14
Oct

Is Venture Capital Pointing Entrepreneurs in a Socially Dangerous Direction?

“Bulk up really big and really fast” is a widely understood underlying objective of venture capital investing. VCs invest in lots of early stage businesses, but really they are after the handful (or even one or two) with the promise to magnetize enormous numbers of customers in the shortest possible time.

Wait, did I just say customers? Actually, in 2017, in VC parlance, customers has become synonymous with users. This equivalence (result of incorrect thinking) is the norm because most of the businesses capable of hitting the ultra difficult growth requirements of these VCs do businesses only online and, more often than not, in virtual/non physical products. So the method for the very few businesses capable of convincing VCs to invest, and to invest repeatedly, round after round, usually includes an important freemium phase of selling. Most people will buy something if it is free.

Selling? Sorry, I meant signing up. Signing up has become the preferred method of closing sales to these customers since a big section of these few businesses peddle subscription offers for something online: Streaming music, Office Productivity suites, etc.

Great for VCs. They plunk some money into a lot of early stage businesses (but don’t forget each of these is selected through a rigorous rejection process with maybe hundreds of other businesses left out). These businesses, in turn, hit their growth metrics and our world welcomes a few more very, very, wealthy people.

But what about all of us other folks left out in the cold? Since most of the products sold in this cycle are virtual, there is no need for natural materials to produce them, no need for delivery services to deliver them, no need for shelves to stock them. I could go on, but I’m sure you get the drift. With the exception of Alibaba/Amazon/Walmart-Jet/ the other really big hits — facebook, Twitter, Google, Office 365 (if you believe Microsoft’s claims) — are all about intellectual property, services and anything other than hard goods.

But, you may argue, what about Uber, Lyft and AirBnB? Their sharing services require cars and, in the case of AirBnB, homes. Sure, but the cars are already owned by drivers. Uber/Lyft/AirBnB are all simply booking and collection services. They aren’t adding to what Economists here in the US dreamed up a while ago as the Gross Domestic Product.

Facebook currently enjoys a market cap of in excess of $470 Bil. General Motors enjoys a market cap of $67 Bil (approx.). But I argue the network of manufacturers, producers, suppliers, delivery services, assembly services, and more circling GM does a million times better job of employing people across the entire social spectrum than Facebook, et al, will every do.

VCs plow money into the Facebooks of the world, while their colleagues on Wall Street diss GM, GE, and other “legacy busineses” and sell off their stocks, complaining about their paltry growth and growth potential. This phenomenon is definitely not positive one and must be closely monitored since it could prove lethal.

25
Jul

Glue Products Have An Advantage When Customers Determine Value for a Solution

“Glue products” connect sections of software solutions for customers. At the application layer examples include Tibco, IBM’s MQ Series and more. At the functional level, examples include software systems for training, networking, data collection, and many more. This post will discuss functional glue products.

A brief word on how these products tie together sections of functional solutions may be helpful:
I have current experience working with Microsoft’s SharePoint server product and related training solutions. So I will present what follows specifically on training as a glue product and how I think sales teams should address value with their customers.

SharePoint customers, on-premises, have objectives like “collaboration”, “compliance reporting”, internal communications (intranet), communications with partners (extranet), etc. Without training, personnel may not be able to successfully deliver on any of these objectives. So does the value proposition for the training component depend simply on the training itself, or should the calculation of value be based on how the system chosen for the training requirement optimizes the overall value of the SharePoint solution? Sales teams should help customers understand the most accurate value calculation will be based on the value of the overall SharePoint solution with the training component included as the optimum choice for the job. This tactic enables a favorable pricing discussion for the training component for the sales team while, at the same time, promising the best chance the customer will have to extract the highest possible value from investment in the overall solution.

If sales teams don’t do the work (in other words come up with a description of the solution the customer expects to build with SharePoint, and the expected role for training or one of the other glue solutions I mention above), then the value proposition will likely come down to an “apple vs orange” comparison where one training option is compared to another without any attention to the overall solution. The sales team will likely find itself haggling over price, while the customer struggles to get to the highest possible return on investment in the overall system.

Convincing customers to participate in a value calculation as I have just described depends on trust. So sales teams should also implement supporting tactics capable of elevating the relationship with the customer.

I am often surprised to see how few early stage ISVs marketing functional glue products demonstrate understanding of these tactics. Successful efforts to sell to enterprise software customers almost always include this type of value discussion, calculation and proposition.

