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Neat blog entry by John Markoff of the New York Times about why Apple’s current blunders aren’t remarkable. In a lot of ways, he’s probably right. MobileMe, a mildly buggy notebook, and numerous troubles with the iPhone 3G are not Apple’s first mistakes. So why is it being talked about so much? It’s because of the bullshit cult of “It Just Works.”

Somehow over the last few years Apple PR (with the help of bloggers and Digg) has convinced a large portion of the population that their products are next to godliness. Anyone who knows a large number of Apple users knows this is total b.s. They’re certainly not low-quality products, and are probably better built than most crap you buy from Dell, but they have enough problems that they’re probably not going to be winning dependability awards. User satisfaction, perhaps, but good old-fashioned build quality, no.

Apple’s own PR has made their failures seem remarkable, even though in reality they aren’t, by building up so much hype about their lack of failures. So even though the current ones are minor setbacks for the company, people take it as a sign of impending doom, which it isn’t. It’s probably had little or no effect on sales.

Despite everyone quoting TechCrunch’s sourceless sales total of 6 million for the 3G model (which I’ll believe when I see it in an earnings report) as if it were fact, we don’t really know how many phones they’ve moved so far. But however many it is, the demand doesn’t really seem to be suffering. They’ve definitely sold somewhere north of a million in almost no time at all.

And despite grumbling about MobileMe, or Airs that can’t seem to stay connected to the net, or iPhones that can’t go for ten minutes without being recharged, everyone who owns one of those products will keep on using it and buy the next one. People buy Apple products for a lot of reasons, and quality is only one of them, and often not the biggest. Most people who own any Apple product beyond an iPod wouldn’t switch to Windows if Steve Jobs personally ruptured their left testicle with baseball bat. A few lost emails aren’t going to do anything.

So these blunders will have no lasting effect. Nonetheless I’m thinking about short-term shorting AAPL (or at least buying some puts) only because I think the market is reacting to phony sourceless sales figures, and underestimating Android. Thoughts?

For those who don’t know, I read a site called Hacker News fairly frequently. It’s usually the 2^nd thing I check each day, after my RSS feeds. It’s a computer-focused site where people post interesting stories and the readers vote them up. It is, I hear, a lot like Reddit was in the early days.

Anyway, I’ve seen a disturbing trend there over the last few weeks, and it mirrors one I’ve seen a few times in the world at large (which is why I’m posting this here rather than there) and I thought I’d address it because maybe, just maybe, I can save someone from making a big mistake. So I’m going to tell you the one concrete, inviolable rule that I’ve discovered in my few years of being an entrepreneur.

I don’t say this lightly. While I might be a spewing fountain of opinion, I generally tend to take Paul Buchheit’s view of advice (which he defined as “Limited Life Experiences + Overgeneralization”) and therefore don’t think there are many absolute rules, at least that I’ve proven conclusively enough to preach as gospel. And even when I do give advice, such as how to get accepted to Y Combinator, I always do so assuming it will be received as just helpful hints from someone who has been there, rather than a one size fits all generalization.

But there are exactly three things I am sure of, and the first two you probably already knew. Number 1 is that evolution as a concept is ideologically correct (even though clearly much of its history on this planet and its mechanisms are as yet unknown) and that anyone who thinks otherwise has a flawed decision making process. Number 2 is that Michael Bay’s career is the greatest atrocity of the last two decades. And the third, and the one that inspired this post, is that if you have a legal question, you should ask a lawyer, and only a lawyer.

The law is a lot like football, where every casual observer thinks he knows way more than he does. And just like every douche bag who ever played three downs of peewee thinks he’d do a better job coaching his favorite NFL team than the guy who gets paid 50 times more than he makes at his lousy middle management job to do so, every person who ever read a blog entry about YouTube thinks he knows something about copyright law. He doesn’t.

This is dangerous to you, seeker of legal advice, because you’ll be fooled into thinking maybe, just maybe, you can save yourself the retainer. The guy telling you “oh don’t bother to form an LLC, you’re not making a profit yet so you can’t be sued” sounds so confident, surely he must know what he’s talking about. He doesn’t, and you really don’t want to find that out the hard way.

