EntrepreneurshipSaaS

Small business startup kit for 2007 – mostly free!

Posted on by Ed Sim

A friend of mine called me the other day to ask for advice on what services (email, voice, apps) he should use to run his business with the caveat being that he wanted to spend as little upfront capital as possible and also have minimal ongoing maintenance headaches.  As I started thinking about his question, I remember what it was like setting up our office in 1998 and the headaches and cost of buying a Nortel phone system and phones and hiring a Microsoft networking expert to get our office set up for file sharing, back up, and email.  What a nightmare!  What was even worse was that we had to have this guy come in at least once a month for general maintenance.  So when we moved in the beginning of 2004, I vowed to outsource as much as possible.  In the end, here is what we did:

1. Exchange server – USA.net – pay monthly based on number of mailboxes and mailbox size and eliminates the headache of ongoing maintenance and backup.  also can add mobile devices like Blackberry, Good-enabled, etc. and easily provision without cap x.
2. Voice-outsourced VOIP, we have a direct pipe to a local provider, we leased some Cisco phones, and once again no upfront cap x and lots of great functionality, we pay a base monthly fee for unlimited calling.
3. Security – we bought some Cisco gear but have a small IT firm as our managed service provider remotely monitoring and updating the software with the latest patches and release.
4. Connectivity = We are networked internally on Windows and have a shared drive where we can access files.  In addition, we have a VPN for remote access to this share drive.
5. Productivity – Microsoft Office

Going back to my friend’s question, if I could set up my office now, here is what I would do:

1. Exchange server – I hate exchange and I would bail on this as soon as I can.  Instead, I would get all of my email and calendaring functionality through Google Apps for your domain – it is free and provides 2 gb of email, integrated calendaring with your email, chat and simple voice chat, and an ability to create simple web pages.  Yes this is basic but it is easy.  In addition, I expect a lot more to be offered once Jotspot is integrated along with some of the other basic Google Office apps such as word processing and spreadsheet functionality.  My one big beef which is holding me back right now is the lack of simple syncing with wireless devices.  There are some apps you can plug in to sync Google calendar but they still need some work.
2. Voice – if I want something more robust I would get a Fonality PBXtra for $995.  If you choose to go the really simple route, the PC-only VOIP providers of today have come a long way since 2004. I am partial to Gizmo Project (wait for our new version which will be accessible through a browser – also, full disclosure, I am on the board) but Skype and other services can once again offer you pretty decent voice communications and functionality like the ability to buy your own phone number, call forwarding, and dual ringing on your computer or cell phone.
3. Security – not as important if your files are hosted offline and backed up remotely (try xdrive which is free for 5 gb or box.net (free for 1gb). 
4. Connectivity – a simple wifi network in the office can get you simple file sharing without an IT professional’s help.  If you want to collaborate with remote workers, you can use a wiki like Jotspot  or Socialtext or some of the shared storage services I mention above.  As far as remote acccess, no VPN is needed as a simple GoToMyPc account ($19.95 per pc per month) or LogMeIn (free for base functionality) can get you the access that you need without the headaches and upfront cost of a VPN.
5. Productivity-Microsoft Office but the online apps are getting better and in fact for collaboration or sharing would consider Google Office apps like spreadsheets and writely