20
Jul

How do ISVs incorrectly estimate the value prospects see in products?

ISVs often incorrectly understand the value estimates prospects come up with for product offers. In my experience this wrong understanding leads to decisions to price products below fair market value. These ISVs make related decisions to proceed with a problematic product marketing plan and, too often, fail.

Clayton Christensen’s book “Competing Against Luck: The Story of Innovation and Customer Choice” presents the notion of Jobs Theory for product marketing. Jobs Theory, as I understand it, provides product marketers with a way to conceptualize their products from the perspective of prospects. This transformation of view point is absolutely the first step in framing a useful estimate of the value (if any) target markets may attach to a product. ISVs unfamiliar with jobs theory are hard pressed to wield a tool with comparable power and, therefore, often mistakenly estimate market perception of product value.

Jeff Thull’s book, “The Prime Solution” includes a lengthy section on the importance of value for selling products to large organizations (Mr. Thull is well known for promoting a sales theory, “The Complex Sale” for markets characterized by these same large organizations. From my own professional experience I can confidently endorse the usefulness of his theory).

One example comes to mind as typical of how easy it is to base value estimates on simply the wrong data: Mr. Thull recounts a story about a product sale to one of these large organizations. This business had been losing money for years in one division. The sales team had qualified this division as a reasonable candidate for its software product, but mid level management at the division expressed little interest. Despite losing money, this division was still budgeted for operation. So line management saw no reason to do anything. Their “job to be done” (to use Mr. Christensen’s terminology) was to operate successfully within the budget, regardless of whether or not the parent organization was making money or not.

But when the sales team changed its focus and had some conversations with managers within the parent organization who actually had responsibility over the ongoing losses experienced at the division, they heard a different story. Senior management had a “job to be done”: “we need something to help us stop losing money and start operating this division profitably, once again”. Once the sales team identified a contact in the senior management team, the dialogue could proceed.

I hope readers can see how different prospects at different organizations can come up with widely different estimates of the value of software solutions. Market prospects at different levels in a decision-making process need to be surveyed before estimates of value can be correctly formalized for products.

ISVs otherwise unfamiliar with Mr. Christensen’s “Jobs Theory” and/or Mr. Thull’s Complex Sales methods come to a wrong conclusion, most of the time, on market value for their product offers. Therefore, the “Measure” step in Eric Reiss’ “Build, Measure, Learn” has to be “done right” if useful results are to be had from the effort.

4
Jun

Successfully Promoting Apps to Enterprise Business Requires More Than An Appeal to Mobile Users

2 Color Design Hi-Res From the recent financial results of leading software vendors — Microsoft, Oracle, SAP and more — it should be apparent enterprise computing remains the most lucrative software market in mid 2015. So early stage tech businesses (ISVs) need to conceptualize, architect, and build solutions on a foundation including a clear understanding of what enterprise computing is all about if a revenue plan includes marketing to enterprise business.

Unfortunately, ISVs with CRM apps written for iOS who expect business consumers to buy simply because they use iPhones are not likely to succeed. Sure these apps will work fine — to an extent — for SMBs, but not for enterprise computing. A scalable architecture is absolutely required for this market segment. After all, enterprise computing includes PCs, Mainframes, and mobile devices (including tablets as well as smartphones). So it makes sense to either include a PC version of your solution, which will work seamlessly along side your client for the iPhone and iPad. If you do not have the PC solution, then you must have the hooks in place to allow users to plug your solution into one built on a scalable architecture addressing this market requirement.

All of the above may seem rudimentary to readers, but I was recently approached by an early stage business with a CRM built for iPhones, only. When I asked about clients for PCs, etc, my questions went into the void and my email exchange abruptly terminated. So early stage ISVs often combine a promising solution for a solution businesses may really need, with a very limited and inadequate understanding of just how users will actually consume the solution.

Of course, building your solution for an enterprise computing market doesn’t stop when you have successfully equipped your solution with a scalable architecture. You will have to also use a method of authenticating users. So here, too, you should choose the method most familiar to the market — in all likelihood something built to communicate with Microsoft’s Active Directory.

The list of critical architectural requirements does not stop with the above couple of examples. There are more, in fact too many to discuss, completely, in this post even in no more than broad terms.

