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Everything I know about Stephen Hawking I learned one evening a couple years ago at the old Claremont Hotel on the border between Oakland and Berkeley, California. I was there to give a speech and was late for the gig, so instead of waiting for an elevator I took the stairs down a couple floors in the old wooden hotel. Bursting through the doors at the bottom of the stairs and into the lobby I almost crashed into Stephen Hawking! Killing a world-famous physicist in a wheelchair is not what I wanted to be remembered for so it was lucky I was able to roll a bit to one side and avoid — just barely — taking out both Hawking and his chair.

Recovering from my gaffe, the first thing I noticed was that Hawking was surrounded by four (4!) attendants, all of them attractive young women (not the girls from the picture). This guy, trapped as he was in his body ravaged by ALS, still knew how to live. He proved this again when I bumped into Hawking — in a completely different sense — in the Claremont bar after my gig, where he was still surrounded by the laughing girls and apparently enjoying a festive beverage.

I thought about that encounter, if it even was an encounter, this week when I heard about Hawking’s new book and Discovery Channel documentary in which he cautions against announcing ourselves to the universe just in case aliens we attract want to eat, enslave, or simply eliminate us, which Hawking apparently sees as a pretty good bet. His premise being that we are a young civilization in an old galaxy and if we are visited by aliens they’ll probably bring enough firepower to burn our sorry asses.

This latter part of the story is where Hawking and I part ways, because I simply don’t agree. If superior aliens are going to find us — attracted no doubt by old Sonny & Cher and Partridge Family episodes — I’d posit that they have already done so, found us boring, and moved on. But I guess that wouldn’t make much of a book, would it?

In other news I was surprised this week, not that HP bought Palm (after all, they’d already bought 3Com, which begat Palm) but that the press had figured the deal would go to Lenovo. This was analyst manipulation of stupid reporters. Yes, Lenovo is moving into mobile devices like all of its competitors, but buying Palm made little sense because: 1) Lenovo is a Microsoft hardware OEM and pretty much nothing else, and; 2) Lenovo already over-paid for the IBM PC business and would hardly be expected to spend a comparable amount for Palm, which holds less market share and brand value. Once burned, twice shy.

HP, on the other hand, really wants to see itself as a significant player in all market segments. They have the technical depth to make good use of Palm technology and their early iPod licensing shows they are somewhat open to lateral thinking when it comes to mobile devices. Now I hope they do something really exciting with Palm’s WebOS.

At this point you’ve probably figured out that there is no dominant theme to this column, which is really a list of random ideas. Most random of all, it seems to me, is word that Google apparently revealed last week at a Mountain View, California planning commission meeting its intention to build housing units on part of its campus in that city. I’m surprised this wasn’t picked-up by the local papers. So in addition to being given free access to unlimited Lucky Charms cereal (the entire basis for Google’s technical success — remember you heard it here first) at least some Google employees will get what might be free (or certainly subsidized) housing.

If work is your life this might even make sense but I would need Google to go just a bit further and agree to regularly wash and groom my two dogs before I’d agree to move in.

This idea of company housing, which is very common in Asia, is not unknown in the U. S..  Apple tried to do it during the first reign of Steve Jobs when the company bought hundreds of acres in the Almaden Valley south of San Jose and proposed to build there a huge live-work development. When Steve left Apple in 1985 the idea left with him and eventually Apple sold the property.

It would be interesting to know if the Steve Jobs of 2010 still thinks his 1985 idea was a good one?

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It is rare when my two primary gigs — technology and finance — intersect in some philosophically satisfying way but it happened recently when Goldman Sachs was being charged with civil fraud by the SEC and I was speaking the same day at the Palmetto Open Source Software Conference (POSSCON) in Columbia, South Carolina.  Just minutes before my time to speak I realized that what I had to talk about was trust — the T-word — a word which has very different meanings in each of these realms.

Trust is present or it is absent. Grab a nerd and he’ll tell you that even the absence of trust is a measure of trust and that particular measure is zero. When trust is non-zero (which is better, believe me) it is based on one of two methodologies — empiricism or transparency (the other T-word).

