May 2005

Some of you may be familiar with the fact that last week the chairman and one of the most powerful business people from Romania - Dinu Patriciu - was questionned for two days for allegedly tax evasion and money-laundering.

The story in short goes like this: before last year's elections the president at that time, Iliescu, received via the Romanian secret services (headed by Ioan Talpes) a report on allegedly muddy waters regarding Rompetrol's practices while and after acquiring some state-owned factories (Petromidia and Vega specifically). After Basescu replacing Iliescu the president took a strong position against the corruption claiming that Justice should use all the evidences on all the cases it has, regardless the political colour of the people involved in dirty business. Now, incidentally, Patriciu is one of leaders of the Liberal Party, which is one of the two-party coalition (DA) having won the elections last year and now playing a major role in the government.

So last week Patriciu gets called for interrogations which lasted more than 20 hours after which he had been told he would be arrested. Now, there's been a lot of speculations about the procedures corecteness of Patriciu being arrested and all related events lately, I will just present some contextual facts:

1. Basescu is in the position in which he actually even asked the Justice to show results of big corruption cases even though they may come from political parties forming the DA coalition (which runs the government) 

2. Romanian Justice institutions are under tight observations given a) the corruption accusations coming from all over the place as a result of worst industry practices similar or close to the 15-years ago times; b) EU putting a lot of pressure on the Romanian government for reforming the Justice system; and c) Monica Macovei, the Justice minister, taking strong action for just doing that and facing a lot of rejection and inertia from a system that basically validated anything that was/is corrupted in Romania.

Consequently, some notoriuos results such as arresting Patriciu may look as success stories for creating a more favourable context for their bad image.

3. Patriciu claims that several procedures while being arrested were not respected and that everything is a political play of the muddy interests the Romanian politics has plenty of.

4. Patriciu is running the second largest oil company from Romania and has one of the strongest management team from around - that includes high profile expats Ivy League graduates. As such I find it hard to believe they did something so stupid as tax evasion, even though Enron is still a recent example of how things can be cooked up.

5. More interestingly is that Patriciu actually claimed that he is going to sue the Romanian institutions for the above-mentioned bad practices and will ask for several hundreds millions dollars damages coming from the broken image, lost opportunity costs et all. And my feeeling is that he has a case and that he may win -- and that would mean actually the defeat of the Justice system and having to adjust to Monica Macovei's reforming plans (people from within are very strongly against - rumours say that PSD, the ex-communists and former governmental party, is behind it - again a very reasonable theory given the corrupted PSD label)

As such, I would be glad that this would be the case - The Romanian government has to pay hundreds of millions of dollars in damages and this will have to lead to some forceful measures that the people involved in the Justice department will have to deal with. However, such a trial may take years and we cannot afford that much. Call me a naive but it could be more plausible than one man in a fragile coalition (Monica Macovei) against a system ossified in more than 50 years.

More on the context here.

Or at least 55% of them.

It's at the beginning of next month and supposedly targets the small and medium companies. The organization arranging it is a State-owned agency, so I have my doubts about it - anyways, instead of bashing it I will just drop by and see what it's like, I guess it's good chance for taking the pulse of the Romanian entrepreneurs. [link]

I was posting the other day about Marissa's blog believing that it is written by Marissa Meyer, the Director for Consumer Products from Google. I guess I was misled by the blog's name, according to my RSS reader though the posts are written by some dudes named either Chris or Denise, so it may be just a PR gig after all, making jokes on Google's competition. :)

...or 101 for buying Viagra in Romania. It made my day. :)

Reading about the Hungarian software market I can't stop making the observation that this is how Romania should look like in a 3 to 5 years time range. I have my doubts though, but I am open to good surprises.

That's a search engine letting you search for spoken words within an audio or video file. I ran into it a few weeks back, but got no time to post it -- anyways, besides its purpose I guess it still needs to index some critical mass of files for becoming relevant. More about it in the faq and the obligatory blog.

Microsoft's move this time.