If you have a solution you think is promising for enterprise computing, but are not familiar with the requirements posed by this market, you need to add someone to your management team who can fill this gap. Our temporary VP of marketing plan can execute on this role until you identify a right candidate for the spot. Please contact us to learn more.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

2
Jun

Engineering-heavy tech startups need marketing communications

2 Color Design Hi-Res Engineering-heavy tech startups have a real need for marketing communications. Simply building the best solution to a pervasive need in a target market is no guarantee of success. People have to know about your business and your solution. If you do not make an effort to let them know about your business and your solution, who will?

The above may sound like an easy process. But more often than not, most early stage tech businesses fail to meet this requirement. The usual set of tactics implemented to meet this need amount to a classic online marketing campaign:

  • a web site is launched to present the business to the public
  • the web site is optimized for search engines
  • the business builds a social media component with efforts on LinkedIn, Twitter and Facebook
  • an investment is made in paid advertising: click ads, Facebook promoted posts, Twitter promotion, etc

But the campaign fails to pay off. Few real prospects pop up. Launching the revenue-producing component of the business takes a long time. Competitors come to market with legitimate solutions to the same problem. What looked to be a defensible market-niche seems to be evaporating.

The obstacle blocking this online marketing campaign from producing expected results is, to an important extent, a matter of poor timing. The marketing communications effort appeared after the fact, in other words only after the product (your solution) took its final shape. Because founder expertise was clearly on the engineering side of the effort little time was spent talking to market prospects, testing branding concepts, slogans, etc.

In fact the marketing communications effort should be in process from the moment a management team takes shape and efforts begin to conceptualize a solution to an important market need, meaning one for which participants will pay a fair, but attractive price to secure and implement.

If your business lacks the in-house technical, coding-literate marketing expertise required to fill this seat on your team, you need to hire someone to do it for you while you try to find the right stakeholder to join your effort. IMB Enterprises, Inc. has this expertise and offers temporary VP of Marketing services on a retainer basis. Please contact us to learn more.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

14
May

Amtrak Derailment in Philadelphia surfaces important points likely to be on any technical product development roadmap

2 Color Design Hi-Res The chronicle of a tragedy that befell an AMTRAK commuter train on May 13, 2015 includes points worth consideration by any product marketer working on solutions for process control, and even the Internet of Things (IoT). These points should also be of interest to anyone with a role in an operational risk management (ORM) effort for mechanized mass transport.

Comments on the most prominent of these points, namely AMTRAK’s inability to implement the Positive Train Control service:

Just because a customer has either purchased a solution, or committed resources to a solution, does not mean the customer has taken the steps required to move forward on it. As Jad Mouwad wrote on May 13, 2015 in the New York Times in an article titled Technology That Could Have Prevented Amtrak Derailment Was Absent, Positive Train Control (a complex solution leveraging real time data from sensors to manage the performance of locomotives on rails) ” . . . might have prevented the derailment of a Metro-North commuter train in the Bronx in December 2013 that killed four people and injured dozens . . . ” and the Philadelphia tragedy, as well.

But Mouwad writes ” . . . the absence of the technology has come up repeatedly.” Bottom line: Positive Train Control looked great on paper, but the task of applying it, Mouwad writes, ” . . . involves fitting 36,000 wayside units and equipping 26,000 locomotives according to industry figures.”

The takeaway for product marketers? Putting together a “complexity assessment”, complete with an estimate of likely impact on customer ROI, should be a mandatory feature of a product roadmap.

In turn, and from the customer side of a purchase decision, an internal operational risk management (ORM) effort should also discount the usefulness of a purchase like Positive Train Control based on likely internal obstacles to implementation. Of course the discount should be applied against the ROI expected from the investment. A governance plan should include the steps required to overcome these obstacles to ROI.

If your business is developing solutions like Positive Train Control, but you lack an internal product marketing management effort to craft a promising roadmap for your rollout, please do not hesitate to contact us. We bring to the table over 30 years experience promoting and selling technology solutions (hardware, software, services) to the kind of complex enterprise customer fitting the presentation of AMTRAK (unfortunately), in this example.

We can also help customer organizations looking to improve the performance of ORM functions in order to better prepare for tragedies like this one.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

8
Apr

Near term future consumer risks from successful malicious online activities look to grow

2-Color-Design-Hi-Res-100px-widthDespite what looks like a daily increase in the number of successful attempts to maliciously disrupt legitimate online activities, end consumers look more exposed, today, and for the near term future than ever before.

