Let’s just ban offshore outsourcing…

As a newly minted US immigrant (I got my green card last year), I have had some interesting experiences in the immigration realm. I’ve also developed some insights into immigration and the impact of offshore labour outsourcing on the US economy.

In case you have been sleeping under a rock for the past 3 years, Silicon Valley, with it’s deep well of engineering talent, is flat out of [decent] developers – which is creating wage inflation (source of infographic unknown) and startup inflation (I’ll write on this topic later).

Between Facebook, Google, Zynga, LinkedIn and some of the other behemoths, all the top engineering talent has been gobbled up and startups are find it hard to recruit. Luckily, with my background in founding technology companies in South Africa (Clicks2Customers, Yola) (now headquartered in San Francisco), we’ve been fortunate enough to able to source some of the top engineering talent in the country to work on building Gyft, which launches next month. It’s a common thread in Silicon Valley – most startups have at least a couple of offshore developers helping build their technology platforms.

Now, try bringing those developers into Silicon Valley to work and live – that’s a whole new discussion. While there are no legal restrictions on outsourcing, there are major restrictions on sponsoring work permits and visa’s for engineers to bring them here and let them live and work amongst us. There is a cap on H1B Visa’s which are routinely hit. Yes – none of this is news – so what’s my point?

My point is – as a startup & technology community in Silicon Valley – we spend billions of dollars outsourcing work to developers who live outside the USA – that money leaves the US economy. In most cases, these salaries are comparable with what we pay the local US developers (perhaps a slight discount here or there). The engineer gets paid in the foreign country, and then spends that money at their local grocer, takeaway, doctor, dentist, plumber, landlord, etc. Instead of allowing us to bring those employees to the USA to live and work, whilst allowing the money can circulate in the local economy and create more (non-tech) jobs here, we’re helping “train the competition” (to paraphrase President Obama – who is pushing for immigration reform in a big way), and building the foreign economies. Apart from the frustration that it’s creating for the Silicon Valley startup companies who are desperately trying to get the right skills to build their companies, there is a clear economic reason why we should allow uncapped immigration of people with specialized skills, provided there are companies here that need them and would rather pay the salary to a worker who could spend the money locally.

If you want to make the argument that no H1B cap would precipitate a decline in American jobs, then you also need to block outsourcing of any kind to offshore developers in order to facilitate that argument – what’s the point of not letting them work here, but then allowing us to send the dollars offshore which has no benefit to local businesses. Instead of bringing the engineers here and paying their salaries (and taxes!!) here and letting it recirculate in the local economy, we’re forcing them to continue to work offshore and build their local economies. So this is all a bit tongue in cheek – I’m really arguing about the merits of limiting H1B’s but then allowing offshore hiring – it does.not.make.sense.to.me. (although the airline and travel industry are probably enjoying the frequent trips that these engineers have to make to ensure sufficient face time with the local US teams on a regular basis).

That said, there are people who are doing a lot to try and spur on immigration reform in the US – and you can help them by signing this petition. So, although I’m not particularly interested in getting involved in the politics behind how these decisions and systems are put into place, I will say that someone needs to seriously rethink why things are the way they are. Either ban offshore development outright [terrible idea], or figure out how to get those dollars back onshore (along with much needed skills) – but let’s not create fake realities by trying to convince ourselves that a cap on US work visa’s for a highly specialized industry is going to create much needed jobs in the US and put the economy back on track!

I’m launching my new startup, Gyft.com!

After 5 years at Yola, I’ll be moving on to launch my next startup, gyft!

gift cards

The guys over at Memeburn have the scoop here.

Also, here is a link to the official press release.

Congratulations to Trevor Harries-Jones (my former Chief Operations Officer) who will step into my shoes at Yola as the new CEO. I will continue to be a shareholder and board member of the company and will still work with the management team to ensure that the company continues to grow from strength to strength.

