Vol 3. No 5
June 17, 2007

Announcements

Just Released!

The Softletter SaaS (Software as a Service) Handbook is now available! Packed with vital information you need to know about the SaaS tsunami.

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Just released! The latest edition of The Softletter Financial Handbook. Over 360 pages of strategic data for your software company.

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Now Open!

www.SoftwareSuccess, the Softletter blog, is now open. Visit here.

In This Issue's Softletter

• Providing Your Customer With a SaaS Security Blanket
  
• Software Licensing and the GPL, Part I of II
  
• Benchmarks: Q1 2007 Venture Capital Investments
  
• Due Diligence: Get Ready to Meet the Buyer's Every Requests
  
• Social Bookmarking Resources
  

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Reminder: The Softletter CTO Survey

Dear Colleague,

This is a reminder to participate in our current survey covering Chief Technology Officer (CTO) compensation.

We're looking for some fairly standard information--in particular, a comparison of "base salary" vs. "variable pay" (bonuses, commissions, etc.) for your most recent full year and for the previous year. We'll use this data to identify trends and current compensation benchmark that you can use to see how your own salaries compare to pay levels at comparable companies.

In addition, we compare salaries based on company development stages, an important factor that's rarely taken into account in other salary surveys.

As usual, everyone who supplies data for this survey will receive a complimentary copy of the final report. Of course, all responses will be strictly confidential. We won't disclose or identify data about any individuals or about participating companies.

Please note that if you do not complete the survey, you will not receive a copy of the results.

The survey is at http://www.softletter.com/survey/ctopay2.htm

Don't forget to push the Submit Survey button at the bottom of the question page, and then wait for the acknowledgement page.

You may want to pass this invitation along to a colleague in the industry who would want to participate.

Final survey results will appear in our June 30th issue of Softletter.

Many thanks for your help!

Age Discrimination in High-Tech, Part I of II

By Rick Chapman, Softletter Managing Editor

(This article is based primarily on excerpts from "In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters." More excerpts can be read at the link below ) 

www.insearchofstupidity.com

An interesting video is currently making the rounds on YouTube these days, a nasty piece of tape that confirms the suspicions of many people that the real reason for high-tech and IT's love of H1-B visas is that the system allows them to import programming and technical talent at considerably lower salaries than those offered US workers. During the video a panel of lawyers discusses how disqualify qualified candidates while saying exciting things like "Our goal is clearly not to find a qualified . . . U.S. worker." You can see the clip here:

Now, there are many economic issues raised by the use of H1-B. Free market advocates (and, to be honest, over time they're usually far more right than they're wrong) will argue that H1-B simply represents a means by which a market regulates itself as less valuable skills are replaced in the market by higher paying abilities. The problem with this argument is most people think that programming and IT management are pretty high-level skill sets and it's hard to immediately see what these jobs are going to be replaced by. We can't all be software architects and system analysts who never dirty their hands with actual coding. And just how do you become a "domain expert" if you don't actually learn a great deal about the domain from the ground up?

Also, the popular counter argument to the "efficient market" argument is that if your market's purchasing power is reduced, via economic contraction, to the level of, say, a typical community of sheep herders, just who is going to buy your fancy goods and services? Henry Ford presented a practical example of this theory in action when he raised the hourly wage of his auto workers to $5.00 in 1913, an unearthly amount in those days. But Ford's theory was that by enriching his workers he was also creating a large market for his cars as well as increasing the value of his work force by attracting the best people he could to his giant assembly lines. Ford's theory, judging by the jump in sales of the Model T and the number of people who rushed to join the company after the new salary structure was put in place, seemed to have some merit.

This brings us, in a round-a-bout way, to the an issue highly related to H1-B: age discrimination. High tech is awash with barely-disguised age discrimination. (A fact that was born out by a small survey we ran in Softletter .) High-tech companies vigorously deny this as US law forbids age discrimination; the companies, of course, are lying. In most cases, if you decide to make a career in high-technology, you will be fawned over whilst in your twenties and respected till your late thirties. At age 40+, if you have not escaped into upper management, it is assumed you will be either A) rich from the money you made working for a hot startup or B) preparing for second career, perhaps as a fries preparation specialist at the food court of your local mall. At 50+ a perk of your job will include a shiny new shovel, with which you are expected to dig your own grave, jump in, and then drag the dirt over on top of you. If you are 60+ and are spotted in the halls of a high-technology company, it is assumed you are either A) the grandparent of an employee or B) a ghost.

The impact of foolish youth on your company's operations can range from damaging to catastrophic, depending on how unlucky you are. This was brought home to me shortly before the first release of "Stupidity" in 2003. I was contacted to possibly consult with a software company that had recently made a series of missteps in dealing with the press upon receiving less than stellar reviews. Reviews can be very important in a firms marketing efforts and bad notices can put a serious crimp in your products sales. When your product has been slammed by a reviewer, there are two paths you can go down. The first path consists of:

Gritting your teeth and carefully reading through the review.

Analyzing any mistakes the reviewer has made about your products capabilities or misapprehensions.

Writing a letter of corrections to the editor of the publication and hope it will be printed in an upcoming issue (your leverage in this regard will be greatly enhanced if youre an advertiser).

Contacting your customers to inform them of your efforts. Contact vehicles can consist of letters, white papers, PR releases, blogs, podcasts, TV appearances, etc.

Putting in place a review management program that, hopefully, educates the market and future reviewers on your product or services abilities.

And, finally, fixing legitimate complaints and shortcomings in your product.

If executed properly, this type of program can have a positive impact on your future reviews and marketing, though none of this will make your current suffering go away.

The other path usually incorporates:

Screaming loudly at your employees whilst simultaneously tearing at your hair in agony and disbelief that the cretin putting this bilge to paper has achieved the miracle of somehow succeeding in putting pen to paper when it is clearly evident they dont possess the required gray matter to sustain basic autonomic functions, such as breathing.

Calling the editor of the offending rag and hurling threats of defenestration, physical violence, and never ever advertising in their Codex of Evil ever again (this final threat will be taken seriously by some publications but never works when accompanied by shrieks of fury at the unfairness of it all; rather, this approach is sometimes effective when delivered by a soft velvet touch and will only have an effect on subsequent reviews).

Calling the reviewer at his or her home and yelling at them.

The second path, which is the one this company had chosen, is never effective and usually leads to a company developing a toxic reputation amongst press, an outcome which can have a long term and devastating impact on your sales and marketing efforts, as dimly remembered data-base giant Ashton-Tate found out when its hapless CEO, Ed Esber, managed to render himself toxic to the entire PC press over the course of three years.

End of Part I

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