When I first started playing poker, I fell into a similar mind trap. I was routinely calling people down because I felt, no, I knew, from their mannerisms that they had a weak hand. So I’d call with middle pair and then they’d roll over a straight. And it wasn’t that they were brilliant sharks, in control of their own tells and tricking me into donating to their kid’s college fund. It was that they saw a runner-runner flush come up and were so afraid of the long shot bad beat that they actually did think they had a weak hand.

And that’s when I realized that, in both poker and life, you can’t read people any better than they can read themselves. You can, if you’re good, very accurately determine if they think their hand is good, or if they think they know the answer to your legal question. But you can’t be sure if reality differs from their perception.

So I see people post these legal questions on HN (or ask them in real life) to largely programmers, and it saddens me because none of the answers (other than mine) are the only valid one, which is “ask a lawyer”. And someone somewhere is misguidedly trying to save a few legal dollars, and in the end are exposing themselves to all sorts of things going wrong because instead of seeking advice from a trained professional, they got 100 opinions from computer science experts, many of which are somewhat informed due to somewhat similar past experiences and many of which are third-hand information whose original source was a blog post by an intern at TechCrunch.

The law is a very vast, complex thing, and your situation is unique. A lot of factors are involved in questions that logically seem as if they should be simple. Lawyers go through a lot of schooling to learn how to examine your situation and come up with the right answer. Their schooling isn’t easy (at least according to the many smart people I’ve met who went through it) and neither is the comprehensive test they take at the end. That stuff isn’t for show.

This is especially rough for programmers who are logical people used to dealing with logical systems because the law is basically the opposite. It may help to think of your legal situation as an equation with ten variables. Changing one of them could easily change the result. So even if the person answering your legal question has been in a situation with nine of the same variables, there’s still a good chance that the answer he’ll give you (which is informed by his past experience, where it probably came from an attorney, then added to overgeneralization to become advice) will be wrong for you. He means well, and you mean well, but the end result is a disaster waiting to happen.

Even worse is the fact that some of those variables are ridiculous things that, logically speaking, shouldn’t even be variables, such as what state/city you’re in, the net worth of some third party, or whether you dress left or right. The law is one ages old hack on top of a kludge.

The worst part is, a lot of the advice could be gotten for free. Someone recently wanted to know if he should form a business entity. A lawyer probably would have given him an informal opinion in a free consultation.

In fact, you can educate yourself far more about anything by just picking up the Yellow Pages (or going to their website) looking under “attorneys” for the category that seems nearest to what you’re after, and calling one. If they’re not in the right specialty, they’ll refer you to someone who is. I’ve met with lawyers of almost every specialty except for injury and divorce (two I hope to avoid forever) and each time learned quite a bit before I ever plunked down a retainer.

So that’s it. If you need programming advice, you don’t ask a lawyer, and if you need legal advice, you don’t ask a programmer. (The former would actually be much better for you because the lawyer would most likely say “I don’t know”.) If you want legal help, ask a lawyer. Case closed.

As I mentioned in my last post, I really get off on all of the character assassination flying around this time of the election year. Two of my favorites, one about each are as follows.

People on the left are slinging some mud at John McCain’s values, as they have for years, because of his marital history. They’re saying his aren’t the same as ours. I don’t get this one. The guy traded one wife for another that was younger, richer, and far better looking. I don’t know what country the critics are from, but here in the good old U.S.A we call that the American Dream. If you haven’t ditched your wife for a 20 year old millionaire blonde bombshell, it’s only because you haven’t had the opportunity.

McCain’s camp, in an effort to unbury themselves from his revelation that he doesn’t know how many homes he has, is hurling some real-estate related trash over the fence. “”Does a guy who made more than $4 million last year, just got back from vacation on a private beach in Hawaii and bought his own million-dollar mansion with the help of a convicted felon really want to get into a debate about houses?”

Wait, so what did Obama do wrong here? I’ve watched enough HGTV to know that when it comes to buying a house, it’s all about saving as much dough as you can. I don’t care if Barack let Michael Vick run dog fights there, if it got the seller to pay his closing costs, I say more power to him. If you weren’t allowed to buy things that were connected to a convicted felon, Escalade sales would drop 90%. Thankfully you are, so you can pick one up for $15,000, already bulletproofed, at your local police auction.