Gyft is a mobile wallet for gift cards, and we’re launching the app in the Apple Store sometime in May 2012. If you want to get onto the waiting list for early access or to be notified, please signup at gyft.com

I am going to start blogging a lot more often from now on – the past 2 years have been extremely busy for me, and I neglected my blog. Since my last post, I’ve had baby (two year old son, Kavin) and I’ve moved from San Francisco to Palo Alto (where gyft is now based).

Free Software is the Future

Chris Anderson is currently writing his new book, called Free, and in it he describes that in a competitive market, price tends towards marginal cost and therefore the price of most software (I think an exception will definitely be in the enterprise space), will tend towards being free. Basically, Economics 101, with a twist for our industry.

Once of the main reasons to date that free software has not become mainstream amongst average computer users is that the free stuff is generally written by open source techies, and no one really focuses on design and usability. So generally, free = open source = unusable by the common man.

Matthew Paul Thomas wrote a great post today in his blog about free software usability – and this one of the best pieces on the topic that I’ve seen written to date. He describes 15 points as to why free software has poor usability, and how to fix it.

Now that you’ve done that (or not, you don’t have to, but I hope I make sense!), I’d like to briefly speak to the headings of the 15 points he mentioned, and discuss how we (SynthaSite) as a company are trying to push the envelope with high quality free software, and pioneer a new way to build businesses and income around free software with alternative revenue streams, rather than charging the end user. We hope to inspire other software companies to be creative in the way, that they also try to build out their business models.

Certainly the thoughts of Chris Anderson follows what leaders on the web have been doing for many years, but usability is going to take the front seat, if you want to be successful in this space.

I’m going to make some points against each of Matthew’s – probably best read after reading his post. Remember though, SynthaSite, although free, is a commercial piece of software, so we do have a different approach to it than traditional free and open source products. Now, I’m not going to do what most bloggers do, and reiterate his fantastic piece of work by cut and pasting – so I highly advise you to read it first before continuing – it’s the best 5 minutes of your life that you will spend on this topic.

Matt’s problems with developing free software and how SynthaSite deals with it:

Weak incentives for usability – The more usable a product, the quicker it goes viral. In the current paradigm of large user bases, usability is key if you want to keep users coming back and spreading the word about your web application.

Few good designers – So true. Typically, open source & free software doesn’t get much attention on the design side, after all, it’s free – right? Wrong. Interface design is one of the most important areas of the software development phase and if done incorrectly, will certainly bamboozle most users (who probably won’t try your product again)

Design suggestions often aren’t invited or welcomed – Matt’s point says it all.

Usability is hard to measure – Not at all, we utilize a number of methods, including metric which are unique to each business. Figure out what goals you want your users to achieve, and test how changes to your interface affect those outcomes. If you’re trying to encourage users to build a blog, then see what percentage of users do that, before and after you make changes. It’s not rocket science.

Coding before design – Most startups can’t afford a user interface specialist – understandably, and we didn’t have one when started, but since getting funding, changed that quickly by hiring UI people – design first, then code.

Too many cooks – Like anything in life, too many opinions won’t help. Someone needs to take charge. We have a dedicated UX team that deals with usability issues, and within that team, the roles are clearly defined.

Chasing tail-lights – what works for Apple won’t necessarily work for you. Understanding YOUR users, and design accordingly.

Scratching their own itch

    remember this if nothing else

– 9/10 times, you are probably NOT the target customer and your needs are definitely not representative of the masses, especially if you’re an engineer building a consumer app

Leaving little things broken – this is a difficult one that all software companies will face. How do you deal with the small stuff and the big stuff at the same time. We try our best and over time, we get better at it. Things are never going to slow down, deal with the small stuff on an ongoing basis.

Placating people with options – Here is a nugget: “Less is more, if more is hidden”. Hide complex functionality – power users will find it, beginners won’t need to!

Fifteen pixels of fame – This is where good UI people come in. They want what’s best for the user, not the engineer and his or her ego. Incidentally, I think this point is more prominent in open source community projects where people feel the need to stand out in forums of thousands of people, rather than companies I have worked in of less than 20 engineers, so I don’t think I have personally experienced this problem.

