Specifically comparing WebMD and Matel, here are a few differences (one that makes WebMD more vulnerable, but two that make it significantly less):

• Matel has a contract with Walmart.  WebMD doesn’t have any such agreement with Google.  This makes WebMD more vulnerable to Google taking a vertical integration approach (not just searching content, but having their own content).  It’s very unlikely, and probably breach of contract, if Walmart starts making toys that are very similar to Matels and selling them in a more prominent position than Matel’s.
• On the other hand, Matel is also at the mercy of the same contract.  I’m not familiar with Matel’s model, but they may have promised some exclusivity to Walmart.  What if Walmart starts losing significant market share to Target, Matel may well be stuck unable to sell to Target.  On the other hand if Lycos comes back and replaces Google as the main search engine, business continues normally for WebMD (assuming Lycos’ algorithm doesn’t find some other health site that I’m unfamiliar with).
• The retail and manufacturing models also have significantly different cost structures.  Matel has made capital investments in their factories to produce a certain number of units, they also have a significant amount of inventory.  If Walmart were to suddenly take away 20% of Matel’s business away, this would be a significantly bigger problem then if Google suddenly took away 20% of WebMD’s traffic.

I’m not saying Google’s move in to health shouldn’t concern WebMD, I’m just saying that the potential impact to the business needs to be evaluated very very differently.  If you’re going to make an investment hypothesis based on partnerships on the web (or elsewhere in technology), I would consider consulting a techie first.

A former colleague of mine recommended Switch by Chip and Dan Heath a few weeks ago.  It’s a book about Change and how to be an effective agent for it.  Little did I know that the next few weeks of my life would encompass a great deal of change as I get ready to change professions.  Like most “self-help” or “management” books it gives you a set of stories about how successful change works and some ideas on how to do it.  Unlike most of these books (but like the very best of them) it actually gives you a model of how to make the right changes work for you personally, for your organization and even societally.

The model consists of three main components that make up the mechanics of change.  These three elements are based on riding an elephant:

• The elephant is your natural willingness and ability to affect change, or to avoid it.  The elephant is what makes it possible for people to go from weighing 250 to running a marathon.  It’s also what makes it so hard to quit smoking.  Once motivated the elephant is great at getting things done, but if it’s not motivated it will kill any chances you have of success.  You can make your elephant work for you by:
• Shrinking the change so it feels less daunting.  Focus on the first step then the second.
• Creating an identity around change and making the people around you feel that they are the kind of people who make change.
• The rider is the logical person above the elephant.  He needs to be able to see the future and make decisions about how to get there if the change is going to happen.  You can point him in the right direction by:
• Finding Bright Spots – Don’t think too much look at the people that are getting things right and mimic them.
• Script Critical Moves – It’s amazing how powerful forming a plan can be.  There are some really interesting studies about how people who say, “I’m going to write a two page paper on Christmas Eve while Mom makes dinner.” are more than twice as likely to get the paper done than people who say, “I’m going to write a paper over Christmas break.”
• The path is where you’ll need the elephant and rider to walk.  There are often ways to make the path easier to follow than it otherwise would be.
• Tweaking the Environment – There’s a great example from Rackspace who at some point removed their voicemail machine FORCING customer service people to answer the phone or figure out ways to do it.  Often times there are simple ways to make the right answer the easiest or only one.
• Rallying the Heard – Making change the socially acceptable thing to do.

That picture is an album cover.  I’m going to present it without comment and give you a link to where you can download the CD.

On to the purpose of Sauerkraut Sundays… As I go through the week, I use Twitter to send out little updates and links.  I realize that I do this quite a bit and that not all of you use Twitter, so with that in mind I’d like to take Sunday to do sort of a week in review.  I’ve selected the most useful of my tweets from the last week and placed them in to the categories that I use in this blog.

Pittsburgh AND Startups/Social Media!!