What is amazing to me is how far and how fast we have come during the last 2 years.  The big difference is that the functionality is even better and so is the price – mostly free!  Given this, I wonder what we will be looking at 2 years from now?  Yes, one problem is that all of the solutions I list above are dependent on having an Internet connection.  What if I am not online and need access to my calendar or some office documents?  Since this is a pretty clear problem, my prediction for 2007 is that online apps get better offline client like functionality.  Maybe it will be the new Adobe Apollo platform that makes it happen for us?  What is clear is that one of the benefits of SAAS for developers is that they don’t have to code in multiple platforms.  Once you start diving into the murky world of multiple operating systems and developing clients for Windows, Mac, and Linux, it can quickly become quite messy and resource intensive.  That is why I also see 2007 as the year that offline apps become big as the Apollo platform is released and allows web developers to build an application on one platform that can be deployed cross operating system.  Also keep an eye out for Microsoft’s WPF/e (windows presentation framework everywhere see an earlier post for more info on wpf).  This is a big deal and will help SAAS-based apps continue its upward trajectory and spread from consumers to SMBs and even further into enterprises.  As an example, take a look at Jeff Nolan’s recent post about how frustrated he is with Exchange and how GMail provides a nice alternative.  With the ability to get my whole office set up with a few clicks, it is no wonder that Microsoft is running scared and embracing SAAS rather than fighting it.

Digital Media

The future of television advertising (continued)

Posted on by Ed Sim

In my last post on television advertising, I mentioned that while video advertising on the web will grow rapidly over the next few years, the $60 billion currently spent on television advertising per year will not go away overnight.  What is needed for the industry is a way to make television commercials more relevant, targeted, and dynamic.  In other words, some of the best practices and technology from Internet advertising should be brought to television advertising.  Well, it is beginning to happen starting with big brands like Wendy’s International.  An article in today’s New York Times highlights the new television advertising campaign from Wendy’s where the ad will dynamically update based on what is happening on the football games aired on Fox. While most viewers may not actually get it on the first airing, Wendy’s campaign is definitely a big deal for the industry. 

The Wendy’s commercials, to be broadcast nationally on Fox Sports this weekend, are one of the earliest national examples of an emerging TV technology that allows advertisers to vary their message at the last minute. The Wendy’s ads will reflect events in the football games, creating what ad executives call a reverse product placement of sorts. Instead of putting Frostys or Wendy’s fries into a TV program, the company will incorporate a show’s content in its commercials.

TV advertisers are also now able to vary their spots based on audience demographics, changes in weather, sales goals or the campaigns of competitors. Borrowing a trick or two from the Internet, where ads are finely aimed at Web surfers, technology companies are working with consumer brand companies to move away from the one-message-fits-all approach.

“This is where the future’s going,” said Chris Boothe, president of Starcom USA, a media-buying agency that is part of the  Publicis Groupe. “We think that everything’s going toward more customization. It’s making sure that the message to the consumer is happening at exactly the time it is relevant.”

Congratulations to portfolio company Visible World for helping Wendy’s and Fox, sticking with its vision over the years, and helping the television industry take advantage of new technology to bring Internet-like dynamicism to an aging platform.

Venture Capital

The similarities between venture capitalists and social workers

Posted on by Ed Sim

I had an interesting call this morning with an entrepreneur who had been up until the wee hours of the morning reviewing legal documents for a big strategic partnership.   He apologized about his state of mind which wasn’t exactly calm and cool, and we proceeded to discuss the issues and parse out the major ones from the minor details.  As I reminded him of a conversation I had with my wife several years ago, we all had a good laugh.  When my wife and I first met, she asked me what a venture capitalist does.  Sure, there was the usual answer of we look for great people building great companies, invest in them, and help them through strategic discussions and introductions.  However, there was a subtler more nuanced answer in that a big part of being a venture capitalist was similar to being a social worker.  Our business is a people business and part of that means not only knowing who we are dealing with but also understanding what makes them tick and helping them through both the good and tough times.  We are part coach, part mentor, and part social worker.  We need to understand the psychological state of the entrepreneurs we work with and the management teams they build.  When an entrepreneur is on the ledge, looking down, and ready to jump, our job as a VC is to pull them off and help calm them down.  When an entrepreneur is too cocky or overconfident, we show them the ledge, have them look down, and then pull them off.  So in many ways, being a good venture capitalist is dependent on our ability to understand what drives the people we work with, how to constantly challenge them and motivate them, pat them on the back when they need it, and push them harder if they are slowing down.  For that matter, these are some of the more nuanced and subtle traits that entrepreneurs need to exhibit when dealing with their employees, constantly taking the pulse of the company and key individuals, and massaging the various personalities and egos to help them stay hungry and excited to perform at their best.  As much as some would like to think that being a VC is about the technology or numbers, it is all about the people.  Anyway, at the end of the call my colleague and I were able to walk our CEO off the ledge and help get him prepared for his next battle.  He never thought of us as also playing the role of social worker in our frequent interactions, but he certainly agreed as he thought more about it.