As there's a first time in everything, today, or better said yesterday, I was invited to participate in a TV show. I had a great one hour of face-to-face discussions with the host, mr. Dinu Malacopol, talking about social software, internet, communication, blogs, wikis, Romania and more. I was a bit nervous at times but enjoyed definitely a great and engaging conversation.

The show was taped and will be aired by Alfa TV, an Astral company TV station which is broadcasted only within Astral cable network, on this Thursday at 8 pm. I am curious too about my performance. :) Great thanks go to Kit who made the recommendation and the intro.

...is absolutely hilarious in responding to Google being accused of copying MyYahoo. For people not in the loop, Marissa is Google's head of consumer products.

Matei sums up very well some recent events placing them in a timeline and guessing that they may constitute a context for what is happening in Romania nowadays. Indeed.

[link]

"If you steal a pack of gum from Walmart, you have a problem. If your whole town goes to Walmart, loots it, and blows the store up, Walmart has a problem. You can?t arrest the whole town." -- that is a good analogy to what is going on in the media industry, whereas Bitorrents or p2p networks are chased for the simply fact that they figured out a simple distribution channel in a business model creating too little value for its fees.

Can you actually imagine that future TV will be a web-based front office whereas you make a playlist with any show you would like to see, in order you would like to. All that against a monthly subscription. If it's possible for audio files, why wouldn't it be possible for video - the trick is that the current players should change their mindsets for figuring out different avenue models. And yes, that is the more difficult to do. 

[link]

I just watched the webcast on the occasion of Google tour factory - great PR event with loads of things to learn.

That is an older idea of mine - in Romania there are some so-called software parks, one of them in Galati, but as far as know from some insiders things are not as bright as they appeared on the paper, that's an old story though.

Now, one may expect the success of such a cluster is a result of external and internal factors, which combined may lead to a profitable proposition for all the actors involved. Such factors and my comments on their Romanian (Bucharest in specific) attributes are:

- a university - plenty of them around, unfortunately the Romanian academics are generally old and teach outdated curricula. The related research is along the same line, everybody is complaining about the lack of money, failing to realize that the good and interesting projects will alaways have funds available. Besides the massive funding from EU most of which had to be returned because of the lack of projects. In spite of such a system, the Romanian students are still fairly well prepared for mainly two reasons: they start working during early stages of their life (I know cases of people starting even while in high school) and they are genuinely open to learn new cool things if they found a proper learning environment. If not, they will learn by themselves.

- a leading company - I thought/hoped that Gecad will give a big impulse and motivation to the local IT landscape, my feeling is that it didn't, even though there are some Romanian companies with interesting models and/or products. But besides Gecad, which is involved in the e-payment solutions area these days, there are few to none innovative companies that would be high profilers and make a success story - I wish I was wrong with that and please somebody correct me if so. 

- availability of venture capital - I think there is plenty of it, I know some of the VCs are complaining that it is hard to find projects, also see point number one above. Not to be neglected also is the National Bank's statement that they sit on 7bn euro which they're not able to find investments for in the Romanian economic landscape. 

- effective governmental action - poor to most ineffective, if you want to do business in Romania the best case scenario is that the government won't make any blocks, under no case expect a hand from it. The legislation is unclear and very interpretable, public clerks are very poorly prepared and not customer oriented, the system is outdated, with a big inertia that in itself is the source favouring corruption and such, etc, etc, etc. But if one outsource the relationship with the authorities one can make very profitable business.

- entrepreneurial spirit - so'n'so, I am familiar with many young people considering or already getting involved in entrepreneurial activities. Problem is that there's no formal education for encouraging or at least giving you some sort of idea on how to do it and what it means. There are however a few private programs, but they're low profile.  

- good competitive intelligence - it depends on the people and their ability to make use of it - there are some good sources around.

- networking among people - not everybody is comfortable with it, Bucharest is like a small village whereas everybody knows everybody. There are several networks centered around interests of course, also plenty of events, fairs and other networking occasions, though in general I know that Romanians are not very comfortable with talking first to people they don't know. 

- the quality of infrastructure, in particular for the transport, and the quality of the environment. - bad to medium. Keep in mind that Romania is quite a big country and is served by only one highway up to date. Travelling by train is cheap and comfortable and the plane tickets are expensive. The environment started to become an issue these years.

