Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Thoughtleaders Archives

Veteran Media Exec Dan Farber Joins Salesforce In Strategic Comms Role

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Dan Farber is one of the first tech industry journalists and in his thirty year career he has helped create many top publications and he has led many editorial teams. He "retired" from his senior executive position at CBS News in the summer and posted photos of his idyllic life in Sonoma County.

But I never believed he would be gone for long. After all, how can a dyed-in-the-wool newsman stay away when the world is changing so fast, and this small part of the world on his doorstep has so much to do with it?

This week he joined Salesforce.com as Senior Vice President Strategic Communications.

He'll be working closely with Salesforce CEO Marc Benioff, who is starting to take on more of a leadership position on local and regional matters, a much needed role given his history of philanthropy and his potential to inspire a tech community that seems a little lost.

I'm looking forward to seeing Dan more often and I congratulate him on this next phase of his career. It also gives me a chance to repost my interview with Dan from January this year:

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Dave Winer On Silicon Valley And Tech: 'Clowns To The Left Of Me, Jokers To The Right'

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Dave Winer is a serial innovator and father of the Blogosphere, if such a thing exists anymore. His recent post is one of his best. It's worth reading because he's a long-time Silicon Valley watcher and he brings his long experience with the tech industry to the article.

Stuck in the middle

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Ray Zinn: 'Do The Hard Things First' - Advice From Silicon Valley's Longest Serving CEO

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A massive metal cast of a sailfish seems to soar out of the desk of Ray Zinn, Silicon Valley's longest serving CEO, founder of Micrel [MCRL:NASDAQ GS], a leading chip company that produces essential components for smartphones, consumer electronics and enterprise networks. 

At 76, he's been running Micrel since its creation in 1978. In 2014 Micrel celebrates 20 years as a public company and a highly profitable one for its long-term shareholders.

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Fresh Thinking On Public Education: 100 SF School Principals Heading To Deloitte University For Leadership Boost

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School principals at Deloitte University.

Deloitte, the giant audit and consulting group, is planning to send as many as 100 principals of San Francisco public schools to its Deloitte University in early June, for a three-day leadership program in a bid to help struggling public schools create a generation of highly motivated and college-bound students.

I spoke with Teresa Briggs, vice chair of Deloitte and head of its Western Region, about the venture and what it hopes to achieve. Here are some notes from our conversation:

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Malcolm Gladwell's David And Goliath - A Tale Of A New Rules Enterprise...

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I had the pleasure of moderating a conversation with Malcolm Gladwell at a breakfast for top tech executives attending Gainsight's  Pulse 2014 conference in San Francisco.

Gladwell said that over the years he has come to appreciate the importance of Geoffrey Moore's classic marketing book "Crossing the Chasm." 

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Remembering IDG's Gentle Media Giant Pat McGovern

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Time’s Harry McCracken has written a wonderful column remembering Patrick McGovern, one of the most successful publishers of the past 50 years, and a huge proponent of tech when it was a far smaller world. He died this week at Stanford Hospital in Palo Alto.

I met him in 2009 (above) and was incredibly flattered when he sought me out to talk about how his publishing group IDG was successfully managing its digital transformation. It was just the two of us talking for a couple of hours in his hotel room at the Fairmont. I was very impressed by his intelligence and his gentle manner.  He invited me to visit him and also tour his medical research center.

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SF Creators Salon: Rediscovering The Lessons Of Trust And Independent Media

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The recent SF Creators Salon focused on the topic of trust and content marketing and as usual, it was a lively evening hosted at InPowered’s community space in San Francisco.

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Doug Engelbart Lives On - A Celebration Of His Life And Unfinished Work

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Stewart Brand speaking about Doug Engelbart - at Computer History Museum.

This week marked the anniversary of a groundbreaking 1968 lecture by computer pioneer Doug Engelbart and colleagues at SRI International, that changed the lives of those that were there, and even changed the lives of those that heard about it from others that were there.

Several hundred people gathered at the Computer History Museum for an evening program of tributes and discussion of Engelbart’s genius, and to raise money for the continuation of his work. He was born in 1925 and died earlier this year.

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Neil Postman Is A True Futurist…Great Interview From 1995

Superb interview here with Neil Postman about technology and the Faustian bargain we make with it. He manages to predict the issues that we face today with social networks, online education, and who benefits from technology.

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Remembering Russia's Extraordinary Visionary: Ilya Segalovich

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"Delicate, subtle, kind, intelligent, gracious, inspired, luminous. He was afraid of nothing, was at the forefront, waited for us there."

“Sometimes it felt like talking to someone who lives five years in the future."

Those are some of the quotes from an excellent article by Andy Atkins-Krüger, writing on Search Engine Land, about Ilya Segalovich, co-founder of Yandex, Russia’s largest search engine. He passed away recently following treatment for cancer.

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Is Bezos The New 'Steve Jobs'?

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Jeff Bezos is by far the most interesting of the tech industry CEOs. He's the new "Steve Jobs" in terms of being able to attract the same type of attention to his every move. 

Will he be able to guide society into a welcoming, bright digital future in the same way Steve Jobs was able to educate and show how things could become?

 

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Society For New Communications Research Awards Gala

I'm honored to be a Founding Fellow at the Palo Alto based think-tank the Society for New Communications Research (SNCR) founded by the amazing Jen McClure. This evening SNCR hosts a gala awards dinner to celebrate the winners of awards for excellence in new communications and to honor outstanding case studies.

It runs alongside a two-day conference with many top speakers such as:

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Thought Leaders: JP Rangaswami - Chief Scientist At Salesforce.com

Salesforce.com recently held its Cloudforce conference. I caught up with its Chief Scientist JP Rangaswami, who's based in the UK.

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Interview: Former ICANN Chairman Peter Dengate-Thrush On New Domain Names

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(Peter Dengate-Thrush, far right, outside an ICANN meeting in Paris. Source: ICANN)

ICANN, the California non-profit organization responsible for setting the name of all domains, will soon allow a vast array of new names to be created. Beginning next year, for the right amount of money ($185,000) you'll be able to create the right to use almost any word as a top level domain name (TLD) instead of generic TLDs .com, org, etc.

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Breathing And Succeeding In The Startup Life

Sri Sri Ravi Shankar and Maharshi Mahesh Yogi

Silicon Valley is like a snow cone on a hot day -- the flavorless chunks of big ice at the top represent the large corporations, HP, etc; while the sweet juice has collected in the bottom within a multitude of smaller ice crystals -- that's where the startups live and that's where most of the innovation takes place.

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Part II: Wired's Chris Anderson - A New Model For Journalism

Part II of an interview with Wired magazine's Chris Anderson... Photo credit

By Matthew Buckland

Matthew Buckland: A while back you made some startling pronouncements on Der Spiegel Online about journalism and media, implying that journalism in the future would be a mere "hobby". Do you still hold these views... is journalism as a craft dead and dying?

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The Fast Closing Web - Interview With Wired's Chris Anderson

By Matthew Buckland

If you don't know who Chris Anderson is, you don't really understand the internet. He's one of the great technology thinkers of our time who has given us new ways of understanding how the medium has influenced business and society, and where it is all going.

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SecondFloor: Charlene Li In Conversation With Broadvision CEO Pehong Chen


Here is Charlene Li, principal analyst and co-founder of the Altimeter Group talking about her background and social media within the context of business.

She is interviewed by Pehong Chen, the CEO of BroadVision, which offers a business collaboration service called Clearvale. The event was video recorded by a crew from Sina.com, the Chinese Internet giant, on the second floor of BroadVision HQ in Redwood City.

This interview kicks off the first in the "SecondFloor" series of interviews with key thought leaders. I'll be conducting some of the future interviews.

Here are some notes from the evening:

- Charlene Li spoke about her latest book Open Leadership: How Social Technology Can Transform the Way You Lead.

-She spoke about her upbringing in Detroit as the daughter of parents from Taiwan and Hong Kong. She said she felt very much an outsider, living in the heart of a working class community of Polish, Irish and Italian. This outsider feeling has proved useful to her career in being able to gain insights into companies and trends.

- Charlene Li worked for many years as a reporter. She joined the San Jose Mercury in 1993 and went to Boston where she helped run local newspapers. She has been passionate about communities for 14 years.

-Pehong Chen has a large following in China for his video interviews with CEOs and key thought leaders. He asked questions about Ms. Li's book and about the importance of being "open."

- Charlene Li said having an open leadership requires a change in culture and it can be done slowly and it can start small. Create a "sandbox" and then gradually expand that sandbox to include more and more of an organization.

- She said management has to give up the concept of control. It's not anarchic, it takes discipline to not try to control everything. She gave the example of the US navy allowing 8 bloggers to visit the USS Nimitz and freely wander around talking to anyone. The Navy wasn't trying to control the bloggers and the service men, it knew that its personnel had the discipline and the training to say and do the right things.

- Charlene Li said that middle management is often the most resistant to change because they are squeezed in the middle and they have trouble with the loss of control.

- She spoke about Facebook and the privacy issues and that within a few years we won't have the same concerns, we will get used to the fact that we are tracked and the data is shared. We are only 5 years into the Facebook "era." Caller ID caused a huge privacy storm when it was introduced, yet today caller ID is seen as helping to protect our privacy and we don't pick up the phone if it is an unknown caller ID.

- Customer Relationship Management (CRM) now has a chance to live up to its name and be what it says it is "relationship management" rather than transaction tracking.

- Business is about people. B to B is really about B to P and P to B. There are lots of Ps.

- I asked if it is too late for some companies to change because they are vulnerable to what I call "new rules enterprises" new businesses unencumbered by legacy culture and legacy ways of doing business. These are faster moving, more agile organizations. Ms. Li said that businesses have 3 to 5 years to start changing their culture and way of doing business otherwise, yes, they will not survive, customers will flock to more open competitors.

- Mr. Chen said that in his experience, once people within an organization "get it" and the benefits of social media in enterprise 2.0, even a little, change happens quickly.

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Please see my recent interview with Pehong Chen:

Broadvision Reboots Its Business As A Collaborative Enterprise Platform



The Miraculous Memristor - Logic And Memory Plus Going Beyond Moore's Law...


I recently visited HP Labs and spoke with Stan Williams, senior fellow at Hewlett-Packard and director of Quantum Science Research, about an incredible semiconductor device -- the memristor.

Until fairly recently, the memristor, short for memory resistor, was a mythical electronic component. It had been predicted to exist by a mathematician, Leon Chua, a professor at UC Berkeley, in an 1971 paper. No one had made a memristor until Stan Williams and his team cracked it in 2008.


The memristor can:

- store data like DRAM or Flash but it doesn't require any energy to maintain the data storage.

- the memristor chips can be laid down in layer upon layer upon layer, creating three-dimensional structures that can store and process data.

- the memristor is easy to make and completely compatible with today's CMOS chip making processes.

- it can be scaled to very small geometries without losing its properties.

- the memristor can also perform logic, it can act as a microprocessor!

It's that quality of a memristor, that it can be used for both data storage and data processing that Mr WIlliams and his team recently discovered, and that potentially turns the world of computing on its head. This is a very big deal indeed.

Here are some notes from my conversation with Mr Williams:

- IT systems now take up 2 per cent of the world's electric power. We need IT systems that are 1,000 times more powerful, we need what is called exascale computing (The Need For A Radical New Type Of Computer Architecture). Yet to get there it would take too much electric power. The memristor makes exascale possible.

- My team first started looking at molecular electronics in 1997. We were seeing voltage curves that we couldn't understand, they had a signature figure of eight shape. One of our team came across a paper by Leon Chua that had a similar voltage curve. We had to scrap everything we were doing and focused on trying to create a memristor. We focused on titanium dioxide.

- We weren't getting very far so I decided to take the month of August off (8th month) and read everything I could about titanium dioxide, from geology, physics, chemistry, math. Titanium dioxide was studied separately by all these disciplines, it was known as a ceramic, a mineral, a dielectric, a semiconductor, even a sunscreen. By studying all of this separate research, on August 26, I finally figured it out, and brought all the pieces together.

- It will take us about 3 years before we have commercial memristors. The good news is that they are easy to make and completely compatible with standard CMOS chip manufacturing techniques. They also scale to small features very well. And standard chip design tools work very well for memristors.

- Memristors could save a lot of power in data processing because they don't require any power to maintain their data storage.

- HP is interested in memristors because we are the world's largest buyer of DRAMs.

- Memristors could be used to replace disk drives and DRAMs. They will initially be used in IT systems, in-between disk drives and DRAMs but then they can start to 'eat' into both sides -- disk drives and DRAMs.

- This gets interesting. We have now discovered that memristors can be used for logic -- they can be used as processors. This is very significant because instead of shuttling data to the processor and then back again, which takes time and energy, we could shuttle the processing code to the data -- which is smaller and quicker.

- I used to be worried that we are going to reach the limits of Moore's Law and the what do we do. But with memristors, we can easily lay down multiple layers of memristors, effectively extending Moore's Law by decades.

- Using memristors for processing brings other potential changes. Instead of just two states, on or off, as with transistors, memristors can represent many states. This means we can create new types of computing models, we can also create analog computers, which you don't program, but you let them learn. You can then replicate the learning to other memristor analog computers.

- We might be able to use memristors in a similar way to synapses in the human brain.

- We spoken to Intel about memristors many times. They seem to be more interested in other types of memory such as phase change memory.

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Here is my PearlTree on memristors:

 Memristor 


Thought Leader - HP's Bernardo Huberman: Studies Of Mass Social Behavior On The Internet

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Is it possible to describe aspects of human behavior through algorithms? Hewlett-Packard's Bernardo Huberman believes you can and he has the studies to prove it.

Mr Huberman has one of the more interesting jobs in the computer industry. He heads up the Social Computing Lab within HP Laboratories. It's a team of about a dozen researchers studying how people behave on the Internet.

They look at fairly ordinary activities such as the number of YouTube downloads, the number of "Diggs" a web page receives, or the number of times people upload and share content.

From such mundane activities his team can derive algorithms that seem to uncover aspects of human nature and provide a glimpse into things about ourselves that could be universal, that could very well be possibly hard-wired into our very being.

The key to this research is that the studies are extremely large, the sample sizes are in the many tens of millions. The larger the samples, the clearer are the patterns of human behavior that emerge.

"We did a big study of 70 million YouTube video downloads and also millions of Digg stories. From that we can now tell which content is about to go viral," says Mr Huberman.

The study is part of the Social Computing Lab's work on what holds an Internet user's attention.

"Attention is a limited resource. We cannot produce more attention. It will be forever limited."

The study showed that attention is a function of novelty. And that attention will decay in a predictable pattern as novelty decreases.

"We see the same graph, time and again. All content has the same graph of attention and decay."

The shape of the graph is not a "Huberman distribution" it is one that has been familiar to statisticians since the mid-19th century, it is a lognormal distribution, also known as a Galton distribution.

Since the popularity of all Internet content always exhibits the same curve it is possible to make judgements about which content is rising in popularity and therefore promote it on a web page while removing content that is falling in attention.

Catching your eye...

HP has developed a tool it calls i-catcher that can be used to maximize attention for any web content. The tool is currently being tested at a large Danish publication where it helps determine the position of content on the page.

Although such algorithms work best when used against large amounts of content, Mr Huberman says that i-catcher has also proven effective within HP's internal blogs, which only have several thousand visitors.

Mr Huberman's team has also studied uploading of videos, numbers of comments, ratings, etc. Not surprisingly, the more of this type of this involvement and sharing activity the higher the quality of the content. But surprisingly, the more people uploaded the less successful was their content in terms of popularity.

Craving attention...

What is people's motivation when they upload content and share? Mr Huberman says it is based on a strong desire to gain attention.

"We are attention machines, we constantly crave attention."

But not everyone is a Paris Hilton or a Julia Allison. Clearly, many people are able to satisfy their relatively modest hunger for attention in moderate ways.

Still, this craving for attention is another insight that Mr Huberman's team has uncovered when it comes to predicting the mass behavior of Internet users.

Asymmetric attention...

Another interesting quality of attention is that it is asymmetric. I ask what this means.

"People will give attention to content regardless of the quality of the content. People are attracted to popularity. They are interested in what is popular and that is often independent of the quality of the content."

I ask how these findings are being used within HP. For example, the marketing department could use these algorithms in their efforts to gain attention for their marketing messages, and to sell more HP gear and services.

Mr Huberman smiles," Yes, marketing is very interested. It seems that for the first time, the work at HP Labs is relevant to the marketing department. Labs has never worked with marketing before."

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Please see:

HP Labs pilots i-catcher, a service that automatically maximizes the viewership of media Web sites (July 2009)

Bernardo Huberman, Director, Social Computing Lab, HP Labs

Social Computing Lab

A Gold Mine Of Original Research Into Online Social Behavior

Video: Social Dynamics In The Age Of The Web


ThoughtLeader Interview: IDG Media Mogul Patrick McGovern

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I recently met with Patrick McGovern, founder and chairman of the media giant IDG. I've long been an admirer of Mr McGovern and consider him one of the savviest media executives on the planet, alongside Rupert Murdoch at News Corp.

IDG is best known as a publisher of technology titles such as Computerworld, and many others. These days Mr McGovern is leading the changes in the media world and taking advantage of the Internet's media technologies to expand his publishing empire across the world.

Traditional media can learn important lessons from IDG. In 2002 about 86% of its revenues came from print. In 2008 print shrank to 37% of revenues, with online publishing generating more than half of all revenues, with the rest from events, for a total of $3.2 billion.

Here are some notes from our meeting.

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Trend Micro's Eva Chen: Hackers Keep Our Industry Forever Young

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I caught up with Eva Chen, CEO of Trend Micro Tuesday morning just before her two appearances at the RSA security conference. She was in great form, enjoying a rare San Francisco heat wave, while we all melted into puddles.