The empirical way to create trust is by not trusting anybody. Here I literally mean canceling out of the equation trust as we know it in any interpersonal sense. This can be done through hedging or laying-off the risk ASAP to a rube. Goldman appears to have done both. The essence of empirical trust in this instance is “I trust because I don’t need to trust because I am (or soon will be in the rube scenario) immune to harm.” This immunity comes from a mathematical proof, whether that proof is provided by a strongly encrypted password on a computer file or by the hedging of counter-parties in some complex financial derivatives play. Empirical trust is a zero-sum game.

It also has no soul.

We see empirical trust in the current REPO-based big bank funding system that has collateral obligations being swapped back and forth like loyalty oaths in Catch-22. The big banks don’t trust each other and for good reason, because they’ve all been lying all along and now that has been revealed. That’s why the lending market has been starved despite the best efforts of the Fed and Treasury to get banks lending again.

Trust through transparency is a completely different creature based on the novel idea that people say what they mean, do what they say they will, and make things that work because you can see how they work inside. Those workings are transparent, get it?

Transparent trust is the basis of Open Source software, which is code that is written for free by volunteers and shared openly with the world. Bill Gates, when he first heard about Open Source, called it communism. But in this case at least it is communism that seems to work.

Open Source works precisely because there is no money in it. If there is no obvious financial reward what’s mainly left is doing it for glory. Linus Torvalds, the original author of the Linux operating system, likes to point out that Microsoft ships new products to meet revenue goals while volunteer Linux developers ship new products when they are ready. To do it any other way would be embarrassing. Viewed in this way Windows Vista, which was two years late but still terrible, suddenly begins to make sense.

Open Source software authors have their names on the product and their reputations at stake, so they make sure the code they ship is as good as it can be. How quaint.

Contrast this with Lehman’s Repo 105 gambit or Goldman’s custom ABACUS CDO’s for Paulson & Co. What Lehman and Goldman sought was the exact opposite of transparency. They sought opacity and hid behind it. They didn’t tell any more than they were legally required to about what was really going on. They lied.

There’s a funny thing about lying — it only works well when done by a slim minority. Nobody wants a strong reliable currency more than does organized crime, for example, which operates mainly in cash. It doesn’t matter how much you steal if the money is worthless, so Tony Soprano was a fiscal conservative.

Empirical trust says that if we properly hedge our bets it won’t matter who is telling the truth. But that just as firmly proves that we have no ethical expectations and no reason to do the right thing, especially if doing the wrong thing is more profitable.

There is an irony here and it is that Open Source software is very successful on Wall Street, where it dominates, while proprietary products from companies like Microsoft and even Oracle are in relative decline. Linux, Java, and a vast array of similar Open Source products are at the very basis of these Wall Street calculations that have been getting us in such trouble. One of the big reasons why Open Source has become so successful is because banks like Goldman have embraced it. They’ve done so because in the case of technology for running your business, transparency is a no-brainer and empirical trust, well that’s just stupid.

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What are the odds that this week’s story about the next-gen iPhone “found” in a Bay Area bar came about by accident? A quick survey of former and current Apple employees (okay, it was only four of them) came out 100 percent on the side of this being no accident but a deliberate plant on Apple’s part.

Look how the story grabbed headlines and created free buzz for Apple at a time when Apple doesn’t have a new iPhone to flog in the face of new phones from Microsoft and a bunch of new Android devices. By “losing” a phone Apple stole the attention and, in doing so, told us only one thing we didn’t know before — that the new phone will have two cameras. Big whoop. Thinner, bigger battery, more Apple components were all to be expected, but the second camera, of course, has us all thinking about iChatting on the bus to work, which is exactly what we’re supposed to be thinking about.

Remember Apple is the only phone vendor that has such tight integration of hardware and software services. Not even Microsoft or Nokia are in a position to offer something truly comparable.

Which brings us to the iPad, which doesn’t even have a camera. Why the heck not? Because adding one would have bumped-up the price, because the 300,000 people who bought a camera-less iPad on Day One will also buy another iPad with camera on the day that version is introduced. Once again Apple is playing to its strengths even in leveraging its weaknesses.

Apple is also about to effectively abandon one old power center in favor of a new one. Apple has historically had great success in education. Remember how Dan’l Lewin 25 years ago built Apple’s education sales operation into a powerhouse that is still an important profit center for the company? Now I am told Apple is about to shutter their education program in favor of shifting it into the Apple Stores.