Remember that move to try to get Google Fiber in Pittsburgh? They started installing it in KC: http://t.co/anyfci1c

February 17, 2012 4:00 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

The founder of South Side-based Evil Genius Designs, Brown was invited back to Carnegie Mellon University http://t.co/Q7WZN3C0

February 6, 2012 12:15 pm via TweetDeckReplyRetweetFavorite

@southsidepgh

southside pittsburgh

Business

Perfect explanation of how a tech company goes bankrupt. http://t.co/l3gWVUn6

February 11, 2012 9:57 pm via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Enterprise IT

Zynga is moving off of AWS... interesting to see people bringing things in house. http://t.co/yUHGSvLp

February 16, 2012 12:27 am via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Just unhooked my phone from my old company's network. Twitter is the most serious app on my phone right now.

February 15, 2012 11:17 pm via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Ok, that does it. I have talked with enough government agencies and healthcare organizations for the next 12 months. #ChangingJobs

February 15, 2012 8:22 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

I'm a south sider drinking in Dormont, who has recommendations?

February 12, 2012 3:16 am via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Pittsburgh

Beautiful day for a little walk on the South Side Riverfront http://t.co/P20gyj7Z

February 17, 2012 10:38 pm via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Tom's Diner in the southside is closed and for sale... that's really too bad, leaves a definite opening for cheap breakfast.

February 17, 2012 3:57 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

NY Times features a really architecturally interesting house in the South Side: http://t.co/aNLRbuVj

February 9, 2012 3:14 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Social Media

By giving you an overly rosy view of your friends' life, facebook actually lowers your self-esteem: http://t.co/izXJbh1M

February 15, 2012 10:52 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Sports

“@BucsDugout: Wakefield was last active player to be on a winning team with the Pirates. They're all gone now.” << Time to make new ones!

February 17, 2012 6:10 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

.@BrinkPG reporting that Morton, Alvarez, Tabata are all at Pirate City! It's SOOOO close!

February 17, 2012 3:54 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Good first pre spring training day. Awesome to see the fellas again. #Pirates

February 15, 2012 5:37 pm via UberSocial for AndroidReplyRetweetFavorite

@GrillCheese49

Jason Grilli

If you're not a big #Pirates fan and want an honest preview, you could do worse that this: http://t.co/iJLIjl2A

February 15, 2012 11:07 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

@HussarJ I'm absolutely okay with it, the fact is, is that this game is a business and I understand perfectly what is going on within it.

February 13, 2012 12:51 am via webReplyRetweetFavorite

@AJ_Burnett34

A.J Burnett

Other

"Besides to have kids you should probably get married and women only like me three months at a time."

February 19, 2012 3:00 pm via Twitter for AndroidReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Posts from this blog

Blog Post: In the battle for the next generation of Tech, $MSFT may take it by default. http://t.co/4GntyxEM

February 17, 2012 4:19 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Post: I'm officially unemployed! Read the story, find the resume. http://t.co/kvKjw7pb

February 11, 2012 3:46 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Post: I'm noticing how it's similar for the #Pirates and startups (or any small company) to find talent: http://t.co/rJaYVCgU

February 13, 2012 12:04 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Post: I'm thinking about how closely linked science/technology and art/humanities are in progress: http://t.co/X2kbIsGz

February 9, 2012 2:50 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

The only winner that’s clear so far is Apple.  They already have great tablet and a great phone and they’re leading the way in letting people know what the next wave of technology is going to mean in their personal lives.  Who else is going to win?

I’ve got your answer, but you’re not going to like it.  Microsoft is going to win.  They’re coming out with a converged phone/PC platform that will be cloud integrated.  It might miss on its first implementation, but if they’re announcing it in February they must be close to that first iteration.  Three years after everyone in technology could see the future, Microsoft has finally decided to evolve.  That would be a recipe for disaster except for the simple fact that no one beat them to it.  Google Docs is a crappy product.  Chrome OS went too far.  Dropbox and Box.net are just patches on the existing problem and are trapped by their initial success from evolving additional features.  All the tablets outside of Apples have major flaws.  Android can’t get all their phones / tablets on the same version.  Blackberry refused to evolve until it was too late (in addition to horrible mismanagement).