Here are some notes from our conversation:

- I was on the plane recently and watching the movie Benjamin Buttons, which shows a man becoming younger over time. And this led me to think about the security industry and why it hasn't consolidated like other industries. Usually, an industry will go through a consolidation where companies are acquired or go out of business, and the industry matures over time then disappears. I've been in this industry for 20 years and it still hasn't consolidated. It seems to stay forever young. And it's because we are constantly challenged by young hackers, there are always new exploits and security threats to deal with, and that leads to new startups, it leads to innovation, and that's what keeps our industry young.

- People often say that security will be consolidated by the platform, but that hasn't happened because platforms change slowly. Security changes very quickly.

- Focus is really important at Trend Micro. We focus on security and that's what keeps us on our toes. For example, a competitor such as Symantec is also in data storage. But data storage doesn't change much, it pretty much stays the same, and that affects management. At Trend Micro we focus on security, an area of constant change. That keeps us fresh.

- At Trend Micro we have had to reorganize the company to deal with the new security challenges. We have our various groups such as anti-virus, spam, malware. We manage by objective, so we would give each group their objectives, and each group would build large databases to manage their security risk information to meet their objectives. We did away with that system, now each group shares all their information about vulnerabilities, and we give collective objectives to all three groups, which leads to a much better result.

- Some of the cultural differences are interesting. US teams are very "star" based, there is a lot of emphasis on individual performance. Asian teams are much more collaborative. For example, in the US, commissions are paid to individuals based on their performance. But in Japan commissions are team based. In the US the attitude is 'why should I be punished by someone else's poor performance?' In Japan people don't like to stand out in that way. Their attitude is that they don't want to make more money than their team colleagues, because then they would hate them. The Harvard Business school chose Trend Micro in a case study of management culture in a global company.

- Cloud computing mirrors the challenges we face globally. A recession in one country affects many other countries. If you dig a well in one spot, you affect the water supply of people far away. The same is true in cloud computing. If you manage your bandwidth well, you can free up bandwidth for a partner supplier in Malaysia or China -- everyone benefits. In cloud computing you are a community of services and connections, everyone can be affected by bad or good behavior.

- I get a lot of my best ideas in planes because I spend a lot of time traveling. I'm always in the 'clouds.'

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Please see:

Trend Micro Broadens Its Endpoint Security Platform With Power Management from BigFix

Trend Micro to Showcase 'Rethink Endpoint Security' at RSA 2009

Trend Micro CEO and Co-Founder Eva Chen Named One of the Top 100 Most Influential People in Technology

Trend Micro Honored with Porter Prize 2003 for Unique Strategies, Innovation, and Management

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Check Point: My Dinner With Gil Shwed

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It is RSA Conference week this week, which means lots of security companies are in town. Among my Monday meetings I had the pleasure of dinner with Gil Shwed, CEO of Check Point Software Technologies [CHKP], one of Israel's most successful software companies.

The media roundtable included several journalists, analysts, and some new members of Gil's team thanks to the recent acquisition of the Nokia Security Appliance business group.

Here are a few quick notes from our conversation:

- Even though valuations are improved there aren't many acquisition opportunites for Check Point. The company is interested in companies that have hundreds of customers, not dozens of customers.

- Companies face many risks and the greatest risks are from security breaches that can take place seemingly undetected. Check Point checks for behavioral signatures to root out intrusions.

- Check Point has made 5 acquisitions, three of them are large. It generally integrates companies by bringing people over to Israel for a week or so, to get to know the company culture.

- Check Point has been a public company since 1996. Being a public company is not so bad, dealing with private investors is a lot worse.

- The Check Point offices in Israel are not open planned. The company has surveyed employees and they prefer to work in rooms of about three or so people. Open plan doesn't work because Israeli's can be loud and they like to offer their opinions freely, they get pulled into other conversations.

- A new law in Israel mandates that all companies have to account for their employees' time so that there is no exploitation of staff. In the few weeks that the law has been in effect, Check Point has had to measure employee time and discovered that staff are working at least one hour longer per week.

- Check Point culture is heavily dominated by food. Senior executives are expected to take turns preparing or bringing breakfast to weekly meetings. There can be a lot of competition between people in serving the best breakfast.

- Food is also important within the entire company. In Israel, each day, employees choose a lunch from 15 different restaurants that is delivered. And each day there is a new set of 15 different restaurants to choose from.

- Communal eating is important. In Israel company dining rooms hold about 400 people. The company has about 2300 staff worldwide and it tries to create the same environment everywhere.

- Gil notices what people eat, especially if they order the same thing every day.

- Rule number 1 at Check Point: If you are at a restaurant with colleagues, you cannot order the same food as your neighbor.

- A former employee found religion and wrote to Gil confessing that he spent about 30 per cent of his time playing online games and hanging out in communal areas, and catching up on personal tasks. He apologized and asked to be forgiven for stealing company time. Gil forgave him and said 30 per cent was on the low side compared with other employees.

It was a fun evening, good food and great conversation. And I didn't order the same food as Gil.

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Thought Leaders: Robin Purohit Leads HP's Software Products Division - Using Software As A Strategy

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Robin Purohit runs the Software Products division of Hewlett-Packard's $3 billion software business, the most profitable group within the company, and its most strategic. As 2009 IT budgets continue to be slashed, the software group is becoming the point of the spear for the entire company, potentially driving hardware and services sales as corporate data centers seek to do more with less.

"This year is going to be challenging for everyone, it will very likely be the toughest year in ten years," for enterprise IT vendors, says Mr Purohit. "But we are ready, we've been preparing for this."

If HP's software business were a separate business it would be the 6th largest software company in the US. In just three years, HP has tripled the size of its enterprise software sales thanks to a series of canny acquisitions.

Opsware, Peregrine Systems, and Mercury Interactive, the largest acquisitions, were joined with several smaller software businesses. The goal has been to bolster HP's strong position in data center management and optimization provided by its OpenView suite.

This market is called Business Technology Optimization (BTO), and this type of software is designed to help CIOs gain a deep insight into how they are deploying their IT investments, identify which parts of their IT are strategic, and which parts can be cut. BTO also includes greater data center automation to try to reduce one of the largest expenses in IT: the large numbers of specialists needed to keep enterprise IT systems humming.

. . .CIOs are unhappy

"Everywhere I go, CIOs are complaining that they are unhappy with their IT spend, that it's costing them too much, and that they need to get more out of their IT systems. They complain that 60 to 70 percent of their budget is being spent on on all the things they need to do just to keep the lights on," says Mr Purohit.

HP's message is that its BTO software can map and optimize an enterprise's IT resources, automate many data center operations, and manage new IT initiatives.

A relatively small software investment can quickly produce several tens of millions of dollars in efficiency savings, depending on the size of the company, says Mr Purohit. It also frees up people and resources, that can then be deployed on new IT initiatives rather than the mundane daily tasks of "keeping the lights on."

Software As A Service (SAAS) is a key part of HP's software strategy and part of simplifying customer IT systems. "About two-thirds of our products are delivered as SAAS. Customers will still buy licenses but they want us to host and run the software."

. . . Change comes from the top

But BTO can only do so much. You can lead a horse to water but you cannot make it drink. Some companies are not able to implement the changes that BTO identifies because they aren't yet able to make the changes needed in their organizational structure.

"It all depends on the leadership within each organization. Our software can reveal the inefficiencies in IT infrastructure but the changes have to be driven from the top. For organizations that aren't ready, we will focus on one key problem and use that as an example of what we can do for the rest of the enterprise."

Services is a big component of implementing BTO, and HP's acquisition of EDS provides it with a strong IT services business. BTO customers frequently become HP hardware customers, says Mr Purohit.

. . . A tsunami of regulations

HP's software catalog includes business intelligence software, a key growth area as companies seek to understand an ever growing mass of transactional data generated by the daily commerce of their business groups. Much of this data is also required to fulfill new regulatory reporting rules. "There is a tsunami of regulations rules that businesses will have to deal with, it goes way beyond SOX."

In addition, large corporations have to deal with a relentless number of lawsuits that require them to comply with discovery requests of specific business data. If it fails to find that information within a short-time frame, it can face punitive fines. "A company the size of HP averages about one legal investigation per week. It can cost abut $100 million a year to comply with those investigations. Our software can reduce that to $5 million to $10 million a year."

In today's tough IT climate, HP is expecting a lot from its software business, to help it maintain profits and help drive its hardware and services groups. Fortunately, tough times are motivating enterprises to seek out the efficiencies and cost savings promised by HP's software.

"Our software business is the largest strategic weapon we have," says Mr Purohit.

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Please see:

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Thought Leader: Valley Veteran Bill Coleman On Failure And The Guild Of Entrepreneurs . . .

Here is the second part of my conversation with Bill Coleman, one of Silicon Valley's top entrepreneurs with an incredible track record of success. He left the US Air Force, where he was chief of satellite operations, and joined the seminal VisiCorp, spent nine years at Sun Microsystems, he co-founded BEA Systems, recently sold to Oracle for $8.5bn. He currently heads Cassatt Corporation a fast growing IT software firm with a unique technology for cloud computing.

Part one is here: Thought Leader: A Conversation With Valley Veteran Bill Coleman About The Economy And The Business Of Disruption . . .

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Mr Coleman is optimistic about Silicon Valley's long term prospects but he is pessimistic about the current situation.

"These days there is just one exit strategy and that is to be bought by strategic acquirers. It's a huge buyers market and that's not good for valuations. And its tough for new companies because every VC firm has to keep their powder dry and make sure that there is enough capital for their companies to survive . . . and no one is dong great right now. That's why cash is king, if you don't have enough cash to survive you either go out of business, or get acquired."

While these are tough times for startups, the giants of Silicon Valley will profit from this downturn.

"I was on a panel with Paul Otellini (CEO of Intel) he said, 'Bill, do you know Moore's second law? The strong get stronger in a downturn.' He's right. The big companies might suffer steep declines in sales but they still have huge amounts of cash and they are still generating huge amounts of cash. They can buy lots of great companies at fire sale prices." [Please see: Cash Rich Tech Companies Cutting Jobs]

Can Silicon Valley save the economy?

"The only disruptive things I see are the three areas we talked about: information technology, biotech, and nano. Silicon Valley is very lucky that the technology we started with is springing all these other technologies; we also have great universities; and we are in at least our third generation of entrepreneurs."

Mr Coleman says that having experienced entrepreneurs is very important to Silicon Valley's continued success. His experience of over 30 years in building complex software systems has shown that "you cannot build it unless your team has been together at least five years and you've done it twice before. It's not something you can just jump into because you did four computer courses at Stanford. It's all about learning on top of learning because there has been generations of experience."

There is a class of very experienced entrepreneurs in Silicon Valley that he describes as being part of a "guild" and this is something that other centers of innovation around the world lack. He tells a story of going to Shanghai with fellow members of the exclusive New Venture Club (members include Larry Sonsini, Carol Bartz, John Thompson, John Young, Regis McKenna, Ken Oshman and about 30 other very successful Silicon Valley luminaries...). The club was there as a guest of fellow member Danny Lui, the founder of Chinese computer giant Lenovo.

"We met with about a hundred Chinese VCs and entrepreneurs, all very excited about their ventures and what they were doing." He said that he spoke with one person that said that they didn't have any "architects" with the experience to develop state-of-the-art software, or state-of-the-art chips. "They felt they were still a generation or so away from doing the type of innovation that Silicon Valley is doing. And that makes sense, it's a guild."

Silicon Valley is also very good at reinventing itself, and getting rid of the low value work by moving up the value chain.

"Silicon Valley is the greatest engine of creative destruction in the world. If we were Detroit, we'd still be populated with chip fabs and people in those horrible suits earning $20 an hour. Instead, we have software engineers making $150,000 per year plus full benefits. Silicon Valley has been successful at reinventing itself time and again. The only other place close to us is Israel. India and China will get there but they aren't there yet."

I mentioned that I had met with a delegation of Russian VCs on a trip to Silicon Valley hoping to build centers of innovation in Russia. I told them I would tell them Silicon Valley's secret. They all leaned closer to hear it. I said it was failure, tolerance of massive amounts of failure. One in 20 companies make it here, but if you fail you try again. In other cultures if you fail you often don't get the chance to try again. [Turning Oil Into Innovation: Russian Delegation Seeks Silicon Valley's Lessons]

"Yes," Mr Coleman said. "I've had failures, Visicorp was a failure and so was Dest Systems. At BEA Systems, when I was putting together my senior staff I wanted people that were in at least one company that had failed. You learn not just about failure and how to make things work, you learn the psychology of failure and how you react to it. If it's the first time you are learning it you probably aren't keeping the momentum going in your company. You are exactly right."

"When I got out of the air force, and went to VisiCorp and we failed. And then at Dest Systems, great technology but we couldn't get any money. I was looking at all these people, at the time there were lots of PC companies , and I started to notice that guys that failed started showing up at other companies in more senior positions. Aha, I realized, it doesn't matter if you have some failures what matters is that you dust yourself off and learn from that failure. I used to say Sun did everything wrong that was possible, but it never did anything wrong for too long. A startup is not a technology company it is a learning machine."

Please see part one of this interview: - Thought Leader: A Conversation With Valley Veteran Bill Coleman About The Economy And The Business Of Disruption . . .

Next week I interview Patrick McGovern, head of global publishing powerhouse IDG and one of the smartest media company executives on the planet.

- - -

Additional Info:William Coleman: Executive Profile & Biography - BusinessWeek

He began his career in the United States Air Force as the Chief of Satellite Operations in the Office of the Secretary of the Air Force. Mr. Coleman has been a Director of Symantec Corp. since January 14, 2003 and is a Member of the Trilateral Commission and serves as a Member of the Audit Committee.

He is also a Member of the Information Technology Advisory Board at Warburg Pincus LLC. Mr. Coleman sits on the Board of Directors of the Silicon Valley Manufacturing Group and the American Electronics Association. He served as a Director of Skillsoft Public Limited Co. since its merger with SkillSoft Corporation in September 2002 till January 31, 2004. Mr. Coleman served as a Director of SkillSoft Corporation from August 1999 to September 2002.

In 2001, he was named "Entrepreneur Of The Year" by both Ernst & Young and the Robert H. and Beverly A. Deming Center for Entrepreneurship at Colorado University-Boulder and, by BusinessWeek, as one of 2001's "E-biz 25 Top Executives." Mr. Coleman has a B.A. in Computer Science from the United States Air Force Academy and a M.A. in Computer Science and Computer Engineering from Stanford University.

Green Technology Is Not Disruptive Says Silicon Valley Veteran Bill Coleman

I recently met with Bill Coleman, one of Silicon Valley's most impressive entrepreneurs over the past 30 plus years. He's been at VisiCorp, Sun, he founded BEA Systems (sold to Oracle for $3.5bn), etc. His analysis of Silicon Valley's future is fascinating.

What was especially interesting about our conversation is that he doesn't see green/clean technologies as a disruptive technology. Yet Silicon Valley leads this nascent industry.

Mr Coleman says that green technology doesn't follow the Peter Drucker rule of being a disruptive technology, which means being 10 times better or cheaper than what was there before.

BillColeman21.jpg"In the green market, what we're displacing is cheaper per unit than what is displacing it. It won't be driven by a tsunami of adoption." He says companies and individuals will take their time before adopting more expensive green technologies, especially with the current economic condition.

However, this could change if President Obama's administration adopted a plan of offering incentives for the development and use of green technology. He says this would be a far better stimulus package.

"There are lots of benefits for humanity, but the economics of the green market won't drive a rapid adoption unless there are incentives."

Mr Coleman is a critic of the current government stimulus package, that focuses on physical infrastructure projects. He says that incentives for green technologies would create better quality jobs and have a longer term economic stimulus effect than pick and shovel jobs that end after the project is done. Green technology jobs have a longer life span than bridge or road projects.

Plus, infrastructure projects slow capital formation, he says, which is needed to fuel the next recovery.

Cloud computing, biotech, and nanotech are examples of Silicon Valley's best disruptive technologies, and they don't need any government incentives, says Mr Coleman. And these are industries where Silicon Valley leads.

The recession will hit hard, says Mr Coleman, but Silicon Valley will survive because it reinvents itself every ten years.

You can read the rest of the interview here:

Thought Leader: A Conversation With Valley Veteran Bill Coleman About The Economy And The Business Of Disruption . . .

Thought Leader: A Conversation With Valley Veteran Bill Coleman About The Economy And The Business Of Disruption . . .

I recently met with Bill Coleman, one of Silicon Valley's most successful entrepreneurs. Mr Coleman has been part of Silicon Valley lore for more than three decades. He left the US Air Force, where he was chief of satellite operations, and joined the seminal VisiCorp, developer of the first spreadsheet; he spent nine years at Sun Microsystems in charge of Solaris development; then he co-founded BEA Systems, a successful web middleware software company, recently sold to Oracle for $8.5bn. He currently heads Cassatt Corporation a fast growing IT software firm with a unique technology for cloud computing.

We talked about Silicon Valley trends and which technologies will likely lead the next phase of Silicon Valley's recovery.


BillColeman1.jpgI'm sitting with Bill Coleman, and one of his colleagues, in a small conference room in downtown SF. We're talking and also trying to eat our sandwiches.

He is telling a story about being at JFK airport late last year, and getting a call from a reporter at the New York Times, asking if the recession would be better or worse for Silicon Valley compared with 2001.

"I said it will be worse than the previous downturn. The last time about 800 companies went out of business that had no business model. Secondly, the large companies had sold too much capacity and it took a year or two for things to catch up. This time the recession is not about Silicon Valley it is about something else."

He said it would take a long time for capital spending to come back and that this would hurt Silicon Valley.

"I said you'll see accelerating layoffs in the first quarter and that's exactly what we've seen."

What will this mean for Silicon Valley innovation?