While I’m here, I just want to thank everyone who participated in my poll. 66 people voted, and only 3 said they didn’t know how many homes they own. I suspect at least 2 of them were joking, but even if you take that at face value, 95.45% of American’s don’t seem to have John McCain’s problems.

In honor, I decided to make what I promise you is both my first and last lolcat ever:

There’s nothing I love more than a good bit of trash talking, which makes election season as much fun to me as Free Burrito Day at Chipotle is to a morbidly obese housewife. The only thing better than a politician talking trash is when it blows up in his face.

Enter John McCain. He’s been harping on how out of touch Obama is with the average American. Imagine his chagrin when he realized, in front of the camera, that he didn’t even know how many homes he owns.

I know a lot of people, and as near as I can tell all of them know how many homes they own. But just to make sure my small sample isn’t subject to some sort of observational bias, I’d like to get your feedback. So if you could spare a couple seconds, please fill out this simple poll off the top of your head. No peaking at last year’s tax return!

*If you’re in an RSS reader, click here for the poll.

There’s been a bit of a stir over a piece that appeared on Sarah Lacy’s blog about Y Combinator about the most recent Boston Demo Day. Sarah herself was shocked because she “thought it was a pretty balanced piece.”

I think the commotion was mainly caused by the writer’s lack of understanding of what exactly Y Combinator does. He didn’t seem to paint an overall negative picture (or at least he didn’t appear to intend to) but he also didn’t paint an accurate one.

Although the comparison to American Idol is tongue in cheek, there are some unfortunate real similarities.

It’s well-known that the recording deals that the Idol winners sign are extremely one-sided in favor of the producers and record companies and rather unfair to the artist. The same can be said for the “winners” of Y Combinator funding. Sure, they get some cash and valuable guidance and experience but they have no choice but to give up a sizable chunk of potential revenue. Generally, they give up on average 2 to 10 % *** of ownership which Y combinator argues is crucial for the success of the project.

I’ve long viewed it as a shame that Y Combinator gets compared to some sort of reality TV show, as it’s really nothing like one. You don’t compete against other startups in your batch (in fact, it would be more accurate to say you cooperate with them all), nobody gets voted off, and winners aren’t selected at the end. And the moderators aren’t either gay or Donald Trump.

Despite his mistaking equity for revenue, he essentially summarizes decision you make any time you take any money, which is that you give up something for it. With Y Combinator, you do it at a lower price than you would a normal angel or VC round, but you also do it at an earlier stage and you get more value add for it. That’s clearly the standard in investing. Earlier stage = higher risk = lower valuations.

So it’s an exercise for the startup to determine if it’s worth it. What shocks me about a lot of the coverage about Y Combinator is that people seem to think that this is any different than any other investment round. It isn’t. It’s the same decision a startup essentially makes every day. They also seem to think the 6% average for the somewhere over $15k they get on average (making the valuation in excess of a quarter million) is a noteworthy amount. Maybe it’s my own naivety, but when I was in that position, my thought was something like “these guys are giving me a valuation of over $300k and we didn’t even have a PowerPoint to show them.”

Also, having been through it, Y Combinator’s investment terms are pretty founder-friendly. They get a few of the standard protective provisions that anyone other than your grandma would require, but they’ve often frequently even waived those. I have a feeling that most angels would have vetoed a lot of the smaller exits that have occurred amongst teams they’ve funded.

And then it continues…

Y Combinator has invested in and supported over 100 startups*** which is very impressive. While the majority of them are still struggling and/or plugging away, there have been a few successful exits and acquisitions. They’ve included; Reddit, Zenter, Anywhere.FM, Loopt, Justin.tv, Scribd, Xobni, and Disqus, to name a few. While some of these names are well-known, none of them can be considered home runs ala YouTube, eBay, or even Digg or Twitter. (The latter two still haven’t cashed in their chips yet.)

First of all, 5 of those 8 haven’t exited or been acquired. (Or at least if they have, their founders owe me a beer, cheap bastards.) And second, Compete.com disagrees with the last statement involving Twitter.

