Patterns of Success - Ed Yourdon

I went to work at Yourdon Inc as a seminar instructor in 1983. My adventures are documented here.
During the 1980's the software development industry was looking for a combination of methodology and tooling to improve the way it built applications. I guess the same is true today.
Back then the radical idea was "structured". Structured Programming, Structured Design, Structured Analysis.
Ed collaborated with other thought leaders like Larry Constantine, Tom DeMarco, Stephen Mellor, Paul Ward, Tim Lister, etc. to create a loosely coupled method ecosystem of books and courses.
He sold the company in 1986 and continued to write books and published American Programmer.








John - Thanks for taking the time for this interview. Before we get into the Patterns of Success core questions, could you tell us what you have been up to these days?

Ed - Currently I am working on a book that I plan to publish this summer. It will be called "CIOs at Work". I am speaking with a number of CIOs (e.g. Microsoft, Google, NYSE). I think the book will be informative for a lot of people in IT because they have limited contact with a CIO to see what goes on in that position.

John - So what are you asking these CIOs?

Ed - I ask them what they think is important, what is coming down the road, what their problems are. Questions like that. They have a lot of common ground but on the other hand the CIO of a software development company deals with some unique problems compared to the CIO of a company that manufactures tangible products.

The other thing that I am doing is acting as an expert witness on lawsuits dealing with failed IT projects and lawsuits involving IP or Trade Secrets.

John - Ha! In my psuedo-random selection of people to interview, I have spoken with Capers Jones who has been an expert witness for failed IT projects and an interview with Bob Zeidman who has been an expert witness for IP litigation.

Ed - Every so often Capers and I have sometimes been on the same side and once or twice on the opposite sides of cases. Being an expert witness is something I never planned on in my career but it is profitable and lets me work a lot from my home office, which is nice.

John - You have done so much in your career, what would you like the focus to be for our discussion of Patterns of Success?

Ed - I have done a lot of work in recent years with software start-up companies. I have been on several  boards of directors or advisory boards and I think that would be a good place to focus.

John - OK. What have you seen these start-ups do to be successful. Any commonalities that surface?

Ed - To ask the question that way almost assumes that the successful companies had some strategic plan from the begining that was well executed. In my opinion, there is a surprising amount of serendipity involved for a company to be in the right place, at the right time, with the right idea, and the right people. So many factors that have to come together for success. When it works you look at the successes like Microsoft or Google and think they were geniuses, but we don't hear much about the companies with a similar idea that did not have one element in place.
I think one of the really big changes in software development has been that successful applications can now be developed very quickly with little effort. I did a lot of work a few years ago talking to the Web2.0 startups. These small companies could often develop and launch their product with very little money. They did not have to go to venture capitalists and turn operational control of the company over. Because of the modern development environments and cloud computing services, these companies did not need a large capital outlay to produce their product.

During the early days of a start-up it really helps to be physically located in an area that has other start-ups. You have immediate access to employees, to a community of entrepreneurs for advice, to sources of support services. Also having a major research university in the area helps. Silicon Valley is the classic example of this type of incubator environment. Another example is the 128 Beltway outside of Boston.

John- What else characterizes a successful start-up?

Ed - Being able to change directions when the first version of the first product is a dud. When I helped guide Requisite Software through its start-up phase, the leaders of the company originally wanted to develop an object modeling tool. But the market was not very excited about that. So they had the ability to change directions and re-purpose the code base that they had been developing to support management of textual requirements. There was a real need for that in the market and the company was able to respond to that need.

John - After the phase in a start-up where the charismatic leadership has been successful and they have taken on some professional management. What happens next?

Ed- Well one thing a startup has to start worrying about is that if they are successful they get on the radar of large competitors. These competitors might decided to squash the start-up or perhaps acquire them. In either case the management should have some strategy on what they should do. As a defense against being squashed a start-up can keep its product feature set ahead of the larger companies. At Requisite we had developed the product using Smalltalk and could come out with a new release every two months. The larger competitors could only release on an annual cycle. That was back in the 1990s and today, with modern languages and development environments almost any company can produce continuous releases.

