Hurd to Oracle

It's going to be very interesting to see how things work out at Oracle with Mark Hurd replacing Chuck Phillips. I interviewed Mark a number of times when I was covering Teradata and NCR, and I thought he did a good job there. I have admired from afar the stock appreciation he achieved at Hewlett-Packard.
But the dysfunctional departure from H-P would give most boards reason to hesitate about hiring him. Oracle's a special case because Larry Ellison is supremely self-confident and also has total control of the company as long as he wants it. Hurd could do the dirty work of making Oracle's Sun acquisition profitable. And he's no threat to Ellison despite his formidable job history.
Hurd came into H-P as a low-ky, nuts and bolts manager who was initially welcomed as the antithesis of the charismatic Carly Fiorina. He cut costs, focused on profits and delivered a steadily increasing stock price. He made H-P No. 1 in PCs and made them profitable. He then acquired EDS, vaulting H-P past IBM to become the world's biggest IT company in terms of revenue.
But the H-P board jumped at the chance to fire him when a former contractor made unsubstantiated claims of sexual harassment, that even the board agreed weren't firable. Instead the board indicated he had lost its trust by fudging some expense accounting. As in many such cases, (think Larry Summers at Harvard) the firing occurred because Hurd had lost his reservoir of internal support for a variety of reasons and nobody (except the shareholders) felt like coming to his aid.
The New York Times savvy Joe Nocera http://www.nytimes.com/2010/08/14/business/14nocera.html?_r=1 noted that Hurd had saddled the board with blame for the notorious pretexting scandal in which company detectives spied on journalists. He also points out that Hurd's profit improvements partly reflected sharp cuts in R&D spending, a long-time point of pride for H-P.
I think the jury is still out on whether EDS was a good strategic decision. Even though H-P is working to cut costs, the service profit margins appear to be far lower than those at Accenture or IBM. EDS is regarded as a "body shop" without much intellectual-property that could be leveraged for higher margins. Analyst Bob Djurdjevic, who has watched the space for years, noted that last year in an earnings report, Hurd seemed to be trying to pretend that EDS revenues were boosting H-P's service business while trying to ignore the actual revenue declines at EDS. http://www.djurdjevic.com/Bulletins2009/10_HP_2Q.html Another data point: after stories reported Hurd's dismissal, the comments section of the Wall Street Journal was full of scathing remarks by H-P workers who celebrated his departure.
Hurd may be the perfect manager to make Oracle's Sun acquisition work. He undoubtedly will have his hands full. Sources tell me that IBM, foreseeing continued losses at Sun, was offering a substantially lower price when Oracle rescued its Silicon Valley neighbor. But Hurd is likely to be even more unpopular in Silicon Valley if he follows his formula of gutting R&D and firing thousands of engineers at Sun.

The Youth Pill

I just finished reading "The Youth Pill" by my former colleague David Stipp. It's a terrific piece of science writing, and it's good news to boot. It shows that scientists are well on their way to developing pills that we can take daily in order to prolong the active, healthy part of our lives by ten years or so.
Full disclosure: David is a good friend and if I didn't like the book, I wouldn't write about it. But I did and I will.
Stipp makes a believable case that researchers can create pills that create the same effects inside our cells that calorie restriction does. As has been repeatedly proved, animals that exist on low calorie diets -- at least one-third less than normal -- live 20% or more longer than their normally fed peers. This isn't unalloyed good news. Very few humans want to live on such restricted diets all their lives.
But calorie restriction doesn't make us live longer through some Calvinist trade-off of happiness for age. It makes us live longer because it changes certain processes in our cells. Stipp explains that the search for the youth pill involves understanding those mechanisms and then finding chemicals that will promote or block those processes.
Stipp is a terrific reporter and writer who makes the science feel accessible, even for those of us who last took biology before the chemical structure of RNA was decoded. He is particularly endearing when describing research subjects like naked mole rats, -- long lived, long-toothed African rodents that live in colonies underground -- and a worm called a nematode that is transparent and reveals "a rich inner life."
The book acknowledges that we're still some years away from having a youth pill. But it makes a strong case that one or more will be developed and they will do a lot more to prolong and improve our lives than curing cancer or heart disease ever will.

