November 24, 2003
CEO's of small companies are responsible for their shareholders and need to do what they can to protect themselves from the simple fact that any innovation can be very easily copied at almost trivial expense by any of the huge software companies, such as Microsoft, and now Google.
This copying is completely predictable. Business plans must account for it from the beginning. If you can't expect to grow fast enough to become an independent company on your own, or to have such a huge user base that you are a very strong candidate for acquisition, you need to at least have fundamental patent protection.
Consider Google's acquisition of Blogger, one of the companies that launched the personal weblog craze. It's got Dave Winer climbing the walls. Winer, a Berkman Fellow at the Harvard Law School, founded UserLand Software Inc., maker of the blogging program Radio Userland. Winer says that Google may crush rival blogging systems like Radio Userland.
He points to the popular Google Toolbar program that's attached to millions of Web browsers. The toolbar makes it easy to do Google searches and block pop-up ads, but it also contains a link to Google's Blogger service. Microsoft's critics once warned that the company would use its browser toolbars to steer people to Microsoft products. Winer sees Google trying to pull the same stunt.
"Do they have a right to do it? Absolutely," Winer admits. "But I also have a right to hate them."
Yes, he has that right.
But "hating" isn't an effective way to protect shareholder value.
On the other hand, given Winer's very early position and history of contributions to the blogging field, he also had the right to protect his shareholders by filing patents. If I was a shareholder, I'd be more interested in a CEO that protected my interests rather than one who hates large competitors who are only doing the obvious, utterly predictable and and completely inevitable actions that large companies always do. Hating inevitable realities is not an effective means for increasing the book value of a company.
He wouldn't have to sue Google -- and given Google's resources it would probably be foolish for him to do so outside of the context of a relationship with a well-heeled partner. And he wouldn't have to attack open-source blogging tools or other small companies if he does not feel it is ethical to do so. But the simple fact of the patents' existence would increase the value of Userland as a company. It would make such potential partnerships much more likely to occur, it would make investors more interested in investing, and it would raise the price of any possible future acquisition.
It would help protect shareholder interests.