Another factor in a larger company deciding to squash vs. buy is if the startup has a loyal customer base. However, there is this "Crossing the Chasm" phenomena of the start-up acquiring the early adopter customers segment. The larger companies may want to enter the market only after it has attracted fast followers.

Finally, a start-up could affect the squash vs buy dynamic by effective IP protection. However, this does require substantial investment, possibly giving up equity to a venture capitalist. Even if you have patents the larger competitor may replicate your IP asserting it is not an infringement. To defend the patent may require a multi-million dollar lawsuit. Alternatively you may try to keep your IP a trade secret. Unfortunately, in the software business the main concepts of your product are often visible on the UI, and the competitor can replicate the code fairly easily.

This phase of a start-ups life is probably the most treacherous. To be a long term winner, the start-up needs to figure out how to go from being the first on the block with an interesting idea to being an established player.

John -  Now lets look at some Failures to Llaunch. It seems in all my interviews for each successful pattern there is an opposite failure. Do X = Success. Not Do X = Failure. What have been some of the more dramatic failures in your experience.

Ed - I agree that the failure is almost always the inverse of the successful pattern. I do think that the most common failure for a start-up is a combination of arrogance, or blindness of the founders. They often will not listen to advice or consider alternatives. This is a delicate balance. On the one hand you almost have to be fanatical about your devotion to the big idea that is at the core of your start-up.There will be any number of people, starting with your family... your spouse saying that the idea will never take hold. It is even more humbling to talk with a venture capitalist who has heard it all, seen it all, and shows you the door. So to be successful you have to be a dedicated fanatic. So one type of failure would be someone who listened to bad advice and gave up on a great idea and the other type of failure is someone who never listened to advice and tried to make a bad idea successful. Since ultimately there are many more bad ideas then good ideas, the most common failure is the second type.

There is another thing I want to emphasize. There is an enormous world between success and failure and that often is the saddest, the world of the mediocre. In the software business an example of this is shareware. We see two clever guys in a garage develop what they think is a great product, but for whatever reason it languishes and only sells a few copies a month. This could change with the advent of new marketplaces like the Apple App Store. I heard of one guy who was selling a couple copies a day of his product. Then he got into the App Store and in the first day sold 10K copies.
But I think that there are a lot of companies, where the founders wanted to be like a Google or a Microsoft and they are just barely staying alive after several years. I think that that is worse then trying hard for a year or two, running out of money, and closing down that business to try something new.

John - OK. The final topic. What do you think the NEXT BIG THING will be?

Ed - I find this type of question very humbling because so many of the things we talked about today as successes I never saw coming. I started using Google in 1998 but never thought they would dominate the market.
That being said, I think what will be a particularly transforming technology in three years will be mobile computing. What form that will take, what products will be leaders, I do not know. I think we are just beginning the journey in our use of this technology. Based on what I am seeing in conferences like PopTech I think mobile technology will have an enormous impact on emerging countries in places like Africa. There are some examples of some amazing things being done with limited technology. Things that we might shrug and ignore. If Moore's law continues for another 3-4 years then trans formative technology will be affordable to a much larger population of people in these countries.  We will see uses of mobile applications in economically depressed areas that will vastly improve the quality of life for these people. The political landscape will change radically with these types of applications. Imagine what China will be like if all 1.3 Billion of its citizens had a smartphone in their pocket and could collaborate on social issues.

John - Look what happened last year in Iran.

Ed - Or most recently in Tunisia and Egypt.

John - It seems that the combination of technologies (battery life, screen size, cpu, network bandwith, etc) are all providing a  more sophisticated platform for a 24x7 constant digital companion.

Ed - Perhaps even more important to my point, is that the more basic phone with internet access is getting cheaper and cheaper so the poorer demographic can get access.

John - If all the products get cheaper and cheaper how do the companies make money?

