Richard Keith Latman - The Blog

Well, Isn't it time for the whole story?

For the past five or so years I have fielded on average about 100 emails a week on this site. Everything from concerns about me, comments on what an idiot I am and marriage proposals have been filed, responded to and laughed with. The past 12 years there probably hasn't been a day where I didn't think, reminisce or wince at the legacy I created with Microworkz.

Many of you have asked for the whole story, all the details, the total thought process and perhaps the real inside accounting of how everything went down. Two years ago, with the help of some amazing writers and researchers, we begin to document, craft and develop the facts into a single manuscript. That book, now titled "The Good Fail", is now in pre-production and will be in online and offline bookstores, Kindles, iPad's and other devices in April 2012.

The publication of this book, part life story and part entrepeneurs reference guide, is the end of the Microworkz story for me. On April 3rd, when the book is officially released, this site and all the content on this site will cease to exist. Microworkz, both as a company and an idea, will have reached its logical and permanent end.

This is the last post I will write here and it's not without a tear in my eye. Microworkz was a dream that I couldn't make a reality. Microworkz was a nightmare that helped shape who I am today. Microworkz was a movement that helped change the landscape of computing. But, most of all, Microworkz was, I hope, the foundation of a story that will help entrepeneurs and future business leaders recognize and avoid failure.

Goodbye Microworkz.


Richard Keith Latman
Twitter: @icarmagic

The Good Fail: Entrepreneurial Lessons from the Rise and Fall of Microworkz

Isnt It Time to Change the Patent System?

It is easy to complain. Much harder to come up with solutions. Many won’t like what I propose, but who wants to make lawyers happy anyway ?

The solution ?

1. End all software patents. Don’t make them shorter, eliminate them.

I have no problem with software being copyrightable just as it always has been. That is more than enough protection and keeps enough lawyers un-gainfully employed.

2. End all process patents. They serve absolutely no purpose. None.

If you create a new process, use it. The benefit is from creating the idea and using it in a business to your advantage. Afraid that some big company might steal the idea ? That is life. When you run with the elephants there are the quick and the dead. That is a challenge every small company faces. A process patent is not going to make your business successful. The successful execution of business processes will. If we had process patents or the culture of software litigation in the 1980′s as we have today current technology would consist of running terminals on DEC and Wang Computers at the local library for $10 per hour and there probably would not be a world-wide web.

No doubt that by the mid 90′s someone would have sued Marc Andreessen and his friends at the University of Illinois long before Mosaic could ever turn into Netscape. My guess is that the patent attorneys at British Telecom would have been all over them contending that hyperlinking was protected, but for $10 per download they could use them in their new browser…

Some of the benefits of eliminating process and software ?

a. Reduce the court room costs associated with process and software patent litigation. That is taxpayer money saved.

b. Improve the efficiency of the Patent Office.

Process patents are a magnet for everyone who has ever dreamed of being awarded a patent. The flood of applications not only slows the speed at which inventions that deserve patents are awarded, it reduces the quality of investigation into applications. That is a lose lose situation. Patents that shouldn’t be awarded are awarded, which in turn creates more work as those patents are challenged.

c. End the ridiculousness of the current Patent Arms Race.

Companies are buying patent collections as a way to defer litigation or to support their litigation efforts rather than to benefit from the intellectual property purchased. Billions of dollars are being spent on this arms race. Billions of dollars that without question impact consumer prices from these companies.

d. Patent costs cost jobs.

Uncertainty is never good. Certainty of risk is even worse. What i mean by that is that almost every major corporation is this country has ongoing patent litigation and many, many small companies (my companies included) have ongoing patent litigation as well.

How does this impact jobs and job creation ? The thing about patent litigation is that it is unlimited and unquantifiable. There is absolutely no way to look at your business and say “this is where and what my risk is”. Because of software and process patents any company could be sued for almost anything. It is impossible to know what the next patent to be issued will be and whether or not your company will be at complete risk. It is impossible to go through the entire catalog of patents issued over the last 10, 15, 20 years and determine which will be used to initiate a suit against your company.

It’s impossible to quantify just how much and how often you will be sued and what the costs associated with those lawsuit(s) will be.

The risks are unlimited.

Unlimited risk in any environment will force a company to hold back resources in an attempt to protect itself. In the case of several of my companies, it means that we have held off hiring people so that we have cash in the back to deal with current and future patent litigation.

It’s a joke, but that is the reality of doing business in this country.

e. Look overseas

Pick any country that is currently doing well, China is a perfect example. In China the Intellectual Property Laws are so weak that someone thought it was a good idea to completely replicate Apple retail stores. Compare their economy to ours. As much as I hate to compare other economies to ours, it’s worth taking a look .

It is time to change. This country needs the change.

Eliminating software and process patents won’t end patent litigation, but it certainly will be a good first step. And while it may only be a step, it will be a positive step towards improving the economy and adding jobs.

Unfortunately, the patent reform bill that President Obama just encouraged Congress to pass, does nothing to address the problem of patent trolls. (The full text of the bill, H.R. 1249, can be read here: http://www.govtrack.us/congress/billtext.xpd?bill=h112-1249).

This bill passed the House 304-117 and it’s companion bill (S.23:http://www.govtrack.us/congress/bill.xpd?bill=s112-23 ) passed the senate 95-5, vitally assuring that the two bills will be reconciled and signed into law in early September, once congress returns from recess. This is “reform” in name only, as the bills will do nothing to discourage the job-killing litigation tactics of the patent trolls

If you care about the issue of patent trolls, you have one month to encourage your Congressperson to amend S.23 and/or H.R. 1249 to include limiting damages from “non-practicing entities” (aka, trolls).