Mr Coleman says he's an optimist but he does have some concerns.

"I have a basic theory that Silicon Valley reinvents itself by inventing a new platform layer every 10 years." He says that Silicon Valley was lucky to develop Information Technology (IT), a technology that is becoming cloud computing, a new platform. Information Technology is also vital in driving the development of two additional disruptive technologies: nanotech and biotech. And fortunately, Silicon Valley leads in all three industries.

Silicon Valley also leads in green technology, a large and growing market. But green technology is different -- it isn't a disruptive technology. He says that a disruptive technology has to have a characteristic of the Peter Drucker rule in that it provides ten times the value of what it's displacing.

"In the green market, what we're displacing is cheaper per unit than what is displacing it. It won't be driven by a tsunami of adoption." Mr Coleman says the government should come up with incentives for companies to adopt green technologies otherwise progress will be slow.

"People already have the capacity for doing what they do today. So this means that they can put off using green technologies for a long time. There are lots of benefits for humanity, but the economics of the green market won't drive a rapid adoption unless there are incentives."

He points out that a government program focused on incentives to adopt green technologies would provide a more effective stimulus than the current stimulus package, with its focus on building physical infrastructure. Building a bridge, or a road, is a one-time event, and it won't provide long term stimulus. "It slows down capital formation," he says, potentially slowing an economic recovery. If the government helped to expand green technology it would create higher quality jobs and provide other long term economic benefits.

Cloud computing doesn't need government incentives because it is a disruptive technology, says Mr Coleman, especially the next stage, beyond what he terms "cloud 1.0." As the cloud computing platform becomes more sophisticated, he predicts that there will be an acceleration in the use of the cloud driven by a "quadruple conversion." Video, audio, and IT data all become IP based, and productivity applications become integrated with social networks.

"As we move forward from Web 2.0 to Web 3.0, all your productivity tools become integrated with your social networking, which becomes your business networking. Your mobile life and your online life will become the same. So now the client moves into the cloud and that's when we'll see a dramatic change in the cost structure of computing and of the capabilities you can have."

He says that a platform ill be successful if it has three characteristics. It has to be able to commoditize a market. Secondly, it has to obey the 10x better/cheaper rule.

"When I was at VisiCorp, heading software development, each of our developers had a PC. This was faster and dramatically cheaper than using DEC VAXs [minicomputers]. Thirdly, a platform must allow you to add value with custom additions. The reason Netscape wasn't a platform was that no one could program to it, nobody could add value. (By the way, that's also true for virtualization...) Unless you have all three characteristics, you won't have a disruptive chain that can accelerate a startup from zero to sixty, and turn it into a major player."

I mentioned that a characteristic of a disruptive platform, is that it disrupts. If you are in the path of a disruptive technology you can often see what's up ahead, you can see the train wreck, but you can't get off the rails in time, you can't downsize or restructure in time, you hit the train wreck.

"Yes. I call it the DEC spiral. DEC tried to deny the importance of the PC and then when they realized what was happening they couldn't layoff people fast enough to match falling prices. There was little left and they had to sell [in 1998 to Compaq, the top PC company at the time.]" said Mr Coleman.

(Please come back for the second part of this interview on Thought Leader Thursday... why Silicon Valley succeeds, the importance of failure, and who will survive this downturn.)

Boom Not Gloom: IT Search Firm Splunk

BoomWatch Series: There are some diamonds out there--companies that are doing very well amid the gloom. One of these is Splunk, based in San Francisco.

Splunk is in the business of IT search -- its technology allows large enterprises to sift through massive amounts of log data produced by networks, servers, routers, etc -- to troubleshoot problems, meet compliance requirements, investigate security incidents, and much more. This is the "dark matter" of enterprise data and there is huge amounts of it. It's not easy to search but it is vital to a modern enterprise.

Splunk has become so useful that in many organizations people say "Splunk it" when trying to troubleshoot a problem.

It's a booming business. Take a look at some of its 2008 achievements:

- Q4 2008 best quarter in company history (+68% vs. Q4 '07)

- Year over year growth of 85%

- 143 new customers in Q4

- 411 new customers in 2008 (+88% vs. 2007)

- 29 Customers in the Fortune 100

SplunkCEO.jpg Late last year I met with Splunk CEO Godfrey Sullivan, a veteran Silicon Valley entrepreneur. He first came to California as a young man and soon began working for Apple -- during the fun early growth years. "I learnt a huge amount when I was at Apple," he says. "After 11 years I left and joined Autodesk."

He was president of Autodesk's Discreet Division and after 8 years left to run Promptu, a short-lived enterprise marketing automation software company.

In 2001 he was tapped to run Hyperion Solutions -- successfully turning it around from $500m in revenues in 2001 to more than double the revenues in 2007 -- and a six-fold increase in its market cap. He's also on the board of Citrix Systems and Informatica.

He could have retired many times over but was lured back into the industry by the opportunity to run Splunk.

"I spent a lot of time looking at the industry to see if there were any companies where I could add a lot of value. And there wasn't much out there. There were a lot of medium sized companies, where their competitors had been acquired by larger firms. But those were the chumps that the gorillas had left behind."

Splunk had all the qualities and positioning where he felt he could make a difference. And that certainly has been the case so far.

In gloomy times Mr Sullivan says it is important to be realistic with your board of directors and set expectations. And it is important to have a "Plan B" just in case. But so far "Plan A" is working out very well for Splunk.

Thought Leader Live: Eva Chen CEO of Trend Micro - The Titanic Security Battles In The Cloud

I'm looking forward to talking with Eva Chen, CEO and co-founder of Trend Micro this Thursday morning at 11am PST (free signup below.)

I'll be asking Ms Chen about the huge changes in computer security and the titanic battles going on behind the scenes to prevent massive criminal scams. The advent of cloud computing has extended the battle lines into a hugely complex online world.

The FBI says highly organized high tech criminal gangs are stealing more money than the entire computer security industry makes in a year. How can companies protect themselves?

Sign up, and tune in at 11am, and ask your own questions too.

http://www.brighttalk.com/webcasts/2023/attend

No Men Allowed: Girls In Tech Expands To New York, LA, And Beyond

AdrianaGascoigne.jpg"Women in the work place are very competitive with each other and that makes the glass ceiling twice as thick," says Adriana Gascoigne. She is the founder of Girls in Tech, a 1300 strong organization that seeks to empower women in the technology industry.

Tech companies continue to be heavily male dominated and that's something that Girls in Tech hopes to change through networking, roundtables, and entrepreneurial workshops. And only women are invited.

"When women get together we can connect on a deeper level than if men are around," says Ms Gascoigne. "It helps to build confidence and it helps to create stronger relationships."

Men are allowed to some events such as dinners but they have to be a guest of a member.

A lot of women in tech tend to try to blend in, they dress in a similar manner to the men, and they behave in a similar way but this is a mistake she says.

"It is important to embrace feminity, to embrace girliness," says Ms Gascoigne. "Too many women think they need to be more like men to succeed. You don't."

Ms Gascoigne says she was lucky growing up, her parents encouraged her to be very self-confident, but that's not true for many women. Being in a heavily male dominated workplace can be intimidating.

It was this realization that led Ms Gascoigne to create the Girls in Tech organization.

The first meetings started with just five or six women getting together every other week. In March 2007 Girls in Tech was launched as an official organization.

IIn September 2008 Jessica Valenzuela and Davina Anthony were encouraged to participate as co-founders to help strengthen the presence of Girls in Tech. There are chapters in San Francisco, New York, Los Angeles, and plans for chapters in Portland, Austin, and London.

(Ms Gascoigne is the director of corporate communications at Hi5, one of the world's largest social networks.)

Please see:

» About Us : Girls In Tech :

Recent Girls in Tech articles:

» How To: Biz Dev in a Slow Economy

» Tune Out to Tune In

» Keeping your career UP in a DOWNTURN: Job Strategies for a Bad Economy

Here is an upcoming Girls in Tech event:

GITEvent.jpg - - -

Please see:

Thoughtleaders: Where are the women in technology? Anita Borg Institute aims to shake things up

SugarCRM: Thorny and Open Source . . .

John Roberts, the CEO of SugarCRM, seems to enjoy being a thorn in the side of his much larger competitor, Salesforce. He says Marc Benioff, the CEO of Salesforce wasn't too pleased when he found out SugarCRM was hosting its user conference at the Marriott, just a few yards from the Salesforce Dreamforce conference at the Moscone Center in downtown San Francisco.

JohnRoberts.jpg"When Marc Benioff found out we were at the Marriott he pressured the hotel to move us out. That's how we ended up here at the St. Regis, and Marriott is paying for it." The move might have backfired for Salesforce because the St. Regis is a lot nicer than the Marriott and just as close to the Moscone.

The reason SugarCRM might be irking Mr Benioff is that it's growing very fast. "We now have more than four thousand customers, and more than half-a-million users, in 80 languages. That's in just four years."

While Mr Roberts credits Marc Benioff with educating the market about the benefits of software as a service, he says SugarCRM is winning business because there isn't any customer lock-in as there is with Salesforce and its proprietary behavior. For example, application developers for the Salesforce Force.com platform have to use a programming language called Apex.

"What is the point of Apex? We built SugarCRM in PHP and we use Internet standard technologies. We are open source, our technologies are owned by the Internet. We view ourselves as the Linux of the CRM world."

Much of the demand for SugarCRM comes from word of mouth, says Mr Roberts. "I don't have to have a big sales force that needs to travel all over the place." Daily downloads average 5,000 per day and recently exceeded 5 million total. Site licenses are $449 per user or customers can choose to the on-demand version for just $40 per month.

"The Internet has totally changed the software industry. We allow our customers to try before they buy."

SugarCRM is home grown and developed in Cupertino from scratch. "We don't off-shore development. I don't believe that you can build innovative software that way," Mr Roberts says.

The company has strong growth and money in the bank. "We raised $20m last year but we haven't had to touch it. We were planning an IPO in 2008 and we needed to show we had $20m in cash."

Mr Roberts says the company might have to wait until 2010 before it can IPO. SugarCRM was hoping that MySQL would be the first commercial open source company to have a successful IPO. But MySQL abandoned its IPO plans and agreed to be acquired by Sun Microsystems for $1bn at the beginning of this year. Now SugarCRM could become the first commercial open source public company.

Until the IPO market reopens, Mr Roberts isn't twiddling his thumbs. "There are five million businesses in the US, and only 10 per cent of them have CRM, the rest are using spreadsheets. That's a huge opportunity for us."

Six Apart: Blogging was Born During a Recession - Interview with CEO Chris Alden

"Blogging grew out of recession and blogging will do well during a recession," says Chris Alden, CEO and Chairman of Six Apart, the software company best known for its Movable Type blogging application.

Movable Type celebrates its seventh year in October 2008, created by co-founder Mena Trott, an unemployed dotcomer. The application has come a long way from its humble roots as a way for laid-off developers to write about their day. Movable Type software is now used by many mainstream media publications and also by newstream media such as Huffington Post, Talking Points Memo, Kottke.org (and Silicon Valley Watcher).

ChrisAlden.jpgWhile Wordpress, the competing blogging platform, has taken over the "one man and his blog" market, Six Apart has moved firmly into the commercial world, providing a simple way for any organization to quickly set up a web site with many community features built-in.

"Publications today want to be able to engage their readers in many ways. With Movable Type you can set up your own private Facebook-like network and you'll see more of those types of features later this year," says Mr Alden.

Six Apart expects to do well in a down economy because corporations can use its software, or its hosted services, to replace home grown content management systems, some of which can cost millions of dollars to build and support. But working with corporations requires having a services group. "Companies want to be able to pick up the phone and know that they have support." Earlier this year Six Apart acquired Apperceptive in New York to beef up its design and development services.

Services is a lower margin business than being a software company and it requires additional people to scale, but Mr Alden says, "Sometimes the seasoning makes the food--it is a necessary thing."

Competing with Wordpress . . .

Six Apart used to own almost all the blogging software market but it fumbled its first moves to commercialize its software by charging a high license fee. Although it rectified that mistake, it triggered a revolt among the early bloggers towards the open source Wordpress, which now has a large and fanatical following. Lots of plugins are available for Wordpress while Six Apart has chosen to build features into its software application--an approach that can offer improved stability and security.

"The competition between Movable Type and Wordpress has been good for both and has made both products better," says Mr Alden. But he does regret the sometimes "snarky" comments that have been made by the rival camps about each other.

Both products offer an easy way to quickly publish web sites. Some key differences: Movable Type makes it easier to manage multiple blogs and its design has enabled it to avoid some of the security headaches that have plagued Wordpress by keeping its template code separated from its core code. "Security isn't much of an issue for most personal bloggers but it is an issue for large publishers."

Disruptive but not destructive . . .

Six Apart is trying to move ahead of its competition by moving up the stack, going beyond being a tools provider to "providing ways of wielding the tools." It also wants to integrate the qualities that a large social network such as Facebook or MySpace offers developers and advertisers. It launched its own ad network earlier this year, and later this year it will announce ways of creating "engaging experiences" for advertisers, and users.

Some of the new features in Movable Type and its hosted solutions, revolve around what is known as action syndication. When a user uploads some photos, or posts a blog post, or writes a comment, that information is broadcast to other platforms such as Facebook, Twitter, etc.

In a similar way that blogging helped to disrupt but not destroy, mainstream media, Mr Alden believes that today's big social networks will be disrupted by new types of social/blog networks. And Six Apart wants to help in that disruption.

Look for a series of big announcements in late November.

More info:

Story continues...


Thought Leader Interview: - Sabrina Horn Says "Sell Like Hell!"

Sabrina HornMonday evening I caught up with Sabrina Horn, head of the Horn Group, one of my favorite PR mavens. Ms Horn runs one of oldest and feistiest Silicon Valley/New York boutique PR firms and in 17 years in the business she has survived the many ups and downs of the local and global economy.

Obviously, we talked about the financial crisis and how it might affect the PR industry. Ms Horn's response was typical: "If we are heading into a recession, bring it on. We've been here before and we know what to do."

Earlier in the day she addressed the San Francisco office and talked about the potential effects of the financial crisis. "I think its important to let my people know that we know how to handle these types of situations."

She finished the meeting with three four-letter words: Sell like hell!

Ms Horn lives in New York and her agency spans both coasts, with about 45 people and $10m in revenues. Over the past few years she has diversified the company into web development and graphic design--services that help her clients.And now social media is a key driving force for the company.

"Eventually social media will replace a lot of traditional PR but there will still be room for both," says Ms. Horn. And companies need to understand the best combination for their business. She says some clients want to rush into "social media" without considering what it means and the commitment that has to be made.

Every company is a media company . . .

I've often spoken about how every company is now a media company and needs to master the new media technologies at our disposal, such as RSS, blogging, Twitter, social media, etc. But being a media company requires a commitment, it is not a "campaign" that runs for a few months and finishes--it is a long term commitment and not everyone understands this aspect and what that means.

I love to remind people that these are fascinating times for professional communicators, whether they are media professionals or PR professionals because there is so much change going on. There are still so many questions about the best use of the new media technologies. What are the best formats, the best practices? And we all get to figure out how this all works, we all have a hand in helping to create the future.

It is this aspect of the PR business that excites Ms Horn. "I'm fed up with the animosity that you see between some journalists and the PR industry. If they think we don't do anything of value I challenge them to spend two days in our shoes, sitting in on our meetings and seeing what we do."

No one has taken up Ms. Horn's challenge. I said I would do it, I'd love to know more abut how things are done in the PR world.

I look at the PR industry as a partner to what I do. I would not be able to do my job if it wasn't for people in the PR industry paying attention to what I'm writing and offering top CEOs, and pitching interesting stories. My problem is not the many bad pitches, which seem to anger younger journalists, it is all the great pitches that I don't have time to get around to.

Horn Group is one of the PR companies that I'll be watching as one of the thought leaders in a rapidly changing industry--with or without a recession.

- - -

Please see:

Horn Group Weblog

Sabrina Horn: Horn Group Weblog: A Nickel for Your Thoughts

. . . There is this undertone in a lot of blogs that what PR folks do in this role is largely intelligence-free. It is true that if I had a nickel for every time in my 17 years at Horn Group I interviewed a starry-eyed professional who pronounced they “like working with people” I’d be sitting on a beach somewhere. But I’m not. Here’s the deal: to all those nay-sayers, those folks who are dare-i-say-it, too complacent and comfortable, all those jaded Doubting-Thomases, THOSE DAYS ARE GONE. Call it a call to arms, or an all hands on deck to our colleagues in PR. We need to embrace the changes seeping through our walls. The reality is, many of us have been leading the charge for some time now.

. . . Are we doing PR? Yes, and no. Its just that PR has changed and taken on a much broader role as a communications discipline. In fact, with some clients, there are times when the last thing we actually talk about is PR. Now its more about how we can help our clients be “social”. But that’s the new PR of today, and the Communications business of the future. To discuss the many aspects of this topic further, we’re co-hosting a panel discussion with Girls in Tech, date TBD. I also invite you to take Dee Anna’s challenge and come spend a couple days with us. It's inspiring, it's awesome, and if we don’t surprise and delight, I’ll give you a nickel.

Thought Leader Exclusive: Olaf Swantee Head of Euro Telco Orange Mobile Says Sustainability Biggest Challenge

Sustainability and the availability of spectrum are among the largest challenges for European telcos says Olaf Swantee, head of Orange Mobile, a subsidiary of France Telecom.

Orange is one of the largest and fastest growing European mobile carriers. It operates in 28 countries and runs 18 R&D centers around the world. It spends about 2 per cent of revenues on R&D, far more than US carriers. It is part of its strategy to avoid the commoditization trends in mobile and distinguish itself from the competition.