I don’t know what scribd’s and reddit’s revenue streams are like, but they can’t be any less than the big goose egg Twitter is putting up. And they do it without the 25% downtime.

Despite the many cool hip services that continue to come out of this factory, the hit ratio appears to be a little low (but the jury is still out on what THAT ratio should be). One can’t find fault with the startups but perhaps with the selection process and the members that make the selections. It’s a skill that can’t be taught, much like making selections in professional sports on draft day. You either have the touch or you don’t. Doesn’t matter how much money you have, if you don’t spend it wisely than you’ve lost. It’s like being a quarterback with a multi-million dollar arm but a ten cent head.

Y Combinator is 3 years old. You really couldn’t expect someone to pick an eBay in 3 years. In fact, even if they did, you wouldn’t know it yet. Whatever the jury decides is a good hit ratio, it’s going to take a while longer to figure out how many cents Y Combinator’s head is worth on the metaphorical quarterback’s body.

Sarah seems to have a few mathematical misconceptions as well that color her thinking.

It reminds me of the risk-reward I hear potential grad school students weighing. In my case, I never considered getting a journalism degree because I didn’t have the money, and I didn’t want to take out a loan. Others argued it would increase my earning potential by x% so that investment would be worth it. The main argument was the connections you get from attending a well-heeled journalism school. So maybe, if I’d come out to a lucrative daily paper job, it could have seemed a good bet. But since those connections—and J School training–are primarily rooted in the daily newspaper world, I’d argue it could have actually cost me career value long term.

That’s results-oriented thinking. It might seem like a bad idea in hindsight given the totally unpredictable shitstorm daily newspapers are weathering at the moment. But that doesn’t mean the decision to enter J school, years before anyone could even have guessed such a thing would happen, would not have been the better one.

And true, her decision seems to have worked out well, but who knows where she’d be if she went to school. She might be Barack Obama’s VP nomination for all we know. It’s impossible to say. You just have to make the good decisions given the information you have at the time and then never look back.

It’s much the same with Y Combinator. You simply have to decide if being funded by them increases your startup’s chances of success by 6.4%. I know a lot of people who’ve been through it, and almost all would do it again.

1% of Facebook is also worth hundreds of millions (at least).

1% of Facebook (which is worth more like tens of millions according to their internal valuations) is worth as much as it is because they sold sizable chunks of their equity to investors to get the sort of funding needed to make it where they are today. And they sold those chunks to people like Peter Thiel who brought a lot of advice to the table, the kind you don’t get over dinner. And I’ll bet Zuckerberg didn’t get weekly doses of Glop either.

It’d be like going to someone’s house for dinner then paying them for the meal they intended on giving you for free. Or, perhaps it’s more like taking out an insurance policy, and most of the best entrepreneurs don’t like insurance or safety nets. That’s why they are entrepreneurs!

I’d agree that if you could somehow get all of the advice and connections you can get out of Y Combinator for free, you should do that instead. I seem to remember some proverb about milk and a cow that basically said that if you were employee #5 at PayPal, go ahead and pass. But for most people that just isn’t a reality. A lot of startups give a couple percent equity to an advisor who provides no funding at all, and often they are smart to do so. For the right person, I would have.

You don’t have infinite slices of equity to pass around, and you don’t know how much you’ll have to give up later on. That 6% you don’t give up could wind up being a big chunk of your holdings– maybe even the only thing you’re left with.

Actually, you sort of do have infinite slices. With each funding round, you print more shares, and all previous holders (including Y Combinator, if they’ve funded you) get diluted. There’s no ceiling on the number of rounds you can do. You could sell 6% at a time as many times as you (and any preferred shareholders you picked up along the way) think is wise, though you won’t because outside of Y Combinator, it’s very rare to sell so little.

So I watched The Dark Knight a couple of weeks ago. Going in I didn’t know what to expect. I really liked Batman Begins, and it had a lot of the same people behind it. But the hype was ridiculous, with the screaming masses ready to hand Heath Ledger the Oscar for Best Supporting Actor months before anyone had even seen it. The IMDB hoi polloi were calling it the best movie ever, ahead of The Godfather and The Shawshank Redemption, which made me realize that an unbiased review was unlikely to be had. Even film critics dare not speak ill of the dead.