Design is high-bandwidth, the Net is low-bandwidth – Some of the most amazing bits of innovation has been in a room with a white board and some markers. As great as the Internet is, it can’t take away that fresh smell of a marker, and the innovation it brings :-)

Release early, release often, get stuck – SynthaSite has put out over a half dozen releases this year already – with more to come. We are an agile organization and our ability to get high quality work out regularly proves that, in my opinion. I seriously recommend that everyone read “Getting Real” and modify as required for your environment. It’s not absolute, but a good guide nevertheless. We work on 3 week iterations, 2 weeks of coding and 1 week of QA & debugging. My CTO, Brent Viljoen, is a whiz at gearing the company into an agile organization and aligning different departments with engineering to deliver the goods as promised. Many CTO’s still live in the past with their long term outlooks and development processes – in the current paradigm, it’s technically retarded. The key really is to incrementally improve your processes – you won’t get it 100% done from day one, but over time, it will definitely become a way of life, and create order from chaos.

Mediocrity through modularity – this point really speaks to building a product from user requirements back into engineering, and not the other way round. We are using GetSatisfaction to constantly get feedback from our users – their wish is our command…

Gated development communities – API’s are changing this field rapidly. Web apps are now integrating 3rd party apps seamless. We recently deployed a Widgetbox integration into SynthaSite, which now gives our users instant access to over 60,000 widgets – from a simple drag and drop interface. The power of API’s and partnerships are only beginning.

If you read this far, thanks :-) – it’s one of my longer posts, and certainly more engineering and usability focused, but highly applicable to any industry that develops any type of product for consumers.

Living in the valley…

I’ve been here for nearly two weeks now – and it’s been really unbelievable how well things work around here!

I’ve bought a car, shoes, groceries, electronics and just about anything else you can imagine online. With my car, I selected the vehicle through Edmunds – received 4 quotes, selected one and the dealer delivered my car to my front door (literally!), without me even meeting him – within 48 hours – complete with insurance. And I bought it on a Sunday!

Shopping online also resulted in the most savings for products that I’ve been purchasing. I’ve been using FatWallet to take advantage of affiliate discounts and coupons, without having to go through the hassle of applying to each merchant program, etc.

I met with a recruiter on Friday to start getting resumes in for the positions that we have to fill in San Fran – and this morning I received 8 resumes for highly technical positions as well – it’s amazing how large the skills pool here is!

We’ve met with about 3 PR agencies here, and all 3 were impressive – some very tough choices ahead in this category. I’ve also had the time to mingle with a couple of valley CEO’s – and the network effect is already starting to happen as I get introductions to new people.

That’s probably the single biggest value that you get out of living and working in San Francisco – the tech circle is humongous and the ability to network with fellow tech startups is probably second to none. I’m also struggling to keep track of all the various activities around here, but it seems that Yelp is very popular!

My apartment is across the road from our offices, and down the road from AT&T park – in South Beach – it’s really a great place to be and I even get to walk to work for like 2 whole minutes :-).

We have a total of 8 people now working out of San Francisco and trying to hire aggressively, so check out the SynthaSite Careers page. We also recently made the following local San Francisco hires:

Chief Financial Officer: Trevor Harries-Jones (Joining us from OpenTV, previously PWC)
Vice President of Marketing: Randy Almond (Joining us from Walmart.com, previously Accenture)
Vice President of Product Development: Sean Crotty (Joining us from Mpire, previously eBay)

And here is a pic of our new offices (yup – looks like a startup office!)

Things are really beginning to move over here – we just got Internet access installed at the office – that was probably the most frustrating thing – AT&T have proved to be utterly useless – it’s taken 3 weeks and we don’t have a T1 line installed yet – and we are using a DSL. Comcast took me one phone call and 48 hours to have it installed – 16mb line – blistering!