What's Wrong with VINSolutions & AutoTrader Merger? Plenty

There is a funny thing about technology and the car business: Nobody seems to care and everybody cares.

It's an interesting statement I know, and at first read probably ridiculous. Let me do my best to tell you what I mean (stay with me here, I am not the best at this stuff). So the upcoming acquisition of VINSolutions (the "Be one with VIN" folks haha) by AutoTrader (AutoTrader.com I think, although I'm not sure how they have this parceled out) is a glaring example that nobody cares about technology except for the revenue it can bring it's owners. Here's how it went:

So in the last 12 months AutoTrader buys Kelly Blue Book (KBB.com), vAuto and it's amazing CEO Dale Pollack and now VINSolutions (Be one haha, sorry I laugh everytime I write it). AutoTrader is an advertising company that sells space to on AutoTrader.com to car dealers and consumers who want to sell cars. It is a VERY profitable business and has been growing for a long time by doing a great sales job and by squeezing every last dime out of dealers (what recession? let's raise prices again). So I think sometime in the last few years some aggressive Investment bank with a good deal of TARP money went to Chip Perry (CEO of AutoTrader) and said something like "Chip you can't really make serious cash unless you go public. Let's do an IPO". Then they probably went to dinner at like Morton's Steakhouse, saw a play (probably "Spiderman" on Broadway) and then had a really expensive glass of really old liquor at some really swanky NY club (I was gonna write "bar" but I really don't know the difference between a "bar" and a "club"). At the end of the night the banker told AutoTrader.com that they had a real problem: They were an old school advertising play and not a technology company. This wouldn't matter to you or I but in the IPO game this is a big yawn and will reduce the money everyone could make. So, much like many have told many before (don't ask who or when), the banker told Chip to go buy some really profitable tech companies so they could pitch this deal to wall street as the "tech superstar for auto dealers". Plan is set, they jump into their limo's with AutoTrader's super bowl/NBA Final/Stanley Cup/World Cup/NASCAR commercials playing on the flat screen and drive off into the night. The next morning I bet the fun began...

Kelly Blue Book is a profit machine and the first purchase. They provide used car appraisals both on and offline to dealers. Seems like a perfect fit for AutoTrader because their core business is used cars and with both together they will be able to cross sell.

Aquisition number 2 is vAuto and a GEM of a company. With this they get the best tech CEO in the space and the core business is again valuing pre-owned cars. Perfect play since again they sell to the same buyer in the dealership: Used car manager

OK here's where it gets funny: Now they buy a rocketship of sales in VINSolutions (Be one with VIN haha). VIN is a "CRM" company with a strong used car pricing tool that used to be their primary business (hence the VIN or Vehicle Identification Number in VINSolutions). About 3 or 4 years ago their CEO, Mike Dullea was a consultant in Kansas City who resold iMagicLab's CRM. Long story short we cut him off and he then partnered with one of our customers and somehow managed to create a CRM under the VINSolutions (Be one with VIN, it kills me) name. The original version looked an awful lot like ours and even used our icons but I digress.

I am not going to slam VINSolutions (Luke, I'm your father) here, after all a $90 plus million dollar transaction is impressive, but what they built was a tremendous demo and a great sales pitch. Like all the car dealer software that seems to do really well in our space, it's flash and dinners and no substance that sells to dealers (see my other post about the same topic here). So, AutoTrader sees the big sales numbers, they see the big ramp of people and dealers and they say "I'm in". Much like other great merger failures in our space like the Dealerskins buy, ADP/BZResults combo or the repeatedly acquired DealerUPs, ZERO due diligence was performed except on the accounting system. The theory goes I guess, if folks are paying they must be happy.

Now, many of you reading are probably saying "how does Latman know they did no due diligence?" and the answer is: Trust me I know. After 9 years in this space I have great friends throughout the AutoTrader and VIN org's. VIN has a fine young CTO in Matt Watson, but the technology is immature and tries to do everything for everybody. When the intial sale wears off there is nothing to be happy about and dealers are stuck to live with their bad decision until someone brave makes a change. Don't believe me? Look at the community boards in our space and see for yourself (look at VINSolutions own internal support social network and you can really see the Titanic being replayed).

OK, so have the picture so far? VIN has really NOTHING to do with pre-owned cars anymore, sells to a completely different buyer (CRM's need buy-in from the WHOLE dealership) and in order to be successful need a huge training team with continual visits to keep people engaged. None of these things are in AutoTrader's core competency and VINSolutions (Are you ONE?) is doing the whole monkey-on-a-cheese-wheel-until-we-are-sold dance. Enter AutoTrader and a big line of credit probably provided by the same bankers that paid for the amazing hash browns at Morton's (no, really, they are to die for, I had an AutoTrader rep buy me dinner one time back at North Bay) and poof, instant technology company.

AutoTrader is now just like Dominion, wait, OMG, that's right, Dominion WAS owned by AutoTrader's publishing arm. Haha, so now both sides of AutoTrader have tried this failed method of buy and drain (for those of you new to the car biz, Dominion owns such storied but ruined companies like AutoBase, AVV and Dealerskins). Unbelievable that they have watched it fail under a sister company and still they do it again.

Do they think potential investors of their IPO are stupid?

Yes, yes, I believe they do. :)

Keith

P.S. If I was a current VINSolutions (new slogan: watch us run away fast to spend our money) customer I would look to Autobase as an example of what's about to happen. AutoBase was THE CRM in our space until it was gutted by the new owners. I don't care what they say, nobody plays the game the same once they get rich (Hey LeBron how's that championship thing going?)