The plan is for Apple to dismantle their higher education sales and pre-sales support division by October, shifting resources to support University sales at the Apple Stores and by telemarketing.

This makes sense and is probably even a good thing. It means more Apple stores in more cities and especially across the street from more colleges and universities. It gives Apple Retail greater resources at a time when the company is already gaining market share. And if Apple makes a serious grab for the textbook market with its iPad (hint, hint), they’d better have a shop nearby to support students.

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Update — Apparently I wasn’t clear enough below for some readers.  Her is the deal: I have so far about 340 candidate companies for 24 positions in my upcoming reality TV series.  That means I have to reject 93 percent of all nominated companies.  Chances are that your startup will not be selected.  So I thought it might be a good idea to point out to those who are true believers in what they are doing that this might be a great time to emphasize more than just the technology and the business.  Emphasize the people who have been, in nearly all nominations so far, ignored.  If you want a better chance of making the top seven percent, then make a greater effort to sell me on your company.  If you can’t edit your nomination, then nominate yourself again or — better still — reach out directly to me with those new details and I’ll make sure they are considered.  What isn’t clear about that?  As for Mrs. Cringely’s remarks, they were a joke. — Bob

I’ve been going through the 300+ nominations for companies to be in this summer’s Cringely (NOT in Silicon Valley) Startup Tour and I am ready to share some conclusions with you. There are three ways to make the final 24: 1) you can have technology that will change the world for the better; 2) you can have an amazing business model that will change the world for the better, or; 3) you can have fascinating people who may not change the world but just might change my world by meeting them.

So far hardly any companies have tried this Door Number Three.

Technology — business — people, that’s what it comes down to, with people being the easiest, frankly, yet I don’t see much personality in these nominations or even in most of the companies.  It’s there, I’m sure, but how can I tell?

Where are the funky company videos? Where are the good natured (or even foul natured — that works, too) founders? Where are the companies relying on smoke, mirrors, and attitude? Where, even, are the single mothers and the Sudanese immigrant company founders?

I am especially disappointed with the entertainment category in this regard. You’d think those people would be the hippest of the hip but they are not. At this point I can see one entertainment company making the cut, maybe two.

We can’t all be another Google but we can present what we have with good humor, of which I am seeing darned little. And that simply doesn’t reflect the startups I’ve known and worked in over the years. Startups are fun, but these seem all too grim.

We have a month to go in this selection process. I’m about to sign that major cable network I’ve been alluding to. This web and TV series is going to happen and it is going to have the crap run out of it over and over on TV until tens of millions of people have seen it.

Don’t you want to be part of that?

Then prove that desire by doing something to stand out from the pack.

One more thing, a word from the very real Mrs. Cringely. I am not making this up, though I’ll tell you right now I don’t condone it. Still, I know which side my bread is buttered on, if you know what I mean and I think you do:

Dear Start Ups,

I thought it might be helpful if you knew the following information….

I’m petite. Extra small should fit just fine. I like fine shoes, especially high heels. My U.S. shoe size is five. I love jewelry. I prefer unique, unusual and funky stuff, not conservative, old lady crap.

Sincerely,

Mary Alyce Cringely

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This column was finished before I realized that this week is Twitter’s Chirp developer conference in San Francisco where Twitter will supposedly (and finally) explain how it intends to make money. As you can see below I have my own ideas on this. Let’s compare my ideas with Twitter’s later in the week and see whose are more fun.

I don’t tweet. Yes, I have a Twitter account that’s attached automagically to this blog and whenever I write something new it sends a link to the world. But that’s not tweeting, not really. Still I have several thousand followers on Twitter and pride myself that I don’t inflict myself on them more than 2-3 times per week. I have 750 Facebook friends and there I am somewhat more active though nothing like many of my friends. But even though I am more active by far on Facebook than Twitter, there is no doubt that Twitter is more valuable to me than Facebook. And if I were Google — “Would Google buy it?” being one of the new de facto questions asked about tech startups — I would buy Twitter before Facebook.

Why I would do this is easy. I connect to more people through Twitter than I do through Facebook. The people I connect with through Twitter ask nothing of me other than that I tweet at them. They don’t tweet back, nor do I want them to. If I wanted that I’d try to friend them on Facebook, which is by definition a bidirectional medium. Twitter is a broadcast medium and, as such, has value similar to radio, TV, or publishing.

