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Small tech companies, big wins

Four examples of small tech ventures that succeeded where big money failed

Slow and steady wins the race, small is beautiful, and sometimes the little guy wins. Here are four tales of small ventures that succeeded where the big money failed, or that focused on pockets of need that were overlooked.

Paul Allen, Metricom's Ricochet vs. Marlon Shafer, Odessa Office Equipment:

Beating Paul Allen with bird poop and a silo to deliver wireless Internet

My fellow geezers may remember Metricom's Ricochet high-speed wireless Internet service way back in the mid-1990s, back in the Dark Ages when dialup Internet ruled. AOL floppy disks covered the land like noxious confetti. Dialup Internet meant tying up a phone line and blazing speeds of 56, count 'em, 56 thousand bits-per-second (or 56 kbps). Compare that to a modern low-end DSL account that delivers 768kbps, and five and 10 megabit cable and DSL for cheap in many cities.

When Ricochet was introduced it was a hit: wireless mesh Internet at 128kbps. Customers were freed from their phone lines and could roam freely inside the network. We take this for granted today, thanks to the broadband cellular network, but back then it was all new. Metricom had ambitious plans to go nationwide, and had over 50,000 customers in 14 states who were happy to pay a premium rate of as much as $75 per month. But their growth was fueled by venture capital and debt rather than revenues; the money ran out and in July 2001 they had to file bankruptcy, leaving debts of nearly a billion dollars and assets worth maybe $140 million. Paul Allen, the multi-billionaire co-founder of Microsoft, and other investors sunk over half a billion dollars into Ricochet. Eventually Ricochet was sold for about $8 million, and became part of Proxim, Inc.

Meanwhile back at the ranch (literally), Marlon Shafer of Odessa Office Equipment in Odessa, Washington wanted to bring the Internet to the Odessa area. The telcos, cable companies, and big-time Internet service providers were uninterested in serving a rural population. So in 1997 he borrowed $15,000 -- that's fifteen thousand, not million or billion-- and hired a Spokane ISP to build Mr. Shafer his own ISP in Odessa. He figured out how to set up DSL without the telcos, homebrew DSL, and for awhile life was good. Until the telcos caught on and decided to squash him. Never mind that they didn't want to serve the area; he was making money and having happy customers, and that was intolerable. So they raised the prices of dry copper circuits until Mr. Shafer was forced to look for an alternative. In 2000 he launched his first wireless rollout. His first antenna was mounted on a grain silo. It wasn't easy, and he made mistakes, but he did what Paul Allen and other Ricochet investors couldn't do -- turn a profit delivering wireless Internet.

The wireless internet service provider (WISP) took off and Mr. Shafer has since expanded service into neighboring communities. He also provides high-speed wi-fi for the Sheriff's department, equipping patrol cars with 11 Mbps radios. This slideshow is a funny and informative history of his adventures running a rural ISP, and he is a popular speaker and consultant. Visit Odessa Office Equipment for loads of great information.

Dell vs. mom and pop shops:

Getting Linux laptops and PCs done right

Linux is a significant-to-dominant contender everywhere, from tiniest embedded devices to smartphones and tablets to mainframes to the world's most powerful supercomputers. Everywhere, that is, but the general-purpose PC desktop. It's powerful, reliable, and flexible, and has thousands of great applications a click away. It's immune to the tens of thousands of Windows malware that roam the Internet seeking new hosts. It's easy on system resources. It's user friendly and doesn't look for excuses to treat users as criminals. So with all of this wonderfulness, why isn't it more popular? It is difficult to find accurate data, so estimates of its market penetration range from under 1% to 7%.

