I understand that you are an enthusiatic fan of the company, but that's not going to save them.
The fact that you have a lot of equipment already, and claim you aren't an early adopter, is part of what makes you an early adopter. When you refer to "Wife Acceptance Factor", then you are an early adopter.
"Promise to release a magic code"
This is totally bogus. I'm sorry to be blunt, but it is. The idea that they will be solvent enough to run a server that can be contacted for warehoused units which are sold 3 years down the road, well, that's just not going to happen.
The main problem is that this is teathered technology, and teathered technology sucks: it has value only so long as the company that built it remains actively solvent.
Look at what happened to all the Riccochet users; there's still a repeater near my house, still drawing power from the municipal street-lighting grid, because no one came out to take the thing down. My taxes are paying for it to suck electricit, and not provide any useful service to anyone, because there's an umbilical involved.
I find it incredibly alarming that there is public acceptance of technological artifacts that turn into lumps of junk when their mothership crashes, and which don't even have the decency to rot away soon after they fall into disuse.
I'd have a lot more confidence in "the TiVO answer" to the problem if it automatically went into that mode after a prolonged period of bing unable to contact the mothership, and it took an action by the user to get it to contact the mothership again, later. Instead, it's another "beamed power" device, which quits functioning entirely.
"record anything you're interested in"
This implies at least two tuners, and probably three. Television programming is intentionally adversarial between highly rated shows; first-run episodes of "The Practice" are never scheduled to run against "Carlton Sheets" or "Ron Popeil" infomercials: it just doesn't happen. The shows people want to watch are on in opposition to each other, and so are the shows people *don't* want to watch.
The technology has to be aware of the environment in which it operates; largely, it isn't.
"TiVO has a very compelling message"
A 'very compelling message' is one which you do not have to work to communicate, because your customers will do the work for you.
Your argument in this regard is a "Build it, and they will come" argument. It's the classical bogus technologist argument that thinks if you build something cool, everyone will want it. In reality, they've built something with a high "geek factor", which fails to be a "whole product".
The deficiencies in the product that they've addressed so far in order to *try* to make it into a whole product, are all based on the idea of additional revenue... that they are offering a service, which has value, instead of making up for a deficiency in the product model that makes the product unusable without it.
Then they try to go to a subscription model, in order to turn the pain into a recurring revenue stream, to make their investors happy, instead of trying to make their customers into evangelists.
Here is the proof in the pudding: how many people have purchsed a TiVO due solely to your wife's evangelism of the product? I.e. she did not have an early adopter maniac (e.g. you) propping up her argument to the person.
I'm willing to bet that this number is zero, or that your wife is abnormally tolerant of new things, having been immunized by you.
As far as "they just need to find their market" goes... they've had 5 years to do that, and they haven't done it yet.
The bottom line is that they need to change what they are selling.
I've been in the same boat, working for a company that wasn't willing to change what they were selling, and which then tried to milk a subscription model as a revenue source, and all the while, doing it with an incomplete product. It's hard to watch someone else make the same mistake.
Personally, I don't like cruft, but the way he wants to "correct" some of the things he doesn't like, well... the cure is worse than the disease.
My idea of hell is an editor that auto-saves code that I'm in the process of hacking up in an editor to let me think about the problem over top of code that already works.
My idea of hell is a platform where every document I've ever opened has no way to close it and no way to exit the application that's got it up in a window, because there;s no 'Quit' or 'Exit' option.
My idea of hell is not being able to drag something in a GUI from one folder to another, because they have an obscure "parent of my parent" relationship, which makes me have to cut and paste the document, instead of just dragging it, because I on;'y have one file manager, which is running all the time, instead of a "file picker".
My idea of hell is symbolic links that get changed when I rename a file out from under them because the OS thinks it knows what I want better than I do, so it's impossible to replace a file with another, while keeping, and the old one, unless you copy it, rename the original, rename the copy, and then edit the original (instead of replacing it).
I guess they'll "brilliantly" go bankrupt, then, from selling something that's so much not what people to expect it to be that it have an over 3 month sales cycle (e.g. your wife).
Look; without the umbilical back to them through UUnet dialup, what functionality do you lose?
You're obviously an early adopter, despite needing the purchase approval to buy the thing. Your wife probably "saves" you from a lot of new technology. But as an early adopter, you probably also have an Internet connection and don't need a seperate umbilical.
Your claims are also a little grandiose... in fact, you can't record everything; you are limited in the number of simultaneous channels by the number of tuners you have available.
Rather than positioning the thing as a product they want to sell to consumers, they need to position it as one that consumers want to buy.
Large sales do not come from "push", they come from creating "pull" in the market.
Maybe TiVO should think about hiring Guy Kawasaki as a marketing consultant: his ideas in this area worked for Apple.
What part of "a better VCR" didn't you understand?
Yeah, it's a better VCR. So sell it as "a better VCR", instead of trying to pretend it's the next best thing to multilevel marketing for converting a one time sale into a continuing revnue stream (or, less politely, "boning people for money on a monthly basis").
Lets look at your list:
o Items 2,3,4,5,6, and 10 are "TV Guide features". o Items 1,7,8,9,11 are "Digital VCR features".
So as far as "infrastructure" goes, you have... "a TV Guide web site". I'm sorry, but it just doesn't cost that much to provide a "TV Guide web site". Television stations would probably give you the information for free, just to get you to watch them, if you would only provide them a method (e.g. XML) and a way to use the same data for display purposes on the web site itself. Worst case, cut a deal with TVGuide.com.
TiVO's mistake is that they are trying to (to put it in IBM-ese or Microsoft-ese) "Establish [grunt!] an ongoing [grunt!] customer [grunt!] relationship [grunt!]" (I seem to have dropped my pen; can you bend over and pick it up so you can sign this service contract so you can actually use the hardware you thought you owned outright? Thanks...).
