Silicon Valley Watcher - reporting on the business of technology and media

By Daniel Bernstein for Silicon Valley Watcher

Richard Edelman totally spoiled ‘Fun with Dick and Jane’ for me.

Edelman, well-respected president and CEO of Edelman PR Worldwide, wrote a blog post this last Monday recommending a few ways our industry can work towards improving how we’re portrayed in film and television. He references Jim Carrey’s latest, Fun with Dick and Jane, in which the comic portrays an underdog communications executive that eventually outsmarts everyone and becomes an unlikely hero to the defenseless everyman. I haven’t seen it.

Edelman asks, “How can we build on this new Hollywood persona, the action-hero PR person? Or better yet, how can we offset the negative images of the mealy-mouthed apologist in the Constant Gardner or the cynical opportunist in Thank You for Smoking?”

Bling, bling..... bling, bling, bling... BAM! Back on the
radar and back in the swing of things here at SVW. Time for
your Friday wrapper from Loco Luco.

Winter has been VERY kind to me: spent New Year's Eve on stage in SF,
singing in front of 7,000 withThe String
Cheese Incident;rocked an intimate, holiday show with Miss Sarah King
in Portland, OR; and sang silly love songs at the Corazon de Amor" Valentine's day event.
All the music has left me a wee bit
behind on the tech front and I'm only now catching up with the latest
and greatest in recent, new media developments(although it always seems
to be a revolving door!).


Ok, so, back on the scene... and 'bling, bling'... I'm addicted
again. Wearing my pho-chanell, pho-diamond studded
glasses(like, major bling, bling, yo!) passing through Vegas airport
this week, I was wishing I could pull up the network on the interior
lenses and kick it 'round the metaverse. I even pretended it
was happening, tapping my fingers against my thumbs, as if I had the
perfect user interface to sort data while I stood in line to board the
plane. yea, I read too much sci-fi.

But here's one step
in the right direction of interface design. Indeed, I'm tired
of sitting... and I've wondered if someday I'll be able to interact
with the machines while going through the primary series of Ashtanga...
or playing basketball.

Ok, but enough about me and my super future, fantasies.
Here's a list of some hot things happenin this weekend round the bay,
through the metaverse, and beyond:

Gogol Bordello in SF this weekend: Ok, so you probably can't get tickets to the show at this late notice(you should still try) but at least you'll know for next time. This incredible gypsy-punk-performance rock act will blow your mind!  By far, the best show EVERYONE I know has EVER experienced.

Then, if you're travelin through Chicago(as I am), check out Andy
Warhol at the MCA
'nough said.

Traveling round the country this week, you may have noticed a
swarm of hipsters stealin up all the bar stools at your favorite
airport bars. Indeed, some of them are headed to spring
break, but the other, more mature, variety(the ones that don't have
"nice ass" stenciled on their pants) are surely headed to Miami for the
music fest. Get an ear full, if you're near, at theWinter Music
Fest in Miami, Fl. 

And, on the home entertainment front... if you've had enough of main
stream, commercial-flix, check out some under-appreciated, indie flicks
at Greencine.com.
 I recently watched the CRAZIESTflick
'bout 'noodlin(the
age old sport of catchin' catfish wit yo bare hands)!  Nah,
you won't find that on netflix...

And, finally, a bit of eye candy from my latest obsession: street art.
  Check out the Wooster
CollectiveorWe make money
not art for some killer street art and underground beauty.
Or, if you're in the Bay Area, see Logan Hicks' and Adam5100's new show, "Layered," at the Urbis
Artium Gallery on Geary Street.

See ya on the flip, Luco

By Daniel Bernstein

Individuals are blogging in every profession, but one profession where citizen journalism seems to have caught on like warm cookies is Public Relations.