Ed - The business model will have to shift towards fractions of a dollar from billions of people. Often, the new innovation will come from a college kid with a passion to transform the world. It is not even on the Microsoft sized companies radar.

John - That reminds me of when you were writing the American Programmer back in the 1990's. Back then your audience worked for a large corporation like an IBM or Microsoft. Today, more and more, the developer is an individual... forget the college student, he/she is a high school student who wants to get the next iPhone or Android app into the market. So the next gen start-up for the next gen technology is a high school kid working to crank out quick to develop, cheap to sell, apps that will impact a demographic able to afford a cheaper platform.

Ed - Exactly. Look for apps used in Africa, developed by Africans, using commodity technologies.

John - I appreciate you sharing your insights with us in this Patterns of Success series.

Patterns of Success - Jim Isaak

Jim Isaak was the 2010 president of the IEEE Computer Society. I am the chair of our Eastern North Carolina Section  Computer Society. One day last year I was invited to participate in a virtual IEEE meeting held in Second Life and met Jim then. I had just started using Google Wave and Jim mentioned that he had been using it as well so I added him to my Wave contacts and participated in a few waves where he and I plus others participated.
Jim is currently involved in a number of ongoing activities with IEEE and publishes a blog of his own.




John - Jim, thanks for sharing your views in my Patterns of Success series. Before we get into the core questions tell me a bit more of what you will be doing in IEEE.

Jim - Well as past president, I still have a lot of responsibilities to support the office of the president. I am also working with the IEEE sales and marketing group to help plan out the future of the organization. We are working through some of the challenges of being a major publisher moving into an age of digital content. I will also likely get into the policy side of IEEE USA. Engineers... no. Let me rephrase that... Technologists are going to face challenges, particularly in the USA, if we don't build up the reputation of the profession to attract more participants.

John - Why shift the label from Engineer to Technologist?

Jim - Because many people work in the field without a degree in engineering from a university. And what we are seeing in the US, Europe, and even Japan is that the population and competitive skills of Technologists is dropping, while it is increasing in China and India.

John - Is this just a $/hr labor rate issue?

Jim - Its a public perception issue. And when I say that, I mean that the culture in China and India highly respects someone who goes into engineering. That is not the case in the United States. In the US the profession is not well understood or valued. The main concern I have is innovation. The ideas that get transformed into new businesses need the discipline of an engineering approach. I was reading an article in Computer Magazine called Computing a Better World where the author argued that things like the microprocessor, world wide web, mobile phone, and other technologies have transformed our world in ways the politicians could not imagine and the impact of these technologists on our life has been far greater then that of politicians or other professions. So what I am going to be doing over the next couple of years is helping to get that information out via the IEEE and help change the public perception of our profession. I am working with my local Computer Society Chapter to reach out to my community, and I am even teaching a class at our local community college on dealing with emerging technologies. No that is not the right word. I think we are in denial about some changes occurring around us. For example, China has become a technological steam roller. They have a huge population, they are becoming well educated, and have a competitive spirit to win in the global market. Over the next twenty years, I think the rest of the world will have to come to terms with that reality and figure out how to survive. I somewhat tongue-in-cheek say to people that they need to learn to speak Mandarin so that they can talk with management in the future.

John - I think we have found the topic area for our interview around Patterns of Success. What successful steps have been taken and could be taken to improve the population of technologists for a future world.

Jim - That's a great focus area.

John - OK. So what have you seen companies, universities, the IEEE do to  improve the profession of technologists?