Just because you *can* tie it into a subscription service that forces ads down your throat doesn't mean you *should*.
If they just sell it as "a better VCR", they would be fine.
Yeah, the "TV Guide" feature is nice. But I have lived this long with my analog VCR without that feature, I'm probably going to be able to survive until Thursday.
Most likely, TiVO will die, when DVD-RW replaces VCRs, while TiVO is futzing around trying to generate a revenue stream other than "unit sales".
Remember VOIP? Do you own an IP Telephone? No? But you're a *nerd*! If a *nerd* won't buy one, what chance have you got to sell it to people with lives!?!
Let's try a point of view experiment:
You're a small business; you're in the market for a new PBX, because you've outgrown your old one, or you want a couple of features that your business needs to improve.
Do you buy into IP telephony?
Or would you buy a "digital PBX" instead?
Surprise! They're the same thing, only in the second case, I'm not trying to sell you end-to-end service to endpoints that don't exist yet... I'm just setting you up to sell that later, when they do.
By doing this, they are attempting to take the natural market for VCR's as durable goods, and convert them to a subscription-based market, when the people making up the market really don't want to be converted.
The reason this will not fail with the satellite and cable boxes is that, when the digital video recorder is integrated there, the incremental value can be cost-amortized over an existing subscription model: it's an already tolerant market, and the incremental value of the recorder will end up raising overall costs, as it becomes a feature checkbox item between competing service providers.
A similar problem exists for Hotmail: their "captive audience" for their up-sell attempts consists entirely of "the set of people who will not pay money for web email". I expect Hotmail to stay around for the ulterior motives ("Got a Hotmail login? Then you've got a Microsoft Passport!"), but I don't ever expect it to be a money maker instead of a loss-leader.
Maybe an example more apropo this forum would be the Microsoft attempt to convert OS users to a su scription model (also doomed to failure, unless they can leverage their monopoly to force the change... and it may -- thankfully -- be to late for that).
Why don't they just start selling both medical malpractice insurance, to drive up medical costs, and individual medical insurance, to cover the inflated costs?
This is to guarantee that the bankruptcy doesn't interfere with them calling to ask me to "please switch your long distance service to our bankrupt company" during dinner, while I'm in the shower, or in the middle of having sex.
With all that going for it, who could possibly criticize the bonus plan...
Because it costs too much to use Perl. Perl has a very high cost of ownership, compared to even C++.
For small projects, and for throw-away code, Perl is the ideal language.
For large projects, and code with a long life expectancy, it is very hard to maintain.
As they pointed out "there's more than one way to do things". For maintenance programming, this means that you have to know every way of doing things, or you aren't going to be able to read all the code.
One of their earlier slides pointed out that they didn't want to have to pay for highly educated people... the specific item was point 12 on slide #20: "Doesn't require a CS degree to use".
While it's possible to hire people so skilled at Perl that they can do the necessary maintenance work for you without a lot of effort, hiring those people costs a lot of money (see slide #18, under the bullet item "Y! is a cheap company").
Everything old is new again...
on
Water Computing
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· Score: 2
When I was a kid in school, one of the teachers found an old book on fluidic computing in the school library, and built a one bit adder, using stoppered flasks and glass and rubber tubing.
Old Singer sewing machines had fluidic computers that they used for switching systems.
Rocketdyne built a fluidic missile guidance system.
The Russians used fluidic computers back in the late 40's, early 50's.
Actually, if you do a patent search on "Alvin Snaper", you will find a number of fluidic computing patents (and the patent for the IBM Selectric ball).
New Coke was a means of converting the bottling plants over from powdered supplies (sugar) to liquid supplies (high fructose corn syrup).
The way it worked was to make something that tasted sufficiently bad, compared to the original, that when they "switched back" to the old formula (actually, the old formula, minus sugar, plus corn syrup), they were sufficiently close to the old formula that people didn't complain about the switch (they just got fat off the new stuff).
The best way to get something small and distasteful past someone is to try for something very large and distasteful, and when people complain, back off to the small distasteful thing you wanted in the first place.
To get unimpeded weapons inspections, ask for a "regime change" and an OK to invade. To switch over to cheaper, easier indistrial process supplies, like corn syrup instead of sugar, change everything, and then change "almost all the way back".
If you don't think Microsoft knows about this technique, you are fooling yourself. You should be much more worried about the consequences of whatever they pick as their "backed down" position.
No. States pay the highway funds. They are not collected directly from individual tax payers. They are not part of the federal tax bill you pay.
Utah had a lively discussion over this when the motorocycle helmet law mandate was introduced ("pass this law or lose your highway funding").
The state pays into, and the state gets paid out of, a federal fund.
The state can choose not to forward the monies.
The escalation curve is not pretty.
-- Terry
"Isn't sedition unprotected speech in the US of A"
on
The Free State Project
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· Score: 2
No.
It is protected speech. It is perhaps the most important reason for most of the Bill Of Rights.
A society which cannot tolerate dissent is doomed to minority. Insert comparative religion analogy based on degree of permitted religious scholarship here.
-- Terry
Highway funds only persuasive to some states
on
The Free State Project
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· Score: 2, Informative
The threat to withold highway funds is only persuasive to some states: those states which have more roads, per capita, then their tax base would ordinarily support.
Specifically, highway funds come from a Federal pool to which each state contributes according to their ability, and from which funds are allocated to each state, according to their need.
It's only if your net take is larger than your net input that witholding of federal highway funds is persuasive.
Most unfunded mandates originate in California (the organ donor reduction acts -- also called "motorocycle helmet laws", and similar legislation on drinking age, speed limits, and other unfunded mandates are basically cafeteria plans for mandates that say "you will adopy 3 out of 5 of the following legislation in order to maintain funding")... and California is on the other side of that equation.
