blog, if you haven’t already. Treat all the other bloggers as your reportorial staff and all the information services as your research department. Use advertising to make money.

Unfortunately, you now have the problem your publisher used to have: circulation. There are millions of people competing with you, no matter how good you are. Check out Daily Kos, The Huffington Post, or Dave Farber to see what the competition is like.

A new system for assembling the virtual front page, editorial page, etc. is evolving and you are participating. The big question is whether you participate by discovering a new form or by going extinct. Here are some of the characteristics these new “pages” will have.

Personalized: Each person will have her own page in each category. The news page will be things that are relevant to her and that she hasn’t seen before. The editorial and op-ed pages will hold the opinions she respects or fears enough to monitor. Actually, the editorials may emerge as advertisements next to the news since, like ads, they contain opinion somebody wants you to believe.

Annotated: Your readers who are awake when your page hits the net will weigh in with instant letters to the editor. You have the option of allowing their comments to go through to the future readers, but you must stay on the job all day and perhaps even revise your original story.

Entangled. There are many clusters of blogs that reference each other. Each blogger publishes links to specific stories or entire blogs that he or she likes. One artificial cause of this can be the Google page ranking scheme which recommends pages that are referenced by many other pages. Naturally, savvy bloggers have been scratching each others’ backs through mutual references.

If you can develop an exquisite sense of what a few hundred thousand people want to read and get their attention with your blog, you will be set for life. You will have become the publisher of an internet magazine. Unfortunately, few people have an exquisite sense of anything.

As an alternative to allowing millions of individuals to become magazine editors who live or die by their choices, site administrators are developing other methods of selection. Slashdot has a multi-level moderation system. Readers of Slashdot are occasionally invited to be temporary moderators who rate comments that readers make on stories. Then other readers are invited to rate the moderators on whether their point assignments were reasonable. Perched on top of this hierarchy of opinion judgers is the owner of Slashdot, Commander Taco. Unfortunately, nobody gets paid for any of this activity.

As a person with good judgment about what other people like to read, your money-making options on the internet are currently limited. Whoever can figure out how to employ editorial talent on the internet will be the next press czar.

Venture Capitalist

If you participated in the bubble and crash, change your name. The investors who lost a lot of money won’t take your calls.

There are several reasons to be cautious about internet-related start-ups.

The railroads were the Next Big Thing in 1850 and gave rise to investment bubbles. After the investment collapse, the railroads experienced huge growth for the next fifty years. Andrew Carnegie made his fortune by being the low cost supplier of the railroads’ infrastructure. Google’s aggressive investment in data centers is reminiscent. However, massive infrastructure investments are likely to be made by companies that are already public, not venture-funded companies.

There will be another ten years of turmoil before everything — data, voice, and video — is distributed by the internet; and the winners will make a lot of money. There are some very big players, like the telecoms, and a lot of politics and regulation. Unless you understand these things, stay away.

Many successful startups will exit by acquisition by the big players. Blockbuster IPOs will be less frequent.

Silicon Valley’s best known VC firm, Kleiner Perkins Caufield & Byers, has declared clean technology as the Next Big Thing and is cutting back on internet investments. The firm is going out on a limb, willing to risk scientific, political, and regulatory surprises.

The internet is important; but it’s neither new, nor a secret. When you tell people to work in the internet you are like the codger in The Graduate who whispered “plastics” to Dustin Hoffman.

© 2007 Carnegie Mellon West