Still, I did a pretty good job of ignoring the hype (which is easy to do when you don’t watch TV) so I went in optimistic. It kinda let me down though. It wasn’t a bad movie really, but it wasn’t anywhere near as good as the last one. And Heath Ledger was actually really good, but not great. He wasn’t even close to what won last year’s Best Supporting (Javier Bardem in No Country for Old Men).

I mostly felt that the movie just tried to do a little too much at once. Superhero sequels almost always do. Spiderman 2 suffered from the same problem, as did X-men 3. They strive to be bigger and faster than the previous ones, with more CGI, more explosions, more villains causing more fight scenes. More of everything.

And it’s sad because what made them work, if the originals were really good, was their characterization. The special effects have to be top-notch, because they enable you to suspend disbelief when they are, which is pretty critical when you’re watching a movie about a man who can swing around from buildings on webs that shoot out of his wrists, but they shouldn’t be the main attraction.

But in order to top the previous ones, the sequels’ trailers need to have more fists flying, more stuff going boom, and more evil-looking dudes making the fists fly and the stuff go boom. And the basic humanity that makes you see a guy in a bat suit fighting crime and actually relate to it is lost somewhere around the third senseless explosion, which is usually about five minutes in.

Also, I think I’m fairly willing to suspend disbelief about a lot of things. A wealthy media mogul/ninja in a bat suit fighting crime? Sure. Another guy dressed like a clown causing it? Ok. A car that can eject a motorcycle from itself? Alright. But Maggie Gyllenhaal being pretty? Sorry, that crosses a line. Let’s just say the last time I saw something that ugly, I pulled the lever and immediately took a double dose of Kaopectate.

So either way, if you haven’t seen the movie yet (and if so, judging by the box office gross, you may be a fictional character) it’s missable. Catch it on DVD.

TechCrunch and a number of other blogs I read on the industry seem to be pretty down on Android’s chances. The logic was summed up thusly by Erick Schonfeld:

And frankly, it is difficult to find mobile software startups excited about making Android apps at this point. This is a platform war. If there are no compelling apps for Android, nobody will buy the phones.

Wrong and wrong. For one, as many have pointed out, the iPhone sold most of its units before there were legitimate third-party apps. It sold them because the phone itself appealed to users. This has been the prevailing paradigm since the industry’s inception, and as we move into the new era of mobile devices will probably remain a significant factor. The primary things people do, talk, email/text, web surf, etc., will still be best served by certain carriers and certain form factors, and hardware will still be a key selling point. It’s clearly on the road to no longer being the only selling point, but for now it’s still not that far off.

The beauty of Android’s openness is that many different manufacturers will use it to make many different phones. The iPhone comes in one variant, the full touch screen, no physical keyboard, smartphone. Great for web surfing and listening to music, awful for use as a phone or email device. Android will surely end up in that form factor at some point too, along with every other configuration imaginable from free (after rebate) clamshell to Blackberryesque, keypad loving email machines.

It’s much like Apple vs. Microsoft in the early ’90s. Apple will make one high-quality (by some definitions of that term at least) model that runs on one low-quality carrier, and fit one very niche (but highly profitable) consumer segment. Android will, if the vision comes to fruition, enjoy the collective development and marketing budgets of a range of mega corporations, and fit every conceivable consumer desire. Whatever type of phone you want, on whichever carrier you want it on, Android will have a model for that. Apple just cannot compete.

And then there are the developers. As someone in the startup space, I’m way more likely to develop for Android than iPhone if the user bases are comparable. For one, I don’t have to pass Apple’s ridiculous approval process. What’s the wait time like on that now? I also don’t have to worry that AT&T might not like what I’m doing and force Apple to employ the old kill switch. I don’t have to worry that Apple will simply build in the functionality I’ve designed and flip the kill switch themselves.

We’ve already seen what’s happened to Facebook developers over the last few months as they’ve exerted more and more control over their platform. Throughout the last few decades we’ve seen one closed platform after another fall to their open competitors. Mac to Windows. AOL to the internet. It seems foolish to say that this will be any different.