In the limit, the reason that the highway system was nationalized in 1956 is that there was a national security argument for support of mobile command posts, in the event of a nuclear war (and later downgraded to "any national emergency", after the widespread protests surrounding the vietnam war).
If that theory still holds, then it's in the federal government's best to continue supplying funds, regardless of what the state does or does not do (or it can see its interstate system go to hell in a handbasket, threatening national security).
It's not so much the registration, which, as you've pointed out, is free.
It's the fact that the cookie expires in 24 hours, and you have to log in over and over and over again, and the login sends the password in cleartext because they don't use SSL, so you have to have a different password for every service that does this to make sure that one is not compromised by the cleartext of another, and then you have to remember the damn things...over and over and over again.
They want a registration? Fine. Make the fricking cookies last 10 years, and people will quit bitching.
"Yes - as a company employee your position has limited liquidity. Your investment actions should reflect such - and this should be planned for (see earlier point)."
Yes, and insurance should be unnecessary, and Social Security and Medicaid should be unnecessary, because everyone should have planned their lives down to the most insignificant detail, mitigating all risks, by the time they hit the age of 7.
(No, I don't want to buy a bridge, either).
It used to be that the downside of working for a startup was that you took a lower salary, and risked either not making the money back, or you would make it back many times over.
The risk was that the return would be zero, not that it would be negative.
None of the risks that the VC assumes are potentially negative; the worst they get is "zero return". This used to be true for the employees, as well. Now it isn't.
With these new laws "designed to stop CEOs from profitting unfairly", we now have an environment of greatly increased risk for the average worker.
First, we had AMT, that put everyone at risk of a large tax liability, with nothing to pay it. Then we issued a patch for that risk: early exercise, using a company provided loan to pay the basis price of the stock, with an option to surrender, incase the options were under water.
Now such a company loan is illegal, so the risk is back.
The reward has to be proportional to the risk.
What we are doing here is getting rid of the reward, but increasing the risk.
This is not the way to stimulate a down economy; it is a way to ensure that extablished businesses don't get competition from new ventures.
It raises the marginal cost of labor for startups, while leaving it unchanged for large comanies, which don't offer stock options to any but their highest tier of emplyess anyway (e.g. in IBM, you have to be in "band 10" to get an offer of stock options, or you have to be management, above band 10).
AMT is asinine. The rule against the loans, which were a way to work around AMT being asinine, is itself asinine. The two are exactly analogous, because the one was intended to address the problems caused by the other.
"If he had instead sold some of his shares immediately (as most financial advisors would recommend for portfolio diversification reasons) and paid the AMT with the proceeds from this, he would have had no problem."
Good theory, except:
1) You would pay short term capital gains, not AMT, if you sold shares immediately. You only owe AMT on shares you exercise, but *do not sell before the end of the year*.
2) After an IPO, there is a minimum of a six month lockout on sales of stock by insiders, to allow the VC's to get their money out. It's in the contract.
3) The SEC enforces what are called "trading windows"; if the window is not open, you can't sell.
4) The AMT in question only occurs if the exercise price exceeds the strike price; to relate this discussion back to the article (like it should be), avoiding this was just made illegal in July.
We should therefore expect more people to be put in the same position: pay the money out of pocket, if you are already rich; go to jail as a hostage so that your family can be made to pay it; or kill yourself to avoid the burden on your family, since you can't bankrupt out of taxes.
Face it: AMT is a tax on paper profits that may or may not turn into real profits.
Even if we pretend capital gains are the same thing as income (they aren't) so we can tax the heck out of them and "rob from the rich and give to the poor", we should not be taxing people on unrealized capital gains. Gains or losses are not realized until the asset is sold.
"you shouldn't exercise your unqualified options until the company has some degree of stability."
This is a nice argument for a company like Autodesk, which failed to offer early exercise to its employees in order to avoid phantom capital gains between option grant and option exercise (a 1 year vesting cliff is fairly industry standard).
It also works for a company like Autodesk, which is already public, and for which stock options are going to be a small percentage of your compensation.
For a startup, stock options is a large portion of your overall compensation: it's what they have on hand to be able to pay you, and cash is a scarce resource.
So, for example, if I made $180K/year in salary, not considering other income, at a large public company, and then went to work for a startup, I might find my salary dropping to $100-120K/year, with the promise of more money from ISOs.
The "I" in "ISO" stands for "Incentive"... the intent of ISOs is to incentivize good people to work in places they would not normally work, were it not for the added incentive.
If 66% of that incentive goes to tax because I'm eating short term capital gains tax in California on it (38% federal, 28% state), then the value of the options are actually 1/3 of what they appear to be.
The normal way to deal with this is to convert it into a long term capital gains burden, instead, but AMT opens you up to risk on this, because it's due in the tax year in which you exercise.
The best way to deal with this is to avoid the AMT by exercising immediately, and then vesting into ownership. That's normally handled by the (now illegal) company loan for the exercise amount, to be paid back on sale or through surrender of the stock (one of the executives in the article surrended stock that was worth much less than the loan made to purchase it; this was supposedly "cheating the shareholders").
The assumption here is that the stock will always be of a value equal to or greater than the value at the time of exercise.
In other words: the reason your stock options are worth less, and you can use the strategy you are talking about, is because they are a much smaller fraction of your compensation, compared to what they would be in a startup.
"I don't see how it's directly related to the AMT"
That's easy: the tax he owed that he killed himself over was AMT.
AMT comes due at the time of exercise; basically, the government wants its money as if you were realizing a short term capital gain, even if what you are really realizing is a long term capital gain. The gain is not in fact realized at the time of exercise, it's realized at the time of sale. But you are taxed at time of exercise, as if that's when you realized the gain.
The gain in question is the difference between your strike price and the price at the time of exercise, times the number of shares.