Jim - The examples I have are almost always double bladed swords. I mean that there are winners and losers in each example area. There are two major root causes of both successes and failures. The first is knowing what you have, and the second is figuring out how to monetize it and turn it into a business. For example, I worked for Intel back in the early years and got a chance to speak with Bob Noyce about the computer business. Intel was making more computer chips then just about anyone in the world. I told Bob that if Intel wanted to be a computer company we needed to learn how to develop distributed software. At that time the focus of Intel was on memory. Bob said Intel is a memory company and we manufacture computer chips to drive the memory sales. So Intel missed out on the Operating System market. And if IBM had chosen Motorola over Intel for the PC (as they should have) then Intel would not even be in the CPU market.
That is another example of not know what you have. If IBM had chosen the 68000 chip instead of the 8080 and had maintained control of the operating system instead of giving that away to Microsoft, it would be a much different market today.
Another example is when I worked at Digital Equipment. They actually developed one of the first practical search engines, Alta Vista. The motivation to develop it was to demonstrate the power of the 64bit Alpha processor, which was a great product based on its technology, but unfortunately the demand for extended memory space was not in the market. But because of the 64bit address space, Alta Vista could do what no other search engine at the time could... it could index the entire world wide web. Frankly, Digital should have been the next Google. They had the technology but did not understand what they had and thought the mini computer business was the future.

John - At a more macro level, do you see overall patterns in how communities of technologists become successful? For example, there is the Silicon Valley phenomena.

Jim - Yes. The Silicon Valley startups introduced a new breed of entrepreneur. These individuals would come up with an idea for a technology based business and pursue it with a passion using VC funding. Often they would fail. What was revolutionary was that they immediately had another great idea and would pursue that one as well. I knew of entrepreneurs who would start and fail several times in just a few years. It drove the money men, the VCs crazy. The financial system was just not ready to absorb that much chaos.
Another phenomena occurred when Sputnik launched and we entered the space race with the Soviet Union. Our American leaders  motivated a generation of youth to pursue science and engineering as a career.

It was cool for someone to pursue science/math and get an engineering degree and go work at NASA.
Finally, I think that each county has its own technical culture. A different way of interacting, of pursuing a problem. For example, Paul MacCready built the Gossamer Condor and won the Kremer Prize for the first human powered flight. The design approach used by the Americans broke many traditional design philosophies. The British persisted in building an airframe from balsa wood even though the strength/weight  was not good enough. The Germans looked at the problem and felt it was impossible so did not pursue.
Americans tend to question authority, break rules, and while failing often, sometimes succeed where others don't try.
<Editor> - After the interview, in the State of the Union speech, President Obama used the phrase "Sputnik Moment" to explain investments in technologies.

John - So on the topic of Failures to Launch... have you seen specific practices or policies that have not helped improve our technologist profession?

Jim - I think Americans have a blind spot when it comes to technology. For example, there is still a debate in our country over evolution, with a minority of our population actually believing in the theory.

It is hard to imagine a scientifically driven culture where evolution is not an accepted fact. Since the Sputnik era our government has had a serious reduction in investment in science/math education. There is a public perception that professional athletes make more money then technologists.  But as Dean Kamen has pointed out, there are more millionaires in Microsoft then in the NFL/NBA/NHL combined. It is ironic that while technologists tend to make more money then some more popular professions, studies indicate that the money is not a key motivator for technologists. They pursue their profession to solve interesting problems. Most corporations do not give employees the opportunity to pursue these kinds of problems. One exception, is Google with its 20 Percent Program. They allow employees to work on whatever idea interests them up to 20 percent of the time. Many of their new innovations have come out of that program.

John - What do you think the NEXT BIG THING will be in three years?

Jim - I hate looking so short out. If it is not twenty years out then it is not worth looking.

John - OK. Give me something that is three years and then one that is twenty.

Jim - I think that the integration of GPS into mobile devices will have a profound impact on how we do things. We are starting to see that today in smartphones but we have not realized all the capabilities of the technology. Information based on your current location, the geology, the traffic, the weather, the history, all that is know about where you are. This will ultimately lead to augmented reality in twenty years. There was a great article in IEEE Spectrum called "Synthetic Serendipity" which is a story about an environment where people see the world always with an augmented virtual reality. You are interacting with people that are there and some who appear to be there but are not.
Another technology that is evolving is the whole eBook technology. The technology is neat but it is being used  as a straight substitute for ink on paper books. The business models are based on selling a book. My daughter got a Kindle. She wanted a physical keyboard because as an author she researches books and wants to take notes and enter bookmarks. But the Kindle does not have numbers on the keyboard so it is difficult to reference a bookmark with numbers.