Maybe the popularity of the PR blogger isn’t that surprising to most people. For many of us, leaping to bloggerdom is a rather small leap because of the skills we share with journalists, like writing ability, basic smarts, wit, etc. I mean, scores of individual PR professionals blog regularly, most notably Edelman’s Steve Rubel, but there are many others, from fellow PR neophyte Blake Barbera of Horn Group to industry luminaries like Next Fifteen’s Tim Dyson and Richard Edelman. It also shouldn’t be surprising then that we, like many journalists, could become big-time influencers, especially given the profile and reputation of Dyson, Rubel, Edelman and the like.

I’ve been taught from a very young age to be skeptical of those influencing me...

. . .and ten predictions for 2006-the year of "Do it Yourself."
by Giovanni Rodriguez, Eastwick Communications

You can learn a great deal about a culture's greatest anxieties – i.e., the stuff that inspires all great product development and marketing – by examining its greatest fantasies and asking, "what's the opposite of that?"

Fortunately, you don't have to go far beyond your TV set to gather all the data you need for this exercise. The evolution of the modern-day reality show – a window into American fantasy life – reveals just how much we have changed over the past half century, and where our priorities lie today.

Consider: in 1955, a faux reality show called “The Millionaire” had the nifty plot device where each week the producers would surprise a lucky family with a check for $1 million. The opposite of that was the dominant fear of the 1950's working class...

[Here is a guest column/blog post)

By G.A. “Andy” Marken President Marken Communications Inc.

Take a look at the raw numbers and blogs are impressive. Imagine being able to reach, inform and influence millions of people around the globe. It looks like the ultimate in 1:1 corporate and marketing communications opportunity. A public tool tailor made for your organization.

By Steve W. Martin, author of The Real Story of Informix Software and Phil White: Lessons in Business and Leadership for the Executive Team (www.storyofinformix.com)

Q. What do Microsoft, Oracle, Computer Associates, Veritas, Sybase, Symantec, I2, Red Hat, Macromedia, Microstrategy, BMC, and Informix Software all have in common?

A. They have all made financial restatements because of accounting irregularities that skewed previously released financial results.

According to a recent report from the Huron Consulting Group there were 203 financial restatements in the software industry between 2000 and 2004.

Approximately half of these restatements were made because of revenue recognition issues. As is usually the case, almost all of these revenue restatements were lower than the originally reported numbers.

Revenue restatements are more than just accounting reversals. Their impact affects a company in every possible way. Customers are hesitant to purchase products, investors watch stock prices free-fall, employee morale is ruined (along with the value of employees’ stock options), and flurries of class-action lawsuits are filed by lawyers eager to capitalize on misfortune.

It’s a devastating experience that almost always results in a management change and sometimes in bankruptcy. As I2’s CEO and chairman said about their company’s restatement, “Surely, the audit was no fun for us or our customers, and our customers were asked a lot of questions internally by their own people.”

If these restatements are “no fun,” then why are they commonplace today?

John Coffee Jr., professor of law at Columbia University, offers the following reasons: “First, there is intensifying or weakening of a particular company’s stock, which usually occurs during a stock market bubble. Second, there is an overall decline in business morality and in the words of Federal Reserve Chairman an atmosphere of ‘infectious greed.’ Third, the company has a weak board of directors who are not independent from senior management.

Finally and most importantly, it’s gatekeeper failure--the failure of the auditors, securities analysts, and securities attorneys, who prepare, review or analyze disclosure documents.”

While Professor Coffee would rightly argue these restatements are the result of greed, cronyism among the board of directors, and a gatekeeper that wasn’t independent, I would like to suggest four additional reasons for revenue restatements that are specific to the software industry.

Pride. The high-tech industry is filled with leaders who have a fundamental desire to become rich and, equally important, famous. Since one of their most important possessions is their pride, they will go to any length to prove they are right and to avoid embarrassment, even if they have to cheat.

I would argue that the CEOs’ desire to protect their egos is just as powerful a motivator as greed.

Pressure. The pressure starts at the local sales office, where proving oneself is a matter of survival. Pressure is exerted on the finance department to keep the numbers up. Pressure is on the gatekeeper to keep the client happy, and an incredible amount of pressure is placed on the CEO from investors, analysts, and the press alike. Pressure at all these points encourages revenue fraud.