As a simple example, say you are granted options with a per share price of $0.50/share. You do not vest immediately, and you wait until you have vested in order to exercise, to turn the options into stock. Now the stock price has been going up; why? Because it's an SEC requirement that the increase in price be amortized in a graduated fashion over the period of time that you hold the stock, uf to the point of the company's IPO: they are not allowed to have the value "come from nowhere", because then they would not be taxed on accumulated value "early enough": the government wants its cut as soon as it's a realized gain.
So say it gets to be $5.00 at the time you vest, and you exercise. The company has still not IPO'ed, yet. But you are looking at a "realized capital gain of $4.50/share". It's not really money, it's fake money. You can't sell the stock, because the company has not IPO'ed; your only possible method of realizing gain from it is to sell the stock back to the company, or to offer it in what's called a "private placement". The board of directors gets first option, and can veto either sale (it's in their interest to veto any sale prior to the IPO, unless it's a sale of founder stock, back to the company, in order to convert preferred stock into common stock).
And if you don't hold the stock for 1 year from the date of exercise anyway, you get to pay short term capital gains tax on it anyway. In California, between the state and Federal, this comes out to around 62% of the value of the gain; if you pay AMT, it's "only" 54% of the gain, and you get some of it back when you actually sell the stock, after holding it for more than a year.
But it gets better: normally, you are in a lock up period following an IPO; that means that you can't sell the stock, even if you own it outright, until at least 6 months from the IPO date, because you are an "insider".
So no matter how you look at it, you are stuck with it for 6 months to more than a year.
The normal "fox" for this is to exercise the options early after the first of the year, and then wait a year and then sell them between the time you exercised, and April 15th, to allow you to pay taxes on the gain. It's about the only way an average person could ever afford to pay taxes on the "gain"... which is still only a paper gain.
So what does "early exercise" get you? It gets you the ability to lock in the strike price at the grant price. What this means is that you don't end up with a capital gains or AMT tax on the difference between the strike and exercise price -- because the difference is $0.00, and no matter what percentage they wanted of it, the government's cut is still $0. You only realize a capital gainst when you sell the stock.
Early exercise also has the effect of starting the 1 year "long term capital gains clock"; since most vesting has a 1 year cliff, and goes month-to-month after that, you're in the clear at the point you can actually do anything with the stock.
At the point you are vested, the company may or may not start charging you interest on the loan they gave you to do the early exercise.
Only now the loans are illegal, so the company didn't grant you a loan.
So now, you get to pay out of your pocket, up front, for the early exercise (assuming you have the money to do that... in which case, why are you working in the first place?), OR you get to get locked up for a year from the point you vest, and the options are basically worth about 38% of what they would have been worth, because you are paying the difference in capital gains or AMT taxes.
Further, if the company is not public, you are screwed: you get to hold the stock until the IPO or sale or other profitable exit for the company, or, you get to eat the loss along with the other investors, if the company goes belly-up. Unless you are sleeping with a board member, then maybe you can sell the stock back to the company, or to one of the major investors/VC's, in a private placement, assuming they want to own more of the company than they already do, and that they are willing to take common stock instead of preferred, in order to get it.
So the most common situation is that you no longer get a company loan for early exercise, and then you exercise the stock, have a capital gains assessed on it as an AMT, or you pay short term capital gains rate on it instead. So you sit on it for a year to make it a long term capital gains tax burden, and meanwhile, the stock tanks. Now it's after the first of the year, so you can't realize the loss in the same year you realized the gain, so you are on the hook for an AMT that is about 6 times the value of the stock, were you to sell it now.
And you can't bankruptcy out of owing taxes (taxes are the one area of finance in the U.S. where debter's prisons still exist), so you basically go to jail over the tax bill, and the IRS goes after your family, with you in jail as a hostage, to pay an AMT on money you never got, except on paper.
Now do you understand?
-- Terry
It's unfortunate that it's no longer legal...
on
Expose on Insider Loans
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· Score: 5, Informative
It's unfortunate that it's no longer legal, due to a bill passed into law last July: no more insider loans.
The reason it's unfotunate is that making unsecured loans, and later forgiving them was one of the ways you could avoid getting taxed twice on the same income. It was also one of the few ways an ordinary human whose last name was not "Heart" or "Rockafeller" or "Hilton" could afford a home in California.
I know people who killed themselves after the market crash in 2000, because their tax bill for their "Alternative minimum tax" exceeded $4M on stock whose value was far, far less than that (one of them was a Netscape employee, who exercised at the market high in February of 2000, and then was screwed, when the stock didn't go back up after falling later that year before April 15th of 2001, when his tax bill came due.
These days, this is closed by a mechanism called "early exercise", where your company gives you a loan to buy the stock options at the time of grant, and then payment is due at the point you sell the stock, or you can surrender the stock in lieu of payment. This avoids the capital gains tax burden (in the form of state and federal AMT) in the case of a loss, by eliminating the appreciated value between the time of grant and the time of exercise.
Now this is illegal; so if you accept stock options and do an early exercise, and the company goes belly up (like 9 in 10 startups do)... well, the paper turns into a debt instrument, and they come after you for the value at the time of the exercise.
It's really assinine to tax deferred compensation in the form of stock or loans, and it's really assinine to tax-collect people to death over it: but now, this is the only option, for ISO grants to employees.
You may think "Good, we'll stop those Enron bastards!"; but the people you are really screwing over are line employees with ISO grants, who are generally taking a below market wage in exchange for a stake, and startups. The "Enron bastards" will just come up with a different approach to the problem, which is that we have a capital gains tax in the first place.
Slashdot Mirror
Look.
I understand that you are an enthusiatic fan of the company, but that's not going to save them.
The fact that you have a lot of equipment already, and claim you aren't an early adopter, is part of what makes you an early adopter. When you refer to "Wife Acceptance Factor", then you are an early adopter.