I’m not sure that any one particular Android phone will ever outsell the iPhone, but it doesn’t matter. 100 different Android phones on a multitude of carriers certainly will. It’s wonderful that HTC is kicking things off for them too. HTC has been making the best smart phones around for a couple years now, and the Dream looks pretty aptly named. Given the remarkable disparity between the CDMA and GSM providers in the country, in terms of coverage, call quality and data speeds, I’m praying they’ll release a Sprint or Verizon version shortly.

Either way, in one corner we have Apple and Cingular pushing a closed platform. In the other corner, we have every other cell phone manufacturer and every other cell phone carrier pushing an open platform. I don’t see how it’s possible to not be excited about Android’s chances.

For those following along at home, my iPhone bet (I took the under on 10 million iPhones sold by the end of this year) has been pretty close. Apple had reportedly sold about 6 million of the original model in roughly one year (and the bet was for about 1.5 years) so they were tracking slightly under. However the 3G model has a much lower price (though it costs more over the length of the contract) due to carrier subsidies. This is clearly good for the over.

I thought my side was looking weak for a bit there, but a couple developments have me liking my action once again. For one, Apple quickly sold out of the 3g model. It did so in one weekend, which is impressive, but that was only around 1 million units. It’s questionable if they can even produce another 3 million in that time. They’re in the process of ramping up capacity, but that takes time.

Also, there’s been a much larger negative buzz around the 3g model than there was around the original. There were some temporary glitches that bricked a lot of units and the MobileMe fiasco, neither of which will probably have any long term repercussions. But the terrible battery life, poor stability, and now more than anything the fact that call quality somehow went from bad to awful, which is getting a lot of mainstream press, all bode well for my side.

So which side do you like now?

I wasn’t looking for a new car. I’ve loved the one I have ever since I bought it a little over two years ago. In fact, if my business sold tomorrow for a billion dollars, I wouldn’t buy a different one. I’m not a car guy, and I’m not so insecure as to feel the need to show off obscene wealth (even if I possessed it) by riding around in a Bentley. That stuff is for poor people who become famous actors or professional athletes.

Me, I just want something luxurious. A car that pays attention to every detail. Comfortable seats. A good sound system. Suspension that makes you feel like you’re floating over a cloud. And my car has all of that.

But as we sat on the tarmac at Akron Canton last week, I saw a vehicle that made me realize the one thing my car lacks: a 3,000 gallon tank. That’s why this is going to be my next car:

First of all, what I like about my SUV is being up high and having 4 wheel drive. This bad boy is way farther from the ground, and has 18 wheel drive. As far as I’m concerned, that’s 4.5x as good.

Second, what better way is there to hedge against fuel prices than to be able to buy a few years worth of it at once? Even if that sucker only gets 10 miles per gallon highway, I’m covered for the rest of the decade. When 2009 rolls around and everyone is complaining about that $11/gallon they’re spending, I’ll laughing my ass off. As little as I drive, I’ll fill it once, and by the time it’s empty we’ll all be getting to work in solar powered helicopters.

My local grocery chain (Giant Eagle) recently opened up a chain of gas stations called Get Go. They have a gimmick where when you shop at their grocery stores and use your Advantage Card (so called because it gives you the “advantage” of paying normal price for items they otherwise mark up in order to convince you to use their Advantage Card) you get discounts on gas. For every $50 you spend, you get 20 cents per gallon off.

So, the play here is obvious. I do all of my shopping there until I spend $1,000 (not hard to do, especially since gift cards to places like The Home Depot and Bed Bath and Beyond count) and get $4 per gallon off, which is still slightly above the going rate for the cheap gas. Then I park my new car outside of the Get Go until a tanker pulls up and reloads (they’ll need it). After it leaves, I wheel this bad boy up to the pump and fill ‘er up.

I figure one tank full of 87 octane would last me at least two years, so I can turn around and resell almost all of it immediately. I would make a cool $12k per load. Then I’d just go blow $1k of it on groceries (filet mignon 7 nights a week baby) and repeat.

I wonder who I’d see about getting a nav system and some Mark Levinson speakers installed in a gas tanker.