When Microsoft becomes the biggest (or depending on Apple, second biggest) winner in this major technological shift, the executives at all of these other companies should be fired.  Microsoft will take the lead sometime next year, and ride the shift to reborn greatness over the next 5 years.  This isn’t written in stone yet, but every day that passes without major innovation from the rest of the marketplace it becomes a little more certain.

In addition to my excitement as a Pirates’ fan, I think its worth drawing a relationship to the business world.  Hiring in business is one of the most difficult tasks any company faces whether that company plays baseball or builds software.  While there are clearly some differences between hiring baseball players and hiring talented people for your company (no stat sheets for companies, no need to placate season ticket holders, etc…) there are enough commonalities to be interesting.  In particular, I think small companies can learn these three things from baseball:

• The first similarity is that great people have a ton of value, especially in the right position.  Mark Zuckerberg is famous for saying that a great engineer is worth 100 average ones and he’s probably only exaggerating slightly.  In 2001, statisticians estimate, that the Giants won 12.5 games more than they otherwise would have because Barry Bonds was in their lineup (if the Pirates had won 12.5 more games last year they would have been over .500).  This may not be true of a great starting pitcher (who only plays once every 5 games), a relief pitcher (who only plays 80 innings in a season), or a catcher (who has to give up some offensive ability to play solid defense) but finding the great ones and paying them appropriately is worth every dime.
• Like Baseball though, not every company has the dimes to pay the all-stars.  Albert Pujols, the LA Angels first baseman, makes an average of $24M per season, that’s more than half of the Pirates’ payroll.  If the Pirates wanted to hire him, they literally would have to fire 3/5 of their starting rotation, their best reliever, their starting shortstop and their catcher.  Similarly, Facebook and Google have made headlines paying lower level engineers millions.  I’m not calling the big companies (and big payroll teams) wrong for doing this, I’m just saying that most companies (and most teams) need to get comfortable with finding another way than straight giant contracts to lure talented people.
• Like baseball, there are ways to come up with talented people at companies without spending a fortune.  In baseball there is an odd twist in the rules that allows teams to hold on to players for the first 6 years of their major league careers for much less money than they could make as free agents.  It’s this little rule (and maybe a bit of luck) that is the basis for the Pirates ability to compete for most of last season without spending a fortune on players.  Similarly, small companies have a lot of tools at their disposal to find and retain talented employees without spending a fortune.  Having a strong network helps you find people the big guys may miss.  Having a fun or interesting corporate culture helps you retain people who aren’t money driven.  Offering people a chance to win with the underdog (and benefit financially) is something a company like Google can’t do.

With the company moving away (for now) from building things (my true passion) it is time for me to go.  I spent a splendid week last week in Charlotte shaking hands and sharing memories with one of the best teams I’ve worked with.  The only hard parts came when I had to educate the sales staff (who’ll be stuck demoing the product without me).  It was hard to walk through the product on screen and see just how much progress the team and I had made over the past 7 months and it was really challenging to see the things I still wanted to do and know that I wouldn’t be around to see them implemented.  When I became the product manager of what is today called Visualization Studio, it was an undurused feature of another tool.  In the past 7 months we have turned it in to Adaptivity’s most used product.  A job is supposed to be just a job, but I have never been able to look at it that way.  Adaptivity’s Visualization Studio was my first software product and it was my baby, it was unimaginably hard to leave it just as it was growing in to its own man.

Last week I focused on making my peace with leaving Adaptivity, and this week my focus turns to finding my next gig(s).  I have had a humbling number of ex-colleagues reach out to me and several of them have pointed to me some potentially amazing opportunities.  I have a couple meetings with personal mentors over the next couple days so that I can begin to sort out what it is I want exactly and how I weight things like money, travel, benefits, working for a startup, etc…  From what I’ve seen so far, it’s going to be a very interesting next couple of weeks.  If you know anyone who might be interested in chatting with me, feel free to pass on my resume or say so in the comments or drop me an email jonathancavell .<at>. gmail .<dot>. com.