Politics. When the management regime changes at a troubled technology company, it is in the best interest of the new leaders to restate earnings and make the largest restatement possible. By doing so, they reset expectations extremely low and improve their likelihood of turnaround success.

In other words, they debook as much revenue as possible, regardless of necessity, so that it can be recounted later and improve the financial numbers under their watch.

Past history. History naturally repeats itself. The Huron Consulting Group report also revealed that fifteen percent of all restatements filed in 2004 were by "repeat filers." These companies had encountered financial trouble in the past and reported erroneous financial information on more than one occasion since 1997.

The difference between greatness and infamy has never been smaller for today’s business leaders. Under the business climate of Sarbanes-Oxley, officers risk losing not only their careers but also their freedom, every time they sign off on their company’s numbers.

However, the real story behind the software industry’s restatements is about the humanness of its leaders and a value system based upon net-worth instead of self-worth. And unfortunately, there most assuredly will be more revenue restatements in the future because history has a way of repeating itself.

In the words of Machiavelli, “Whoever wishes to foresee the future must consult the past; for human events ever resemble those of preceding times. This arises from the fact that they are produced by men who ever have been, and ever shall be, animated by the same passions, and thus they necessarily have the same results.”

By Steve W. Martin, author of The Real Story of Informix Software and Phil White: Lessons in Business and Leadership for the Executive Team www.storyofinformix.com

By Luke Maroney and Dawn Montefusco for SiliconValleyWatcher

While VCs were sailing their boats and enjoying the sunshine of Memorial Day weekend, 500-plus psychedelic geeks and silicon hippies gathered at the Palace of Fine Arts in San Francisco for the 6th annual Mind States conference. Now that the buzz has worn off, it’s time to give a rundown of what happened at this unique event, subtitled Technology and Transcendence.

The West Coast conscious heard the latest developments in everything from techno-biological enhancement to current psychedelic research, herbiculture and visionary art. The most interesting thing, however, wasn’t the chill room or the mescaline-packed San Pedro Cacti but the substance of the sessions.

Marc Pesce, the writer, educator, and technological guru, gave a presentation called "Hyperpeople," in which he described a world interconnected by social technology where "we no longer need to rely on mass media to get our information."

A guest article by Charles Oppenheimer, CEO, Recursive Technology, for SiliconValleyWatcher

Larry Augustin of Medsphere, the open-source electronic health records company, gave a talk last week at the SDForum SIG on open source. It was a great talk, especially for the unfortunate few of us whose entire creative energy revolves around enterprise software. There was lots of audience interaction, and we barely got out of there by 9pm. The thesis of Larry's argument is that open source based companies can operate with profit margins similar to those at typical enterprise software companies that rely on license revenue. And the time is right for open source products at the application layer, which is significant because applications are why customers invest in the whole technology stack in the first place.

by Louise Kehoe for SiliconValleyWatcher.com

1997 MacWorld was a memorable event, in many ways. I was sitting in the front row wedged between Muhammad Ali and Ellen Hancock (Muhammad is a large man, the seats were small). This was Gil Amelio’s last MacWorld appearance. He talked for nearly 3 hours. I don’t remember much of what he said, only that Ellen was suffering on his behalf, I was suffering on her behalf and we were all suffering for lack of seating space. Then Steve Jobs walked on stage. He spoke briefly, to wild applause, in sharp contrast to the reaction that Gil received. We all knew then that Gil was on the way out.

Louise Kehoe chatting with Steve Jobs: So what have you been up to, Steve?

by Michael Terner, CEO of KnowNow Inc

The Internet revolutionized the way businesses operate. Now RSS is about to completely change the way employees, partners and customers communicate. RSS will, for the first time, truly enable the information you need, and only the information you need, to find you. Whether employees need the most up-to-date corporate financial data, manufacturing and inventory statistics, FCC filings, breaking industry news or any other time-sensitive information, “event-driven” RSS is taking over where other communication mediums fall short.