I met last week with Olaf Swantee, head of Orange Mobile at the Orange Labs, San Francisco:


Yahoo, Google and Blip.tv

Some highlights from the interview:

- Orange has a close relationship with Apple and co-develops certain technologies.

- It also invests in content which is responsible for about 6 per cent of revenues.

- Normal user uses 30 KB of data per month, Orange's iPhone users use abut 90 MBytes per month. Blackberry users use about 1 to 2 MBytes per month.

- Orange is very keen on building a seamless mobile internet, despite the high costs of investment in building out its wireless data networks. It is doubling the size of its data network every year.

- Mr Swantee says sustainability is one of the biggest challenges for Orange. Larger data networks use more energy, require more bay stations and will require more spectrum.

- European regulators are a problem.

- WiMAX is not seen as a solution to the spectrum bottleneck issue.

- Orange is looking at Google phone and partnering on search.

Also on camera is Yves Martin, Chief of Staff. Off camera is Georges Nahon CEO of Orange Labs San Francisco, and Pascale Diaine.

Thought Leader Interview: Judy Estrin on the Innovation Gap in Silicon Valley and Beyond . . .

Here is my recent interview with Judy Estrin, former CTO at Cisco and one of Silicon Valley's most successful serial entrepreneurs. She has been concerned about the topic of innovation for many years because we aren't making the investments needed--in Silicon Valley and as a nation.

She says that the explosion of Web 2.0 type innovation is masking a large problem.

She has a new book on this topic: Closing the Innovation Gap: Reigniting the Spark of Creativity in a Global Economy

We spoke for about 90 minutes, here is a highly edited version of that conversation.

- - -

http://www.theinnovationgap.com/

Jazz Guitarist Stanley Jordan Translates Financial Data into Musical Patterns of Prediction

Tuesday I had the rare privilege of meeting the great jazz guitarist Stanley Jordan at the studio of leading Bay Area photographer Jim Dennis. Mr Jordan is in town as part of a tour for his new album "State of Nature."StanleyJordanandme1.jpg

I have no musical talent at all, I couldn't carry a tune even if it were super-glued to me. I enjoy talking with musicians and I'm always interested in how they think about things because they use parts of their brain that I don't.

As we were listening to the excellent "State of Nature" Mr Jordan was telling me about a project he has been working on for several years. He has developed software that can take large amounts of data and translate it into musical passages.

"I first started doing this with weather data. I've been collecting barometric, temperature, humidity data for many years and by assigning different instruments to the data I could hear patterns in the weather that I couldn't see in the numbers," said Mr Jordan.

Then he began experimenting with currency data, looking at the exchange rate between the US and Canada. "I used several years of currency exchange data and I could hear the drop in the US dollar and I knew it would continue to drop."

Stock market data . . .

Last year he loaded up with ten years worth of stock market data. "I was shocked at what I was hearing and I stayed clear of the market. This was a just a few months before the whole sub-prime collapse."

I asked how he could tell if a trend would continue or stop. "Musical patterns have a certain energy that needs to be played out and that's what I was hearing."

It's an interesting approach to interpreting large amounts of complex data. I wonder if a person such as myself, with no musical ability, could interpret that data in the same way. Or does it take a musician's mind? I'm thinking the latter.

Mr Jordan said he can tell me more about his experiments with data. "It's the opposite to computer music in which you try to create music by programming data into the computer. Here, you take existing data and map it to the music, you can assign certain data to the alto, etc."

Stanley Jordan is in town for the next few days, he is playing at Yoshi's in Oakland July 7-9.

- - -

State of Nature

Stanley Jordan's first release in more than a decade is "State of Nature" it's an excellent album. I asked him what inspired this project.

"I was thinking about nature and how inspiring it is to me. And I was getting upset at how much pollution and destruction there is, and how it often seems we can't do much about it."

He talked about how the outside world, nature, inspires our inner world and that through music he hoped to motivate people to do something about the external world.

"But I didn't want it to come across as preachy at all, it is an invitation, it's more like "here, come over here and check out these amazing things."

And that's exactly how it is, it is not a preachy album, it's inviting and motivating. The last track on "State of Nature" is a theme based on Joe Jackson's "Stepping Out." It's uplifting and extraordinary in its gentleness and its spirit. "With that I wanted to invite people to step outside and to do something in the world, to change it for the better."

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State of Nature is a series of reflections on the relationship between Humankind and the natural world. Through music, Stanley attempts to address the fundamental questions of Man's inharmony toward self, other, and nature, and then attempts to musically express the partial answers he has found in his quest. Extensive commentary in the liner notes chronicles his thoughts on these matters and illuminates the meanings of the songs. The songs are mostly instrumentals and are intended to stand on their own, yet each contributes to the overall theme in a specific way. Using the music as his guide, he ponders the questions of how we can be so knowingly destructive to the environment and yet not change our ways, and how we might develop ourselves on the inside to becomes more harmonious with nature. To his surprise and delight he finds his own answers within, and he attempts to share these insights in the music, which is ultimately hopeful and optimistic. The key to finding the answers was to realize that his own work on this project symbolized Humankind's quest toward being in the world--not only living sustainably but also attempting to achieve and maintain a state of grace.

News.com Chief Dan Farber Brings Lessons Of Blogger Media

I'm waiting for Dan Farber, the new head of CNET's News.com, in a large, sun-lit foyer. People are coming out for lunch and their mood seems relaxed and cheerful despite a 10 per cent cut in CNET staff numbers made just just a few days before.

Dan comes down and we walk out to have lunch. He chooses a restaurant that has real tablecloths. "I need to eat some real food," he says. I nod in agreement, the single, blogger lifestyle, doesn't encourage good eating habits.

It is always a pleasure speaking with Dan because we speak the same language. I'm not saying this in an elitist way, but there is something that happens to you through the experience of blogging, that does change your perception of the media industry, and provides an understanding of what is going on that cannot be attained by reading about it.

Dan Farber at his deskIt doesn't matter if you've been a media professional for decades, or how young or old you are, understanding the changes going on in the media industry comes from experiencing it first hand. You can see what I like to call the "trajectory of ideas" in the mediasphere, how media is consumed and shared.

And it is that understanding that Dan Farber brings to his new job, as editor-in-chief of News.com, one of the first online news organizations.

Dan nods as I say that we speak the same language. "Things have changed a lot in this business. There is a velocity to news media and you can see it as a blogger," he says. "There is no end to your day."

Over at ZDNet, Dan set up a large blogger network (I write there too) and he was probably the most prolific of the entire group, often writing posts late at night and many times throughout the day.

"I have to restrain my blogging these days, because we have writers with beats," he says. "But everyone now blogs at News.com, it doesn't matter who you are, even if you are in production, you blog." (Dan's new blog at News.com is Outside the Lines.)

Dan has a team of about 35 people, most of them reporters and editors plus a few software engineers. And he is leading CNET's premiere brand: News.com.

Emergency meetings...

Tom Waldrop, over at Intel (Intel is a sponsor of SVW) told me an interesting story about the launch of News.com. He said that the corporate communications team at Intel had an emergency meeting to discuss whether online journalists were real journalists and how they should work with them.

When I left the Financial Times in mid-2004 to become a journalist-blogger, about a decade after News.com launched, Intel had another emergency meeting. Tom Foremski has left the Financial Times to become a blogger. Are bloggers real journalists? How should we work with bloggers?

It wasn't just Intel asking those questions. Tens of thousands of corporations worldwide are still trying to figure out the changes in the media industry, and who is or isn't a journalist, and how they should respond...

News.com was once a leading light of the change in the media industry towards an online media world. For example, CNET's decision to drop print publications (except in China) was a bold one.

Lost the lead...

When I met with Shelby Bonnie, the former CEO of CNET, in mid-2004, he told me that the company had 5 different publishing systems, and two large data centers. It was trying to reduce the number of publishing systems.

CNET tried to create one publishing system, Project X. However, this was later abandoned, at a cost of about $60m according to one of my sources. This was not atypical, many media companies were trying to crete their own content management system. The Financial Times was shifting to a new, never before tried publishing system, when I was there. It broke down several times a day, it cost millions of dollars to develop. Some days it was a wonder that we managed to produce a newspaper.

All of this meant that News.com was not leading the next big change in the media industry: the adoption of the blogging platform as a two-way publishing platform linking journalists and readers.

Bloggers take the lead...

Upstarts such as Mike Arrington, publisher of the popular Techcrunch blog, are these days seen to be in the forefront of the new changes in the media industry, and are challenging even relatively new media companies such as CNET .

Mike Arrington recently revealed a plan to deliver a "crushing" blow to CNET by building a "dream team" of bloggers and rolling up prominent blogs into one organization.

Dan Farber smiles at the mention of Mike Arrington. "We are a better platform to roll up blog sites because we have the infrastructure, we have ad sales people, etc." I agree. I can't see the over-sized personalities of the blog world sharing the same planet let alone the same company.

CNET could potentially regain its lead in pioneering the new media world. And that's what Dan Farber can provide: the blogger publishing experience from the front lines of the business.

Among the changes Dan Farber has already made:

-Different CNET departments now publish using the same template.

- Publish a story as quickly as possible, edit it later.

- Stories are updated constantly.

- Adding the right keywords and tags to make stories discoverable by search engines. About 40 per cent of CNET traffic comes from search engines.

- Use Internet standards whenever possible.

- There is no end to the work day, you are always on call.

- Everybody blogs.

- Create synergies between news, reviews, analysis, and blogs.

- Getting journalists to put in web links to non-CNET publications. "It's about being part of the web and not separate from it," he says.

- Carrying a pad of paper and pencil is not enough. Journalists also take photos, videos, and make podcasts.

I know that some of my colleagues at large media companies are not too happy with all the extra work they now have to do: blogging, video, podcasts etc. Dan says that his team gets it and is happy with the changes.

New skills...

You can certainly teach an old dog new tricks, Dan and I are living proof of that. I've got nearly 25 years under my belt as a journalist and Dan has a few more than that.

It just goes to show that this "new media" has nothing to do with age, there is no "generation gap" it is an "experience gap." And Dan is making sure that his News.com team gets that experience and is ready for this new, always on world. (I'm finishing this at 3 am Monday morning.)

Dan Farber can bring to CNET the best practices of the new media world, but as he says, he doesn't have control over everything. CNET still needs to sell ads and control costs within a challenging time for all media: a complete revamp of the media industry business model.

As I like to say: These are the best times to be a media professional because we will never ever be at such an amazing and disruptive change in our industry in our lifetime.

The trick is to make sure you are on the right side of the disruption, and not on the sharp pointy end of it. Can CNET become a disruptor? That's part of Dan's challenge, and that's what makes his new job one of the most interesting jobs in media.

ThoughtLeader Interview with Jon Flaxman: Driving Change Across HP's Global Business Groups

Early last year, Hewlett-Packard quietly added a new C-level executive position: Chief Administrative Officer, and appointed Jon Flaxman, a 27 year veteran. His mandate is to re-engineer HP's global business processes, to make them more efficient, more productive, and to improve asset management.

HP clearly expects a lot from Mr Flaxman. He reports directly to CEO Mark Hurd and he is on HP's elite 11 member Executive Council Leadership Team.

With a US recession looming, his job is going to be critical to HP's performance, if there is any industry-wide downturn.

"We spend more than $1bn a year on travel, we spend more than $16bn on procurement, we have office space in multiple countries equalling about 900 soccer fields. How do we make the best use of that real estate? And how can we improve our business process? My job is to build shareholder value," says Mr Flaxman.

If I were a HP business group manager I'm not sure I'd be happy to get a message that Mr Flaxman called. Because that could be a sign that his team is taking a close look at how business is being done and what can be improved, and what can be shifted.

Building "shareholder value: can be code for unpleasant changes such as cutting jobs and ratcheting up work loads. But it doesn't have to be that way, says Mr Flaxman. He points to HP's increasing head count and that he is looking at ways to better deploy staff, and use HP technologies to make his teams more productive.

JonFlaxman.jpgA key chunk of the drive for operational efficiency is HP's shared services group, which consolidates many operational tasks that were previously handled in separate departments. Its shared services group is a way HP can in-source rather than outsource--and gain the same benefits and more.

Another key initiative has been to significantly reduce the number of suppliers while at the same time strengthening those partnerships to enable closer cooperation on product and service launches.

Call centers are also an important focus because that's where customer retention plays an large role. And there are other HP business groups where improvements can have a large impact on overall performance.

"You can't just take one business and analyze it. You have to consider the whole process and where it fits into the company's strategy. And how it affects our other business groups."

What are the metrics for this? "We constantly benchmark ourselves. We look at the industry and also at our competitors. But our goal is not to have the best business process in the industry right now. We want to go beyond that. Because if we just focus on today's benchmark, by the time we reach it, it will have moved on. We want to be ahead of that trend," Mr Flaxman explains.

halo.jpgHP uses a lot of its own technologies. For example, to reduce travel costs, it has set up 38 Halo rooms, which feature its high-definition telepresence video conferencing technology.

HP has also been consolidating the number of its data centers and using its technologies to manage the resulting massive numbers of servers and storage systems. HP's data center management tools, and virtualisation technologies, free up its IT experts to work on new projects. HP is building a state-of-the-art IT architecture to support its aggressive "everything" as a service strategy.

[Please see Essential Viewing: Chief Strategist Shane Robison]

HP's technologies can also manage its power use and control its carbon footprint.

"I focus a lot on green technologies. We have a goal of reducing our carbon footprint by 15 per cent by 2010, (compared with 2005 levels)," Mr Flaxman says.

And as HP acquires companies (Opsware, Mercury Interactive), Mr Flaxman is there to make sure that those businesses are integrated into the HP way of running a business. This speeds up their contributions to the bottom line, which is always welcome.

---

Additional info:

Chief Strategist Shane Robison on HP's Services Strategy:


Direct link to YouTube.

[I was happy to notice that if you Google Shane Robison, Silicon Valley Watcher pops up in the number 5 slot, The Inquirer is number 4, and Forbes is number 3.]

Enigmatic Lunarr Unviels Even Simpler User Interface In Private Beta Release

lunarr.gifMy favorite Portland based startup company is Lunarr, which has created a unique collaboration service that combines a wiki-like front with email. This allows messaging between one or more collaborators on a document or what Lunarr likes to call a "flip" side.

Hideshi HamaguchiHideshi Hamaguchi, one of the co-founders of Lunarr, recently visited with his team,to show me a preview of the beta version of the service.

The user-interface of the alpha version was already very minimalist, with just a few tabs at the top and no branding at all. Mr Hamaguchi said that Lunarr has managed to simplify its user interface even further while at the same time adding functionality--an impressive claim.

Dog-ear simplicity...

The solution was to get rid of the tabs at the top of the page and add a single "dog-ear" on the top right of the page to show that there is a back side to the document. And there is just one line at the bottom of the page that has three choices on the left "upload file - import web - use template."

I was impressed. That is very close to what I consider must be the simplest user interface of all: a blank web page with just a cursor blinking in the middle of it.

Unknown unconstrained uses...

Since I first wrote about Lunarr in September 2007, it has acquired about 1200 users. I asked how are people using this service? [Please see: A Once in a Blue Moon Company with a Unique Collaborative App]

"We don't really know," said Mr Hamaguchi. Why not take a peek at what people are doing I asked? "We have very strict data privacy regulations we would never do that," he said.

Interesting and fascinating. A company that doesn't know how people are using its service seems to be a recipie for disaster. Yet I think it is a fascinating approach because people could discover totally new ways of using the service without being constrained by the way it is being used by others.

It can also be a bit daunting for some users because they are presented with a blank page. That blank page is a collaborative document that can contain a web page, a text document, a pdf, virtually anything. But how would you use it?

Lunarr has started to provide a limited set of templates to help people get started, but there are many other types of uses that haven't yet been created or explored. And that's exciting.

Patience can pay...

Toru TakasukaWhat is also interesting is that Lunarr is patient. It is completely self-funded by cofounder Toru Takasuka, one of Japan's most succesful and richest entrepreneurs. It can wait and develop Lunarr at its own pace, it doesn't have to have a revenue model immediately.

It doesn't have VCs or other investors pressuring Lunarr's team to rush into commercializing the business. It's an interesting approach that many Silicon Valley startups must envy.

Lunarr has started getting the word out through a cryptic billboard message on highway 101 in the heart of Silicon Valley. Every month it will change, remaining cryptic, until it emerges into public beta in about a year.

Lunarr remains private by invitation only. I have a few invites left if you are interested in trying it out. Send me your email address tom at siliconvalleywatcher.com. I'll give priority to my Facebook friends so please send me a Facebook invite, it lets me know something about my readers.

And if you are a Lunarr user, I'd love to find out what you Lunarrtics are up to :-)

Here is Lunarr's first billboard:

Jan_nightshot_close.jpg

Here is Lunarr's description of what it does:

LUNARR is the first and only company to add a "back page" to all digital documents in order to streamline collaboration. The metaphorical "back page" is similar to that of a piece of paper. With one click, any Web page or local file can "flip" to it's own back page where LUNARR automatically stores all meta-information and communication surrounding the document or project.

LUNARR plans to replace the current paradigm of attaching documents to an email system and is already integrated into any email host.

The back page stores the entire history behind the creation of the document including all email communication, revisions, linked documents pertaining to the front document and more. First, put a document on the front, and then click a small dog-ear icon in the top right corner to "flip" the document to the back page to access all meta-information. Users may also send the document to collaborators from the back page.

The front can display Web pages (including Web-based office suites), MS Office files, any local program file, audio files, video files, and more. Users can also link any file type to the back for easy storage and organization.


Please also see: Portland's High Tech Community And The Space To Think

Thought Leader: Autonomy's Mike Lynch On The Meaning of Meaning Based Computing

I recently met with Mike Lynch, CEO of Autonomy, the second largest European software company. Autonomy has become a force in the enterprise software market with its search and discovery technology that can find related content based on its meaning.

