Ed asked me if I had seen the April 30, 2009 Wall Street Journal article In Major Shift, Apple Builds Its Own Team to Design Chips.  I had not.  Ed summarized it for me and later sent me a copy.  He found the article interesting, “not only because Apple is fascinating to watch – but also because when you read the article, most of the intelligence gathered is from job postings on their web site (and the skills/type of technologists they are seeking) and from the human capital they are bringing in house.”  Ed told me that for years now, many savvy business strategists watched their competitors’ job postings to glean reliable competitive intelligence.  This WSJ article was nice primer on how to do it and on how much detail it can provide. 

The title of the article trumpets its conclusion that Apple is implementing a new strategy to add in-house capability to design computer chips for its various consumer products.  For many of us regularly engaged in competitive analysis the message is much broader: You may learn a great deal of “secret” competitive information by monitoring the public job postings of competitors.  The methods used by the WSJ reporters and the intelligence that these techniques yielded are instructive:

• Keeping track of high-level new hire announcements by your competitors’ may reveal important data about their product plans: Apple recently hired Bob Drebin and Raja Koduri, both ex-CTOs of the graphics product group of chip-maker AMD.
• Published job descriptions in job postings may contain gems. Apple’s postings reveal a broad search for people with experience relevant to “testing the functional correctness of Apple developed silicon.” Other Apple job descriptions “involve handwriting recognition technology … [and] managing displays.”
• Researching a competitor’s recent job postings may also connect to their publically announced acquisitions. Apple earlier had purchased chip-maker P.A. Semi. In discussing that acquisition, Steve Jobs had remarked that “You can’t just go out and buy the chips off the shelf” to run increasingly sophisticated software on iPhones and iPods.
• Industry insiders expect that P.A. Semi engineers could “help create ARM-based chips that could improve the performance and battery life of future iPhones” and these are well-known goals for those products.
• Competitor participation in job fairs can provide more clues. Apple recruited “soon-to-be-unemployed engineers at memory chip company Spansion, Inc.,” which was headed for bankruptcy.
• Targeted networking on Linkedin may produce valuable competitive data. Linkedin contains “more than 100 people listing current Apple job titles and past expertise in chips, including veterans of Intel Corp., Samsung and Qualcomm, Inc.”

Thinking about the online search techniques that the WSJ writers used led me to wonder about using other searchable social media such as Facebook, Twitter and the new Google Profile for competitive insights.  Perhaps searching those sites with key words that relate to competitors’ hiring just might turn up idle chatter containing useful increments of additional “secret” information.  So I searched Twitter with the keywords Apple chip design to give it a try.  The shear number of results surprised me, but the timing of the earliest ones was an even more unexpected discovery.

There were quite a number of Tweets referring to What’s Apple Building in There? by John Paczkowski.   On April 27, a few days before the WSJ revelations, Paczkowski posted his article connecting Apple’s P.A. Semi acquisition to the Bob Drebin hire.  I raise this not because the WSJ may have drawn from the Paczkowski article without attribution; that may or may not be so.  The larger point is that keeping an eye on blogs about an industry, a specific competitor (such as Apple) or selected competitive trends trends (such as chip design) might also yield valuable inside information – even if the WSJ never covers the company or the issue.  

All these competitive information gathering techniques will work for any company, large or small. These methods could help your company avoid getting blind-sided by an unexpected competitive challenge.  Should you be watching more closely the company web sites of your competitors and the job boards, blogs, PR releases that refer to them?  Perhaps most companies need to establish a procedure for systematically searching the web at regular intervals for this kind of crucial information.  Check Useful Links on our HOME page for a well-researched list of resources for conducting competitive intelligence.

So my idea of the best practice for online marketing is to keep a close watch on Guy. His blog is virtual textbook on how to use the latest Internet tools. For example, Guy’s “online magazine rack” called Alltop recently put up a video promotion for MyAllTop, a new version with customizable pages for the reader. Click over to Alltop and watch the video; a slick, sharp, and highly effective application of best marketing practices on the Internet. Guy is the man.

Click around through Guy’s various articles to see how he shares freely not only what he does, but precisely how and why.  His article How to Use Twitter as a Twool is a terrific read, not only for it’s content, but for the attitude it teaches and his delightful sense of humor. Guy makes clear how he has built his enormous and loyal following by sharing information.  If you market on the Internet, or anywhere else for that matter, keep an an eye on Guy!

By the time entrepreneurs go looking for venture capital funding, they have already invested a great deal. They have spent years developing and refining the business concept, researching technologies, markets, customers, products, competitors and alternative business models. Inevitably, they have invested some of their own money and maybe asked family and friends to take some risks too. Moreover, they have spent months drafting, vetting and editing a business plan that proves – right there in black and write – that this business is a winner with enormous financial upside. When they finally gets an audience with a VC, they are in no mood to hear a “no thanks.”

On the other side of the table, the VC knows exactly how the entrepreneur feels; he has been here many times. Any investor with an ounce of empathy would find it had to say no thanks to someone who has worked so hard to hear a “yes.” As if empathy were not enough, there are plenty of other reasons for VCs to avoid saying “no;” some good, some bad, some true and some false.