WSJ fails to deliver in story on farmers and derivatives

Former NYT reporter Edmund Andrews delivered a devastating critique of a Tuesday WSJ story that purported to show that new financial regulations would hurt farmers. http://bit.ly/9ubTCE
As a former WSJ reporter I was shocked to read through the whole story and find no evidence of actual impacts. Worse, there wasn't even any cogent explanation of how any individual farmer was likely to be directly impacted.
I admired the Journal for going beyond the usual Washington-bureau article about vote-counting on the Senate floor and whether there are enough Republicans signing on to make it a bi-partisan bill. We need more stories that look at the real world impact of what Washington does.
But it's disappointing when a reporter goes out to Nebraska, talks to some pretty intelligent farmers, dealers and co-op managers and comes back with a story that doesn't actually demonstrate that the legislation will have any impact. At the least, the reporter should have found someone to say that spreads on derivative contracts are likely to rise by two-cents per hundredweight or something. Then we could get some idea of the magnitude of the issue.
As Ed wrote, the headline certainly led readers to expect more than the story delivered.

WSJ vs NYT on Teach-for-America Success

How different can two factual articles be?
When the NYT and WSJ cover the same subject, they sometimes display completely different world views.
The Wall Street The Journal's op-ed page and NY Times news pages had pieces on Teach for America in the past three days. It was fascinating to see the differences in their conclusions. The Journal evaluated TFA based on its results for kids. The Times evaluated it based on its results for teachers.
It's a classic example of differing world views: do organizations exist for their workers? Or for their customers? Twenty-year-old TFA recruits top college students from liberal-arts colleges, trains them for five weeks and offers them to underachieving school districts. Despite widespread teacher-union opposition, some 4,500 will start work in 100 terrible school districts next fall.
The Journal loves TFA because it believes the talented college grads that TFA recruits to teaching help kids learn. At the same time, TFA disrupts the teachers' unions that play a huge role in the Democratic Party.
The Times is deeply skeptical about TFA because Ivy League kids are signing up, but they aren't committing to a lifetime as teachers.
As is typical in analyses of education, each cites studies to support its view of the positives or questions about TFA. (Having covered education for the Journal for a few years in the 1990's, I can attest that education statistics generally are either slippery or slipshod, and often both. There's no SEC or GAAP for education statistics, and they tend to be flimsy. Experiments are seldom replicable)
The Journal piece emphasized TFA's concentration on improving performance of students. Money quote from the WSJ article by Naomi Schaefer Riley, former editorial page writer there:
"The results are clear. A 2008 Urban Institute study found that "On average, high school students taught by TFA corps members performed significantly better on state-required end-of-course exams, especially in math and science, than peers taught by far more experienced instructors. The TFA teachers' effect on student achievement in core classroom subjects was nearly three times the effect of teachers with three or more years of experience." A new study from the University of North Carolina found that middle school math students taught by TFA teachers received the equivalent of an extra half-year of learning."
The Times is dubious: "Research indicates that generally, the more experienced teachers are, the better their students perform, and several studies have criticized Teach for America’s turnover rate.
“I’m always shocked by the hullaboo, given Teach for America’s size” — about 0.2 percent of all teachers — “and its mixed impact,” said Julian Vasquez Heilig, a University of Texas professor. Dr. Heilig and Su Jin Jez of California State University, Sacramento, recently published a critical assessment after reviewing two dozen studies. One study cited indicated that “by the fourth year, 85 percent of T.F.A. teachers had left” New York City schools.
Predictably, the quotes in the Times are from profs at a teachers college -- Cal State Sacramento. The critique is about lifetime job commitment - not what most parents and kids are concerned about.
If TFA is right, teachers colleges and the job-security concerns of their graduates are the problem rather than the solution.
The Journal quotes are from a Washington think tank. The Journal cites analysis of student performance. It's arguably politically motivated, but it's looking at the impact on students.

There's also an interesting side issue -- how to evaluate TFA vs. the Peace Corps, a comparison TFA encourages.
The Journal: "TFA received a federal appropriation of $21 million last year, and it has asked for $50 million in fiscal year 2011 Given that the Peace Corps gets $350 million, Ms. Kopp suggests "this seems like a no-brainer . . . " But so far, TFA has a big zero next to it in President Obama's budget. Almost no Republicans have signed on to support it because of budget deficit concerns.