Autonomy's technology has been licensed on an oem basis and is found in many enterprise software applications. The company acquired California based Zantaz earlier this year, which helps companies discover documents related to legal issues such as lawsuits.

Mr Lynch is also on the board of the BBC and talks about the changes and challenges in the media sector.

Video and editing by Aron Pruiett.

Thought leaders: Dan'l Lewin - Microsoft Seeks Closer Ties to Silicon Valley and Startups around the world

Dan'l Lewin and his side kick Doug Free are the human face of Microsoft to many people in Silicon Valley. Mr Lewin is corporate vice president of strategic and emerging business development and a 30 year veteran of Silicon Valley.

I spoke with Mr Lewin recently at the large Microsoft campus in Mountain View, just a stone's throw from Google's HQ, and also not far from Infinite Loop, Apple, where he used to work with Steve Jobs. [Bio: Dan'l Lewin]

"My job is to identify strategic business opportunities and work with startups to see where we can partner together using Microsoft platforms and technologies," Mr Lewin said.

He and his team spend a lot of time meeting with VCs and startups in Silicon Valley but increasingly, he has also been spending more time travelling to other innovation centers around the world, India, China and more recently, Latin America.

Microsoft doesn't have a great reputation as being a good partner. In the 1990s Silicon Valley was very upset with Microsoft and its business behviour towards Netscape, resulting in an anti-trust conviction. But that was in the past, he says. "In the 1990s Microsoft didn't realize how large it had become, we now recognize our size and influence and we have a very responsible leadership."

Mr Lewin says that he and his team look at about 100 startups per month and end up working with about 200 per year.

His job also includes meeting with some of Silicon Valley's largest companies. Some are competitors but in today's world that doesn't preclude partnership opportunities.

Mr Lewin is always on the look out for potential acquisition targets. Microsoft makes about 20 acquisitions every year, some are small firms, others are large companies such as the TellMe acquisition in March, conveniently located close to the MSFT campus in Silicon Valley.

With TellMe's 320 staff plus expansion of its research facilities, Microsoft now has about 2,000 employees in Silicon Valley. Its researchers focus on XBox and consumer markets.

As he and Doug Free roam around the valley, he is also able to report back to Redmond on the key conversations happening here. But he says that the Microsoft campus in Redmond is very much like Silicon Valley in terms of the conversations people have about technologies and trends, and that it is not an isolated or insulated place.

Good Citizen

Microsoft also strives to be a good citizen. It's Silicon Valley employees are the second largest contributor to the United Way charity, MSFT matches each contribution. On a per capita basis its employees give more to charity than any other company in the valley. Its staff are also involved in local schools and Microsoft offers its meeting and conference facilities for free to any local non-profit and educational organzations.

It is good that Microsoft shares its wealth and it would be good if many other Silicon Valley companies did the same.

IBM's Irving Wladawsky-Berger and Engineering the Complexity of Business

I interviewed Irving Wladawsky-Berger on his recent visit to Silicon Valley. He's one of my favorite industry people and it is always a pleasure to chat and compare notes. He announced that he was retiring at the end of May, but he will still be involved with IBM and academia. More info here. Mr Wladawsky-Berger is one of IBM's top strategists. He has been the key open-source evangelist within Big Blue, persuading the company to standardize on Linux as one of its core business strategies.

Linux and the entire open-source movement would have taken a lot longer to establish itself if it wasn't for the support of the world's largest computer company. IBM provided the credibility that gave corporations the confidence to use Linux. And it has been IBM's defense of the intellectual property around Linux that has kept it from being mired in dozens of lawsuits.

Emergence Raises New Fund and Maintains Focus

I've been waiting for a few minutes inside VC firm Emergence Capital Partners' swank offices in San Mateo as general partners and co-founders Gordon Ritter and Jason Green walk in. "I see that you've managed to escape the Sand Hill Road gulag," I tell them.

They laugh and we sit down to talk about their VC investments and philosophy. They tell  me that getting out from the Sand Hill Road VC community in Palo Alto was important.

"We got fed up with the same scene, and seeing startups go from one firm to the next, all day long," said Gordon Ritter.

"We also wanted fresh and independent thinking and so getting out was important in that regard," said Jason Green.

The four year old Emergence recently announced a second fund, $175m, an increase of $50m over its first fund. And its focus is on what they like to call technology enabled software and services startups.

The first fund had an early success with an investment in Salesforce about a year before it went public. And the other investments have been in similar types of companies in the software as a service sector.

"We decided from the beginning that we would specialize in one type of investment rather than have many different investment sectors," said Mr Ritter. Most other VC firms invest in startups in different sectors. But Emergence decided that focus and specialization would enable it to establish through leadership and expertise--and that would produce more successful investments.

Mr Green says that this has paid off in that they are now known for their expertise and that their portfolio companies have succeeded in raising additional funds.

"Startups in our space know about us and they come to us." He said that Emergence gets to see about 68 per cent of all dealflow in their areas of expertise. That's about 600 business plans per year.

Technology enabled service startups are attractive because they offer a regular services revenue model. Mr Ritter does not believe in hybrid models where companies offer a license for the software, or a software as a service.

 RightNow Technologies, for example, offers its software to customers to run in their data centers or they can purchase it as a service.

"Hybrid models won't work because not everybody will upgrade to the new software and so that limits development of new features and services," said Mr Ritter.

The small and medium business market is a natural target market for the type of companies Emergence funds--a huge opportunity and one that IBM, Hewlett-Packard, Oracle, Microsoft, SAP, etc are also targeting.

How about exit strategies? "It's too early to think about IPOs and selling companies," Mr Green said.

But when the time comes, the two men are confident there will be plenty of opportunities for exits. The large IT vendors are obvious potential buyers for their portfolio companies.

Emergence is emerging as new rules VC firm. I define a new rules venture as: take a few specialists in a specific area; focus on the most efficient and productive business processes; and wrap open source and web services IT around them (Mr Green says their in-house IT capabilities are far more sophisticated than at the $1bn VC firms where he used to work).

In many ways, Emergence is a technology enabled services company itself.

Additional Info:

Story continues...


SVW Interview: CTO John Roese on Nortel's Burn the Boats Strategy for 4G

John Roese CTO Nortel

The clap and rumble of thunder is followed within seconds by the sound of a torrential, tropical downpour. I'm sitting in the Tonga Room, in the bowels of the swank Fairmont Hotel in San Francisco, with John Roese, CTO of Nortel, the $11bn Canadian telecoms equipment giant.


The thunder and lighting and tropical rain storms are fake, and only briefly interupt our conversation, which must sound like mumbo jumbo to many of the happy hour crowd that is sitting on adjoining tables.


As soon as I met Mr Roese that Thursday evening, we launched straight into a conversation about the IPSEC standard, and then into an alphabet soup of acronyms associated with a multitude of communications standards and Internet technologies.


But that's what this sector is about: billions of dollars being staked by telecommunications, cable companies, government agencies and enterprises on numerous existing and next generation communications and networking technologies.


The problem is that not all sectors of the market are as fast moving as others. There is a lot of older telecommunications and Internet infrastructure in place.


Yet there is a fourth generation (4G) of mobile wireless and communications technologies ready to roll. They offer dramatic improvements in capacity and equally dramatic reductions in costs.


Burn the boats


However, there is still a lot of 3G and older equipment being purchased with few gung ho proponents for 4G. It is a status quo that Nortel was once happy to support unti just a few months ago,  when it came up with a radical new business strategy.


"We realized that for Nortel to be successful, we had to get totally behind 4G. That's why we have been selling our older lines of business. We call it our burn the boats strategy. It is what Alexander the Great did when his army crossed into Asia, there is no going back."


I said it was very brave of Nortel to do such a thing and it showed that it must be confident it can shift the telcos and cable companies into making large investments in 4G. From where I sit, I don't see that happening anytime soon.


Fat, dumb and happy


Fat, dumb and happy is how Mr Roese described the attitude of some large telcos. And it was refreshing to see that he pulled no punches in his criticism of telco/cable industries for their slow rate of progress in bringing new technologies to consumers.


From the telcos/cable point of view, why mess with a good thing?  My bill for telephone/mobile calls, and cable/entertainment has tripled over the last five years.


Yet I'm not talking more on the phone, or watching more TV.  Plus, in those five years, those providers have adopted lots of comms technologies that have slashed their costs but not mine.


Last mile paved with gold


The last mile into the home has become the golden mile for the duopoly that controls it--all with government approval. Being a regulated industry has lots of benefits.


Mr Roese smiles and nods. He is much more optimistic than I am. He should know about these things, at just 36 years old, Mr Roese is already a veteran of this industry.



I joined Nortel in the middle of 2006 after being CTO of networking technologies at Broadcom in California, CTO at Enterasys Networks (along with being CMO, CIO and a host of other roles) in Andover, Massachusetts, and CTO of Cabletron Systems.

The fact that this is my fourth CTO role of a significant public telecom company by age 36 can either mean that I am overly focused on this type of work or that I really enjoy being in the center of the telecom industry. The truth is probably a bit of both.


From: John Roese’s Blog » Introduction to my blog


BTW, Mr Roese is not the only new blood, numerous top jobs at Nortel have been refreshed in the past couple of years. CEO Mike Zafirovski joined late 2005 from Motorola and GE.


Nortel also has Lauren Flaherty as chief marketing officer, an IBM veteran. She is considered one of the top marketers in the world and very keen on new media, blogs etc.


An $11bn startup


I tell Mr Roese that I'm impressed with this bold "burn the boats" strategy.  It must do wonders to boost morale at one of the oldest tech companies in the world (Canada's Nortel is more than 111 years old). Not to mention the brutal years of retrenchment and job losses from the dotbomb fallout.


"Morale is up, our people are very excited. We see ourselves as being an $11bn startup. We are totally focused on 4G becoming a success. And what will move the telcos is competition," he says.


He names a few upstart companies such as Clearwire, which is betting on WiMAX, one of the 4G technologies. And there are others in developing regions of the world--which is understandable because there is no legacy business or legacy infrastructure to protect ... and to continue to milk.


In North America, Clearwire and a few other small companies, are just a drop in the bucket in terms of potential 4G spending. I would think that it would take more than that for the major telcos to get serious about 4G in a hurry.


And there are other infrstructure drivers that still need to take place. Intel (an SVW sponsor), for example, won't have it's WiMAX chipset ready and in volume until late 2007. Then there has to be time for the market to build, which means a good two years or so before 4G WiMAX systems light a fire under our incumbent last milers.


Mr Roese says things will happen faster than that, (but then he would, he doesn't have a boat...or a paddle).


Extending enterprise 4G


He says that the enterprise market will be one of the key drivers of change because corporations will want to extend their use of WiMAX and other 4G comms technologies beyond their walls.


"We are doing a lot of work in getting the business people talking with the telcos so that they can see there is demand for 4G. We are also doing a lot of work talking with governments such as the Canadian government about where research and development funds should be directed."


These, and many other projects, initiatives, and efforts to educate markets will pay off for Nortel, says Mr Roese. And Nortel's investment in developing a range of 4G communications technologies means it is ahead of rivals.


I ask Mr Roese if WiMAX and other 4G technologies work as advertised? It seems there has been much talk about their promise of cheap, ubiquitous wireless broadband but not that many pilot projects.


He says that there is no doubt about the effectiveness of 4G and that Nortel is setting up a WiMAX umbrella in Ottowa and other municipalities, to demonstrate that it works.


Silicon Valley blackspot


I ask him to consider setting up San Francisco and Silicon Valley as a WiMAX hotspot to prove the technology. It seems as if the telcos deliberately keep the Bay Area in a backward blackspot.


Getting a decent broadband connection is as difficult as getting a decent mobile phone signal in large parts of Silicon Valley. That has to be deliberate.


My theory is that this is done by the telcos  just to mess with Silicon Valley and it's so called disruptive companies and technologies--it's a finger in the air rather than a signal in the air.


Eat your customers


What I'd love to see is companies such as Nortel taking a much more aggressive approach to move markets.  Instead of "eat your children" as Intel chairman Andy Grove has advocated, I'm looking for "eat your customers."


Nortel, and other companies that have groundbreaking technologies, should set up new businesses that challenge and compete with their customers. They'd only need to do it in a one or two regions, eat the lunch of just a few customers, before the rest of the market got the message and switched to the new technologies in double quick time.


Clearly, Nortel has lots on its plate without venturing into the telco business directly. It must execute on a bold strategy that will be very interesting to follow: Nortel has burned its boats but most of its potential 4G customers haven't.


. . .


Additional Info:

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SVW interview: John McHugh head of HP's ProCurve Networking - second largest network company

ProCurve logo - John McHugh interview
On Tuesday Hewlett-Packard's ProCurve Networking, the second largest enterprise network equipment vendor, will announce its vision for the next five years: Adaptive Networks.

I recently met with John McHugh VP and general manager of ProCurve Networking. This HP business has been growing at about 25 per cent per year over the past five years, a fast pace of growth under the leadership of  Mr McHugh, a 25 year HP veteran who joined straight out of college.

It is an impressive achievement, especially since few people associate HP with network equipment. Yet it is precisely this fact that has helped ProCurve build its business. Looking at Mr McHugh's business card, the HP logo occupies a tiny piece of the real-estate, and that is done on purpose.

Mr McHugh's insight was to keep the HP name low-key, knowing that that would help ProCurve establish a distinct identity and communicate an image of a singularly focused business.

"I didn't want to make the same mistakes that others have done, such as Dell, where its network business is seen as ancillary to its main business. ProCurve is full of people that are veterans in the network business, we speak the same language as our customers. And we re-invest about 12 per cent of our revenues in R&D. These things are very important to network equipment buyers," said Mr McHugh.

ProCurve's focus comes at a time when market leader Cisco Systems is moving into consumer and other markets. Cisco also talks about the network being the computer, a tag that was often used by server vendor Sun Microsystems and brings up associations with processing rather than networking.

ProCurve is sticking to its core mission, to make better networks.
And Mr McHugh credits Procurve's focused strategy for some large wins from companies that used to only buy Cisco equipment.

Procurve prices are less than those of Cisco, and there are no annual maintenance fees--factors which play especially well in educational and government sales.

"We are less expensive than Cisco, but that's not why people switch. We have to do more for less, it is not enough just be cheaper," Mr McHugh says. "And we have to show customers that we have a vision, that we have the technologies and the foresight to be able to help them deal with issues now and several years away."

And that's where the unveiling of the Adaptive Networks vision comes into play. It is about placing more intelligence at the edges of the network; it is about having management systems that make complex networks easier to administer; and increasingly, it is about being able to implement business policies across an entire IT infrastructure because of regulatory and audit requirements.

And because ProCurve has had to grow up within a world that required its equipment and systems to be able to interoperate seamlessly with that of other vendors--its Adaptive Networks strategy is one that can be integrated existing networks.

Announcing a clear strategy to network buyers now, is also good timing. A lot of companies upgraded their networks to deal with the millennium bug. Companies refresh their network equipment between five and ten years, with seven years being the average, that means many networks are now ripe for replacement.

ProCurve has benefited from keeping the HP name low-key and from taking advantage of its HP connection. For example, it deploys sophisticated security technologies developed within HP Labs. And from the development of powerful switching chips that add a lot of intelligence into the edges of an enterprise network. Those chips are adaptive in that they can be reprogrammed on the fly, essential in being able to adapt to changing security threats, changing regulatory demands, and changes in business applications.

However, predicting the future is notoriously difficult, and there is one technology that could derail the network industry from building more intelligence into networks, and send it back 20 years into the stone age of dumb data routers.

This potentially disruptive technology is called IPsec. It allows computers to create an encrypted communications channel that tunnels through a network system. It carries its own intelligence and therefore the network is just shuttling packets.

IPsec is part of Microsoft Vista, the next big upgrade to Windows, and it is turned on by default. Corporate Vista buyers get an intelligent software based networking technology for free. IPsec could be used in a way that could extend the life of existing networks.

Mr McHugh says "I'm keeping an eye on IPsec, especially since we don't yet know how people will use it."

ProCurve's strategy is to be able to work with IPsec and to become the larger "wrapper," adding capabilities to IPsec streams and thus be able to hang onto the value-add intelligence piece of the network equipment market.

[Coming up: John Roese, recently appointed CTO of Nortel talks to SVW about Nortel's "burn the boats" business strategy.]

-----------------------------------------
Additional info:

ProCurve announcements in 2006:

» ProCurve Networking by HP Climbs to No. 2 in Enterprise Networking Revenue and Ports—November 27, 2006

» ProCurve Networking by HP Joins Ethernet Alliance to Drive Adoption of Ethernet in the Enterprise—August 1, 2006

» ProCurve Networking by HP Delivers Secure, Unified Wired and Wireless Network—May 15, 2006

» ProCurve Networking by HP Expands Functionality at Network Edge with New Intelligent Switches—February 13, 2006


How IBM Venture Capital Group succeeds without any venture capital

By Tom Foremski

Late last year I met with Drew Clark, co-founder of IBM Venture Capital Group which operates out of the heart of Silicon Valley, in Menlo Park.

There are just half-a-dozen specialists and their support staff, yet the group has been very successful, and doing it with OPM (other people's money).

Drew Clark, explains: "In the late 1990s we saw the many billions of dollars invested by the venture capital community and we thought about the best way we could participate and leverage those investments. That's when we set up the VC group. Since then we've helped IBM acquire key startups and also partner with hundreds of others in business ventures."

IBM's Venture Capital Group does not manage a fund as do other VC organizations. The company doesn't even have a strategic VC fund such as Intel, which makes billions of dollars in investments. Instead, it tells the VC community, and the startups, what types of technologies it is interested in, and the direction of its business strategies.

Then it waits for the magic innovation engine of Silicon Valley to spit out companies with technologies that it can leverage across its global business platform.