UPDATE-there are lots of different types of social workers but in this context think counselor or sounding board.  My comparison with social workers was not meant to make all entrepreneurs sound like they have serious issues-the point is that sometimes the daily bump and grind of operating a business can get to you and having a VC who knows your business and who is part counselor/part sounding board can be an invaluable resource.

Digital Media

Set my music free – thank you EMI

Posted on by Ed Sim

Thank you EMI for releasing music singles without any DRM protection on it.  While I continue my love/hate relationship with the IPod, I do believe that my music needs to be portable and free. I recently bought the new Treo 680 for my wife and was in the process of loading music on her device when I remembered that my selection was limited.  I also have the same issue with the new Blackberry Pearl I just bought for myself.  Why is this the case?  It is because the hardware and technology vendors want to lock consumers into their ecosystems.  It is because the music companies are afraid of piracy.  In this case, it is because any music I bought from ITunes over the last few years requires me to have a device (iPod, iTunes, or  music phone) that can play ITunes or AAC encoded tracks.  Sure I could go convert the files to a wav format and then reconvert them to MP3 but who has the time or desire to do so.  The same goes for any device using Microsoft technology – your new device has to support WMA DRM.  In the end, I buy my music but it can’t go anywhere with me which is quite frustrating.  As we all know, this will become a bigger problem in the future as more and more devices support music like the Treo and new Blackberry Pearl.  As a consumer, I don’t necessarily want to be locked into one vendor forever and want to be able to easily port my songs between different devices.  There are forward thinking individuals in the industry like Michael Robertson (full disclosure, Michael is also the founder of portfolio company Sipphone) who wants to store your music in the cloud and allow you to access it from any device – wireless, Tivo, any PC, but at the end of the day the problem is that I still need to have iTunes if I want to play the music I bought from them.  This has to end!  So EMI is releasing a Norah Jones single through Yahoo Music with no DRM.  This is a baby step but a big one.  Maybe the fear of Apple’s dominance in the music industry is outweighing the industry’s concern for piracy? Either way, this is a welcome step for consumers.  I still may go back to the stone age and buy CDs and rip them myself as I want my music to be free, free of all DRM so I can use it how I want and on what device I want.

Entrepreneurship

Setting unattainable goals can hurt your company

Posted on by Ed Sim

It is near the end of the year and I would hope by now that most companies have been through a revision or two of their strategic plan and budget for 2007.  While strategic planning and budgeting is a task that some may find quite onerous or even useless, it is an imperative process and one that will help align your team and continue driving the growth of your business.  Rather than go into a step-by-step walkthrough of this process, I thought it would be more helpful if I share with you the number one mistake I see made year in and year out – companies putting together plans and revenue targets which are unattainable. Look, we all want our companies to excel and stretch to reach their goals but at the same time setting a bar in the clouds can be detrimental to you and your company’s health.

Why is this a problem?  First, creating a plan that is too ambitious only sets you and the company up for failure.  People don’t like to fail and you and your employees can get demoralized after repeatedly missing targets by a significant amount and especially if your compensation is tied to a plan that will never be realized.  Secondly, in trying to hit an unattainable plan, management teams typically make another huge mistake – overhiring too early or frontloading all of their hires to spend their way to success.  What this does is speed up cash burn without delivering the desired results.  In an earlier post, I mentioned how hiring too far in advance of your market can lead to ruin:

"Do more with less and be careful of ramping up sales until you have a repeatable selling model.  In other words do not hire too many sales people and send them on a wild goose chase until you have built the right product, honed the value proposition, identified a few target markets with pain, and can easily replicate the sales process and model from some of your customer wins."