It is much easier to monetize my Twitter account and — again since it has more people in it — that account has to have greater commercial value.

Think about it. On Facebook I can tell the world that I’ve just written an interesting post and that they should go have a look-see. But, damn it, then I have to see the responses of 50-100 people. They like it, they hate it, they can’t be bothered with it, they find me annoying, etc.. I send out one thing and get 50 things back. Most of the time I don’t want that.

Facebook has a great monetization model — for Facebook, not for me. Twitter, on the other hand, has a perfect monetization model for the Tweeter, though I am not at all sure the company even realizes this.

Twitter works better for me than Facebook in two ways. First, Twitter is the new RSS only better, because Twitter sends not just the text and illustrations, it sends a complete link that brings readers back to see the text and illustrations and the ads that put my kids through private schools.

But that’s nothing compared to the Twitter ad possibilities — ads that you are probably seeing every day and don’t even realize.

Say you are a big celebrity with a million Twitter fans. You could tweet “God I’d love a Mars Bar right now!” and what would that be worth to M&M Mars? At a $1 CPM it would be worth $1000. But I think $1 is too low for Twitter because, after all, your followers follow you. They don’t drive by. They don’t happen to see you. They’ve asked you to enter their homes and spray paint your thoughts on their walls — thoughts that actually matter to the candy lover inside each one. That makes a commercial tweet worth a $10-$30 CPM. Take an average $20 and that’s $20,000 per million followers with Ashton Whathisname making $60,000 per day or $21.9 million per year from his three million followers.

Only one tweet per day has to be commercial to achieve this. In fact I’d recommend that no more than one tweet per day be commercial or people will start to realize what a racket this service is. One tweet per day makes it a daily competition among advertisers to be that Tweet.

Here’s my new trademark: One Tweet Per Day.  This trademark is for sale.

I know a very nice lady, a documentary film producer, who has 20,000 followers on Twitter. Her one tweet per day is worth just as much as Ashton’s on a CPM basis — a $20 CPM for $400 per day or $146,000 per year. There is no reason to justify it being any less on a CPM basis, that is unless you could quantify the age group and buying habits of that group. I’m sure that will be next.

Facebook can’t even come close to producing numbers of this sort. And you might claim that Twitter can’t either, but that’s just because nobody has yet tried that we know of. Maybe they’ve been doing it for years and just didn’t tell anyone.

Now what happens when Twitter — still seeking that elusive business model, remember — suddenly realizes that a One Tweet Per Day ad auction is that ideal business model? Keep 30 percent like Apple does ($7 million per year of Ashton’s money) and send the rest on to Demi.

That’s the day Twitter gains an extra zero in market cap and Google makes its grab before that one zero becomes two.

Remember you heard it here first.

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Look at the photo with this column. It’s of an audio microcassette I found in my desk drawer yesterday while madly looking for something else in my overgrown office. As you may be able to read on the picture, it is an interview with Bill Gates from June, 1998. That’s the interview I did for my ill-fated Vanity Fair piece on the relationship between Bill Gates and Steve Jobs. It is almost sixty minutes entirely devoted to Bill talking about Steve. Quite a historical document, especially since its contents have never been published. And they won’t be here, either, except for one short quote that stood out when I listened to the tape today after almost 12 years.

“What I can’t figure out is why he (Steve Jobs) is even trying (to be the CEO of Apple)? ” wondered Bill. “He knows he can’t win.”

It is easy to see what Gates meant if you look at a comparison of the two companies in June, 1998. Microsoft stock was around $29 with a market capitalization of $250 billion. Apple’s stock was at $7.25, triple what it had been a year before when Microsoft had stepped-in to bolster Apple with a $150 million investment, but still worth a market cap of only $6 billion. In terms of products, market share, cash flow, and general strategy Microsoft had it all over Apple in 1998 and the idea that Jobs would ever catch up to Gates was, at the time, ludicrous.

But look at the two companies today. Jobs is still running Apple despite cancer and a liver transplant while Gates has moved on to saving the world at the Gates Foundation. Microsoft is worth $240 billion, a tiny drop from 12 years ago, with the shares now around $27 (down from $29). Nothing gained in more than a decade. Apple shares, on the other hand, have gone from $7.25 to almost $240, Apple’s market cap has risen more than 33X from $6 billion to $220 billion. And Cupertino’s cash hoard today is almost exactly the same as Microsoft’s at around $40 billion.

