Silicon Valley's app culture eroding US ability to make serious software

[Q&A] Decidedly old school and proud of it, Pegasystems CEO Alan Trefler says the current app culture has abandoned the concept of customer-centricity with serious consequences for the US' ability to make software.

Charles Cooper Former Executive Editor / News
Charles Cooper was an executive editor at CNET News. He has covered technology and business for more than 25 years, working at CBSNews.com, the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet.
Charles Cooper
5 min read

Pegasystems CEO Alan Trefler Josh Miller/CNET

Most tech CEOs don't court controversy, but Alan Trefler is decidedly old school. He's also a survivor.

In 1983, Trefler founded Pegasystems, a company that makes software that helps companies' business and IT staffs collaborate on projects. Since then, he and his company have hung on and prospered -- Pegasystems recently passed $500 million in annual revenue as it announced a dividend and 2-for-1 stock split -- while more than a few former software highfliers have dropped from the firmament. Ask his opinion for the current state of app development, and Trefler doesn't hesitate to reply.

It stinks.

"Systems are being built today that are the antithesis of the way other industries do it," said Trefler before lighting into a critique of the current state of software development where consumer apps sporting goofy names seem all the rage.

"We haven't changed from the way software was getting built 50 years ago," according to Trefler. "Systems are being built today that are the antithesis of the way other industries do it. If you were building a 787 or a vase, you would use CAD. But with most software, there's no model in the heart of software systems. It's all just coded around artifacts that got spread among hundreds of classes that are archaic."

Chalk some of this up as self-promotion. Pegasystems' pitch is that it can simplify business processes with rules-based software solutions. Pegasystems says that its products can reduce the time needed to manually translate design requirements into code, a process that's often fraught when the business and IT sides wind up talking past each other. It's an argument that's resonated; the 58-year-old Trefler became the latest paper billionaire in 2013 after shares of Pegasystems more than doubled over the previous 12 months. (He still owns a 52 percent stake in the company.)

But as he watches the drumbeat of software announcements making headlines, Trefler, a lifelong Massachusetts native, worries about where things are heading. He frets that a "venture-fueled app culture," embodied by some of Silicon Valley's seemingly instinctive drive to overreach, "is destroying America as a place for making serious software."

Another unusual item on Trefler's curriculum vitae: He is a former chess champion, who has matched moves with several of the game's greats, including former world chess champion Garry Kasparov as well the current title holder, Magnus Carlsen. If you want a crack at him, Trefler plans to play chess against 20 opponents simultaneously at the company's next annual customer conference.

CNET recently visited with Trefler who was in San Francisco for a round of chess and customer meetings. The following is an abridged transcript of the conversation.

Q: What's been the biggest surprise for you in IT's development since you founded Pegasystems in 1983?

Alan Trefler: The biggest shock was how this movement toward outsourcing eviscerated better software design. People in the 1980s knew computers were getting faster. But instead of getting faster and coming up with better models and then saying, "Hey, look, we're still doing software the same way we did in the 1950s and '60s and let's solve it with a better metaphor, or a better approach to software," we said, "No, let's send it overseas, where there are cheaper fingers to type. It's an incredibly stupid way of operating that doesn't reflect business outcomes...We've created a culture of full employment for engineers instead of elevating questions so they could be posed to businesspeople.

Sounds like you're trying to play the role of Johnny Appleseed?

Trefler: Well, last year we did half a billion worth of seeding.

Given the big takeouts of young software companies, Facebook-WhatsApp being the best example of the trend, what does an old-school guy think of the new school way of tech?

Trefler: I think the venture-fueled app culture embodied by Silicon Valley is destroying America as a place for making serious software. All the money and kids solving problems that don't need solving will not make America more competitive and will erode America's lead in software...and I think it will get worse, not better. Marc Andreessen talks about software eating the world. But you're going to get indigestion, when there are lumps of apps that do not reflect a coherent customer experience. Software has failed its users. Instead of a customer-driven model focused on users, we have pinpoint solutions that can't be integrated without a whole new way of thinking about the problem.

What's wrong with the app culture that you're criticizing?

Trefler: We've moved away from trying to figure out how to run sophisticated businesses in customer-centric fashion to creating a bunch of little pointy features that can't create great customer experiences...We have this mobile-first stupidity. It's got to be mobile everywhere. It's got to be built into the architecture. The current app culture has abandoned the concept of customer-centricity...The US should have had software as a core differentiator in the world. But the Angry Birds of the world from other countries are going to have no trouble catching up to us.

Why shouldn't they sell if someone's willing to make a fair bid?

Trefler: I think we're in a bit of an unworldly time where poor investment choices for investors coupled with a bubbly stock market are leading to discontinuities that are unsustainable...When these products get bought, they stop growing.

Look at the culture of acquisition embodied by the likes of Oracle, IBM, SAP, etc.; their revenue gains come from soaking customers. Clients hate them for their lack of innovation. There's no evidence that the acquisition culture leads to improved outcomes for customers. And if it doesn't lead to improved outcomes for customers, that's not good for the economy. There are so few companies willing these days to stand firm. I respect the guys at Snapchat that they were willing to pursue their vision (for reportedly refusing CEO Mark Zuckerberg's $3 billion buyout offer to become part of Facebook.)

Your company works with big brands like Bank of America and ING. Are these folks mostly done with their transitions to this nirvana of being a digital enterprise or are there still pain points?

Trefler: There remain enormous pain points. Many have technical and cultural impediments that take very long periods of time to work out.

It's 2014, dude. Are these folks living in caves?

Trefler: Some are -- I won't tie that to any individual customer name. But you have to stop settling for the stuff you're settling for. Part of my message is that you have to uplift the expectations because it could be better.

Is there any way that humans can still hold a candle in future competitions with computers like Deep Blue?

Trefler: The very best chess is done by people who have played in conjunction with computers. Even in games between two grandmasters, there's bound to be a move where someone makes a mistake. But a computer never misses. The slightest error gets punished. But a person playing with two or three computers will kick the ass of a grandmaster or the world's best computer (playing alone). That's because ultimately the combination of human intuition and pattern recognition is very different from computers. If you made a chessboard not 8x8, but 16x16, the next week, Magnus Carlston would be kicking butt at 100 percent and the computer would be losing desperately. I think the future will be much more about symbiosis.

So what's your favorite opening move?

Trefler: d4 (aka P-Q4)