When I spent a week in Buenos Aires recently, I left my Blackberry behind and just used my iPhone for a week. My conclusion: I don’t like my iPhone 3G and was happy (or should I say, less unhappy) to get back to the U.S. and my Blackberry.

I am not here to sing the praises of the Blackberry; the reason I had to leave it behind is that Verizon said it wouldn’t work in Argentina. This is a model of the Blackberry labeled “World Edition” (otherwise known as 8830). It didn’t work in Peru either, when I went there about 18 months ago. And it didn’t work right away in England when I went there in March this year; it did work after about 45 minutes on the phone with Verizon support. Seems like false (or aspirational) advertising to call something a “World Edition” that doesn’t actually work in the rest of the world.

I come not to damn the Blackberry 8830; instead, my experience with the iPhone confirmed all the issues I had with it as a U.S. smart phone and added the experience that it must have been designed to frustrate anyone actually traveling outside the U.S. with it.

In the U.S., my iPhone basically doesn’t work as promised. The browser, the email program and most of the downloaded apps will pretty reliably crash within a few minutes of use. The email program will crash and the email I was working on will disappear. (And then I have to use the glass keyboard, which just doesn’t cut it for fat fingers, which I have, to retype the message.) I thought this kind of unreliability is what Apple was trying to avoid by delaying the release of the developer tools and apps store.

And then there’s the iTunes Apps Store (or whatever the heck Apple is calling it these days). Apple started out with the brilliant concept of a place to buy music for your iPod called the iTunes Music Store, but they have twisted and bent it out of any recognizable shape in order to sell videos and now iPhone applications in the same place. When I download a “free” app from the iTunes store, it has to go through some kind of unintelligible dance about whether it really is free or not. And then Apple sends me an invoice for $0.00. If I wasn’t a fairly experienced user, I’d be completely befuddled by Apple’s download process. And then some of the apps developers update their apps every couple of weeks, which causes a whole different set of problems — my iPhone tells me I have application updates, then tells me I can’t download them because they are being modified, and then when I can download them, puts me through the same stupid purchase process for free updates and sends me yet another invoices for $0.00! Conclusion: Apple didn’t take the time to redesign the store and now the iTunes stores is a total UI mess and probably an e-commerce mess as well.

Outside the U.S., my iPhone decided that I am a bad user and constantly told me I was doing the wrong thing. We called AT&T to make sure that the iPhone would work in Argentina and they turned international useage on before I left. AT&T sent me an email warning me that if I actually used the iPhone the way it is deigned to be used, I would have a huge bill. When I arrived in Argentina, the iPhone itself told me turn off “Data Roaming” to avoid outrageous charges. Turning off data roaming requires four clicks on the phone: Settings/General/Network/Data Roaming (and means you can’t browse the web or get email). As soon as you turn Data Roaming off, the phone starts telling you (repeatedly, every time you try to do something involving data) that data roaming is turned off so you can’t get any data (even if all you’re doing is reading email that was already downloaded). To turn data roaming back on is another four clicks, and instantly you are warned that you will incur unusual charges. I felt like the iPhone was constantly scolding me — for doing what it was telling me to do! Conclusion: Apple really didn’t think anybody would use the phone while traveling (at least to Argentina) and didn’t bother to include that in the PRD for iPhone 3G, even though it is the second version of the phone and clearly designed primarily for data roaming!

Four days into the trip I got an SMS message AND an email message from AT&T warning me that I had incurred unusually high roaming charges and that I should call AT&T (toll free!) to discuss how to minimize these charges. Remember that we had already called AT&T before I left the country and set the plan for international roaming. Remember that I had been trying to minimize data roaming. Our office manager called AT&T and they changed me to a different plan that was half as expensive and backdated to it the day before I left the country. That reduced my charges from $400 to $200 for the first four days. I can’t wait to see the final bill, now that I’m back. Conclusion: AT&T is a complete mess as a company and cannot get its pricing straightened out for normal people traveling around the world.

Bottom line: I don’t like my iPhone even more than I don’t like my Blackberry World Edition 8830. One of these days, the combination of hardware companies, wireless operators and software and service companies will actually design a fully useable device and service. Won’t life be grand then?

I got this email from a good friend, whom I’d prefer not to identify publicly. But I thought his sentiment was relevant to our current times so we decided to share it with you posthaste.

“Yesterday I ran into an old friend. As his hedge fund has tanked, he has lost 20 pounds (skinny to start with), is taking Valium every night to sleep, has night sweats and heart palpitations.