“Events” are anything that produces a change in the business state, such as a drop in the available inventory of widgets. For instance, as soon as the number of widgets drops below a certain level, event-driven alerts are syndicated via RSS to subscribers of that information—without having to poll for it—so they can take immediate corrective action. Event-driven syndication eliminates latency, reduces errors, ensures regulatory compliance and fits nicely into existing business processes. This sort of notification used to be handled by e-mail, but that channel is now completely overburdened, having been either drowned in spam or ignored until it’s too late. Event-driven RSS provides a solution to this problem. With event-driven RSS, stakeholders in an organization’s overall success move from searching for information to watching it.

Mark Coker represented Symantec competitor McAfee for about four years from June 1993 to July 97. He says there are some lessons Symantec could learn from McAfee's attempts to grow by acquisition-Tom Foremski

by Mark Coker, President, Dovetail Public Relations for SiliconValleyWatcher.com

Symantec's acquisition of Veritas risks paralleling a similar strategy pursued by McAfee Associates in the mid '90s that ultimately failed. In early '94, company management believed their annual antivirus revenues, which were then at around $15 million, would peak soon around $20-$30 million (yes, really), so they decided to use their cash hoard and strong cash flow to diversify their product line by creating an integrated suite of network security and management tools. As inspiration, they looked to Microsoft, who had obliterated its desktop productivity app competitors in the early '90s by coming out with Microsoft Office, an integrated suite.

McAfee made numerous acquisitions over the next few years, leveraging their high flying stock as currency. Acquisitions included network management, additional network security (encryption, firewalls, etc.), systems management, help desk and storage management products, and made an unsuccessful bid to acquire Cheyenne Software. (Cheyenne was then one of the three storage management leaders along with Veritas and Legato. Although the attempted Cheyenne acquisition failed to happen, the industry took McAfee seriously from then on). McAfee ultimately acquired Network General, the Sniffer company, and renamed the combined entity Network Associates. Most of the acquisitions languished or imploded, while anti-virus became the little-engine-that-could and exploded beyond anyone's expectations.

More recently, the company sold off or closed its distracting diversions, returned to its security roots, and changed its name back to McAfee.

Why did McAfee's strategy fail?

Mark Coker represented Symantec competitor McAfee for about four years from June 1993 to July 97. He says there are some lessons Symantec could learn from McAfee's attempts to grow by acquisition-Tom Foremski

by Mark Coker, President, Dovetail Public Relations for SiliconValleyWatcher.com

Symantec's acquisition of Veritas risks paralleling a similar strategy pursued by McAfee Associates in the mid '90s that ultimately failed. In early '94, company management believed their annual antivirus revenues, which were then at around $15 million, would peak soon around $20-$30 million (yes, really), so they decided to use their cash hoard and strong cash flow to diversify their product line by creating an integrated suite of network security and management tools. As inspiration, they looked to Microsoft, who had obliterated its desktop productivity app competitors in the early '90s by coming out with Microsoft Office, an integrated suite.

McAfee made numerous acquisitions over the next few years, leveraging their high flying stock as currency. Acquisitions included network management, additional network security (encryption, firewalls, etc.), systems management, help desk and storage management products, and made an unsuccessful bid to acquire Cheyenne Software. (Cheyenne was then one of the three storage management leaders along with Veritas and Legato. Although the attempted Cheyenne acquisition failed to happen, the industry took McAfee seriously from then on). McAfee ultimately acquired Network General, the Sniffer company, and renamed the combined entity Network Associates. Most of the acquisitions languished or imploded, while anti-virus became the little-engine-that-could and exploded beyond anyone's expectations.

More recently, the company sold off or closed its distracting diversions, returned to its security roots, and changed its name back to McAfee.

Why did McAfee's strategy fail?

Mark Coker, President of Dovetail Public Relations, tells SiliconValleyWatcher.com readers...

...I'd like to share a personal story about my agency that describes a dilemma I think many good tech PR agencies face...