The Times points out that TFA's attractions aren't altogether eleemosynary:
"Teach for America has become an elite brand that will help build a résumé, whether or not the person stays in teaching. And in a bad economy, it’s a two-year job guarantee with a good paycheck; members earn a beginning teacher’s salary in the districts where they’re placed. For Mr. Cullen, who will teach at a Dallas middle school, that’s $45,000 — the same he’d make if he’d taken a job offer from a financial public relations firm."
Again, the Journal focuses on the outcome (cost effectiveness) and the Times focuses on the workers.

The Journal has certainly created anxiety among its fans in the past year over whether political concerns color its coverage. But in this case, the Times seems to have gone way out of its way to critique TFA, and the Journal's analysis looks solid.

Great book on Civil War

I just finished reading John Keegan's "The American Civil War: A Military History."
I've read a number of Keegan's books, including his wonderful book on WW II, and I find they always enhance my understanding of things I thought I already knew.
The Civil War book had several revelations. First: Lincoln, as commander in chief, understood the war better than any of the West-Point-educated generals. Richmond hardly mattered. Lincoln knew that it was a war to defeat an army.
Second: Grant really was a great general. Yes, he butchered nearly 100,000 of his own soldiers. But he knew what he was doing. Keegan's brilliance is that he shows how the territory -- the geography -- where the armies fought dictated the kind of war they fought. Keegan also shows how the deep-seated beliefs of the two sides (and the fact that they fought in units comprised of their neighbors and friends), created a level of bravery and a frequency of battles that has never been seen in any other campaign. Only a willingness to fight (and an economic and demographic advantage) like Grant's could have prevailed. Keegan reminds us that he had to conquer hostile territory against an entrenched enemy.
Third: Sherman's March to the Sea was a much more daring military campaign than I had realized. After reading Keegan's book, I am amazed that even late in the war, the Southerners couldn't cut Sherman's tenuous supply lines that stretched 900 miles to Louisville.
Every time I read one of Keegan's books, I am reminded that winning wars really matters. Sometimes, when reading history, it's tempting to think that historical developments are inevitable. Reading a military history is a reminder that things could go wrong and that history could have developed in very different ways.
One criticism of the book: despite acute attention, I couldn't understand Keegan's explanation of how Grant conquered Vicksburg. As Grant and Lincoln expected, that was a crucial event, opening Tennessee and eventually Georgia to Union conquest. But Keegan's explanation of some very sophisticated tactics lost me. One of my reactions to this book is that I need to read a book about the battle of Vicksburg.
If you care about America, this is an excellent choice for your mental library.

Today's Journal looks like the old Journal

I really liked the front page of the Wall Street Journal today. There was a fine feature, with no time peg, on India defining poverty upward, and having a hard time deciding who is actually poor enough to rate benefits. There was a sweet a-hed on zoo tigers obsession with Calvin Klein's Obsession for Men. And there were solid news stories on Obama planning to allow offshore drilling again and Goldman Sachs getting caught stalling the probe by a government commission.
It was like the old days -- a couple of stories I never would have expected to read anywhere else, and a couple of newsy features on business and economic stories where the Journal has expertise.

Speechifying at MITX awards

MITX -- the Massachusetts Innovation and Technology Exchange had its annual awards ceremony last night. It highlighted dozens of tiny Massachusetts start-ups developing businesses from custom-jewelry-design Web sites to counterfeit-drug-detection programs for West Africa.
The group also gave me a "Lifetime Achievement" award ('what, it's over?' one friend inquired). I was allowed to speechify for a few minutes and reflect on how technology has progressed and the changing fortunes of the state as a high-tech hotbed.
Here's my talk:


When I came to Boston in the fall of 1978, covering computer companies was a half-time job for one of the four reporters in the Journal's bureau. Banking and mutual funds were the prestige beats in the region. Polaroid and Raytheon were the premiere high-tech firms here. Bolt, Beranek & Newman had invented the packet-switching technology for ARPANET that eventually turned into the Internet -- but it was best known as an acoustic consulting firm.
One of the first computer entrepreneurs I met was An Wang, whose company's word processors had already transformed office work. Dr. Wang referred to himself as "the secretary's friend." Once on a tour of the United Nations, he was introduced to the secretarial pool. He got a standing ovation.
Today, of course, Wang word processors have disappeared from the landscape. And so have secretaries.
Reflecting back on 30 plus years of covering technology as both a business and a social story I'm astounded at the changes I've seen. And its clear the rate of change has accelerated. The decade of the 80's saw the emergence of PCs as common office tools replacing typewriters and calculators and ledger sheets. By the end of the decade, people were beginning to use internal e-mails to communicate within companies and some consumers used Prodigy and CompuServe e-mail.
Technology really started to revolutionize people's lives in the 1990's.
The key development? The decision by the U.S. government to open up the Internet to commercial use in 1993 along with the release of the Mosaic browser. That was just 17 years ago, about halfway through my tenure as a Wall Street Journal technology reporter.
By then, computers were getting cheap enough so most middle-class households had one. Business people were replacing their pagers with cell-phones. Still, by 1995 there were only 16 million Internet users. Today there are over 1.8 billion people on the Internet and there are some 4 billion cell phones around the world.
Today we simply assume that, with a little effort, any of us can talk or text with just about any literate person on the planet at any time. That's pretty amazing.
Even though I worked for a business paper, as a reporter I always tried to see how technological developments affected us sociologically. I loved writing stories showing people using technology. I remember writing about cell phones when my best example of one in use was Mitch Kapor -- already retired from Lotus -- using one to let his chauffeur know when to pick him up.
I thought I'd throw out a list of five ways that technology has made our childrens' lives dramatically different from those of kids just 20 years ago. None of these are revelations, but the speed with which they've transformed their lifestyles is startling.
As Sgt Pepper said: It was Twenty years ago today
Parents were giving kids pagers so they could tell them when to get in touch; today even 10-year olds carry cell phones.
20 years ago kids knew maybe 50 people. Today any teen-ager with fewer than 500 Facebook friends is a recluse. And they actually keep in touch.
20 years ago: teenage drivers needed to learn to read maps; today they listen to a GPS.
20 years ago: kids bought CDs. Today they pay for iTunes or steal the music.
20 years ago: kids did research at public libraries and ambitious families bought them encyclopedias. Enough said.
Twenty years ago, also, there was a big community of substantial technology companies in the Boston area. There were signs of trouble, but no one then could have imagined the astounding decline of the local high-tech leaders.
That was one of the great disappointments of my experience as a Boston technology reporter. Digital Equipment, Wang, Data General and Prime were all substantial companies with huge resources, smart employees and big ambitions. So were Lotus and Computervision and Apollo; Cabletron and Bay Networks. And that's not even mentioning more dubious propositions like Symbolics and Thinking Machines and Kendall Square Research.
Like most observers, I never anticipated they would decline so swiftly. I wrote about the business errors that individual companies made. But I missed the structural problems that wiped out the whole lot of them. In retrospect, I think they suffered because having a proprietary base of business went from being an asset to being a burden in the space of five years.
No business model can survive being flipped on its head so dramatically. Only very adroit managers with huge financial cushions managed that transition.
The local companies lacked flexibility because they had avoided consumer markets. Selling to consumers forces a company to be nimble and be very disciplined about costs. All the local companies sold to businesses almost exclusively.
Today, despite the disappearance of the large publicly held technology companies, Massachusetts technology is thriving, as we can see tonight. Clearly the sustainable advantage for Massachusetts is continual innovation, even though the ideas may end up growing elsewhere. So long as Harvard and MIT maintain their leadership -- and they've proved they can do it for centuries -- the area is going to be a great place to invent and start businesses. Two of the most significant Internet businesses of the last decade were started in dorms near here; Napster and Facebook.
All we really know about the future is that we don't know much. I was reminded of this recently at a conference on the future of publishing. One of the top executives of Conde-Nast recalled that just a decade ago " "we were all terrified about the merger of AOL and Time Warner." Meanwhile, Google and Facebook didn't exist. And today, he said they are: "the world's largest media company and the world's biggest publisher."
Watching this space has never been more fun.