"Promise to release a magic code"
This is totally bogus. I'm sorry to be blunt, but it is. The idea that they will be solvent enough to run a server that can be contacted for warehoused units which are sold 3 years down the road, well, that's just not going to happen.
The main problem is that this is teathered technology, and teathered technology sucks: it has value only so long as the company that built it remains actively solvent.
Look at what happened to all the Riccochet users; there's still a repeater near my house, still drawing power from the municipal street-lighting grid, because no one came out to take the thing down. My taxes are paying for it to suck electricit, and not provide any useful service to anyone, because there's an umbilical involved.
I find it incredibly alarming that there is public acceptance of technological artifacts that turn into lumps of junk when their mothership crashes, and which don't even have the decency to rot away soon after they fall into disuse.
I'd have a lot more confidence in "the TiVO answer" to the problem if it automatically went into that mode after a prolonged period of bing unable to contact the mothership, and it took an action by the user to get it to contact the mothership again, later. Instead, it's another "beamed power" device, which quits functioning entirely.
"record anything you're interested in"
This implies at least two tuners, and probably three. Television programming is intentionally adversarial between highly rated shows; first-run episodes of "The Practice" are never scheduled to run against "Carlton Sheets" or "Ron Popeil" infomercials: it just doesn't happen. The shows people want to watch are on in opposition to each other, and so are the shows people *don't* want to watch.
The technology has to be aware of the environment in which it operates; largely, it isn't.
"TiVO has a very compelling message"
A 'very compelling message' is one which you do not have to work to communicate, because your customers will do the work for you.
Your argument in this regard is a "Build it, and they will come" argument. It's the classical bogus technologist argument that thinks if you build something cool, everyone will want it. In reality, they've built something with a high "geek factor", which fails to be a "whole product".
The deficiencies in the product that they've addressed so far in order to *try* to make it into a whole product, are all based on the idea of additional revenue... that they are offering a service, which has value, instead of making up for a deficiency in the product model that makes the product unusable without it.
Then they try to go to a subscription model, in order to turn the pain into a recurring revenue stream, to make their investors happy, instead of trying to make their customers into evangelists.
Here is the proof in the pudding: how many people have purchsed a TiVO due solely to your wife's evangelism of the product? I.e. she did not have an early adopter maniac (e.g. you) propping up her argument to the person.
I'm willing to bet that this number is zero, or that your wife is abnormally tolerant of new things, having been immunized by you.
As far as "they just need to find their market" goes... they've had 5 years to do that, and they haven't done it yet.
The bottom line is that they need to change what they are selling.
I've been in the same boat, working for a company that wasn't willing to change what they were selling, and which then tried to milk a subscription model as a revenue source, and all the while, doing it with an incomplete product. It's hard to watch someone else make the same mistake.
-- Terry
Personally, I don't like cruft, but the way he wants to "correct" some of the things he doesn't like, well... the cure is worse than the disease.
My idea of hell is an editor that auto-saves code that I'm in the process of hacking up in an editor to let me think about the problem over top of code that already works.
My idea of hell is a platform where every document I've ever opened has no way to close it and no way to exit the application that's got it up in a window, because there;s no 'Quit' or 'Exit' option.
My idea of hell is not being able to drag something in a GUI from one folder to another, because they have an obscure "parent of my parent" relationship, which makes me have to cut and paste the document, instead of just dragging it, because I on;'y have one file manager, which is running all the time, instead of a "file picker".
My idea of hell is symbolic links that get changed when I rename a file out from under them because the OS thinks it knows what I want better than I do, so it's impossible to replace a file with another, while keeping, and the old one, unless you copy it, rename the original, rename the copy, and then edit the original (instead of replacing it).
-- Terry
YES YES YES!
Build it, and run it, until we get rid of leap year!
-- Terry
I guess they'll "brilliantly" go bankrupt, then, from selling something that's so much not what people to expect it to be that it have an over 3 month sales cycle (e.g. your wife).
Look; without the umbilical back to them through UUnet dialup, what functionality do you lose?
You're obviously an early adopter, despite needing the purchase approval to buy the thing. Your wife probably "saves" you from a lot of new technology. But as an early adopter, you probably also have an Internet connection and don't need a seperate umbilical.
Your claims are also a little grandiose... in fact, you can't record everything; you are limited in the number of simultaneous channels by the number of tuners you have available.
Rather than positioning the thing as a product they want to sell to consumers, they need to position it as one that consumers want to buy.
Large sales do not come from "push", they come from creating "pull" in the market.
Maybe TiVO should think about hiring Guy Kawasaki as a marketing consultant: his ideas in this area worked for Apple.
-- Terry
What part of "a better VCR" didn't you understand?
Yeah, it's a better VCR. So sell it as "a better VCR", instead of trying to pretend it's the next best thing to multilevel marketing for converting a one time sale into a continuing revnue stream (or, less politely, "boning people for money on a monthly basis").
Lets look at your list:
o Items 2,3,4,5,6, and 10 are "TV Guide features".
o Items 1,7,8,9,11 are "Digital VCR features".
So as far as "infrastructure" goes, you have... "a TV Guide web site". I'm sorry, but it just doesn't cost that much to provide a "TV Guide web site". Television stations would probably give you the information for free, just to get you to watch them, if you would only provide them a method (e.g. XML) and a way to use the same data for display purposes on the web site itself. Worst case, cut a deal with TVGuide.com.
TiVO's mistake is that they are trying to (to put it in IBM-ese or Microsoft-ese) "Establish [grunt!] an ongoing [grunt!] customer [grunt!] relationship [grunt!]" (I seem to have dropped my pen; can you bend over and pick it up so you can sign this service contract so you can actually use the hardware you thought you owned outright? Thanks...).
-- Terry
"Infrastructure" my arse; it's a VCR.
Just because you *can* tie it into a subscription service that forces ads down your throat doesn't mean you *should*.
If they just sell it as "a better VCR", they would be fine.