John - I had read about another problem with the Kindle for people citing source materials in a reference paper. The common standard for a citation is to indicate the page number. But if you are reading on the Kindle it does not give a page number, only a location range.
This has been something that has fascinated me. I have talked with several people about what will be the book of the future. Information can be disseminated by paper books, e-book analogs, blogs, wikis,or tweets. What is the characteristic that makes a book a book? I often think it is the persistence of the authors intent. In a future book some facts may dynamically update (e.g. the Solar system losing Pluto as a ninth planet) but there will be a general longevity to the unit of knowledge packaged in that "book". However, the book might be a Physics text like the Feynman Lectures that I had in college but they would be presented on an iPad with the lecture on Newton's equation of motion including a dynamic widget that shows a pendulum swinging as the equations for the kinetic energy and potential energy change over time.

Jim - I think that the key is that we want to have a body of knowledge from an authoritative, trusted source that we can call a book no matter how it is physically packaged. The reason why the internet in general with Facebook or Twitter or Blogs will not replace the book is that we are not sure that we can trust the content.

John - And this is something that you are struggling with for the IEEE as it maintains an  authoritative body of knowledge and moves into the mobile age with digital content. It does tie back to our earlier conversation of how the technologist profession will become more capable. These technologies may allow an order of magnitude improved educational experience with collaborative, dynamic, interactive eBooks.

Jim - A lot of the pieces are in place for the IEEE to support this change. Tony Durniak, executive editor of IEEE publications hosted a workshop six months ago called the Future of Information with participants like Vint Cerf.

John - Did you have the conference up in Second Life?

Jim - No. We still thought that a face-to-face meeting was more productive. Second Life got a lot better when they added voice to the Avatars but in a real life meeting you get facial expressions and body language that conveys a lot more then you get in a virtual world.

John - If in the IEEE groups of professionals could come together virtually and collaborate on problems and most of these "meetings" might end with the just one event. But sometimes the people would recognize that the content captured during the meeting was important and needed to persist. Then someone could push a button and publish a bookish like thing that would persist and be refined over time by this collaborative group.

Jim - Oddly enough that was the advantage that Google Wave offered. I think that users of Wave struggled to figure out how to get real value from it. Perhaps Google should have just rolled Wave into Gmail as an optional extension.

John - Jim, thanks a lot for sharing your insights with us.

Patterns of Success - Bob Zeidman

I was introduced to Bob Zeidman by Capers Jones. Capers has been working on a scoring method for software. On that scale the most damaging practices have to do with the litigation over patent violation and IP theft. Turns out that Bob has a company called Software Analysis and Forensics Engineering that helps clients with these problems. Bob has written several books including the soon-to-be-released The Software IP Detective's Handbook.

John - Bob, thanks for joining me on the Patterns of Success series of interviews. Before we get into the core questions tell me about your new book coming out.

Bob - The book covers a lot of areas. Hopefully that will mean a lot of people will like the book, the union of all the possible readers instead of the intersection. There is stuff in the book for software managers, business people, and entrepreneurs, teaching them what is Intellectual Property and what kinds of Intellectual Property can protect my software and my business.  There is stuff in the book for attorneys who want to understand in very broad terms what the issues are in protecting software intellectual property in particular. I sometimes deal with attorneys who don't have much IP experience and I sometimes deal with IP attorneys who don't have much software experience. The book is also for computer scientists and mathematicians. Some of the sections are highly mathematical showing algorithms for measuring software IP value or for comparing two sets of software for IP similarity.

John - When I worked at IBM as part of Global Services, I would sometimes run into a problem with my colleagues in IBM Software or IBM Research over IP protection. If we asked them to participate in a customer meeting, they could brief the customer on a topic but had to leave the room if a brainstorming session of new ideas was going to take place. This rule was to avoid any contamination of their current or future development work.