What I have been thinking about lately is WHY this was the case.  Why is Apple the worlds largest company instead of a company (say Intel or IBM or Cray or Cisco) that’s better at making technology achieve new feats of speed or size?  The answer that I’ve come to is that computers, and many other fields where the raw sphere of possibilities is advancing, grow in phases.  For a little while there is growth in technical capabilities; the micro-chip is invented and then powered to go faster, display screens get smaller, memory capacities advance, etc…  At some point the technology stops becoming the limiting factor.  It’s at that point that the creative/artistic/humanities people need to begin to come up with more/better ways to use the technologies that are in front of them.  It’s the creatives that can look at a 3″ hard drive and see an iPod, read a text and envision Twitter, understand that 4G doesn’t change how fast we do things on a phone, it changes WHAT we do on the phone.

Apple is the largest company in the world because we don’t primarily need faster/smaller right now we need more functional/easier to use.  I think we’re going to be in that mode for a while, but at some point the speed of the ideas will outpace the technical advances and the pendulum will reverse.

It’s late on Superbowl Sunday, so you’re not getting very interesting Sauerkraut bits today.  All I could find on short notice is the above recipe for “Super Sauerkraut Salad” (find the original here).  Since it’s Superbowl Sunday, it seemed appropriate enough.

On to the purpose of Sauerkraut Sundays… As I go through the week, I use Twitter to send out little updates and links.  I realize that I do this quite a bit and that not all of you use Twitter, so with that in mind I’d like to take Sunday to do sort of a week in review.  I’ve selected the most useful of my tweets from the last week and placed them in to the categories that I use in this blog.

Pittsburgh AND Startups/Social Media!!

Google's Pittsburgh Office named one of the 15 coolest Tech offices in the US (complete with tour): http://t.co/00XgUrEJ

January 30, 2012 1:40 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Lots of smiles @alphalab this morning - all companies have now officially closed on their investment! #Congrats!

February 3, 2012 5:05 pm via Twitter for AndroidReplyRetweetFavorite

@jimcjen

jimcjen

Look for Shoefitr's 3D shoes in the March 2012 issue of @runnersworld magazine!

February 3, 2012 4:46 pm via webReplyRetweetFavorite

@shoefitr

shoefitr

There was a problem with the blakbirdpie shortcode

Business

people forget that facebook has been around for 8 years. to put that in perspective foursquare is 3 years old.

January 31, 2012 12:25 am via webReplyRetweetFavorite

@cobyberman

Coby Berman

What's weird about interval training today? I'm doing it outside... in shorts... in January! Getting ready for @PGHMarathon

January 31, 2012 4:12 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

“@NickBEnd: @BurgherJon @PGHMarathon That's awesome!" << I plan to beat nick in the marathon #SoMuchSarcasmItsALittleSad

February 1, 2012 12:29 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

If there is a food better than Mrs. T's Pierogies I don't want to know what it is. I'm fat enough as is.

February 1, 2012 2:13 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Look at that 400 porn advertisers and bots have found their way to following me.

February 4, 2012 2:58 pm via webReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Pittsburgh

Why is @justinbieber at a Heat game wearing a #Pens hat? http://t.co/vLfs4llX

January 31, 2012 11:17 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Shadyside/Eastside ped bridge opens today with eyecatching design. See it here: http://t.co/IHJH7dHC

January 31, 2012 1:03 pm via webReplyRetweetFavorite

@pgtraffic

Jon Schmitz

Occupy Pittsburgh ordered to leave BNY Mellon property http://t.co/tNW0Bh0z #pittsburgh