Yeah, the "TV Guide" feature is nice. But I have lived this long with my analog VCR without that feature, I'm probably going to be able to survive until Thursday.
Most likely, TiVO will die, when DVD-RW replaces VCRs, while TiVO is futzing around trying to generate a revenue stream other than "unit sales".
Remember VOIP? Do you own an IP Telephone? No? But you're a *nerd*! If a *nerd* won't buy one, what chance have you got to sell it to people with lives!?!
Let's try a point of view experiment:
You're a small business; you're in the market for a new PBX, because you've outgrown your old one, or you want a couple of features that your business needs to improve.
Do you buy into IP telephony?
Or would you buy a "digital PBX" instead?
Surprise! They're the same thing, only in the second case, I'm not trying to sell you end-to-end service to endpoints that don't exist yet... I'm just setting you up to sell that later, when they do.
-- Terry
This is exactly right.
By doing this, they are attempting to take the natural market for VCR's as durable goods, and convert them to a subscription-based market, when the people making up the market really don't want to be converted.
The reason this will not fail with the satellite and cable boxes is that, when the digital video recorder is integrated there, the incremental value can be cost-amortized over an existing subscription model: it's an already tolerant market, and the incremental value of the recorder will end up raising overall costs, as it becomes a feature checkbox item between competing service providers.
A similar problem exists for Hotmail: their "captive audience" for their up-sell attempts consists entirely of "the set of people who will not pay money for web email". I expect Hotmail to stay around for the ulterior motives ("Got a Hotmail login? Then you've got a Microsoft Passport!"), but I don't ever expect it to be a money maker instead of a loss-leader.
Maybe an example more apropo this forum would be the Microsoft attempt to convert OS users to a su
scription model (also doomed to failure, unless they can leverage their monopoly to force the change... and it may -- thankfully -- be to late for that).
-- Terry
Why don't they just start selling both medical malpractice insurance, to drive up medical costs, and individual medical insurance, to cover the inflated costs?
At least that's an honest scam...
-- Terry
"...you don't HAVE to answer the phone..."
What if it's the hospital calling to tell you one of your kids was hit by a bus?
You only have the luxury of not answering the phone when it rings if you have no personal life.
-- Terry
So let me make sure I have this clear...
This is to guarantee that the bankruptcy doesn't interfere with them calling to ask me to "please switch your long distance service to our bankrupt company" during dinner, while I'm in the shower, or in the middle of having sex.
With all that going for it, who could possibly criticize the bonus plan...
-- Terry
Because it costs too much to use Perl. Perl has a very high cost of ownership, compared to even C++.
For small projects, and for throw-away code, Perl is the ideal language.
For large projects, and code with a long life expectancy, it is very hard to maintain.
As they pointed out "there's more than one way to do things". For maintenance programming, this means that you have to know every way of doing things, or you aren't going to be able to read all the code.
One of their earlier slides pointed out that they didn't want to have to pay for highly educated people... the specific item was point 12 on slide #20: "Doesn't require a CS degree to use".
While it's possible to hire people so skilled at Perl that they can do the necessary maintenance work for you without a lot of effort, hiring those people costs a lot of money (see slide #18, under the bullet item "Y! is a cheap company").
-- Terry
Whoa!
To hell with folding laptop monitors!
With this, you could make electric silly-putty!
-- Terry
When I was a kid in school, one of the teachers found an old book on fluidic computing in the school library, and built a one bit adder, using stoppered flasks and glass and rubber tubing.
Old Singer sewing machines had fluidic computers that they used for switching systems.
Rocketdyne built a fluidic missile guidance system.
The Russians used fluidic computers back in the late 40's, early 50's.
Actually, if you do a patent search on "Alvin Snaper", you will find a number of fluidic computing patents (and the patent for the IBM Selectric ball).
-- Terry
New Coke.
New Coke was a means of converting the bottling plants over from powdered supplies (sugar) to liquid supplies (high fructose corn syrup).
The way it worked was to make something that tasted sufficiently bad, compared to the original, that when they "switched back" to the old formula (actually, the old formula, minus sugar, plus corn syrup), they were sufficiently close to the old formula that people didn't complain about the switch (they just got fat off the new stuff).
The best way to get something small and distasteful past someone is to try for something very large and distasteful, and when people complain, back off to the small distasteful thing you wanted in the first place.
To get unimpeded weapons inspections, ask for a "regime change" and an OK to invade. To switch over to cheaper, easier indistrial process supplies, like corn syrup instead of sugar, change everything, and then change "almost all the way back".
If you don't think Microsoft knows about this technique, you are fooling yourself. You should be much more worried about the consequences of whatever they pick as their "backed down" position.
-- Terry
> > The state can choose not to forward the monies.
> > The escalation curve is not pretty.
>
> Clearly it's more complex than what you've described.
The escalation curve is not pretty.
-- Terry
This definition applies to all constitutional ammendment attempts, as well.
-- Terry
No. States pay the highway funds. They are not collected directly from individual tax payers. They are not part of the federal tax bill you pay.
Utah had a lively discussion over this when the motorocycle helmet law mandate was introduced ("pass this law or lose your highway funding").
The state pays into, and the state gets paid out of, a federal fund.
The state can choose not to forward the monies.
The escalation curve is not pretty.
-- Terry
No.
It is protected speech. It is perhaps the most important reason for most of the Bill Of Rights.
A society which cannot tolerate dissent is doomed to minority. Insert comparative religion analogy based on degree of permitted religious scholarship here.
-- Terry
The threat to withold highway funds is only persuasive to some states: those states which have more roads, per capita, then their tax base would ordinarily support.
Specifically, highway funds come from a Federal pool to which each state contributes according to their ability, and from which funds are allocated to each state, according to their need.
It's only if your net take is larger than your net input that witholding of federal highway funds is persuasive.