Bob - I think that is a smart strategy. I have been a consultant for almost 25 years and at a bunch of companies I was treated like an employee. This was great because I had access to relevant information and I had a camaraderie with people. Now I had signed an NDA but there were times when I would be in a meeting where all sorts of company confidential information was being discussed and sometimes they would get uncomfortable and ask me to leave. But they had not thought through a consistent policy to deal with the situation.

John - So let’s talk about these Patterns of Success. Over the years as you have been giving advice to clients, what have they done in this area to be successful?

Bob - One piece of advice I give companies is to have written procedures for protecting your IP. Trade secrets are another big area that needs written procedures. Trade secrets are not very well defined in a company. In some cases having an ill-defined Trade secret allows one company to take another company to court to resolve the issue. But if the defendant can show that the plaintiff did not have well documented procedures for protecting the trade secret then the suit would be dismissed.

John - So what you are recommending is that companies identify what their trade secrets are and then put in place procedures to protect them.

Bob - Well you don't have to identify the trade secrets up front. That is hard to do. But you need to put in place some general procedures. For example, everyone who comes to work for you signs a non-disclosure agreement.  Everything that you think is important to your business you mark as confidential. There is a written policy where employees are not allowed to email source code outside the company or put it on a USB drive. This does not prevent the improper behavior but it does prove in court that you were trying to prevent the theft of trade secrets.

John - If I am a software developer and am going to a conference I need to be careful about what I disclose but at what point is the general description of a concept or a demo of a prototype become an issue for protection of trade secrets?

Bob - Yes. Whatever you disclose in public cannot later be claimed as a trade secret. So if you describe the architecture then that is not a trade secret but the source code would be if it was protected and not disclosed. The problem is that the more you disclose about something the more difficult it is to protect the rest of your product. Let’s say an employee leaves your company and goes to a competitor and creates the same product. The claim could be that the employee stole a trade secret. But as soon as it is revealed that you talked about the product in a public forum, you have to fight very hard to prove what you did not say at the forum or that others could not have guessed the details of the product from what was revealed.

John - What happens if prior to going to the conference I had filed for a patent?

Bob - Now patents are different. 

John - Don't they cover the whole trade secret area?

Bob - No. Actually they are complimentary. A patent is a protection from the government that says if you disclose your invention and make it public, so that others might improve on it or work around it, the government will give you the rights to all income based on the patent for a limited period of time. A trade secret is something you do not want to be made public and goes on forever as long as you can keep it secret.

My company, SAFE, has some tools which are used in court and lawyers always want to prove that the tool really works. So we have to disclose the inner working of our tool. That is what we have patents on. But we have some tools used within our company that are never shown in court. These tools we keep as trade secrets.

John - That got me thinking about the tools you use in court. Is the way it works is a comparison of two bodies of source code looking for signatures/patterns that prove one source is a copy of the second?

Bob - Yes. And ultimately it means you must show both sets of source code side by side and show how you know one is a copy of another. Our tool pinpoints where those locations are.

John - Any other patterns of success?

Bob - Start ups and small companies do not focus enough on patents. I think that is a mistake.

John - But filing for a patent is a fairly expensive process. One that smaller companies often cannot afford.

Bob - There are ways to cut down on the cost. But my experience as a software entrepreneur is that the investment in the patent pays off. With a patent pending, you are more likely to get investment in your company. It also means that if your business fails for any reason the patent might be something you can sell.

John - It is also a barrier to entry for potential competition.

Bob - Yes. I have had big companies tell me that they intended to duplicate my protected IP because they thought the patent was invalid. In reality they thought that I did not have enough money to pay the lawyers’ fees to defend my patent. However, there are people out there who will provide the funding to defend a patent in court.

John - As a small business you really have to be clever in figuring out the smallest number of patents that provide the maximum benefit.

Bob - Here is a scoop. An exclusive for your blog. I just started up a new company called The Zip Fund to fund patents for entrepreneur and start-ups. My company will help pay for the patent and help them go through the filing process.