So just do yourself a favor when you build your strategic plan for next year – get input from all of the key stakeholders (sales, marketing, engineering), get them to buy off on the plan, and put together goals that force the company to perform at its best while at the same time being grounded in reality.  A good possible solution is for your company to lay out 2 plans – a baseline growth plan which the board approves and an upside plan that has a higher benchmark which the employees use as their goal.  What this does is allow companies to manage to a certain burn rate (baseline) but at the same time continue to push its teams to excel and deliver results.  If the company exceeds the baseline plan in a certain quarter, companies can always add a few more people to maintain the upside growth.

Entrepreneurship

What startups can learn from Nintendo

Posted on by Ed Sim

James Surowiecki has a great article in the New Yorker this week about the new Nintendo Wii system, titled "In Praise of Third Place."  What James really asks is if you are a distant third in a market, how do you compete with the big boys?  In this case, Nintendo is slugging it out with Sony and Microsoft and rather than going into hand-to-hand combat, Nintendo has changed the game and the stakes – forget about being the most powerful and fastest machine but how about focusing on being the easiest to use with a significant differentiating feature – motion sensors.  James goes on to say:

The point is that business is not a sporting event. Victory for one company doesn’t mean defeat for everyone else. Markets today are so big—the global video-game market is now close to thirty billion dollars—that companies can profit even when they’re not on top, as long as they aren’t desperately trying to get there. The key is to play to your strengths while recognizing your limitations. Nintendo knew that it could not compete with Microsoft and Sony in the quest to build the ultimate home-entertainment device. So it decided, with the Wii, to play a different game entirely.

I would argue that rather than title the article "In Praise of Third Place" that it should be titled "In Praise of First Place" because what Nintendo did was slice and dice the multi-billion dollar gaming market so that it could be first place in a submarket (which is quite huge) that Nintendo has defined, that plays to its strengths, and that it can win.  This is a big deal and quite smart.  Even though Nintendo is a large company fighting even larger ones, this is a strategy that any startup can use – change the stakes and be the best in your new category.  This does not mean to slice ad infinitum until you get a market so small that it is irrelevant, but the point is that going into "hand-to-hand" combat with those with much greater resources can be quite hazardous to your health.  Take a look at an excerpt from an earlier post I wrote about competing with the big boys. 

First, as a startup you have to get away from a feature/function battle because you will always lose against a big boy.  If a customer has already bought a product from an incumbent, they are more often than not willing to stay with that incumbent if they can deliver the extra feature/function soon enough in a good enough way. What I like startups to do is win with the product roadmap and vision.  Show the prospect how you solve their needs today better than the incumbent but more importantly why you are different and how your approach will solve their future needs.  If you can differentiate on this level, it gives you a much better chance to win. 

Digital Media

The future of television advertising (continued)

Posted on by Ed Sim

A little over 2 years ago, I wrote a post about the future of television advertising.  While I have always been bullish about broadband video advertising, I have never believed that the $60b television advertising industry would disappear overnight.  In fact, before the Internet dominates all advertising why couldn’t one bring the tools of the web to the television world making TV advertising more effective, targetable, and measurable – in effect changing it from a mass media to a more targeted dynamic one.  That is in effect what one of our portfolio companies, Visible World, has been working on during the last few years.  Visible World enables every ad to be as dynamic and diverse as the market and audience it captures as new data resources, analytics, tools, and platforms transform marketing.  With its simple-to-use tools, advertisers create, monitor, and deliver intelligent video spots that are edited automatically anywhere and any time they run to reflect the time, location, and context in which they appear.  All while delivering traditional reach within any media plan.  Think of what the web looked like in a static world versus today’s dynamically driven one where web pages are now assembled on the fly based on who you are and what you like.  Visible World is bringing the power of dynamic customization to television advertising.  It is especially nice when someone like Jonah Bloom, Executive Editor of Ad Age and a guy who really gets it, recognizes the power of our platform as evidenced by his AdAge column the other day.