So this is what the picture looks like and probably the reason for which we don't have in Bucharest a cluster Sillicon Valley-like. This image also has to consider the brain drain and the so-what Romanian atitude.

Even though at my first thinking I believed it would be expensive, it looks like the costs for a five-year pilot project for urban wifi is $115k. That's in Seattle. A number which seems pretty reasonable to me, and with somewhat straightforward business models for recouping it. Anybody cares to jump on for Bucharest? :)

Probably most of you already knew about it, I am just making myself the echo of it -- Jorge Cortell who's teaching (or used to) Intelectual Property to master students from Valencia was fired for helding a conference about the P2P benefits and its legal implications. You can read what happened in his own words and something similar with a pic here. (via Espen)

The latest from Google Labs - I guess it was just a matter of time following on My Yahoo. It's pretty useless to me anyways. The only way I'd be toying with it was if it'd been possible to customize it with the feeds - import my OPML for example and put my feeds on the page wherever I want to via drag and drop.

If you happen to live in or travel to Switzerland, take a look at this map, it is ubercool - I am simply speechless (via Martin)

A while ago I went to a conference in which, among other things, high profiles in the know discussed about the Romanian software development industry. Everybody was keen to mention that outsourcing assignments, or positioning as the low cost provider, will ultimately lead to industry's failure. Even the State's officials, whenever they have the chance, mention that IT and software in particular are the most promising/important industries for the Romanian business future. But is it like this, and, more importantly, do they put the money where their mouth is?

As a start, keep in mind that last year India had $3.8 bn in exports and China had $2.8bn with a very strong increase from 400 mil in 2000. [link] I mentioned those because most of the Romanian IT pros claim superiority to Chinese or Indians - which, to some extent, may prove right given the cheap skills, proximity and cultural similarities proposition.

In 2004 there were 5-6000 Romanian software companies and the industry totalled about 400 mil with about 75%-80% coming from foreign contracts. Please note that this is not an accurate figure, I've heard many figures thrown in and claiming to be THE ones; however, given the muddy and cumbersome fiscal/taxes policies in Romania it is quite hard to come up with a number close to reality. But 400 mil is a good enough figure and we will probably have a half a billion gotten at sometimes in the next years.

Now, what is the most important asset in this business? People, and not only that, but skilled and experienced ones. Romania has roughly 21 mil people - hardly a figure to compare when talking about China or India. BUT, in this low-figure context a fact that signals an emergency state in the Romanian local landscape is that every year the Romanian professionals are keen to leave the country for looking for better opportunities - last year 15.000 young uni graduates went out for better opportunities. And that comes in the context of reversed trends in India for example. How did the Indians reverse the trend? They simply created a proper business environment that gave a close to market valuation to the local talents - why would anybody leave abroad considering a foreign proposition if he/she were to make a decent living at home?

As such Romania lacks a proper business environment which directly leads to the lack of better emerging personal opportunities which comes from the low motivation - that's the number one reason when people decide to leave. This is the result encompassing things such as no career perspectives, not so attractive financial incentives, lack of a professional business environment and projects that are boring or not intelectually stimulating.

So, putting all of the above and the figures together we're not doing quite well, in spite of the the present advantages mentioned: the skills & costs combo, cultural similarities and proximity. Currently we are facing a skills shortage every year, and this will naturally lead to a considerably increased costs side - which will affect the outsourcing interest. That's fine by me - the problem is that the alternative to this in the big picture is not very encouraging, in spite of everybody acknowledging it. Of course there are isolated cases of Romanian ventures that switched their business model, but they're too few to consider it as a trend.

This is the situation like - it's quite bad i think. What is the Romanian attitude, especially when you see that most of your young and skilled people are leaving the country? Their typical answer is: there's nothing we can do, or so what, we can live without them anyways. That's in between the elections, because every four years all the officials are rushing to make pompous promises that all the Romanians are sick of by now. The reality check is very clear and the old farts from most of the leading layers of the Romanian administration are more preoccupied with their personal present than with what it will come. And this leads to a deteriorated business environment, exactly the value proposition India and lately China are putting on the table - in  the software environment, of course.