For example, Steve Mills, head of IBM's Software Group, can acquire a small Silicon Valley software company and immediately monetise its products across IBM's global distribution channels. It would take years for a software company to acquire that kind of capability.

It is a sweet deal for IBM since it doesn't have to identify, and invest in startups, and help grow them into larger businesses--the Silicon Valley VC community does it all for them and with their own money.

And the VC community is happy to do it and have an exit--selling a portfolio company to an IBM, SAP or Oracle,  is very welcome.

The IBM VC group has had a hand in 15 acquisitions, and Mr Clark says that the annual rate of acquisitions will accelerate. It will  accelerate because IBM is pushing harder into emerging markets, in India and in China.

"In China we helped a small startup in the financial services area where we needed a secure online payment system. We have good contacts with the banks and we were able to put together an IT and business solution that has been very successful," Mr Clark says.

It is such IT services projects that IBM can help startups find customers, and help refine their technologies. Big Blue is creating "innovation" centers around the world where its engineers and researchers help startups develop their technologies, and bring them into contact with IBM's client companies. It partners with about 1200 startups.

IBM benefits from the IT/business services contracts that build the complex IT and business infrastructures. Services is more than half of IBM's revenues and increasing--so it is a smart strategy. It makes more money from services than it would as a vendor of hardware and software.

Mr Clark is particular impressed with China and the startups that are emerging over there. He sees a lot of innovative thinking in China, and emerging technologies that IBM could leverage.

We spoke for a while abut innovation and Silicon Valley and the unique culture of this place. Mr Clark fully appreciates the value that Silicon Valley continues to produce, despite innovation occurring in many other places around the world.

I see Silicon Valley as unique because it tolerates massive amounts of failure. Here, people are allowed to fail, and fail often--something that other cultures punish.

Mr Clark and his teams regularly  meet with VCs to tell them what they are looking for. One current area of interest is in Service Oriented Architecture.

- - -

Additional Info :

IBM: The Venture Capital Group Report

About:

 

IBM Strategy & Venture Big News - Drew Clark | PodTech.net ...

Drew Clark of IBM's Director of Strategy and CoFounder of IBM's Venture Capital Group talks about the formation of a new Venture Capital Advisory Council ...
www.podtech.net/home/technology/105/ibm-venture-news-drew-clark - 30k -

Jajah is innovating the phone call

Jajah is one of those rare startups that managed to put a tingle down my spine. It's best described as a telecommunications company creating new types of phone call services using Internet technologies.

Jajah is not a VOIP company, don't confuse it with Vonage, or Skype. Jajah uses VOIP but this is not about technology it's about spotting a very large business opportunity. And it's also about innovation in its proper sense.

Jajah has developed what it calls "web activated telephony" which is a mouthful compared with the simplicity of its service. You go to its web site, input your phone number, and the number you want to call, and click to connect--that's it. You use your own phone, there is no download, no headsets to use, it's dead simple. And for many users it is free.

I recently met with Roman Scharf, co-founder of Jajah. "We wanted to create a very simple to use telephony service and one that uses the current telephone system and telephones. Skype is popular but only 3 per cent of Internet users use it. You need to install the software, and you have to be at your PC, and use a headset."

Jajah takes advantage of free local calling by establishing local PBX sites in more than 100 countries and using its network to carry the voice traffic between them. The beauty of this approach is that it leverages the existing global telephone network, and more importantly, it has a massive potential market of existing phone owners--much larger than the number of Internet users.

But how defensible is this approach to competition? "There is a lot that we do on the backend that is not easy to do. Also, it would take at least a year to negotiate all the contracts with the telephone companies around the world." A year is a long time for a competitor to establish the back end infrastructure especially since Jajah is well into phase two--negotiating big partnership deals on the front end.

Mr Scharf says that telephone companies are concerned about Skype and Vonage but not about Jajah. "We work with the phone companies and we help them keep customers. In Germany, for example, there is huge churn in phone customers, the phone companies costs of acquiring customers, so that they can sell them all the other services, is huge. Partnering with Jajah allows them to keep hold of their customers."

Jajah is close to announcing some partnerships with large media companies that will expand its reach. It is also exploring business models that could eventually make all voice calls free, to anywhere.

But this is not all. Jajah will soon be unveiling some very inventive phone call products/services. I'm not able to talk abut them yet but I'm impressed with Jajah's creativity. I'm also amazed that nobody has thought to innovate on the basic telephone platform--which has barely changed in function in 125 years.

Jajah is name you will be seeing a lot because I'm certain that you'll be using its co-branded services in many places--online and offline.

 

- - -

Additional info:

 

JAJAH Mobile and Roman at ScobleShow

Thursday, October 19. 2006

Robert Scoble recently launched his new video blog project called ScobleShow. He dropped by our office in Mountain View at the end of September and taped an interview with one of our co-founders, Roman Scharf. Roman also does a brief demonstration of Jajah Mobile with special guest Guy Kawasaki.

 

 

 

Headquarters:
JAJAH Inc.
2513 Charleston Road
Suite 102
Mountain View, CA 94043
European Office:
JAJAH Technologies S.A.
11A, Boulevard Joseph II
1840 Luxemburg
Development Center:
JAJAH Ltd.
48 Ha'amal St.
Ra'anana, Israel

 

 

JAJAH - web-activated telephony

Just Say No to our Digital Leashes

I recently met Timothy Ferriss, a kindred intellect. Timothy has packed more lives into his 29 years than Steve Jobs has in his 51.

He's finishing up a book called The Four-Hour Work Week: Escape 9-5, Live Anywhere, and Join the New Rich , due out in April, and it is packed with some great tips for our harried times.

Tim is already a successful entrepreneur, and one that discovered the aimlessness of entrepreneurism at an early age. "I was constantly on the go, running around, making lots of money but hating to think that I would be doing this for the next 40 years. I'd already seen enough people do that and end up with quadruple bypass surgeries in their 50s, but I didn't know how to get off the tread mill," he said.

So a couple of years ago, Tim took off to the closest airport, and picked a destination at random. "I didn't know where to fly. I saw London on the board and bought a one-way ticket. Until then, the whole of my life had been scripted, I wanted to do something spontaneous."

Hallelujah, I can relate to the thrill of unscripted adventures. Tim ended up traveling the world, he lived in London, in Ireland learning Gaelic, in Japan learning Japanese and spent six months in Argentina learning Spanish.

[BTW, Tim is also a linguistics scholar, a neuroscientist and a competitive wrestler...]

"Argentina is an incredible place, it has every type of climate and you can get a great apartment for $400 per month. And there are more wireless networks there than anywhere I've ever been. Incidentally, Japan has none at all, I couldn't find any."

And that's where Tim gave up his Spanish studies and took up Tango classes. I had just been reading about Tango in a collection of short stories: "Sex, Death and God in L.A" One of the stories talked about how Tango can become a very addictive pastime...

"Soon, I was doing 6 to 8 hours of tango lessons every day," says Tim. "I was in a class filled with beautiful women and there just two guys." [Surely there must be more to tango than just beautiful women, I need to investigate further...]

Tim is by nature an athlete, a competitive wrestler by earlier choice. It's no surprise that he soon got into competitive tango and got as far as the semi-quarter finals of the world championships(!)

Getting back to his book, one of Tim's themes we discussed (at SVW's 24 hr meeting booths at the Lucky Penny Diner) was digital leashes.

"I've upset many a relationship because I couldn't get off my email. I'd be managing my email or my alerts and instant messaging, getting interrupted all the time. I had a desktop computer at the time, and that screen would always be on, bright and beckoning. Now, I use a notebook so that I can close it shut."

I know what Timothy is talking about and so do my readers. Not only do we have to deal with information overload, in this day and age we also have to deal with what I call "conversation overload."

I like to joke that I love BlackBerries, except for the email feature. Every time I peek into my inbox I lose two to three hours--and I'm still not done.

And some days I don't get to manage my email because I'm out and about visiting with people, trying to get interviews and scoops. Then when I get back to my desk, I'm writing and ignoring my email until my writing is done, or I fall asleep. Some days several days worth of email gets backed up in my inbox at which point I fantasize about blowing it all up.

When Tim went traveling he put himself on a one-day-a-week email diet! "I went from being addicted to email to checking it just once per week. I also left a message on my phone that I would not be checking voice mail messages but to send me an email."

It is difficult saying no to our digital leashes but I believe that being able to "just say no" is going to become an essential character trait for survival in our always on society. Tim's upcoming book has lots of great tips on this and many other subjects related to our modern lifestyle and culture, stay tuned for more...

SVW chat: IBM's CTO of Emerging Technologies talks about Web 2.0 and trust

David Boloker CTO of Emerging Technologies at IBM came into town to speak at Ajax World. I caught up with him Wednesday morning and we talked about Ajax and Web 2.0, and a new early alpha initiative IBM calls QEDwiki that can provide the framework for integrating information and applications within enterprises:

David Boloker is very interested in Ajax and very interested in making sure that there aren't dozens of nuances of Ajax. He and Scott Dietzen, CTO at Zimbra, one of the earliest Ajax apps companies, founded the Open Ajax Alliance.

"Every Ajax toolset was following its own nuance of Ajax and the problem was that each toolset wanted to 'own' the whole page. This created many conflicts and made it difficult to pull together different components," said Mr Boloker. "We did not want to create a standards body but to create agreement on some basic things such as naming JavaScript objects."

Is an Ajax application the same as a Web 2.0 application? "No, a Web 2.0 application has to include the social dimension, how it implements tagging, for example, and sharing, and all the other community oriented aspects that are important," said Mr Boloker.

For IBM, Ajax and Web 2.0 represent new generations of  applications that use the web as a platform. And they have characteristics that enable users to create their own "my web" experience by mashing/pulling  together Ajax components from many different sources.

A key to that approach is to be able to provide the framework that enables that type of integration. And that is the OpenAjax Hub an open source project.

But with everyone having access to this framework, where is the value-add? Mr Boloker says it will be in two places. One is in the value of the data or content. The databases of content will have value to organizations and users, such as Reuters feeds, or databases of chemical data for example.

The second place will be in the Services Oriented Architecture (SOA) layer which is all about services. And IBM is a services oriented company.

"The focus for us is on the business professional, not the IT department. All you need to do is operate a mouse and know how to drag and drop."

That's the basis for IBM's alpha project called QEDwiki (Quickly and Easily Done wiki), which is being tested by 20 large corporations. This is IBM's version of what Jotspot, SocialText, and others are offering, a way to enable business people to mashup sources, feeds and applications, by what I call drag and drop share or not (DADSON), depending on user access rights.

But mashing up feeds and data means trust in the source. I pointed out that Google News recently was carrying a news headline that had been hacked, it carried an anti-US anti-Israel message. In that case, Google had not verified the content, it was corrupted, and that corrupted trust in Google.

In the brave new world of web applications and mashups, verifying that content comes from where it says it does will be absolutely critical. But how will that be done?

Mr Boloker said that feeds could be signed with security certificates but he also acknowledged that even Microsoft has had problems with security certificates.

Trust will come from long standing relations, contracts, and also using security technologies, said Mr Boloker. "It will come from your relationships with your vendors and an established history of trust. You will assign different levels of trust to a feed. And trust will be offered as yet another service."

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Additional resources and links:

Story continues...


Anita Borg on why there should be more women technologists

The late Anita Borg did a tremendous amount of work in highlighting the need for more women in technology. With the upcoming Grace Hopper Celebration of Women In Computing conference in San Diego Oct. 4 to 7, an event she co-founded in 1994 with Telle Whitney, I'd like to publish part of Anita Borg's Heinz Award acceptance speech. It raises awareness about why there should be more women in technology fields.

3/12/2002:

I would like to thank the Heinz Foundation for recognizing with this award that the development of the technology for the future must have positive social and human impacts. In the near future, technology will affect everything: our economic, political, social and personal lives.

Will technology be used to help solve problems of energy, food, water and clean air? Control disease? Nurture our children? Care for our elderly and disability? Will technology be used to increase literacy, particularly among women? Will it enable a fair global economy? Will we live in peace? Will it be used to solve the problems or create the futures that women want?

Story continues...


Thoughtleaders: Where are the women in technology? Anita Borg Institute aims to shake things up

In about two weeks, more than 1200 women plus a handful of men will meet in San Diego for the Grace Hopper Celebration of Women in Computing. It is organized by the Anita Borg Institute, the leading advocate for women in technology leadership roles, and the Association of Computing Machinery.

Anita Borg, founder of the institute.
Anita Borg, founder of the institute.

I recently I met with Telle Whitney, the energetic and passionate head of the Anita Borg Institute,  housed within HP Labs in the heart of Silicon Valley. Also at the meeting was Alan Eustace VP of engineering at Google. Both Mr Eustace and Ms Whitney had once worked with Anita Borg, one of the world's top women computer scientists.

The topic of why are there so few women in computer engineering and technology research is one that has been around for many years. Have we made any progress?

"Some days it feels like we haven't moved much; but other days it really does feel that we have made a lot of progress. We just have to remember that culture changes slowly," said Ms. Whitney.

The forthcoming Grace Hopper celebration and conference, is a highpoint at the Anita Borg Institute, and this year it becomes an annual even--from being held once every two years.

"It is very exciting to see women connecting with each other," said Ms Whitney. "Suddenly, they are not in the minority anymore: they are with hundreds of other women. That makes a big difference."

Ms Whitney said that when she worked in tech research she sometimes felt isolated as a woman. And that isolation sometimes leads to women leaving their company, or their profession, to go and do other things. The Anita Borg Institute wants to reverse that trend and raise the numbers of women in tech research.

Alan Eustace will be one of the 80 or so men in the minority at the "Hoppers." The reason he is going is because this is the place to find the brightest women engineers and researchers.

"At Google, we want to recruit the smartest people, and that means we cannot ignore 50 per cent of the population."

Other big sponsors include IBM, Yahoo, Cisco, Intel, Microsoft, IBM, and HP. All will be seeking to recruit women and increase the diversity of their workforce.

So,  is this a "jobs fair" I asked? They laughed and said no; but there is intense competition to recruit the top women candidates.

"These are very difficult people to recruit because they have many options," said Mr Eustace. "Universities want them, other corporations want them, and we want them."

But with so few women in science and engineering, if Google and the others snap up the best and the brightest, won't that mean that Universities will lose out? Teachers are often cited as being the most influential on women's choice of careers.

"I think people generally know if they want to teach, or to work in the commercial sector. It doesn't have anything to do with us," said Mr Eustace. "We would be eating the seed corn if we were to pull women away from teaching."

To tempt the women at the Hopper celebration to the recruitment tables of the tech giants--goodie bags have been prepared.

Microsoft's goodie bag includes lipstick, while Google's contains chapstick [does this indicate something about the two companies...? Indoorsy (Seattle+rain) or Outdoorsy (SF Bay area sunny)?]

Mr Eustace said he is looking forward to the conference. "When you see so many women in one place, so excited, and so enjoying being there, it is an amazing thing. I get goosebumbs."

Men are welcome at the conference, and within the Anita Borg Institute. It's an attitude that makes sense, since they can help put things right.

But tracking changes in company employment data is difficult. Company human resource departments will not release employment data to protect themselves from legal actions.

For example, when I asked about the number of women engineers at Google, or the percentage of women to men engineers, Mr Eustace declined to answer. Yet he is a board member of the institute and a passionate supporter of this cause. Without such metrics, the work of the institute cannot be assessed.

"We've asked the HR departments at many large companies and they won't give us the information," said Ms Whitney. "We have plans to produce an aggregate number, which would not identify an individual company, but would still provide useful trend data."

_ _ _ _ _ _ _ _ _

  [Thanks to Jane Evans-Ryan from MCA Communications and Eric Mason, communications director at the Anita Borg Institute, for setting up this meeting.]

Additional information about Anita Borg:

Story continues...


SVW Top Chat: Henri Richard sales chief at Advanced Micro Devices


I've been a little harsh on Advanced Micro Devices (AMD) lately, mainly because I've been writing about a revitalized Intel (an SVW sponsor) and its bid to win back market share with its Core 2 Duo chips and an ambitious roadmap.


My view has been that AMD has had the party all to itself with its low-power consuming high-performance Opteron server chips--and now the Empire Strikes Back, as was said by Nathan Brookwood, analyst at Insight64 and a top Intel watcher. Intel is now dressed to the nines and ready to crash the party (and drink all the beer :-).


AMD has done very well over the past four years in driving a truck through gaps in Intel's product roadmap, making systems with AMD's Opteron server microprocessor a favorite in many data centers. And it has won some large customers for its PC microprocessors, notably Dell, which had been an stalwart Intel loyalist.


Here is a Google Finance chart of AMD and Intel's relative stock movement over the past year:


Intel-AMD.png


 


The Opteron chips have been AMD's spearhead and it has managed to capture as much as 26 per cent of the sever market. Computer data centers often cannot get more electric power. By using low-power consuming hardware, data centers can boost their computing power.


Now with Intel's multicore Core 2 Duo microprocessors coming onto the market, AMD faces the full competitive brunt of a massive competitor that is almost 10 times its size in market cap ($12.5bn versus $112bn).


Intel's chips are fast and low power consuming and packed with other goodies. And Intel has state-of-the-art fabs all over the world capable of pumping out millions of microprocessors with a low cost of manufacture.   It just seems obvious that times are going to get tough very quickly for AMD, it is going to be difficult to hang onto market share-- let alone increase it to 40 per cent, as AMD has said.


AMD also has the tough task of integrating its $5.4 bn merger with ATI Technologies, the Canadian graphics chip maker. And it has to migrate chip production to the 65nm chip process, a very challenging task and one that is vital to its ability to compete against an Intel already at 65nm.


Chip fabs are the most complex industrial facilities of our times, they are filled with hundreds of very expensive and very finely tuned machines. Every time a chip maker switches production to a smaller geometry, or to larger wafers, much of the machinery changes and everything has to be recalibrated and tuned up again for maximum yield.