Modifying TV spots
In an hour of omnipotence I’ve rebuilt and redistributed ads for some of the biggest companies in the country. Borrowing their existing creative I’ve modified a dozen commercials, turning each execution into hundreds of 30-second spots, each more targeted and relevant than the original. I’m confident that my work — if it were affecting the real world and not just Visible World’s demo system — would’ve multiplied the ROI on these ads by a geometric factor that would establish me as a genius within my organization, or at least ward off shareholder griping for another quarter….

Already six major marketers are using Visible World to manage and modify their ads in real-time. Another 12 are having dashboards built for them right now. This is a technology at a tipping point, and if you’re not prepared to take my word for it, maybe you can persuade the folks at Visible World to give you a turn as ruler of the ad world. It’s pretty heady stuff.

In short, I don’t believe that television advertising will go away but that it must be reinvented quickly and that advertisers must embrace rather than fear new technology.  And as we move into the future, rather than focus on broadband vs. television (digital vs. analog), I also see a world where both sides can work with each other to effectively deliver better results for advertisers.  As video becomes increasingly more fragmented and viewed on various systems and devices (television, VOD, broadband, gaming systems, cable, mobile, iPods), it will be imperative for advertisers to have an easy way to manage and optimize their video advertising campaigns wherever the audience is.  In addition, the more progressive advertisers will try to figure out how to marry online ad optimization with the offline world.  For example, let’s say you are an advertiser and your online ad for a specific mortgage product for ARMs is getting more clicks in a certain geography versus one for fixed rate mortgages.  Using that data from the Internet, wouldn’t it be great if you could change your television commercial so that the next airing has an updated offer for ARMs instead of for fixed rates?  That is just one example of how Visible World can bring the two worlds closer together, using data from your Internet campaigns to enhance and optimize your media spend on television.  And of course, without the Visible World technology, it would be hard to do this in a near real-time, automated, and cost-effective manner.  There are so many more ways that Visible World can make a television commercial more relevant and effective.  As Jonah goes on to say:

These are fairly obvious ways of using the technology, but as smart creatives start to get comfortable with this tool, we’re going to see way-more-ingenious applications. The ads could even become responsive to the programming. Think the Geico gecko opening his sales patter by commenting on the score in the game, perhaps — sort of entertainment being integrated into the ads, rather than the other way ’round.

Advertisers are starting to get it so keep an eye out for this idea of "advertising responsive to programming" during the next couple of weeks.

Web/Tech

Yahoo’s manifesto for change

Posted on by Ed Sim

If you are a big company getting your butt kicked, it seems like the thing to do is issue a memo.  Bill Gates did it after Microsoft lost out on the first wave of the Internet.  Ray Ozzie wrote one for Microsoft about the importance of software as a service last year (see an earlier blog post).  The most recent memo is from Brad Garlinghouse of Yahoo (see WSJ Article – annoying that it is password protected) who wrote a "call to arms" for Yahoo to stop doing everything and to focus on a few things and to do them well.  According to Brad, "we want to do everything and be everything — to everyone" which means they are investing in too many areas and are spread way to thin.  Brad goes on to outline a number of basic issues that can and will kill any business, small or large (see memo here):

1. We lack clarity of ownership and accountability
2. We lack decisiveness

Rather than just outline the issues, Brad recommends some much needed solutions:

1. Focus the vision
2. Restore accountability and clarity of ownership
3. Execute a radical reorganization (blow up the matrix where there is no clear owner and kill redundancies and overlap)