One reason is its lack of visibility in the retail space. Computer nerds know all about it, but Auntie Jo and Uncle Orv don't see it on TV commercials, even though Linux powers their DVR. They don't get to see it side-by-side with competing brands on store shelves like every other consumer product on the planet. Dell is the only Tier 1 vendor that sells Linux on laptops and desktops, and they could do better. A lot better. You need relentless persistence and the skills of a bloodhound to find the darned things, and then you have to wade through endless layers of "We recommend Windows!" banners. Can you think of any other product marketed this way? When you visit the Ford dealer, are they hidden behind Toyotas and Dodges? Is Pepsi plastered with Coke stickers?

To get Linux laptops and PCs done right, you must go to a mom and pop shop, an independent Linux OEM such as System76, Emperor Linux, ZaReason, Eight Virtues, LinuxCertified, or Los Alamos Computers, to name just a few. These little shops do all of the things the big vendors can't seem to figure out: how to deliver laptops and desktops with your favorite Linux installed, and everything works; make it easy to comparison-shop and customize; do custom orders; easily create and replicate their own customized Linux images; and roll out new Linux releases without a lot of agony. Just like ordinary Linux users do everyday.

And they're all making money.

Traditional vs. self publishing:

Leveraging digital distribution over the Internet and print-on-demand

Self publishing textbooks online saves Minnesota school district $175,000 and Ebooks vs. Print books illustrate the quiet seismic shift in the book publishing industry. It's a different game now, and authors can cut out the herds of middle-people that bog down traditional book publishing.

The publishing industry has always had a love/hate relationship with authors and readers. Me, I think authors and readers are very best of people, but publishers don't always see it that way. Book publishing is the purest form of publishing because readers pay. If you don't please your readers you don't sell. Contrast this with online publications, which are nearly all advertiser-supported. The product being sold is not the content, but eyeballs and behaviors.

Traditional book publishing carries a large overhead in the costs of typesetting, printing and distribution. Paper is heavy and expensive to ship, and it's always a crapshoot predicting how many copies stores will need. If you ship too many some are wasted, and if you don't send enough you lose sales. Author royalties on books range from 5% to 15%. That is one heck of a lot of overhead for a single author to support.

It's a different game now thanks to two disruptive changes: digital distribution over the Internet and print-on-demand. It is completely feasible to be your own publisher. It's more work as you have to manage the typesetting, proofreading and copyediting, cover design, and marketing yourself. The potential payoff is you have complete control, you can make changes and updates when you want, you don't have to maintain a large inventory, you can keep your titles available for as long as readers keep buying them, costs are low, and you have a chance at making good money. For some authors it's a good sideline, and some are doing well enough to make a nice living. There are dozens of good how to books and all kinds of online articles to learn how to be your own publisher. Try Aaron Shepard's site and books for starters.

Big labels vs. musicians:

Open source gives artists control over their careers

Just as with book authors, high tech and the Internet have made it possible for musicians to bypass the big record labels entirely and control their own careers. Musicians and fans can find each other without interference, and when fans buy music and band swag, the band actually gets to keep the money.

There is a wealth of both closed and open source software for musicians, and some run their entire business on open source. Like artist and musician Dick Macinnis, the creator of Dream Linux. Dream Linux is a high-quality Ubuntu-based multimedia suite for all kinds of creative artists: musicians, photographers, moviemakers, graphic artists, and Web designers. Mr. Macinnis does all of his own artwork, Web design, and recording and audio production.

Geoff Beasley of Laughing Boy Records migrated his entire studio to open source several years ago. He gained stability, faster fixes and updates, better performance, and great customizability. This is no small deal as he makes his livelihood from his music. You can hear him speak about his experiences at Linux.conf.au 2012.

Will you get fabulously rich?

Tech billionaire legends fuel many a startup, and more power to anyone who hits the jackpot. Most of us will never be billionaires, or even millionaires, but being independent, doing the work we love, living our own dreams, and making a good living are also wealth.

This article, "Small tech companies, big wins," was originally published at ITworld. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.

Now read:

4 strange places to find open source

Open source jobs: What's hot, where to look, what to learn

10 best (unknown) open source projects

How America is losing its tech mojo (and how it can get it back).


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