One of the nicest services I discovered by OpenDNS – which doesn’t really work well outside the USA or Europe. OpenDNS basically gives the public a very quick DNS lookup server (the server that allows you to find a website on the Internet) – and anyone can use it – it’s very easy to setup. I HIGHLY recommend it for people living in EU & North America.

All in all, living here has been great so far and aside from missing family & friends, I’m loving it!

Endeavor

I’m fortunate enough to have qualified into Endeavor, through my previous company, incuBeta and as a result, I’ve tapped into an amazing network of people that have really allowed SynthaSite to flourish. Amongst other great resource opportunities, we also received interns from Georgetown University (Washington D.C.), Harvard & MIT – the latter currently working in our offices. Being part of Endeavor has really opened up the doors for very high calibre interns, which small companies functioning in parts of the world like Africa, would rarely get the option of obtaining. In fact, SynthaSite is one of just 2 companies in South Africa, selected by MIT this year for it’s GLAB internship program.

The MIT folks are really helping us optimize the usability aspects within SynthaSite, along with other great insights across our business. These are skills extremely difficult to find in our local market, and as we open up offices in the USA, it’s making it a lot easier to identify what our future recruiting needs will be (please keep an eye on our website if you’re in the job market!).

Here is a great video from Endeavor at the 10 Year Gala held in New York in November that I had the pleasure of attending (Michael Buble entertained us!):

Cloud Computing

I’ve been going on quite a bit recently about the changes in the economics of delivering software as a service, particularly relating to Cloud Computing – which leads me to a great article that came out this weekend from the New York Times, on the impending battle between Google & Microsoft.

SynthaSite launched our Alpha on Amazon’s EC2 cloud, and it held up perfectly – although it was not easy to scale the application architecture and we’re going to work on that – so in the interim we’re using some standard servers while we build out our virtualization infrastructure.

The future of the software is certainly in the cloud and delivered through the browser – Microsoft is not arguing about that – but they would prefer to ensure that it’s tied to the desktop in some way (and obviously IE). With the fragmentation that’s occurring as a desktop level (Linux, Mac, Ubuntu, etc), I doubt that this is a good long term strategy (in fact, they’re actually missing the plot totally) – especially given what a flop Vista is. That said, the article above is a great read!

The thing that really concerns me, is that if Microsoft really believes that applications should live in the browser – then why do they build IE only applications (such as Office Live). It’s really frustrating to not have cross browser compatibility – the browser is the new operating system, believe it or not…

Endeavor Entrepreneur Network

I’m in New York at the moment attending the Endeavor Annual Gala event. I have the benefit of attending talks by Barry Diller (IAC CEO), Scott Meyers (About.com CEO) and a host of other great speakers. It’s a 3 day conference – hence my time for other things, like blogging, is very restricted!

The Endeavor network is really a great network for entrepreneurs from “Emerging Markets”, although arguably, some of these markets have already emerged! I can only highly recommend the support we’ve received from Endeavor, which is a non-profit organisation.

Synthasite was fortunate enough to be one of the companies selected by MIT (Massachusetts Institute for Technology) to host a team of MBA interns who will work closely with us for the next 3 months and fly down to Cape Town in January to assist us with post-Beta testing. I had dinner with the team on Monday night, and I can honestly say that I’m thoroughly impressed by the calibre – but would you expect any less from MIT? I might add that there were more companies applying than interns available – so getting selected was seriously something special!

I was also privileged to speak to a class of students at MIT in Boston as well – and it was great to be able to share my experiences as an entrepreneur with them.

Also, through Endeavor, we also received an eMBA from Harvard who spent 3 months with us earlier this year, and he did a great job! Now I get 4 MBA’s – it’s going to be great having some extra resources – we’re very excited!

The bottom line is:

I can really encourage any and all emerging market entrepreneurs to at least apply to join Endeavor – the benefits are fantastic and it’s great being part of a support network. You need to be operating primarily in an emerging market – but check their website for more details.