This is all just basic Business 101, but sometimes if you grow too quickly and don’t take a step back and strategize about what’s important, you can get lost pretty quickly.  Whatever happened to the whole media group in LA with Lloyd Braun?  How about all of the turf wars between the tech team in Sunnyvale with the media guys in LA?  As an example, whenever one of my portfolio companies wanted to do something with Yahoo we were always never sure of who the real owner of the decision was and consequently it made it incredibly frustrating to work with them.  When there is no overarching vision and when there is overlap in terms of responsibility, you can imagine how much time executives can spend fighting amongst each other rather than focusing their aim on the competition.  And inevitably this leads to slow movement, bureaucracy, and an exodus of top talent.  While outlining a vision can sound hokey, it is important for every employee to not only know, but live, eat, and breathe the company mission.  It sounds like Yahoo’s mission to be the "most essential global Internet service for consumers and businesses" lacks clarity for the executives.  While I do use and love a number of Yahoo services, I always use Google for my searches.  I am sure all of these basic changes and suggestions, if taken up by Yahoo, will help them execute in a more streamlined and efficient manner, but at the end of the day it is going to be tough to outsearch Google in terms of technology and monetization (2x the monetization rate per search for Google vs. Yahoo).  Assuming Yahoo does narrow its focus, I can’t wait to see what ultimately will be the top 3 priorities for the company.

Investing/MarketsSaaS

Is the bar lower for a tech IPO?

Posted on by Ed Sim

I am not sure if you saw the news, but Salary.com recently filed for an IPO to raise up to $50 million. On the book is Thomas Weisel Partners, William Blair, Needham, Pacific Crest, and Wachovia. According to the S-1 filing:

Salary.com is a leading provider of on-demand compensation management solutions. Our comprehensive on-demand software applications are integrated with our proprietary data sets to automate the essential elements of our customers’ compensation management processes….

In addition to our on-demand enterprise software offerings, we also provide a series of applications through our website, which allows us to deliver salary management comparison and analysis tools to individuals and small businesses on a cost-effective, real-time basis…

We offer our solutions principally on an annual or multi-year subscription basis. Our direct sales group markets and sells our solutions primarily using the telephone and web-based demonstrations. From the introduction of our solutions in 2000 through September 30, 2006, our enterprise subscriber base has grown to approximately 1,500 companies who spend from $2,000 to more than $100,000 annually, including companies such as Wal-Mart, Home Depot, Procter & Gamble, Merrill Lynch, UPS and Cisco Systems. We also sell to both individual consumers and smaller businesses through our Salary.com website.

From April 2001 through June 30, 2006, we achieved 21 consecutive quarters of revenue growth. During the years ended March 31, 2004, 2005 and 2006, we achieved positive operating cash flows of $0.3 million, $0.9 million and $1.8 million, respectively, and used $0.7 million of cash in the three months ended June 30, 2006. During these periods, we have consistently incurred operating losses, including $0.8 million for 2004, $1.9 million for 2005, $3.0 million for 2006 and $0.8 million for the three months ended June 30, 2006. As of June 30, 2006, we had an accumulated deficit of $21.8 million.