Two factors contribute to this assessment:

  1. Hacker tools now include a much richer supply of once legitimate access credentials. At the same time the set of organizations victimized by hacker successes are moving at too slow a pace towards safely pooling the kind of information critically important to an objective of better defending future victims from the next round of hacker activities
  2. Risk management programs–electronic data insurance policies–exist (and are available for businesses to purchase), but are not funded to an appropriate level, given the extent of business exposure to hacker activities. There is little indication of the underwriters of these programs adding much more financial power to them anytime soon.

Both of these factors are worth further description: proven methods exist to render information specific to organizations anonymous. As written earlier in this blog, I have personal direct experience promoting content sets (Key Risk Indicators, or KRIs) produced by one of these methods by an ISV targeting operational risk management teams for banking institutions subject to the Basel II accord.

There is no reason why similar technology cannot be used to strip critically important information about compromised login credentials of the specifics required to directly identify the source of the data. In case readers are unfamiliar with the imperative for keeping organization-specific information absolutely private, there are a number of good reasons for this requirement. The two most prominent of these amount to:

  1. Protecting an institution from full revelation of the extent of damages suffered to peers within its industry group and
  2. Protecting an institution from potentially damaging publicity

Certainly other reasons exist. Readers looking to explore these can contact me. I will be happy to discuss the topic further.

But the lack of interest on the part of risk underwriters to “bulk up” on the financial resources they offer does not look to be as sanguine and easily correctable. On April 7, 2015, the Wall Street Journal published an article written by Rachel King titled Cyber Insurance Capacity is ‘Very Small’: AIG CEO. In my opinion Ms. King is on track to publish this piece, which includes excerpts from an interview Ms. King had with Mr. Peter D. Hancock, the CEO of AIG.

One of the quotes Ms. King includes from her conversation with Mr. Hancock should provide the data security ISV community with a very valuable insight: “‘I suspect, over time, the willingness of insurers and by others in the industry to provide greater capacity will increase with greater comfort in the maturity of the countermeasures'” Apparently Mr. Hancock, AIG, and, perhaps, a good chunk of the rest of the risk underwriting business community are not yet convinced about our ability to defeat the hackers. Makes sense to me and ought to provide ISVs with a reason to work harder at the hacker problem.

In the meantime, businesses, and the members of the general public affiliated with them, should plan on more pain.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

2
Apr

Frequency and intensity of successful malicious exploits of online data call for a pooling of information between impacted parties

2-Color-Design-Hi-Res-100px-widthWhen hackers obtain otherwise legitimate credentials to online sites and the data repositories they contain, the likelihood of success for their efforts to depart with data they do not own is much greater — perhaps unstoppable. Therefore it makes sense for parties impacted by these attacks to pool their information so a new level of defense can be promptly implemented against further successful exploits with the same credentials.

Unfortunately this is the condition apparently in place in March 2015. On Sunday, March 29, 2015 the online edition of the Wall Street Journal ran a story written by the Associated Press titled Some British Airways Frequent-Flier Accounts Hacked. Notable in the article is mention of what appears to be the method the hackers used to access the data: “The breach apparently was the result of a third party using information obtained elsewhere on the Internet”.

Then, through what looks like a brute force method of simply trying credential set after credential set against the access control method at the perimeter of the British Airways web site, the hackers eventually succeeded in their effort. Tellingly, the writers from the Associated Press note this attack is, apparently, the fourth such recent attempt. The other attempts compromised data owned by the “Hilton and Starwood” hotel brands and “United and American airlines”.

It is very hard to defend a data repository against requests for access based on legitimate credentials. Sure processes can be implemented to detect brute force access methods and to deny access — even to holders of legitimate credentials — when they are presented within the context of a brute force attack. But what if the “automated process” mentioned by the Associated Press amounted to a substantially more sophisticated tactic than a rapid, repeated completion of an online site access form? It would be much harder to detect a brute force attack should it transpire over days, or even weeks.

Regardless of how one argues data owners should defend themselves against these types of attacks, the substantial value of implementing data consortiums — literally groups pooling data about attacks — as a defense method should pass muster. One can argue law enforcement agencies already provide this type of knowledge “beyond the wall” and should be able to play this role. But there is another aspect to the potential of a data consortium for online data security, a similar opportunity to the concept of Key Risk Indicators (KRIs) as it has been applied to efforts to implement Operational Risk Management (ORM) solutions for global financial businesses. This application of a data consortium will not fall within the purview of a decision to look to law enforcement for “environmentally relevant” data about similar data security breaches. I have some experience with ORM solutions including KRIs and would be interested to speak with readers with an interest in hearing further about this notion. Please contact me to discuss.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

31
Mar

On the brighter prospects of a world with more tasks handled by machines

2-Color-Design-Hi-Res-100px-widthSince the advent of the world wide web in the early 1990s it has been possible to craft viable business models from highly specific — and limited — market niches. Now, in 2015, with the promise of an expansion in the capabilities of computing machines to handle more tasks of, perhaps, a mundane nature, this opportunity horizon has widened even further. (If you would like more information about why I have specifically connected the enormous popularity of web pages exposed over Ethernet networks for the general public as an important milestone leading to an enormous expansion in the range of viable tech business notions, please contact me as I offer consulting services in this area).