It’s pretty easy to argue that Jobs did win. Certainly Apple has the mojo lately with its string of home run products like the iMac, iPod, iPhone, and now the iPad. Even Mac market share is up in the double digits and Apple’s profit margins are the best in the industry. The trend line is definitely up for Apple and mildly down for Microsoft.

What Bill Gates didn’t count on when he declared Jobs a loser back in 1998, was the Californian’s tenacity. It took 12 years to do it, but Apple is well positioned now to take Microsoft’s crown.

I mean it. Look at the downward price erosion of Microsoft Office caused by a combination of Open Office and iWork, which is down to $30 on the iPad.

How long will it be until Apple is giving iWork away to sell hardware — an option Microsoft doesn’t have? Not long. By then a bit more of Redmond’s goose will have been cooked.

Digital market leadership is now Apple’s — not Microsoft’s — to lose.

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We’re halfway through the selection process for the Cringely (NOT in Silicon Valley) Startup Tour with more than 300 companies nominated including half a dozen still in stealth mode. I love to sign NDAs and welcome more stealth mode nominations because they tend to be interesting companies that are fresher. With a major PR push about to begin I am still hopeful we’ll get 500 companies from which to select the final 24.

If you have a startup and are discouraged about the competition for those 24 slots, I urge you to try anyway for two important reasons: 1) The nomination process alone offers real publicity for your company and has already produced unexpected opportunities for some, and; 2) if this project is even a modest hit on TV it will probably be extended in future seasons. So if you don’t make it this time you may well make it next time. There’s a fair chance we’ll be doing 44 companies per year for years to come.

The next step is standardizing the information I have on all the nominated companies and we’ll be doing that through a confidential online survey. The CEO or designated contact person for every nominated company will shortly receive an e-mail from me inviting them to fill out a fun and festive questionnaire about their company. It’s easy to do, has questions you might not expect to see, and just filling it out may well give you a fresh perspective on your own operation. Again, this information is confidential, though you can choose to include it in your public nomination if you like.

We’re still looking for experts to participate in the tour. These are people who have had successful startups and want to give something back to the community. Some will be local people, some regional or national. A couple will come with me to each company to observe and offer advice. Big shots like Andy Grove and Steve Wozniak will watch episodes on video and comment for the camera.

Startups always need money, of course, so I’m trying to include among my experts a cadre of venture capitalists and angel investors. While pumping money into your company isn’t a specific objective of this project, I’m sure it will happen a few times and showing that process to a viewing audience should be very interesting.

This is a renewed call, then, for experts, especially regional ones. If you are the founder or co-founder of a successful startup or are a VC, an angel investor, or represent a group of angels, I (bob@cringely.com) want to hear from you. Our geographical distribution at this point includes every state except Alaska so wherever you are we’ll probably be nearby this summer.

From this point on I’ll be doing weekly updates on the Startup Tour, as we’re calling it. Next week I try to talk Warren Buffett into giving me a new RV!

Oh, and while I have you on the line, if you can’t get enough of things Cringely, here’s a short interview I did recently about the financial crisis for AI5000 magazine. It’s worth a look if only for the caricature of me.

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Thinking about Ed Roberts, who died last week, reminded me of the best story he ever told me about Bill Gates and Paul Allen, explaining why Gates was always richer than Allen and why that differential may not have been fair. Here’s the short version:

There was a time when Paul Allen, not Bill Gates, was the boss at Microsoft. When it came time to visit Albuquerque to demonstrate that first BASIC interpreter to the folks at MiTS, Allen made the trip, not Gates. It was Paul Allen, not Gates, who was later offered the job as head of software for MiTS — a job I have in the past characterized as the single most expensive position in the history of employment because accepting that job meant that Allen got only 36 percent of Microsoft’s founder shares, compared to Bill Gates’ 64 percent.

There’s an irony in that stock differential, and it is that Gates argued he was working 100 percent for Microsoft while Allen was working for both Microsoft and MiTS, Microsoft’s only customer, and therefore deserved less stock because of his divided duties. The irony is that shortly after they divided the shares, Gates went to MiTS founder Ed Roberts asking for a job, too, which Roberts gave him, paying $10 per hour. A more aggressive Paul Allen would have demanded a share adjustment at that point, but the real Paul Allen let it slide.