I would usually put IPO filings in the nonevent category but as I dug deeper into the company and financial performance, it did raise some interesting questions for me.  First and foremost, the traditional rule of thumb that most investment bankers have quoted me in the last couple of years was that in order to go public a company needs to have an annual run-rate of $40-50mm of revenue and a couple quarters of profitability.  While the Salary.com numbers are strong (read the S-1 here), they are not close to those metrics.  In fact, during the last 3 fiscal years for the company, it did $6.4mm, $10mm, and then $15mm in revenue.  The trailing twelve month number is closer to $20mm in revenue.  While slightly cash flow positive, the company is not GAAP profitable.  So the natural question for me is to ask whether or not the barrier for a private company to go public is much lower today and whether or not this will signal an ongoing trend in the future.  This is obviously relevant for a number of reasons.  Outside of a few outliers, most of the returns generated for VCs have been from M&A transactions.  If the IPO markets open up again, it would give investors and entrepreneurs another option to create value.  Using a back of the napkin analysis, most companies sell about 20% of their stock to the public, so one could assume that Salary.com is valued at around $200mm pre-money implying a 10x multiple on trailing twelve month revenue.  I must say that sounds quite appealing.  Anyway, we should all watch this company as it goes through its paces because if it does well, it could open the door for plenty of other companies like it.  There must clearly be an appetite from the institutional money managers who are looking for more upside from rapidly growing small cap companies.  By the way, one other interesting point about Salary.com is that is an on-demand application play with some web-based advertising thrown into the mix.  It is also mostly a subscription-based business which means it has a highly predictable revenue stream which is great for forecasting future performance.  Finally, the company only raised $5mm of VC dollars so it is highly capital efficient.  If you read from the S-1 above, most of the sales are generated through the telephone or through web-based demos, all of the traits for a nice frictionless sale and great business model.

Security

The state of consumer security

Posted on by Ed Sim

I had the pleasure, and I mean pleasure, of recently rebuilding two of my home PCs running Windows XP because of performance degradation and other issues.  I ended up doing a clean wipe of the hard drives and reinstalling Windows XP from scratch.  Once I got the machines up and running with broadband connection, I recognized that I was completely naked on the web with no protection.  As you may or may not know, I have invested and am on the board of 2 security technology companies which sell into the SMB and enterprise markets (see Deepnines and netForensics).  Therefore, I clearly understand the need to lock down your systems and protect yourself against spyware, viruses, and other malicious attacks.  Of course, there is always a tradeoff between security and performance.  In the past, I have been an avid user of best of breed software on my PC – ZoneAlarm Pro for firewall, Norton Antivirus, and Webroot SpySweeper for Spyware.  One, this is not cheap, and two, and it becomes a headache to manage and keep track of after awhile, especially if you have more than one machine in the house where you have to set up rules for each separate PC.  For example, as you can see from a recent post, a new software release from Webroot killed one of my machines.  Despite the management overhead, what this best-of-breed approach offers me is diversified protection and real-time scanning.  What good is having virus protection if you are already infected and the virus scan detects and removes it after you are already infected?  There is a huge difference between prevention and remediation. 

So of course, with an eye on simplifying my life, I decided to download and install Windows OneCare on one machine.  It was easy to download, offered diversified protection against threats, and also allowed me to add multiple machines.  However, one drawback, which did not really seem to be highlighted anywhere was that there was no real-time scanning and protection for incoming email.  That in my mind is a huge flaw.  How can Microsoft give everyone the perception that they are locked down with this new service when it does not scan your PC in real time for threats antivirus threats in your email?  I can see a whole army of consumers feeling secure but still having tons of issues without the real-time functionality. 

Anyway, this post is not about Windows or any one specific product, but the fact that I have to download and install security software on multiple machines and have to set them up and manage them.  As you know I am all about simplicity and reducing friction in usage, so why not have one simple box that does it all for the consumer – cable/dsl modem, router, wireless LAN, with best of breed security software loaded into the device?  Zarouterpressfinal3jg Just like the enterprise security market went from packaged software installation to set and forget appliances, why can’t I have the same functionality in the consumer market?  As we all know, hardware is a commodity and prices have fallen dramatically.  And just like enterprises, I want defense-in-depth for my house which means building in security at the edge before it can even get to my machines.  With best-of-breed security functionality built into the router, I can set security policies once for my whole house and not have to install and manage client software for every machine.  I also get my CPU cycles back on my PCs as they can be a drain for the machines.  The good news is that forward thinking companies like Checkpoint ZoneAlarm are starting to go after this market and recently announced just such a device for the consumer market.  If you look at this graph you can see why having comprehensive security at the edge is needed.  Malware gets blocked at the edge before it can do damage to your PCs.  In my mind the state of consumer Internet security is that we are still in the dark ages but it is getting better.