February 2, 2012 7:22 pm via twitterfeedReplyRetweetFavorite

@PittsburghPG

Pittsburgh news now

Great little @PittsburghPG article on the terminal building in the south side. http://t.co/1HYhWD7U

February 4, 2012 11:18 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Social Media

“@Techmeme: Blogging Declines Across the Inc. 500 (@dstrom / ReadWriteEnterprise) http://t.co/wZAJvYny http://t.co/MEK3CSKs&#8221; << Interesting

January 30, 2012 1:25 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Sports

The River Hounds (Soccer Team) are building a stadium at Station Square... in other news, the River Hounds Still Exist http://t.co/exJ0gH2f

January 30, 2012 1:56 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Two former Steelers and two former Panthers in the hall of fame class this year: http://t.co/l0MvYzR4

February 5, 2012 2:43 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Other

“@cdixon: Asked 4000+ times on Yahoo Answers: "Do I need a passport to travel to Hawaii?" https://t.co/dXehgKCC&#8221; << These people vote!

January 30, 2012 1:13 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Fantastic story from NPR about 'Mutant Rights' should X-Men figurines be taxed as human dolls or toys? http://t.co/Od87sX3R

February 1, 2012 12:17 am via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Posts from this blog

Blog Post: My favorite quote from Joe's Memorial had to do with getting better or worse every single day. http://t.co/E7w2djKx

January 30, 2012 1:10 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Blog Post: Have you caught the irony in criticizing Mitt Romney for his role in Bain Capital? http://t.co/XsPyq8UY

January 31, 2012 12:23 pm via TweetDeckReplyRetweetFavorite

@BurgherJon

Jonathan Cavell

Most private equity firms (and especially Bain) are setup to buy companies that are struggling to live up to their potential, help them achieve that potential, and then resell them at a profit.  Before Bain was a private equity firm, they were (actually still are) a leading strategy consulting company.  They only entered private equity when they realized that some companies could benefit so much from their consulting help, that they’d be better off owning the company then just collecting a consulting fee.

Weak companies, even the ones that employ hundreds or thousands are a DRAIN on the economy and ultimately lead to less jobs.  I’m most familiar with software companies, so let’s think of an example from my industry.  Let’s say there’s a $200M (revenue) company that’s struggling.  Their management is leading them in the wrong direction and existing customers may keep them alive for another few years, but they won’t be growing with their current strategy.  Say they employ 250 people, you’d think if we pull the plug on that company it would cost us 250 jobs, right?

It’s not that simple though, that company is actually costing the economy jobs.  There are probably 20 or 30 extremely talented developers hiding inside that company (developers are the hottest commodity for software companies right now). These developers are currently not being put to productive use, they are chasing the misguided projects of poor management.  If they were instead working for a Google, a Facebook or (even better) a startup, think how their community would be different.  They would be producing valuable software for a company that would soon need more and more managers, accountants, sales people, etc… to sell and distribute that software.  It probably wouldn’t be long before 250 jobs seemed like a small number.  Let’s say a good developing core of 20 or 30 (with proper management) can support a company of 500, models like GroupOn suggest that number might be conservative.  If we look at it that way, the dying software company isn’t saving the economy 250 jobs, it’s costing it 250.

A private equity firm like Bain Capital would buy the $200M company with 20 or 30 great developers and try to turn it in to a 500 person company.  It’s true, they might fail and the company may go down anyway.  But even then, they are helping the economy by forcing those 20 or 30 great developers to find companies that can more effectively use their talents.

Here’s the ironic twist.  The reason private equity firms exist is that bad management is allowed to happen.  Why is it allowed to happen?  Because companies are democracies and sometimes democracies end up with shitty leaders.  That’s right, the bad managers at the companies that Bain and other private equity firms purchase are installed in their positions by the boards of those companies which are elected by the shareholders.  If the shareholders knew how to vote effective leaders for their companies then Bain wouldn’t have a business.  Of course, it’s some of those same voters who are now confused about whether Mitt Romney’s work at Bain Capital was good for the economy or not.