John - For a share of the future value of the patent?

Bob - The reason I have not made a big public announcement is that I have not worked out the best business model to realize revenue. It would be a long term investment for me because even valuable patents often do not become valuable for years.

John - Now, in the area of Failures to Launch. Where have you seen companies have catastrophes around IP?

Bob - One of the classic problems is when an employee leaves one company to join another or start a new company and takes the software they were working on.

John - Is this done for financial gain, or is the developer often just taking what they worked on so that they could repeat a clever design pattern?

Bob - I have seen both. In the extremes of the Open Source movement I see people who feel that software is the same as thoughts and that you can't control my thoughts so you should not control my code. But that is pretty rare. More often, programmers see a financial opportunity and don't think they will be caught. All these scenarios are copyright infringement. On the flip side I have seen big companies bully little companies, especially when an employee from the big company goes to the smaller company.

One recent case was a couple of people who went into a big company with a PowerPoint presentation to sell them some software. They also showed a demo of the software. A few years later they sued the big company for theft of trade secrets. It boiled down to six slides in that PowerPoint deck. They ended up settling out of court because the judge decided to allow the case to go to trial on merit. I worked for the big company at the time. The problem was that a lot of judges are not well educated about software IP. The plaintiffs found an expert willing to testify that the PowerPoint slides were the key to everything. The judges are often reluctant to make an early decision and prefer to bring it to trial and let the experts battle it out.

John - Based on your knowledge of this whole IP litigation area, what have been some of the biggest cases?

Bob - One of the largest settlements was a case that I worked on that involved Texas Instruments. They successfully pursued patent infringement cases against Samsung and Hyundai. Each case was settled for approximately one billion dollars.

John - What had Samsung and Hyundai done?

Bob - They had used TIs technology for their products either not knowing of the patent or thinking that they were not infringing. TI has some very basic patents on putting semiconductor wafers through a process to make chips.

John - So TI must have a substantial chunk of their revenue coming in through patent royalties,

Bob - I have heard that some years TI makes more money from royalties than from sales.

John - Any other major litigation's involving IP?

Bob - One of the major cases involved Atari Games vs. Nintendo, where Atari wanted to make game cartridges for the Nintendo console. They reversed engineered the cartridge functionality and the judge ruled that reverse engineering from public documents was perfectly legal. Except Atari made two mistakes. They got something from the copyright office under false pretenses. This might not have been a crime but the judge was not happy about it. But worse, when they reverse engineered the Nintendo cartridge so that they could make it work with the console, they copied some of the code. If they had set up a clean room development lab where the communications in and out were controlled, then they could have avoided the copyright problem.

John - Shifting gears. What is the NEXT BIG THING about three years out?

Bob - Well I have a lot of stuff my company is working on...but I can't tell you.

John - Ha Ha. You would lose your trade secrets via this interview.

Bob - Right. But some of the stuff we have announced that will be important is in the area of Social Gaming. All of that code is accessible by the users of the game. There is a big frenzy to create new games and we have seen some similarities in code from different social games. We did a press release on the similarity of some Zynga code and some CrowdStar code. We think in the coming years this will a big problem that needs to be protected on social networks.

John - Why is the source available to the users?

Bob - These games are done in Flash which is very easy to decompile. Because they want to run on multiple platforms, a company wants to use an interpretive language like Flash.

John - And another problem might be that these social games might have many people contributing to the problem. I might want a super tractor in Farmville so I grab an object from another game and enhance it to run in Farmville. And hundreds of my fellow gamers do similar things. Lots of people to prosecute.

Bob - That brings up another good prediction. Right now we are focusing on the game companies, but in a virtual world like Second Life the virtual economy is tied back to real money. So if someone steals something is Second Life and sells it for Lindens, they can convert those Lindens for Dollars. Someday there might be a service in Second Life, a detective agency, to track down these thefts and return the virtual property. Instead of using DNA and fingerprints we would use software tools.

John - Thanks for your contribution to Patterns of Success.