“I made out okay, ” he told me when I asked about it, years later.

And while I have you on the line, if you are into Open Source software and live in the southeast or will be passing-through, please meet me at POSSCON 2010, the Palmetto Open Source Software Conference April 15-17 in Columbia, SC.  I’ll be the keynote speaker on April 15th and promise to shock and awe you with my amazing insight and bad grammar.

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Ed Roberts died yesterday in Georgia. He was the founder of MiTS, the designer of the Altair 8800 and as close to being the father of the American personal computer as anyone can get. I say the American personal computer because French readers constantly correct me on this. Where, again, are all those French computer companies?

I knew Ed Roberts, though not very well. I never worked for or with him but I met him many times even years after he gave up computers for medicine in his late 30’s. That transition from digital hardware to medicine is key to Ed’s story and I think provides the crux of this column, which is just one of probably dozens of published remembrances of the man.

Ed sold MiTS and started medical school less than three years after introducing the Altair 8800. In one sense this could be seen as a logical transition from a dodgy electronic kit company that had almost gone under many times. It was Ed cashing-in to some degree and assuring the financial health of his family. But it was also much more. It was a recognition that even in 1978 Ed Roberts was being left behind by computing.

It was an amazing experience to visit Ed’s medical practice, which was run with the help of many computers — MiTS computers. More than two decades past the height of his success, Roberts was still using he same hardware and using it well. In addition to Altairs with 8080 processors there were 8088’s, 8086’s, and even Motorola 68000’s. And every one of those was running some medical or back-office application connected to a terminal.

Twenty years into his medical career Ed could still program his Altairs in assembler. So it isn’t that he lost his touch for technology.  It’s that his era had passed. Ed’s was the era of ascii terminal computing. An ADM3a was Ed’s violin. And an Apple II (worse still a Macintosh or even a Windows box) was, therefore, his nemesis.

Linux might have called him back but by the time it was available Ed wasn’t.

Think back a couple columns to that discussion of engineers and their half-lives. Suddenly Ed leaving Albuquerque with a pocketful of money makes a lot of sense. He was two half-lives (75 percent depleted) into his digital career. It was time for something new. And that’s not sad in any way, because Ed Roberts got to have two careers, two professional adventures, and did a great job with both.

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Update — The very real problem with the iPad simulator described below is affecting hundreds of developers and turns out to be an artifact of a documentation error by Apple.  Literally what should have been a ‘>’ was made a ‘<’ by mistake (or vice versa).  The result is that some applications were built in a way that was within the tolerance of the simulator but not of the target hardware.  Now that iPads are coming available the solutuion is simple: test your app on the actual device.

It’s iPad Day and the fanboys and girls are out with their credit cards buying the non-3G, non-GPS early model iPads that go on sale Saturday.  These are the iPad equivalents of an iPod Touch.  I haven’t touched one yet though I’m sure I will shortly.  But I don’t expect all of my favorite iPod Touch applications to be waiting for me on the iPad because developers are telling me that they are being rejected for the simple reason that their very fine apps won’t run on actual iPads.

The problem, you see, is that very few developers have iPad hardware.  Almost none do, in fact.  So nearly all development has taken place on the iPad simulator.  And now it turns out the simulator maybe wasn’t as accurate as Apple led developers to believe.  Or maybe the actual hardware has deviated from Apple’s original spec.

iPad applications that run perfectly well on the simulator are being rejected by Apple because they literally won’t work on the actual iPad hardware.  I’m sure this won’t be a problem for long now that iPads are about to begn hitting the streets.  But it is ironic, no?

The irony, for me, comes from the fact that there is a fairly long history of companies issuing technical specs that third-party developers find hard to meet for all kinds of reasons.  This happened with NFS from Sun, which Apple, NeXT, and SGI were all incompatible with for awhile because they wrote to the spec, not to the interface as it existed in reality.  Everyone else ignored the spec and just made their NFS implementation work with Sun’s, which turned out was incompatible with Sun’s own published spec.

Now with the iPad we find that both the simulator and the actual hardware are probably off by a bit.

But this too shall pass.