I have been thinking pretty much along the same lines for the last months or so -- a blog, or a personal/corporate website incorporating or using the blog format, or whatever you want to call it, will become a very good platform for microtransactions. If the owner has something to sell/buy he just put it out online. Also he can add a tool that would make the transaction safe. A commercial example that comes into my mind is Hugh's cartooned t-shirts. Long tail enabled indeed, the rest is just a marketing problem. [link via]

When you have business promoting all sorts of things by giving away I-anything (i.e. Ipods), you can very well say that the I-anything marketing is viral. Sony entered in this game by differentiating the longer lasting battery life of its mp3 player because it is definitely very hard to fight Apple's coolness factor. On the other hand I know people not preferring an Ipod especially because the herd is running for it being coolio. :)

A few of you alerted me via IM or email about it, thanks --- I didn't bother though to put it on since I already acknowledged it that it's a long term bad strategy with probably some fruitful outcomes in the short term range. If you're after a more consistent argument filled up with rather academic terms read what Umair has to say.

I'd say that the more important piece of news is BBC making available downloads via P2P networks. Only in UK for a start.

"It's one of the least visited countries in Europe. Take the chance to explore Romania before the whole world discovers its charm." -- Susan McKee, a native Chicagoan. [link]

An informative article about Bulgaria starting with the poverty as the main problem in the light of the EU accession and then briefing the main economic indicators. I believe that two of the main problems in both Romania's and Bulgaria's situations are the lack of a credible justice system and the very low labour efficiency (directly related to the economic output). And if we combine those two mechanisms that hardly function (Ro and Bg) with an already coughing European economy I think that the future won't be as straightforward as the EU officials put it. The only promising perspective from our side is that we're still in a virgin teritory, business wise, with plenty of opportunities for grabs. Yet.

Newsgator just acquired FeedDemon - both provide RSS reading software, but complementing each other -- Newsgator needed a desktop app for a complete value proposition and FeedDemon was offering just that. I still stick with Sharpreader. (via Om)

...and writing about them, this is certainly a good thing for getting the phenomenon off the ground, locally. @rgumente is mentioned as one of the most active economic blogs, even though economics has a different meaning from business and strategy. But that's less important. (via Daniel)

...and it will be integrated with Google maps shortly. That means Romania is included, I can't wait -- via John.

Quiz time, been a long time since I mentioned one here. My result says that I'm a cultural creative - let's see some traits from around. :) (via Stefan)

What it looks like since the beginning of the year -  in Europe the number of deals decreased by the end of 2004, though the value of euro invested is on a relatively higher trend. Software and biopharm are the most attractive areas while UK and France have 50% of the dealflow. See the whole ppt [via Marc]

I had an interesting discussion this afternoon about, among other things, the Romanian internet landscape, and agreed upon the fact that the space is quite dry with very few sources of quality content. For a good parallel I've been pointed to I feel lucky option for shit - I cannot agree more. :)

...or the advantages given by the internet nowadays. This reminds me actually of some older stuff.

For those who don't know already vlog stands for videoblogging -- interesting space to watch. Also, it seems like there are more than 200 videoblogs up to date. (via unmediated). Question: what do you get if you combine this concept with a mobile phone that has a camera incorporated (which is pretty much standard I guess). I hope I might have the answer pretty soon.

Interesting initiative: a tool for groups of people pooling $$ for purchasing things or fund raising. See some of the examples to get its practicality.

I believe that communication is one of the biggest problems in the business world and not only -- here are some tips for doing something about it.

Dodgeball is a social software tool for the mobile setup and run by two guys from NYC. Since 2000. Not a bad exit, huh? :)

More on that over at Silicon Beat.

To the point and written straight from the heart. I fully subscribe to it - truth is that it's gotten more and more frustrating to deal with the Romanian atitude towards all areas, business included. It's not that things can be improved, everybody knows that - it's that everybody seems to have an opinion on how to fix them and nobody's doing anything about it. Besides the famous, now, Romanian lack of seriosity, which probably is a function of one's motivation after all.   