This is always a risky endeavor because if you cannot get high enough production yields fast enough, that chip fab becomes a massive expense.


Henri Richard AMD Chief of Sales and MarketingCan AMD continue to give its giant competitor a run for its money? I recently visited Henri Richard, AMD's chief of sales and marketing,  at AMD headquarters in Sunnyvale.

Story continues...


The Empire Strikes Back - Sean Maloney leads Intel's push to win back markets

Thursday was a very important day for Intel (a sponsor of SVW) as it introduced its Core 2 Duo family of microprocessors, representing the most important product launch since its Pentium launch 13 years ago.

"The empire strikes back," was how Nathan Brookwood, microprocessor analyst at Insight64 termed it. And that's an excellent comment on what this launch means to Intel, the world's largest chipmaker.

The Core 2 Duo launch is more than just a new microprocessor family; it represents Intel's determination to return to its core capabilities after embarrassing missed product deadlines, less than successful forays into other businesses, and an obsessive need to regain market share lost to rival Advanced Micro Devices.

It is also a return to a culture formed from a rigorous engineering discipline that doesn't tolerate missed deadlines, or *any* loss of market share--no matter how small.

To further underline the importance of this event, just days before the launch Intel appointed its most effective and aggressive senior executive, Sean Maloney to lead its global sales and marketing.

. . .

As Intel chairman Craig Barrett looked on from the front row, CEO Paul Otellini strode the stage and reported that over the past couple of years Intel's engineering teams have consistently met all their deadlines on time, and sometimes ahead of schedule. This includes the new Core family, which will form the foundation of Intel's business for the rest of the decade and beyond.

But getting to this point was not easy, it required a complete overhaul of its microprocessor designs in order to make low electric power consuming chips operating at higher performance levels. These two goals are extremely difficult to achieve with traditional microprocessor designs. Intel had to develop innovative technologies, making the chips smarter about power conservation, while providing higher performance through the use of multiple processor cores.

During this time, it was not easy watching rival AMD make significant inroads into its markets, with its Opteron family and other microprocessors.

The significance of Thursday's launch was further underlined by its location at Intel's HQ in the heart of Silicon Valley, in huge tent filled with nearly 300 journalists and analysts.

Sean Maloney, the freshly appointed senior VP of global sales and marketing, demonstrated the capabilities of the chip family, and promised further advances in lower power consumption, increased performance, and new types of applications for the digital living room.

. . .

Over the past 24 years Mr Maloney has earned a reputation as Intel's top troubleshooter. He is the one that Intel relies upon to tackle some of its most challenging business problems.

Mr Maloney used to head Intel's UK operations and then became technical assistant to CEO and chairman Andrew Grove. From 1992 to 1995 he worked side-by-side with Intel's legendary top executive, learning all aspects of the business. This is how Intel grooms executives destined for its senior ranks.

Through a series of senior positions Mr Maloney quickly became known as one of Intel's most effective and aggressive managers, tackling some of the company's most difficult jobs such as rebuilding its troubled communications chip group.

Again, Mr Maloney has been handed one of the company's most challenging jobs: reigniting sales and growth for what insiders call "Intel 3.0," the next big phase of Intel's business strategy. Intel 3.0 represents the third reinvention of the company.

Very few people remember that Intel started off as "the memory chip company," then it became "the microprocessor company," and now it is set on a new course to become "the platform company."

But Intel is like a supertanker in that it takes a while for it to set up a new course; when it does, it becomes an extremely aggressive competitor.

AMD, located just a stones throw away from Intel's HQ, has done well to exploit changes in microprocessor markets at Intel's expense. Now it faces the full might of a refocused and reenergized Intel determined to win back any lost market share--and then some.

Yet AMD's response is puzzling. Earlier this week it announced plans to acquire Canadian graphics chip maker ATI Technologies in a $5.4bn deal. This is not the time to be distracted by a huge merger--unless AMD's management is looking to ATI as a life raft.

In fact, a life raft might be the best way to view this deal if you consider that AMD has to develop its own multi-core chip family, develop global sales channels, *and* invest billions of dollars in building new chip fabs, which, by the way, includes mastering a new manufacturing process at 65nm. Each one of these are extremely challenging and risky endeavors.

I cannot see how AMD can continue to gain market share and profit at Intel's expense. It is up against a competitor that just announced a record number of 550 PC/notebook design wins; and 200 server design wins for its new microprocessors. Intel has already successfully made the transition to 65nm production; plus it has one of the industry's most capable managers, Sean Maloney, leading its global sales push. This is the Empire Strikes Back--with a vengeance.

- - -

Coming up: Sean Maloney talks to SVW on net neutrality. (I grabbed a few minutes with him for a chat before his presentation.)

Thoughtleader: lunch with IBM's top strategist Irving Wladawsky-Berger

IrvingWB1.jpg
Wednesday I had lunch with IBM's top strategist Irving Wladawsky-Berger, vice president, technical strategy and innovation. He was in town to appear on a panel at the AlwaysOn conference in Palo Alto.

It's always a pleasure to catch up with Mr Wladawsky-Berger. I've been meeting with him on a regular basis from many years. Our conversations are always wide ranging and we compare notes on many different aspects of the IT industry and beyond.

We started off chatting about Withnail and I, a cult British movie that his daughter had recommended. (I am very fond of the type of characters in that movie from my upbringing in the UK.)

Then we moved on to my favorite subject, blogging and media. What is a blog or what isn't?

I said that the definition is very broad, and I like to remove the "b" word because it is universally confusing. It is about the ease of online publishing using a very robust platform, with the ability to publish outwards and publish back--it's a two-way media technology.

Mr Wladawsky-Berger said that blogging encompassed an incredible variety of types of content but that authenticity was a prime requirement. "You cannot have somebody ghost write a blog," he noted.

Mr Wladawsky-Berger said he likes to write long posts that explore a theme or idea; he references books, and other sources, rather than other blogs. He said he would rather be writing about the world at large than writing about what someone else has blogged.

I said it is good to spread some link-love but there is a danger of stepping into an echo chamber. I'd love to do more link-love but I'm out and about all day trying to get exclusives, scoops, any original material. It's in the tradition of you-can-only-get-it-here that news organizations have practiced for centuries. The drawback is that I'm always behind in my email and in my blog reading. But when I do blog read, I start with my Technorati links (trackback is dead).

We also agreed on another important point, salad nicoise for lunch.

I asked what was catching his eye these days. "I'm fascinated by complex engineering systems and how to apply the disciplines of engineering to ever more complex business systems such as customer service. It's relatively easy to do the back-end IT stuff that businesses need, but the front-facing stuff, dealing with people, is complex because people are unpredictable. And that's what makes this all very interesting."

Mr Wladawsky-Berger is a visiting professor at MIT and lectures on this, and related subjects.

I asked Mr Wladawsky-Berger a question I've wanted to ask about IBM for some time: how many business processes could I outsource to IBM? IBM's services group is half the company's revenues and it has a huge high-end business consulting group that has extensive domain experience in many industry sectors.

"Well, if you just want to stay at home and have us run everything, you couldn't do that, there is more to business than that, culture is very important," he said. However, there is an Indian telecommunications company that has outsourced everything to IBM except customer service.

"Sunil Bharti Mittal, CEO of Bharti TeleVentures Limited made a presentation our company meeting in Rome and he has been incredibly successful. He has managed to grow revenues while the price of cell phone minutes has been dropping," Mr Wladawsky-Berger said.

I mentioned that keeping the customer service as a core capability was smart because this is about keeping the cultural interface. I changed the description of Silicon Valley Watcher to "reporting on the business and *culture* of Silicon Valley" because businesses exist within a society and they have to understand their culture interface with many different communities otherwise.

That is why it is easy to outsource back end functions, software development, but it is not possible to outsource the front-end cultural user interface; that has to be kept local. The cultural aspect is part of Mr Wladawsky-Berger's research work on complex engineering systems, trying to understand the unpredictable human elements that can determine the success or failure of a business.

It's interesting discussing these topics and seeing how sometimes we can come to similar conclusions through different routes.

Coming next: The only thing that saved IBM from the disruption of PC revolution was ... Find out in Part 2 of Lunch with Irving Wladawsky-Berger...

---
Mr Wladawsky-Berger is responsible for driving big changes at the world's largest computer company, and beyond. His influence within IBM and the industry is remarkable and achieved without much fanfare. He has managed to drive some important changes within IBM towards open standards, and very early support of Linux, and many other IT initiatives. And these have had great effect across the IT industry.

Irving blog: A collection of observations, news and resources on the changing nature of innovation and the future of information technology.

Business as a Complex, Continuously Evolving System
Reflections on blogging - one year later

SVW: The remaking of IBM: A chat with IBM chief strategist Irving Wladawsky-Berger

Sabrina Horn: Celebrating 15 years of the Horn Group


sabrina_3.jpg
I recently interviewed Sabrina Horn, the head of the Horn Group, one of Silicon Valley's largest independent PR companies. The Horn Group this month is celebrating fifteen years in business and Ms Horn has seen many of Silicon Valley's business cycles.

Over the past three years she has been working from the company's Manhattan office. She has returned to the East coast where she was raised. She has two young girls, five years and eight years old.

Ms Horn spent 20 years on the West Coast but she says that after the dotcom bubble burst she wanted to "get back to my roots, I needed a new challenge, even though managing a company through the downturn has been very challenging."

I asked her about some of the cultural differences between the East and West coasts. "East coast has more of an attitude of being no nonsense, direct, get the job done. But the Web 2.0 companies out here are very much like their counterparts in Silicon Valley, they have very similar cultures and you wouldn't be able to distinguish the from each other."

One of her goals was to diversify the company away from enterprise software and towards other industries and services. For example, in New York she created a business group that helps companies with web site design, and related services. Now that group brings in about 25 per cent of total revenues and she expects it to bring in 50 per cent within five years.

This is all part of a future for PR/communications that helps companies get their stories out and also publish them. "The Internet is such a visual medium that it makes sense to help companies improve their online presence."

Ms Horn is very much aware of the power of blogging and the new media/social communications technologies that are pouring out of Silicon Valley. Podcasts, vidcasts, new media oriented press releases, and the many different ways companies can communicate are readily apparent from her vantage point. But she admits that it is often difficult to convince clients on best strategy and good practices because they are often stuck in the old way of doing things.

She also recognizes that for PR companies to be more effective at what they do, they have to be recognized as strategic consultants and important partners, rather than subservient to the whims of the current marketing director.

[I've always considered it strange and unhealthy that marketing departments run the communications. Corporate comms should have it's own seat in the C-level suite. That's true in very few companies. There should be a chief Conversations/Cultural Officer or something like that because businesses exist in a society and they need to have the appropriate understanding of the conversations, the culture of that society. That's why SVW reports on the business and culture of Silicon Valley.]

Ms Horn also understands that in today's world PR firms have lost their ability to control the message, and that's a very important realization. Because it means readjusting and accepting the fact that we live in a very different media world today.

[For example, I tell companies that they cannot control their message because the world will tag/label them in anyway it wants, and in all sorts of ways. The new control comes from having the discipline to repeat a message a hundred times and more, making sure that everyone in an organisation understands and articulates a consistent message, time and again. (You'd be surprised at how rare this is!)]

Remaining an independent PR firm is tough in today's world where clients want global reach and representation. But it could be argued that smaller, independent PR companies provide more value, attention and can leverage existing partnerships in other regions to provide comparable services to the mega-agencies.

Ms Horn says that she receives offers to buy her company on a regular basis but she says she is having too much fun to take those offers seriously. "If you are passionate and involved in something, you cannot just walk away from it. I love coming to work everyday," she says.

She shared with me three rules she has learned from running her business:
-The day you think you know it all is the day you need to quit the job.

-There is always far more that you don't know you didn't know.

-Always make sure that the check clears the bank.

Wyse tolls the bell for the corporate PC...the move to thin computing

I recently spoke with John Kish, CEO of Wyse, a leader in thin client/thin computing systems. Wyse is also one of the companies relaunched by Garnett & Helfrich Capital, a private equity firm specializing in venture buyouts.

Wyse is in the sweet spot of the move away from fat, loaded PCs, towards very thin, high performance clients running Windows applications on a server.

With Wyse's technology combined with those from partners Citrix and VMware, users feel they are working on a high performance Windows XP PC. John Kish, CEO of Wyse, notes that this type of thin computing system offers many traditional customers of PCs significant advantages.

For example, in the corporate world the PC is a large problem. It is a target for spyware and viruses, it often contains sensisitive data about customers, and it is expensive to buy and maintain.

"The beauty of thin computing is that the client offers the same functionality as a PC but if you disconnect it from its network, it is useless, it contains no data, it becomes as useful as a doorstop," says Mr Kish.

Story continues...


RightNow: The Microsoft of Montana and the philanthropy of success

I'm a big fan of Greg Gianforte, the CEO of RightNow Technologies and I was mortified that I almost missed him the other night when he was in town. Somehow the meeting time didn't sync up with my Treo, fortunately I was downtown and we managed to connect.

Mr Gianforte is a serial entrepreneur; RNOW is his fifth startup and is one of the leading CRM software-as-a-service companies and is going like gangbusters. It recently reported another blowout quarter.

His greatest passion is in starting companies and giving startups advice. He has given me plenty of great advice.

One time at a conference, a few people over heard some of the pearls of wisdom he was handing to me, and very soon there was a crowd of entrepreneurs around him, following him around the hallways, asking him questions about the many intricacies of leading teams and building dreams. He loved it, and I didn't hear him say "RightNow" once in more than two hours....

You might say that Mr Gianforte isn't keen on venture capitalists, and that would be a kind way to phrase things. You can find out more by reading his book, published late last year: Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money

RightNow is headquartered in Bozeman, Montana; it also has offices in Silicon Valley and overseas locations. And it is growing fast. "We're hiring on average one person per day," Mr Gianforte said. I said great, maybe I can run some job ads for you, I've been meaning to start a jobs board (coming very soon).

The other thing I like about Mr Gianforte is that he isn't afraid to challenge his competition in the media, and on the speakers circuit. Not everybody has the cojones to do that, or to challenge him (unfortunately.)

The other thing I like about Mr Gianforte is that as he grows more successful he takes on larger social projects. He is a spiritual person and somebody that wants to create a lot of value in his community. For example, he estimates that RightNow's payroll in Bozeman has reached more than $300m and each $1 bounces around about five times within a community. That means more than $1.5bn in products and services--a huge amount for a state where average salaries in rural areas are just $11K per year.

Mr Gianforte's latest social project is to retrain people in small Montana towns to become specialists in various HR functions. The idea is to encourage companies to "outsource to Montana" and help revitalize some of the towns in the state.

"Even if only some of the people in these towns find work, that money will make a big difference in those communities," he says.

That's a characteristic of many entrepreneurs, I've noticed. They like being successful, making money--but they love being able able to make a big difference in the world, especially where they live.

- - -
Related stories:

Startup advice (you have to read this!)

Most startups should avoid venture funding, not pursue it

Some of Greg Gianforte's thoughtleader columns in SVW :

Water into wine: monetizing open source via on demand

Serial advice from a serial entrepreneur

RightNow, right time, right place...tales of the newrules enterprise

You can also purchase his latest book, "Boot Strapping Your Business,"
through our affilate link.

Exclusive interview: Terry Garnett explains his firm's VC buyout strategy...

. . . and the launch of Ingres and Wyse Technology--two well established companies with large market potential


I recently met with Terry Garnett of Garnett & Helfrich Capital--the venture buyout firm behind behind Ingres and Wyse Technology. These are two very interesting companies that had caught my eye and I didn't realize the same investment team was behind both ventures.

I have been writing a lot about Ingres because it is a small open source software company that has been assembling a dream team of top executives more suited to running multi-billion dollar business groups. So you can bet that Ingres won't be sitting on its hands. (Please see SVW: The ambitions of Ingres: A small company with the executive team of a giant )

And Wyse Technology is another interesting company, essentially reinventing the whole thin computer concept and renaming it Thin Computing. It takes a systems approach to driving down the cost of installing and operating large numbers of PC systems which can be replaced with Thin Computing systems and the users don't even know it. (Please see SVW: Wyse says in talks with Google and Yahoo on thin computing)

Garnett & Helfrich Capital has a modest buyout fund by the standards of Silver Lake Partners and others that have raised multi-billion dollar funds. But, it's not the amount of money you have, its the operational abilities, and long experience in the industry to be able to read the evolving trends--that Mr Garnett and his partner David Helfrich bring to the table.

Their current fund of $350m has done some very interesting deals and there are more to come plus plans to raise yet another fund around the end of the year.

I popped in on Mr Garnett last week, in the "VC Gulag" a raggle taggle sprawl of small office buildings on Sandhill Road (they are moving to larger quarters in Hillsdale). We covered a lot of ground, here is part of our conversation:

Mr Garnett said he used to be a venture capitalist at Venrock but he also has a long career in the software industry at many different companies. Here is his bio:

From 1990 to 1994, he worked with Oracle Corporation reporting to Larry Ellison, as Senior Vice President, Worldwide Marketing and Business Development and other positions. He has helped establish and build CrossWorlds, Lightyear, he has worked at McKinsey & Company; and held management positions with Tandem Computers. From 1995 to 2003, he was at Venrock where he led early stage financing and served on the boards of: New Era of Networks acquired by Sybase, Niku, CrossWorlds Software acquired by IBM, Neoforma, Netobjects; he was an early stage personal investor in Siebel Systems and Checkpoint Software.

It's clear that he understands the enterprise software market and his partner David Helfrich has led what he calls, a "parallel career." The two met at a horse riding school for their kids, and they spent two years "at the rail" getting to know each other before they decided to pool their skills and created Garnett & Helfrich Capital in March 2004, with an initial fund of over $250m, soon expanded to $350m.

