Author: Paul Wallbank

A weekend of research into exploding iPhones didn’t come back with much in the way of firm evidence, but what came out is a pattern in responses to past debacles from exploding batteries to filmsy laptop screens, dud operating systems, support failures and the Leyland P76.

In an eerie way, it’s like Dr. Elisabeth Kubler-Ross’ five stages of grief. Lets have a look at them;

1. Denial and Isolation

“There is no problem. Go away.”

“You still here? Damn. Well the claims are product is crashing randomly, exploding, setting fire to people’s balconies and scaring their cats and toddlers is a figment of a few anonymous bloggers and a media beat up.”

2. Anger

“Our product is designed to the highest Engineering standards and manufactured to .0001 micron precision. Any failure in them is due to operator misuse and will void the customer’s warranty.”

“Claims the product has a design flaw are unsubstantiated claims by journalists in the thrall of our competitors and proof of the left wing, anti-business bias of certain media organisations.”

3. Bargaining

“We have no comment as to whether we are compensating customers for the damages allegedly caused by our product.”

“Accusations we’ve offered Caribbean holidays to the entire tech journalist and blogger communities are totally unfounded.”

4. Depression

“Yes, we have discovered an usual and unexpected flaw in our product. As a consequence we have fired three contractors in our Mount Gambier sales office and senior management will go on a five day dealing with crisis course in Tahiti.”

“We still maintain our products are designed and manufactured to the highest standards and are considering legal action against scurrilous bloggers and those media outlets that misreported this unfortunate chain of events.

5. Acceptance

“Okay, we messed up.”

“We’ve dropped the lawsuits, paid the fines to EU consumer protection authorities, plea bargained a five year prison sentence for our North American managers, compensated our injured customers and are now working on a better product that won’t lose your data, catch fire on your back balcony or break down in Lane 6 of the Harbour Bridge during a wet winter morning peak.”

“We’ve learned our mistakes and won’t repeat them.”

“Honestly. You can trust us.”

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Most IT support businesses are doomed to failure and that’s why they are such a good training ground.

“My friend cannot find work so he wants to start a computer repair business. Do you think this is a good idea?”

When a taxi driver or anyone else asks me this, my reply is “why does your friend think it’s a good idea?”

Most people think computer repairs and IT support is easy and anyone can do it – after all it’s just a matter of clicking a few buttons and if you know how to use email, you can fix most PC problems.

Strangely, the only industry that shares this mentality seems to be coffee shops. Many people seem to think they can run a café because they can drink coffee, but at least setup costs are a barrier to entry which doesn’t exist for the mobile computer support businesses.

The funny is were you to ask the same people if they could be a swimming pool cleaner because they go swimming or if they would be a good motor mechanic because they drive a car to work, they’d think you were crazy.

That said though, I usually don’t discourage friendly taxi drivers or anyone else from telling their friend to go ahead and set up that computer business.

Even though I personally think the computer support sector is a graveyard for most entrepreneurs, it’s a great training ground. You learn about the importance of cashflow and how it’s different to profit – although some techs take a while to pick up they arent’ the same thing.

More importantly, you learn how customer service is the greatest challenge in most business. As a proprietor of a computer repair business you learn quickly how to politely explain the customer’s problem lies between the keyboard and chair or that the error is really a code ID10T.

But the main reason for recommending an IT support business precisely because most are doomed to failure.

Failure is the biggest test of friendships and trust. Being in a sinking business is a stressful time and you quickly find who can be trusted, who’ll stand by you and who isn’t as reliable as you like.

Once you’ve established who you can really trust in business, you then have the foundations for a wildly successful second business.

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This article originally appeared in Smart Company on August 4, 2009.

The recent story of how Skype may be forced to shut down is straight from the Bill Gates textbook on how to do business.

In late 1980, IBM were casting around for an operating system suitable for their new line of personal computers. The obvious choice was the CP/M program. However, IBM couldn’t come to an agreement with Intergalactic Digital Research (seriously, that was their name) over using the software.

So they ended up on the doorstep of a small company in Seattle who specialised in programming languages, not operating systems, who’s main product was previously highway traffic counting systems.

Microsoft didn’t have an operating system so they bought one from a nearby computer store, modified it slightly and did a deal with IBM.

Most of us would have sold the system to IBM and happily congratulated ourselves on making a quick couple of million dollars or so, but that wasn’t Bill Gates’ style.

Rather than selling the program outright Microsoft licensed it to IBM and so millionaires and one or two billionaires were made.

It also set the course for the world’s software industry. By and large software is licensed, not sold. Buying a disc at the local computer superstore gives you nothing but permission to use the program.

That’s the same model Skype’s founders, Niklas Zennström and Janus Friis used when they sold the business to eBay for $3.1 billion US dollars – the underlying software that actually drives the service was licensed to eBay.

Now Zennström and Friis are claiming eBay have breached that license and want to withdraw eBay’s rights to use the technology.

For eBay this is a big problem as they were hoping to sell Skype and the founders’ move makes that almost impossible.

Both the Skype and Microsoft stories show licensing can be a lucrative option with the bonus of a steady cashflow if you have the right product.

For business buyers, the lesson is stark – do your homework, talk to your lawyers and understand exactly the ramifications of licensing and similar arrangements.

If you’re a Skype user, you don’t need to worry as the case isn’t expected to be heard until June next year. By then either an agreement will have been reached or your Skype credits will have long expired.

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