TV on the cell phones. Certainly a space I will be watching in the future.

That's the name of a tool for generating RSS feeds for any web page, or so they claim. I still have to figure it out as it requires some programming knowledge (not for faint-hearted indeed), but the idea is tres kewl.

So I guess I am not the only one.

Via TJ -- great chance to learn about the Europeans greatest according to Red Herring. Also it may be a valuable reference when looking to spot new things to come ahead from the old continent.

So what is Rodrigo looking for when testing to invest in a venture? I've been posting tons of related stuff, so there's no new theory, just a different European perspective, good to refresh things once in a while.

Apparently Loic is doing a great business development job for Typepad, by getting (yet) another deal done with a French cable provider for offering bundled products/services. Great strategy for Typepad's market expansion in Europe executed flawlessly so far.

Btw, what would you say it's the direct competitor for Typepad in Europe? Blogger? Oh wait, Blogger's free, and so is Wordpress...:)

It's been all over the blogosphere, everybody's quoting Seth for acknowledging a simple thing: there is a big difference between people willing to learn and use new things (and eventually making money out of it) and the rest of the crowd. The leaders and the followers - it's been like this forever, Seth is just putting it very nicely into the web 2.0 context - and explains it in simple words for the ones that still didn't get it.

Seth's blog is generally very good and a must read. Period. But, in case you didn't follow it lately, some of the great posts he's had generated a lot of buzz around, which resulted in a lot of PR waves that would certainly be a big help for his book. Which is a must read too.

... about how much they are willing to pay for accessing the newspaper's online archives. Note that it wasn't IF they want to pay, but a choice between two paid models. This comes at a time when BBC widely opened their video/audio archives for a while already. Charging for online information when the switching costs are close to zero -- I am thinking that the type of info one can find in archives must be really-really valuable if anyone's willing to pay for it. Or it's simply just a model that speculates the ignorance/inability of the people to get informed --- such a model will never be sustainable a la long.

Wanna know what it's like with the big boys? Have a look.

The PR story version of a challenging confrontation which was possible due to Msft underestimating Google, and, to a larger extent, neglecting search as underlying technology behind a business model. Business model that, surprise-surprise, doesn't depend on Windows or on what the user is served on the desktop when buying a PC. It's certainly only the beginning of the (hi)story, I think we live very interesting times. (link via Cristi)

Or with the email service particularly: 1G for emails and unlimited storage for the photos, among others. Also check out the Yahoo mobile page, I guess Russell may have some merits there. Too bad it's just US-oriented.

Did it ever happen to you to travel for a couple of days and not have a chance to have internet access? Doesn't feel wierd, or at least as if you're a bit disconnected from what is going on in the world? It does in my case and that's why the internet could be the fourth place to go, it's simply the place where the conversations happen -- I kinda disagree though with the Starbucks as being the third one, as that is more like a cultural thing (i.e. American). But the concept may be valid - getting hooked up via wifi wherever, be it the coffee shop, the airport, a park or a conference.

A well spent 15 minute-read of the Q&A with Warren Buffet and Charlie Munger at the BH annual meeting.

Not quite free but for equity, cash or royalties. That's a really smart move since the SMEs which will be caught in the game will ultimately create value for the MSFT environment. [link]

UPDATE: Some follow up comments on the topic.

..as seen by the AT&T CIO and CTO, Hossein Eslambolchi. Broadband, wireless, convergence, security and the rest -- all these should be common sense by now, I guess that the trick is how one will make good use of them - value creation in the space that is. ;) [link via Jeff]

There is this idiot who keeps spamming the blog for a while now. At first we decided not to pay attention, one idiot extra in the world doesn't make any difference. Besides, we've been working hard lately for having a better technical version of the blog which would prevent those idiots very easily and we're seeing it coming to an end sometimes soon. As such, we had our full attention on that and kind of neglected the actual website.

