His heart was racing as he glared at me across the long conference table. I could see from the artery pulsing in his neck, the veins in his thick biceps keeping rhythm. As his hands balled up into fists, the arms of his short sleeve dress shirt stretched to the point of bursting. The VP of Engineering knew there would be no visits from Santa to his house that Christmas, nor to most of the other people sitting around me at that conference table. I was the reason.
In the summer of 2002, the race was on between mobile phone makers to ship the first color screen phones. Operators saw massive business potential in allowing customers to buy downloadable ringtones and animated wallpapers for their new color screens. Openwave, where I was heading up licensing and account management to the device manufacturers, had developed an extension to their mobile phone browser allowing media like wallpapers and ringtones to be downloaded using the mobile internet.
This was a novel concept. At that time, adding a new feature to phone service typically meant that operators had to purchase multi-million dollar, specialized equipment dedicated to that specific feature. Putting the corresponding feature into the phone itself was painful. What passed for an operating system in those devices was essentially hand-crafted, complex and fragile. Memory was about 10,000x more expensive compared to 2016. Software updates were unheard of. If there was a grave error requiring everyone’s phone to be sent back to the factory for a software update, it could put that company out of business.
We’d had a close cooperation and partnership with this phone maker. They were among the first to release phones with our browser into Europe and Asia. We’d built and provided them with a mobile browser to help seed the marketplace with capable phones to help drive the market for our mobile internet server technology. They got a rich, open mobile internet capability on their phones for very low cost. Essentially deeply subsidized.
I needed their engineering team to finish hooking the browser up to their media storage. More than just myself, mobile operators across Europe needed phones with a better way of letting customers browse for media, buy it and download it directly on their phones. But from the phone makers’ perspective, there was little upside. The holiday buying season would come and customers would choose the sexiest phone that they felt they could afford. New, unproven features wouldn’t change that demand curve. They just introduced risk for meeting shipping deadlines.
So, here I was, holding up their release because the download feature wasn’t quite working. Even for the basic OS in those phones, this wasn’t a complicated feature. Most of it involved making sure the browser connected to a secure, authenticated website, and upon receiving a of a known type, storing it where the ringtone player could find it. A lot of the feature was simply a specification about this process to allow flexibility to fit consistently into each phone maker’s user experience.
“If this is so easy, you should have done it yourself!” the Product Director said sharply. Then, the VP of Product Management called for a break.
As the group scattered for the toilets, or to get coffee, the head of Business Development approached me. I wasn’t even sure why he was there.
“Do you even understand what you’re doing to us?” he asked. If they didn’t ship these phones to their operator customers for testing in the next 3 weeks to start acceptance testing, these phones wouldn’t make it on to store shelves in time for Christmas, when the majority of their products are sold.
I explained that this was also a problem for us. We’d provided the browser & mobile internet tech for their phones at much less than cost. Our business was made on the server technology we sold to the operators. The browser was a critical enabler, and without the ringtone download–we’d have a very sad Christmas, as would their customers, the biggest mobile operators in Europe.
He urged me to try to find some flexibility in signing off on at least a provisional release of phones with the incomplete feature. They weren’t fighting against the ringtone download feature, in principle. Though they had some doubt about whether that would be popular compared to the current approach of finding the ringtone code in a paper catalog or a TV ad, sending that number as a text message and then getting back a ringtone via SMS. So simple.
Once we regrouped, we settled on a plan that they would pay for extra engineering help from us to finish the work, we’d let them ship a small volume of phones to start operator testing. But I’d got something much more valuable from that meeting.
We learned:
Our exercise-left-to-the-reader approach of giving them a specification and a partial implementation which gave them openness and flexibility was received by them as ambiguous and complex.
It would have been much better to deliver them a more complete feature implementation. And, they’d happily pay to de-risk their work. We learned just how valuable as we discussed the impact of a missed product release.
This was a valuable customer, an early partner, and we’d felt the partnership was built on getting an essential feature, the browser, at a very low cost. They, along with several other major phone makers, helped seed the market so we could sell our servers. We were partners. Now, I was concerned that the VP of Engineering was going to come around the conference table and toss me through the window of the 23rd floor.
Under commercial pressure, good will dissipates quickly. Tangible financial interests endure. More significant, each parties’ interests may be complex, multi-faceted and change over time. Money can help each side keep score–a useful abstraction. Rather than deferring the money discussion til the end, it helps keep discussions focused towards a definitive conclusion.
Ultimately, strong partnerships persist when built on a transparent, but very tangible exchange of value. So, flying home later that week, I set about writing up a new business model.
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