Most unfunded mandates originate in California (the organ donor reduction acts -- also called "motorocycle helmet laws", and similar legislation on drinking age, speed limits, and other unfunded mandates are basically cafeteria plans for mandates that say "you will adopy 3 out of 5 of the following legislation in order to maintain funding")... and California is on the other side of that equation.
In the limit, the reason that the highway system was nationalized in 1956 is that there was a national security argument for support of mobile command posts, in the event of a nuclear war (and later downgraded to "any national emergency", after the widespread protests surrounding the vietnam war).
If that theory still holds, then it's in the federal government's best to continue supplying funds, regardless of what the state does or does not do (or it can see its interstate system go to hell in a handbasket, threatening national security).
-- Terry
It's not so much the registration, which, as you've pointed out, is free.
...over and over and over again.
It's the fact that the cookie expires in 24 hours, and you have to log in over and over and over again, and the login sends the password in cleartext because they don't use SSL, so you have to have a different password for every service that does this to make sure that one is not compromised by the cleartext of another, and then you have to remember the damn things
They want a registration? Fine. Make the fricking cookies last 10 years, and people will quit bitching.
-- Terry
"Yes - as a company employee your position has limited liquidity. Your investment actions should reflect such - and this should be planned for (see earlier point)."
Yes, and insurance should be unnecessary, and Social Security and Medicaid should be unnecessary, because everyone should have planned their lives down to the most insignificant detail, mitigating all risks, by the time they hit the age of 7.
(No, I don't want to buy a bridge, either).
It used to be that the downside of working for a startup was that you took a lower salary, and risked either not making the money back, or you would make it back many times over.
The risk was that the return would be zero, not that it would be negative.
None of the risks that the VC assumes are potentially negative; the worst they get is "zero return". This used to be true for the employees, as well. Now it isn't.
With these new laws "designed to stop CEOs from profitting unfairly", we now have an environment of greatly increased risk for the average worker.
First, we had AMT, that put everyone at risk of a large tax liability, with nothing to pay it. Then we issued a patch for that risk: early exercise, using a company provided loan to pay the basis price of the stock, with an option to surrender, incase the options were under water.
Now such a company loan is illegal, so the risk is back.
The reward has to be proportional to the risk.
What we are doing here is getting rid of the reward, but increasing the risk.
This is not the way to stimulate a down economy; it is a way to ensure that extablished businesses don't get competition from new ventures.
It raises the marginal cost of labor for startups, while leaving it unchanged for large comanies, which don't offer stock options to any but their highest tier of emplyess anyway (e.g. in IBM, you have to be in "band 10" to get an offer of stock options, or you have to be management, above band 10).
AMT is asinine. The rule against the loans, which were a way to work around AMT being asinine, is itself asinine. The two are exactly analogous, because the one was intended to address the problems caused by the other.
-- Terry
"If he had instead sold some of his shares immediately (as most financial advisors would recommend for portfolio diversification reasons) and paid the AMT with the proceeds from this, he would have had no problem."
Good theory, except:
1) You would pay short term capital gains, not AMT, if you sold shares immediately. You only owe AMT on shares you exercise, but *do not sell before the end of the year*.
2) After an IPO, there is a minimum of a six month lockout on sales of stock by insiders, to allow the VC's to get their money out. It's in the contract.
3) The SEC enforces what are called "trading windows"; if the window is not open, you can't sell.
4) The AMT in question only occurs if the exercise price exceeds the strike price; to relate this discussion back to the article (like it should be), avoiding this was just made illegal in July.
We should therefore expect more people to be put in the same position: pay the money out of pocket, if you are already rich; go to jail as a hostage so that your family can be made to pay it; or kill yourself to avoid the burden on your family, since you can't bankrupt out of taxes.
Face it: AMT is a tax on paper profits that may or may not turn into real profits.
Even if we pretend capital gains are the same thing as income (they aren't) so we can tax the heck out of them and "rob from the rich and give to the poor", we should not be taxing people on unrealized capital gains. Gains or losses are not realized until the asset is sold.
-- Terry
"you shouldn't exercise your unqualified options until the company has some degree of stability."
This is a nice argument for a company like Autodesk, which failed to offer early exercise to its employees in order to avoid phantom capital gains between option grant and option exercise (a 1 year vesting cliff is fairly industry standard).
It also works for a company like Autodesk, which is already public, and for which stock options are going to be a small percentage of your compensation.
For a startup, stock options is a large portion of your overall compensation: it's what they have on hand to be able to pay you, and cash is a scarce resource.
So, for example, if I made $180K/year in salary, not considering other income, at a large public company, and then went to work for a startup, I might find my salary dropping to $100-120K/year, with the promise of more money from ISOs.
The "I" in "ISO" stands for "Incentive"... the intent of ISOs is to incentivize good people to work in places they would not normally work, were it not for the added incentive.
If 66% of that incentive goes to tax because I'm eating short term capital gains tax in California on it (38% federal, 28% state), then the value of the options are actually 1/3 of what they appear to be.
The normal way to deal with this is to convert it into a long term capital gains burden, instead, but AMT opens you up to risk on this, because it's due in the tax year in which you exercise.
The best way to deal with this is to avoid the AMT by exercising immediately, and then vesting into ownership. That's normally handled by the (now illegal) company loan for the exercise amount, to be paid back on sale or through surrender of the stock (one of the executives in the article surrended stock that was worth much less than the loan made to purchase it; this was supposedly "cheating the shareholders").
The assumption here is that the stock will always be of a value equal to or greater than the value at the time of exercise.
In other words: the reason your stock options are worth less, and you can use the strategy you are talking about, is because they are a much smaller fraction of your compensation, compared to what they would be in a startup.
-- Terry
"I don't see how it's directly related to the AMT"
That's easy: the tax he owed that he killed himself over was AMT.