But it started to get annoying so I decided to ban the 85.64 and 85.65 IP classes - our guess is that the idiot is using Astral and has the IP allocated dynamically. If any of you is having troubles posting comments as a consequence please drop me a line and we will fix it asap.

Googspy is a tool that lets you see what key words your competitor buys from Google. Apparently their servers are down now, but the concept is quite interesting and can become a very insightful competitive intelligence source. (via Marketing Playbook)

After a long back-and-forth Andrei finally jumped into the blogging wagon. He is one of the two business partners I am working with at Krogos - a sharp mind and a great friend. 

"If you're going to be the standard, you need to be boring. If you're boring, you've got to be cheap" [link]

That reminds me of Hugh's "you're either the cheapest or the best, there's no middle ground". Btw, I just re-read the Hughtrain over the weekend, I am working on a SIV theory these days.

I read today an interesting comment exchange over at Rodrigo's about the LesBlogs and why it was/wasnot an important event. This got me thinking actually about how (most of) the participants got to know each other - most likely it was the blogs th eglue that put them together.

But was it really it? Or differently put it, is it really the blogging that got people from lots of countries in Paris for two days of endless discussions? (have a look also on Doc Searls' presentation about what blogs are and are not)

The answer is yes and no. Stricto sensu it may be the blogging that triggered the meeting; nevertheless, looking further, that's just a bunch of people who are openminded, looking for cool and innovative things, willing to share them and ready to learn new ones. And sooner or later such people will find a way to run into each other, they keeping blogs were just some of the underlying reasons. And it certainly made the event title. :)

Now, I have met diverse people - some don't get the blogs, or are not interested or are simply enthusiasts. I think I've seen quite a broad spectrum. My observations though are that most of the people who get it are opinionated individuals with a desire to learn new things and willing to share some of their knowledge. Besides, they're good coomunicators. And this is what actually blogging is - a way of coomunicating cool things one learns about (chiming in their 2 cents most of the times). Candidly and openly. It can be under various forms but the end result is always an informative one. It is not for anybody and if used with a hidden agenda can get to bad consequences. See the below mentioned quote of the day.

Hugh's hitting the nail in the head, I know some individuals who think otherwise. Anyways, this quote made my day: :)

"I think anyone who tries to make money DIRECTLY through blogging is statistically JUST BEGGING to have his ass kicked by the market. A few bright sparks may get away with it ocasionally, just like a pretty waitress in Los Angeles occasionally gets discovered in a restaurant and is starring in a movie a year later. Nice when it happens, certainly, but I wouldn't place a bet on horse with those odds."

These days I've had some interesting discussions with my mom about the present state of education in Romania - she is a teacher so she has first hand experience about what is going on in the area. We were talking along the same lines - she was saying the quality of the young teachers coming from behind decreased, considerably shown by the interest kids manifest for classes or for learning in school, while I was saying that the results of the education system are not really reflected in the kids needs after they had finished the school and had entered into the real world.

Now, Romanian kids are quite famous for being skilled in various fields, be it technical (programming, maths) or non-technical (languages and such). This is highly reflected by the constant good results from the international contests from all over the world. However, even if most times those results are considered to be a proxy for the education level in Romania, I dare to say that things are not exactly accurate. I think they are a result of a combination of some of the following factors: kids' innate talent, their curiosity to learn new things, their hard work (most of the time a direct result of beiong pushed from behind by parents/educators) and some of the directions the teachers would allegedly provide.

Please note that the teachers should play a higher role; in the Romanians' most cases they don't - there are either old teachers who are not in contact anymore with the fields they're teaching, their speech becoming obsolete, or the other way around, they're young and education was the only field they were able to go to since they didn't adapt in the real world. Of course it's not all white and black, there's lots of grey in between, it depends on the teachers motivation and I guess that the poor financial incentives as well as a poor infrastructure play an important role.

However, I guess that any job will provide quality results especially if one does it professionally and with passion in spite of the lack of means. Teaching doesn't make any difference, especially considering the new learning paradigm that sooner or later Romanian teachers will have to embrace. There's a long way ahead though, and until they do Romanian kids will seriously consider mastering things on environments more proper and adapted to the real world needs.