Now most VCs are honest, fairminded business people who behave ethically.  Still, VCs often fail to voice their sound business reasons for saying ”no thanks.” For example, if the entrepreneur has failed to make a convincing case that the target market size is attractive, that the product or service is compelling enough to sustain competitive differentiation, that the business model will work or that the management team has relevant experience, then a “no thanks” makes sense. Still, it feels bad to say “no” and VCs know that entrepreneurs don’t like it. Many presenters become defensive, some will think the VC is stupid and/or out of touch. The entrepreneur might even tell her friends and networking colleagues that this particular VC is a jerk.

If a VC does say “no thanks” and the entrepreneur reacts calmly and rationally, she is still rather unlikely to simply take one “no” as a final answer: The VC may well be in for a long discussion of the merits of the business plan, whether they want to listen or not. Yet VCs are professional investors disciplined to think ahead, to keep their options open and to avoid alienating rare resources such as smart entrepreneurs, so they often perceive that their interest lies in simply saying little or nothing; at least not saying “no” directly.

For VCs, there is always the nagging possibility that this idea might turn out to be the next Google, Genzyme or Facebook. If they say “no thanks” now, they may fear that the entrepreneur will shut them out of later investment rounds. Even if the VC is convinced that this venture is a loser, he may worry that the entrepreneur may not come back when she does have a great idea. It may be selfish to avoid saying “no” directly and not telling the candid truth about why not, but then entrepreneurs are unlikely to ever find out that the reason the VC gave them for not investing was only an excuse. 

VCs may avoid saying “no” in some quite ambiguous ways that are tough for an entrepreneur to see through. For example, they may tell the entrepreneur that the firm has too many portfolio companies that need attention just now; “Try me again in six months.” That could be true or it could be just the right “maybe” to get the entrepreneur out of the office without making them angry or inviting a debate. “I just could not sell the idea to my partners” is another hard answer to figure out. “This looks interesting, but it’s not in our space” might be true as well (but makes one wonder why the VC had you in for a presentation in the first place). A little advance homework should shed light on what kinds of deals a particular VC firm prefers and largely avoid this reason.

One egocentric, insensitive and potentially dangerous way that some VCs may avoid saying “no” is to send the entrepreneur on an impossible mission. “Get your sales up to $2 million before the next partners meeting and I’d say you have a shot” is one example. Another might be, “If you get Warren Buffet or Bill Gates to invest, we’ll come along” or “sign up a few high profile reference accounts like Boeing, Microsoft and Intel and we will reconsider.” These are extreme examples, of course, but you get the idea. By setting a high bar and/or a short timeframe, the VC can not only avoid saying “no” but also leave the entrepreneur believing that it was their own fault that they missed out on funding.  A thoughtless VC may may set a lower bar, or repeatedly send the entrepreneur off to put together just a little more information.  That behavior is sure to start a meaningless quest.

That is not to say that every suggestion that a VC might be more interested if the start-up achieved a certain milestone or had more information is either false or unreasonable. Yet sending start-ups on an endless quest leaves open the selfish possibility that if someone else funds them, the VC could still get in on the next round. Of course, if the entrepreneur does meet the challenge, the VC can always set up another impossible quest, or revert to “My partners are not crazy about it” or some other excuse. Again, most VCs strive to be fair and completely straightforward, but some do not.

So what’s the harm when VCs don’t say “no,” even when they mean “no?” Entrepreneurs are optimists by nature and they need to be. So the lack of a “no” sounds like “maybe” to them, or least an affirmation that there is nothing fundamentally wrong with their plan. Yet in fact, the mere lack of a “no” from a VC says nothing of the kind and it can create serious problems, especially for inexperienced entrepreneurs. Their idea may be a stinker, and plainly so to a professional investor: More commonly it may just be too risky to fund, or not have the potential for the $100 million to $500 million in fifth year revenues that attracts venture money. VCs reject many plans because the management team lacks relevant experience, but any one of a dozen other good reasons may apply.

So a discussion with a VC that ends in only a “not now” may actually teach an entrepreneur nothing of value, perhaps even mislead and encourage them to continue to seek funds and obfuscate that the management needs to make substantial changes in the business model, strategy and/or management. An entrepreneur may well leave the VC’s office, not only without a clue, but essentially lulled into believing that it was only his timing that was off or some other reason that seemed false but benign to the VC.

To avoid a long wasteful quest, entrepreneurs need to hold VCs to a higher standard. They must state clearly at the outset of their conversation that they welcome constructive criticism, that they want the whole truth, no matter how difficult, that they do not need coddling and won’t take a “no” personally and that they will not insist on a long debate. It may help to remind the VC that entrepreneurs hear “no” all the time. Point out that the VC’s experience and insights could really be helpful, but only if his assessment is frank and straightforward. No one wants to hear “no thanks” but the reasons underlying a decision not to invest are inherently valuable. Hearing only happy talk that avoids the actual issues can inadvertently fuel a fruitless quest that wastes the resources of entrepreneurs and investors alike.