“He runs his own firm. He is the boss. But he is not a warrior. He is seeing disaster at every turn, rather than openings where he can attack. He is questioning himself and doubting his own fighting instincts, consumed with how his actions might be viewed, rather than taking swift and deliberate action. He is coddling wimps, instead of cutting loose those hindering his attack. He is acting like a frightened mother, not an inspired and powerful leader. Worst of all, he’s turned his fear and anger internally, against himself. When he needs to be strongest, he consumes himself with worry and purposeless actions.

“In the great heat and confusion of battle, you see men cower, become smaller, or retreat into some psychological refuge. Then you see the few who rise up out of the smoke and fire like an avenging spirit, usually with a mad gleam in their eyes and a slight determined smile, taking great pleasure in engaging a worthy enemy.”

Just what the heck is going on, anyway? Chicken Little or Chicken Noodle Soup? Depression of 08 or a correction on the way back to normal risk-and-reward. The Geek and The Gadfly don’t totally agree, so here’s what each thinks. Like always, we trust and respect our entrepreneurs to figure it out better than we can!

The Geek: It is Armageddon and batten down the hatches!

[Sequoia Partners distributed a tough message to its CEOs earlier this week, essentially calling on them to batten down the hatches for a down cycle that could last for years.] This is an important message as all start up companies must fight their way through some tough economic times ahead. Please read [what Sequoia wrote] and start considering how the world has suddenly changed and how it will affect each of you. The message is: save cash, focus on your core business, build revenues (or get to them quickly) and establish your value proposition now. Don’t waste money on nice to haves or crazy experiments. Discipline your team. Stay lean and tight.

All well and good and I agree: but here’s one lesson I learned during the last bust that Sequoia didn’t talk about. Down cycles are an excellent time to steal market share from your competitors. The trick is to use cost-effective tactics and focus your strategy on stealing market share more than growing the market or establishing new ones. Think about using guerilla tactics. Develop one or two core tactics to go after your competitors and then be aggressive. Don’t expand your staff unnecessarily. If you have to hire, it’s better to hire one killer person than three pretty good people. Make do with what you have but focus them like a laser against competitors. Focus your development efforts on tweaks that matter most to your existing customers; don’t start new initiatives. Focus marketing on relationships, use public relations to position, position, position. Use pricing tactics to lock in long-term commitments; sell what you have now, not futures. CEOs need to invest in meeting with key customers and strategic partners (including your investors) one on one (that means in person and not on the phone or via email) and do it often. Rally your team and get them to understand the gravity of the situation.

The Gadfly: This is a correction and not a sea change.

Everything Gilman cites above is completely valid and I endorse it 100%, but it’s the advice I like to give my CEOs anyway, anytime! The issue here is whether the economy is really suffering or whether the economy is being thrown into turmoil by the excesses of Wall Street and the loss of confidence in our institutions. I think it’s the latter; I tend to line up with Brad Feld and Fred Wilson or Bill Gurley.
A correction is a tough thing to handle in your strategic planning, because it resets all the assumptions you used for how long it takes to close customers or how much costs to acquire them or customers’ relative interest in investing in change (the sine qua non of venture backed companies). But we don’t invest in companies that are providing 10 or 20% incremental improvement for customers; we invest in companies that are providing radical, game-changing products and services. That’s how we make oodles of money, by calling a few of those game changes right. I believe that the value that our companies provide is usually enhanced in tough markets: it’s harder for competitors to raise capital for incremental proposition; when the general economy is bleak, it’s easier to persuade customers to save 50% of their cost or increase their revenue 100% or to stay close to their friends and relatives.

So I haven’t given the entrepreneurs in my portfolio any different advice than I have been all along. Don’t spend a dime you don’t need to. Seek your value as fast and efficiently as possible. Only hire the best people; don’t experiment with people you pay a salary. Find partners and customers who are willing to pay to work with you. Get to revenue as fast as you can.

Personally, I am thanking our lucky stars that the world really does represent a risky place. I am only worried that fear and panic is leading to really bad judgements: I grew up thinking that the government wasn’t supposed to be in the investment business and certainly wasn’t supposed to be a shareholder in profit-making businesses (well, at least ones that are supposed to make a profit). I grew up thinking that some banks were supposed to help you make money and some were supposed to help you store it safely. And I thought taking risks meant that sometimes you had to pay for stupid decisions, whether companies or individuals. What worries me most is that the rest of the world (outside of venture-backed startups) seems to be thinking very differently than I grew up thinking!