AMT comes due at the time of exercise; basically, the government wants its money as if you were realizing a short term capital gain, even if what you are really realizing is a long term capital gain. The gain is not in fact realized at the time of exercise, it's realized at the time of sale. But you are taxed at time of exercise, as if that's when you realized the gain.
The gain in question is the difference between your strike price and the price at the time of exercise, times the number of shares.
As a simple example, say you are granted options with a per share price of $0.50/share. You do not vest immediately, and you wait until you have vested in order to exercise, to turn the options into stock. Now the stock price has been going up; why? Because it's an SEC requirement that the increase in price be amortized in a graduated fashion over the period of time that you hold the stock, uf to the point of the company's IPO: they are not allowed to have the value "come from nowhere", because then they would not be taxed on accumulated value "early enough": the government wants its cut as soon as it's a realized gain.
So say it gets to be $5.00 at the time you vest, and you exercise. The company has still not IPO'ed, yet. But you are looking at a "realized capital gain of $4.50/share". It's not really money, it's fake money. You can't sell the stock, because the company has not IPO'ed; your only possible method of realizing gain from it is to sell the stock back to the company, or to offer it in what's called a "private placement". The board of directors gets first option, and can veto either sale (it's in their interest to veto any sale prior to the IPO, unless it's a sale of founder stock, back to the company, in order to convert preferred stock into common stock).
And if you don't hold the stock for 1 year from the date of exercise anyway, you get to pay short term capital gains tax on it anyway. In California, between the state and Federal, this comes out to around 62% of the value of the gain; if you pay AMT, it's "only" 54% of the gain, and you get some of it back when you actually sell the stock, after holding it for more than a year.
But it gets better: normally, you are in a lock up period following an IPO; that means that you can't sell the stock, even if you own it outright, until at least 6 months from the IPO date, because you are an "insider".
So no matter how you look at it, you are stuck with it for 6 months to more than a year.
The normal "fox" for this is to exercise the options early after the first of the year, and then wait a year and then sell them between the time you exercised, and April 15th, to allow you to pay taxes on the gain. It's about the only way an average person could ever afford to pay taxes on the "gain"... which is still only a paper gain.
So what does "early exercise" get you? It gets you the ability to lock in the strike price at the grant price. What this means is that you don't end up with a capital gains or AMT tax on the difference between the strike and exercise price -- because the difference is $0.00, and no matter what percentage they wanted of it, the government's cut is still $0. You only realize a capital gainst when you sell the stock.
Early exercise also has the effect of starting the 1 year "long term capital gains clock"; since most vesting has a 1 year cliff, and goes month-to-month after that, you're in the clear at the point you can actually do anything with the stock.
At the point you are vested, the company may or may not start charging you interest on the loan they gave you to do the early exercise.
Only now the loans are illegal, so the company didn't grant you a loan.
So now, you get to pay out of your pocket, up front, for the early exercise (assuming you have the money to do that... in which case, why are you working in the first place?), OR you get to get locked up for a year from the point you vest, and the options are basically worth about 38% of what they would have been worth, because you are paying the difference in capital gains or AMT taxes.
Further, if the company is not public, you are screwed: you get to hold the stock until the IPO or sale or other profitable exit for the company, or, you get to eat the loss along with the other investors, if the company goes belly-up. Unless you are sleeping with a board member, then maybe you can sell the stock back to the company, or to one of the major investors/VC's, in a private placement, assuming they want to own more of the company than they already do, and that they are willing to take common stock instead of preferred, in order to get it.
So the most common situation is that you no longer get a company loan for early exercise, and then you exercise the stock, have a capital gains assessed on it as an AMT, or you pay short term capital gains rate on it instead. So you sit on it for a year to make it a long term capital gains tax burden, and meanwhile, the stock tanks. Now it's after the first of the year, so you can't realize the loss in the same year you realized the gain, so you are on the hook for an AMT that is about 6 times the value of the stock, were you to sell it now.
And you can't bankruptcy out of owing taxes (taxes are the one area of finance in the U.S. where debter's prisons still exist), so you basically go to jail over the tax bill, and the IRS goes after your family, with you in jail as a hostage, to pay an AMT on money you never got, except on paper.
Now do you understand?
-- Terry
It's unfortunate that it's no longer legal, due to a bill passed into law last July: no more insider loans.
The reason it's unfotunate is that making unsecured loans, and later forgiving them was one of the ways you could avoid getting taxed twice on the same income. It was also one of the few ways an ordinary human whose last name was not "Heart" or "Rockafeller" or "Hilton" could afford a home in California.
I know people who killed themselves after the market crash in 2000, because their tax bill for their "Alternative minimum tax" exceeded $4M on stock whose value was far, far less than that (one of them was a Netscape employee, who exercised at the market high in February of 2000, and then was screwed, when the stock didn't go back up after falling later that year before April 15th of 2001,
when his tax bill came due.
These days, this is closed by a mechanism called "early exercise", where your company gives you a loan to buy the stock options at the time of grant, and then payment is due at the point you sell the stock, or you can surrender the stock in lieu of payment. This avoids the capital gains tax burden (in the form of state and federal AMT) in the case of a loss, by eliminating the appreciated value between the time of grant and the time of exercise.
Now this is illegal; so if you accept stock options and do an early exercise, and the company goes belly up (like 9 in 10 startups do)... well, the paper turns into a debt instrument, and they come after you for the value at the time of the exercise.
It's really assinine to tax deferred compensation in the form of stock or loans, and it's really assinine to tax-collect people to death over it: but now, this is the only option, for ISO grants to employees.
You may think "Good, we'll stop those Enron bastards!"; but the people you are really screwing over are line employees with ISO grants, who are generally taking a below market wage in exchange for a stake, and startups. The "Enron bastards" will just come up with a different approach to the problem, which is that we have a capital gains tax in the first place.
-- Terry