I think it makes sense for readers to keep this factor in mind as they witness public debate about the notion of just whether or not the proliferation of robots, hardware computing machines powered by algorithms, and even what are colloquially referred to as “smart” applications (and apps) will, in sum, result in a net positive, or negative, result for the sheer number of people employed.

An OPED piece published on the CNN web site on March 18, 2015 communicates the seriousness of this debate and adds a raw edge to it: Silicon Valley to millennials: Drop dead. The piece is written by David R. Wheeler. I could not find any information about him, beyond his picture on the CNN web site. So I can provide no background on why CNN decided to post his article.

The raw and right-to-the-point flavor of Wheeler’s chosen title for his piece certainly captures one’s attention. When this factor is combined with CNN’s decision to go to press, and prominently, with this piece, I would hope my readers will agree the topic has a lot of interest behind it, as it should given what I take to be Wheeler’s core point: “The commonly held belief is that with hard work and a good education, a young person in America can get a good job”.

Given the statistics Wheeler provides in his piece, he is probably correct in his conclusion the employment horizon has darkened. But if I replace “can get a good job” in the above quote with “can achieve financial security and even wealth”, then the horizon opens up for another phenomenon we are all witnessing today: an explosion in the number of small businesses and, particular, technology startups.

As recently as Sunday, March 29, 2015, an article appeared on the Financial Times web site about an entrepreneur by the name of Bart Van der Roost. Mr. Van der Roost has started a business by the name of neoScores. I hope readers can share my appreciation for Van der Roost to craft what may become a very promising business from an especially narrow niche market — musicians requiring scores on digital devices. Perhaps we can extrapolate from his notion an opportunity for literally millions of these niches just waiting for entrepreneurs to expose.

Sure code is required. But isn’t code one of the skills people can go to college to learn? I hope we can all take a more sunny view of a new world of computing with hardware devices (powered by algorithms) capable of executing a widened vista of tasks.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved

28
Mar

What is prompting interest in Altera from Intel?

2-Color-Design-Hi-Res-100px-width This last week the Wall Street Journal published an article written by Dana Mattioli, Dana Cimilluca, and Don Clark about Intel® and Altera®.

The topic was Intel’s public expression of more than a passing interest in Altera from the perspective of an acquisition. Despite the fact no name could be publicly associated (the following claim is merely attributed to “people familiar with the matter” in the article) with the most important clause in the piece, “Intel Corp. is in advanced talks to buy chip partner Altera Corp”, a lot of editorial content appeared almost instantaneously after the publication of this article in the online WSJ, in what might easily be construed as merely a knee-jerk reaction as the 800 lb gorilla in the PC CPU business starts moving around and sniffing the air.

Is this interest the result of Intel’s obsession with opening other substantial revenue streams? Or is it being prompted by Intel’s inept handling of Altera as its biggest tenant for its foundry business? Or, finally, is it even being prompted by recent market acknowledgement of favorable features of Field Programmable Gateway Architecture (FPGA) semi-conductors (Altera’s main product line) for the development of what amounts to today’s hottest trend in computing — machine learning, algorithms and computer cognition systems. Incidentally, anyone skeptical on this last point should read this call for proposals from the ACM.

I will not take the time here to provide more detail on each of the above points, namely, the need to augment the PC CPU business with something equally compelling for major markets, the foundry business model, or FPGAs as a superior platform for machine learning applications. If you would like further detail on any of these, or all, please contact me and we can talk about it.

If impatient readers with a keen interest in either player in this drama still think it is very important to put together a strategy now to plan for this acquisition taking place, it might save them a lot of effort to simply mention “this notion has come up before” as a quick look at Analyst: Intel may acquire FPGA vendor, which was published back in 2010 will corroborate.

Bottom line, we need further word from Intel and Altera before any one of us should write much more about this. The setting simply is not clear enough, now, to warrant all of this chatter.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2015 All Rights Reserved