"I sometimes explain what we do as 'there is a little bit of chocolate in my peanut butter' by which I mean it is a little bit of venture capital investing combined with venture buyout."

The investment firm was founded on the belief that there were decent sized business groups within larger tech companies that were good businesses but were not getting the attention or the funds from their parent organisations.

The firm analyzed hundreds of IPOs and acquisitions over the past few years and started to identify business groups of at least $50m in revenues, that could survive a buyout, and the temporary disruption that such events create for a business.

Ingres was one of those businesses, a database software group spun out of Computer Associates, a business with great revenues, large numbers of customers and a solid reputation within enterprise software markets.

"It was important that Ingres had a long history, it wasn't a new startup with an uncertain product and an uncertain future. Enterprises want to buy from companies that are stable and will be around for a long time" Mr Garnett said.

But spinning out from CA was not easy because of the huge management shakeup that was going on in the wake of a scandal that is currently in the courts (Please see: Former CA chief Kumar pleads guilty to fraud.)

The deal was further complicated in that Mr Garnett had to recreate three offices from scratch, set up the telephone systems, the billing systems etc. He had to create the entire infrastructure for a 100 plus employee company from nothing, and hire the executive team, and act as the CEO.

He says he would love to give up the CEO position and get back to his regular work but that, "Finding a CEO is more difficult because of the A-list caliber of the current executive team, they are going to demand an A-list CEO." Mr Garnett said he loves to recruit and his philosophy is to recruit 10 A-list executives because they will bring in another 40 top people.

Buyouts are very popular these days, and Silver Lake is one of the top firms in this area. But Mr Garnett points out that its much easier for Silver Lake to write a check to take, for example, Serena Software private--there is no infrastructure building that had to be done, as in the case of Ingres. That's why Silver Lake might find it difficult to compete against Mr Garnett's team, if it wants to target this middle sector of the buyout market.

Mr Garnett hopes to do about five or six deals with the first fund, and he sees lots of opportunities to buy out healthy business groups from within tech giants such as Siemens for example. "In a lot of cases the seller is not getting any credit from Wall Street for owning those business groups," he said. So the deals can be very compelling for these large tech businesses. Usually, the seller will retain about a 20 per cent stake in the new company, which helps with customer continuity.

A good example is the blade server switch business bought out from Nortel. Here is a list of deals.

Mr Garnett's many years in the enterprise software business have given him an understanding and an appreciation for brands, and the realization that brand building is long and difficult. Therefore if he can acquire products such as Ingres and Wyse, that have long established brands, that brings with it a significant amount of credibility among customers that is very valuable.

I think this is an important understanding of how markets and customers buy products. During Internet 1.0 and the dotcom boom, there was a lot brand building attempted, but throwing money, billboards, and cute sock puppets at the challenge of establishing lasting brands didn't work. Brands are built slowly, over time, they are trust-built relationships just like human relationships.

What's the exit strategy? The same as for other ventures: IPO or sell to larger players. But building a $50m to $100m dollar revenue businesses to the next stage, is a lot less riskier than trying to build a startup and take it beyond several millions dollars in revenue. It's smart investing and there are still plenty of deals to be done. It'll be interesting to see which other players emerge in this field.

The ambitions of Ingres: A small company with the executive team of a giant

By Tom Foremski for SiliconValleyWatcher
Jim Finn, Tom and Dave Dargo (by Dan Farber)
I met with the executive team of Ingres Tuesday evening and it's clear that this newly minted company has major ambitions in the open source enterprise software market.

Ingres was formed in November when Computer Associates spun out its enterprise database group to Garnett & Helfrich Capital--which specializes in venture buyouts. And over the last few months Ingres CEO Terry Garnett has been pulling together one of the top executive teams in the industry.

It's a team that has spent many years in Oracle--its top target. Dave Dargo, senior VP and CTO came from Oracle and is a respected authority on Linux; Dev Mukherjee, CMO, came from Microsoft and IBM and is credited with key thought leadership in establishing utility computing and software as a service. In recent weeks, Jim Finn, who led Oracle's corporate comms for many years and is credited with managing the tricky acquisition strategy, and was recently head of comms at IBM Americas; Tom Berquist, a former star Wall Street analyst was appointed CFO; and earlier this week Bill Maimone joined as Chief Architect, he had lead database development at Oracle.

Mr Garnett also used to work at Oracle as senior vp of worldwide marketing, and he says Ingres collectively has about 1,000 man years of experience at Oracle. Check out the rest of the executive team: http://www.ingres.com/company/Executive_Profiles.html

Ingres is offering an open-source enterprise-ready database that can compete against Oracle. MySQL is one of the leading open source databases but it has run into a problem: Oracle has acquired open software companies and controls the transactional database engines that MySQL needs for the enterprise market.

Dave Dargo, CTO, says that MySQL now has to replace those database technologies and that could take 18 to 24 months. This helps Ingres win business that might have gone to MySQL.

With such a stellar executive team Ingres clearly has ambitions that go beyond being just one of several open source database companies. The opportunity is in being able to offer the database and the rest of the enterprise software stack , and the question is how will that be done? Will it be done through acquisitions or partnerships?

Oracle's increasing share of the enterprise applications market, combined with its database and middleware stack--is pressuring large enterprise players such as SAP, BEA Systems, Red Hat, Symantec and others. These now become natural allies to Ingres, and potential partners in the fight against Oracle.

The business opportunity is in attacking high IT costs. "Oracle customers hate the high license and maintenance fees. There is an opportunity to come in at one-half to one-third of Oracle's fees," says Mr Garnett.

The enterprise IT market is also switching to a services pricing model, annual fees instead of licenses. Oracle faces a stressful transition to the new model which could take two years to complete; Ingres doesn't have that legacy issue, making it attractive to enterprise customers.

"I think we can carve-off five to ten per cent of the enterprise database market, which is $16bn. And if we can do that, I don't see why we couldn't get to ten to twenty per cent of the market," says Tom Berquist, CFO.

A trend in its favor is the acceptance of open-source software within large enterprises where new IT projects increasingly have open-source components. Ingres challenge will be in how it can leverage the open source community in the same way MySQL has benefited. And how quickly it can build the enterprise software stack.

Other considerable challenges come from IBM and Sun Microsystems, which already have a substantial enterprise software stack and can commoditize the software at a faster rate because they can sell the hardware services.

Suddenly, the enterprise IT market has become very interesting as these large players try to commoditize each others core markets. [See "Stack war" by Nicholas Carr] And the players that only have one part of the stack are forced to scramble for allies or seek mergers.

This is why Ingres has become the dark horse of the enterprise market--and one of the hottest and most interesting Silicon Valley companies around. It is a small company with the executive team of a giant--so you can bet that it won't be sitting around quietly. I'll be meeting with Dave Dargo soon--watch this space :-)
- - -
Please also see my fellow ZDNet blogger Dan Farber: Ingres prepares for assault on Oracle's turf

Part 2: SAP Jeff Nolan's strategy to disrupt Oracle. . .

By Tom Foremski for SiliconValleyWatcher

[Part 2 of my meeting with Jeff Nolan, he heads the Apollo Group, it is a strategy and communications organization within SAP that is sometimes called the "Attack Oracle" group.]

Part One is here...it discusses Oracle open source acquisitions...

Creating a stack

Will Oracle's open source plans cause open-source communities to fork-off? "I don't know," Mr Nolan says. "Oracle has good reputation in the developer community and I'm not sure that it is that easy to for a community to fork off if they don't like the way Oracle is running things."

Mr Nolan's view is that Oracle is probably assembling a middleware stack and wants to use open-source components so that it can offer a subscription based pricing structure. This is exactly the direction that Sun Microsystems, Computer Associates and other IT vendors are moving towards.

He is right, we are coming to the end of the licensing model for enterprise IT software, and in Sun's case, John Loiacono, Sun's Software chief, told me late last year there would be a time when Sun would even throw in the server hardware for "free" as part of the monthly enterprise software subscription price. SAP is riding that trend and so are others.

IBM is very strong in middleware but Mr Nolan points out "this whole middleware stack is becoming commoditized very quickly." SAP's strategic strength is in its dominant position in enterprise applications and business process; and with a very broad customer base of more than 32,000 companies. It also has a large number of vertical applications which puts it in a good position to grab for more of the coveted small and medium enterprise (SME) market--the fastest growing IT sector.

SAP's strategy is different from that of Oracle, IBM, and Microsoft. SAP believes that the value is in the application and in the business process. Its software is reconfigurable which gives it a lot of flexibility because it doesn't have to create new code--and it owns its own vertical applications.

Oracle's strategy

Oracle's strategy is based on the belief that owning the database is the key to owning the glass house of the IT organization. And its database is used by most of the Global 2000 enterprises, which is a trusted role. It can try to commoditize the middleware through the use of open source components, and use the open-source platform to integrate its PeopleSoft and Siebel enterprise applications--which would create a powerful alternative to SAP.

IBM is app-less

Story continues...


Exclusive: Jeff Nolan--SAP's top strategist speaks to SVW

. . . Oracle-JBoss deal imminent...

By Tom Foremski for SiliconValleyWatcher

Jeff.jpgI'm running late for my meeting with Jeff Nolan, one of SAP's key strategists, and a former venture capitalist at SAP Ventures. I pull into the car park of SAP Labs, located next to Xerox PARC, in Palo Alto, and the car park is full, but there is a spot out towards the back of the building and I find my way into a bright, tastefully furnished lobby and get my visitor badge.

Mr Nolan offered to meet me in downtown Palo Alto, but I like visiting people on their home turf because you get to feel the vibe of a company. Plus I like to see the car park--is it full, what kinds of cars, etc. All these things indicate something about the culture of an organization and its people.

SAP Labs has been coming up on my radar screen from several different sources over the past year and I've liked what I've been hearing. SAP is a German software company but it has had a presence in Silicon Valley for many years and Hasso Plattner, the company founder has a home nearby.

And with the battle over enterprise software markets being fought by SAP, Oracle, Microsoft, IBM and others, SAP Labs has been gradually expanding its workforce in Silicon Valley and has developed a momentum buzz.

Story continues...


Interview with Michael Yang CEO of Become.com--a stealth Google in the making?

By Tom Foremski for SiliconValleyWatcher

It was good to catch up with Michael Yang recently, the CEO of Become.com, a comparison shopping search site. This is a stealth Google in the making and that's good--because in this new rules world you don't want to get on someone's radar screen too early.

I first met Mr Yang and his team about a year ago. It was one of those dinner events where my plan was to pop in and stay a short time because of an already full day running around Silicon Valley. I stayed much longer.

I stayed because it is an impressive team, and one that rode through the last bubble with the MySimon comparison shopping site, later sold to Cnet. Now the core of the team is back and this time they know how to play and win, and this time potentially win big.

"We are just at the beginning stages of the online economy," Says Mr Yang. "Online commerce is a small fraction of total sales." And he's right, most analysts predict strong growth over the next five years as online commerce grabs more of the sales pie.

At the heart of Become.com is a search engine technology called AIR (Affinity Index Ranking) that uses a unique algorithm developed by Become.com co-founder Yeogirl Yun, the CTO and a former classmate of the Google boys, Larry and Serge. Become.com says its algorithm is much more difficult to spam and has lots of other superior features.

But the effectiveness of the algorithm will be proved over time--because it needs to learn from the online habits of its users. That's why large beta populations are important to these Internet 2.0 companies.

Story continues...


Richard Edelman meeting coming up . . .

I'm looking forward to meeting Richard Edelman on Tuesday. Mr Edelman is president and CEO of the largest independent public relations firm Edelman.

We had some online debates about the future of PR and so it's great to meet in person and chat about such things with one of the PR industry's top thought leaders.

And it is just by chance that it happens to be Valentine's Day :-)

I've been asking why hasn't the PR industry joined the media industry's hand basket to hell? Media and PR industries have always moved pretty much in tandem--with maybe a six to nine month lag.


Here are some of my recent posts about media and public relations.

Geoffrey Moore: Disrupting myths of disruptive innovation

By Tom Foremski for SiliconValleyWatcher

Geoffrey Moore, one of Silicon Valley's top IT consultants has published a column disrupting the notion of disruptive innovation, as one of ten myths about innovation.

In "Top 10 Innovation Myths" published on Sandhill.com, Mr Moore attacks the belief that innovation is inherently disruptive.


To be sure, authors like Clay Christensen and myself have spent much of our life's work chronicling the impact of disruptive innovation, but it is only one type among many. And the more established your company, the less likely it is a type for you to specialize in. Alternatives include application innovation, product innovation, platform innovation, line extension innovation, design innovation, marketing innovation, experiential innovation, value engineering innovation, integration innovation, process innovation, value migration innovation, and acquisition innovation.

I respectfully disagree. In this passage Mr Moore applies the term innovation so liberally, that it might seem that he has proved his point by showing innovation in its numerous forms, and that this somehow dilutes the value and the qualities of the term.

I think innovation *always* has to have the quality of disruption. It is something which causes everyone affected by it--to adopt it or die. Innovation is always the better way.

Because if an innovation is not sufficiently disruptive it will not overcome the inertia of the status quo--and will therefore not be classed as innovative. It's a circular argument, but completely within the nature of the term's meaning, imho.

The other forms of innovation that Mr Moore might be indicating I might classify as incremental efficiencies, or what in the the chip industry would be called "design shrinks." That's when chipmakers use their current silicon technology infrastructure to develop ways of reducing the size of their chip designs--producing a few more chips per wafer, and nudging up profit margins.

I think that innovation has to be very disruptive and offer a superbly excellent ROI in order to gain attention, and overcome cost of switching barriers.

And every Silicon Valley startup had better have some kind of disruptive innovation in its garage otherwise why bother?

In the chip industry, innovation comes about every ten years when it retools itself for larger silicon wafer sizes. The chip industry is currently switching to 12-inch wafers from 8-inch wafers.

That automatically improves produtivity by 2.4 times while reducing unit production costs, requiring less human labor, which reduces contamination and improves yields. [The bunnysuits protect the chips from the workers.]

A 12-inch wafer chip production technology is a disruptive innovation--there is no way an 8-inch wafer fab can compete against the massive gains in manufacturing efficiencies.

But each time the chip industry makes the transition to a larger wafer size--the technology differentiation between the chip makers becomes far less dramatic and disruptive.

Please take a look at Mr Moore's column "Top 10 Innovation Myths" He has a tremendous track record and is one of our top thought leaders on IT strategy and author of Crossing the Chasm and other ground breaking books.

And he has a new book to promote :

Dealing with Darwin : How Great Companies Innovate at Every Phase of Their Evolution

- - -

I had an interesting meeting with Mr Moore about six months ago:

Deadly dull enterprise IT markets--Geoffrey Moore and John Gallant hope Vortex conference will spice things up

[thoughtleader thursday] More from Geoffrey Moore and John Gallant on IT strategy. . .

A rising star at Intel: Meet Senior VP and head of global marketing and sales

Tom Foremski, Silicon Valley Watcher

On Monday I met with Intel's rising star senior vp Anand Chandrasekher, head of worldwide sales and marketing. Mr Chandrasekher has been in the job less than a year, previously, he headed Intel's Centrino group, one of the most successful Intel businesses of all time.

The Centrino mobile chipset business has been a huge cash cow for Intel. It caught the shift from desktop to notebook just at the right time. And Centrino has been instrumental in pushing Intel's gross margins back up into the 62 per cent range.

These are software industry type margins yet they come from a chipmaker which has to juggle billions of dollars in capital costs in predicting future market needs. On top of that, it has to operate the most expensive and most complex industrial factories of our modern age: the chip fab.

In fact, this is the secret to Intel's success. It is not that it is a microprocessor maker (that's just the app) it knows CMOS like nobody else. CMOS is the dominant process for making advanced, highly complex, microprocessors and other types of chips.

And Intel is utilizing nearly every element in in the periodic table to create new materials that enable it to double the complexity of chips every 18 to 24 months.

Here are some of the highlights from the interview:

[Mr Chandrasekher is Indian, and during our meeting, one of his aides kept him fed with cricket scores, there was a big game on :-)]

Low-power high-performance

Low electric power consuming chips are a prime focus for Intel, says Mr Chandrasekher. "We did a study about five years ago and found that our customers were already complaining about high electric power costs in their IT data centers, so now, our designs are totally focused on reducing electric power usage and performance per watt of power."

Story continues...


Network Appliance and its strategy for world domination

Wednesday evening I was having dinner with Network Appliance CEO Dan Warmenhoven and co-founder Dave Hitz. It's refreshing to see a company that isn't afraid to expose its top executives to the media.

It was a small gathering, just four business journalists: Wall Street Journal, Barron's, Reuters and SVW. Such small gatherings are excellent, because you get access to top executives, and you get to hear stories that other journalists don't hear. And as a journalist, you need information that few others have; it's the distinction between publications.

Most recently, I had spoken with Dave Hitz, who called me from Washington D.C. He was out on the East coast meeting customers, and also legislators discussing data protection bills.

Dave is also a keen blogger, and he just recently jumped to a PageRank of 6, which is pretty good. Here is some link-love to Dave's blog.

And here is my latest post on ZDNet, about Network Appliance and its crafty positioning in what could be the control point in data centers.

Water into Wine: Monetizing Open Source via On Demand

A SVW guest column by Greg Gianforte, CEO of RightNow Technologies.

If steel were free...

Imagine a car company that got its steel for free. So, instead of spending its money on costly raw materials, this company could invest in high-value differentiators such as better vehicle design, build-to-order manufacturing, and superb customer service.

Now imagine that this company also offered customers completely care-free car ownership; Its customers would never have to worry about gas or oil changes or insurance, because that would all be taken care of for them. All they'd ever have to do would be to get in and drive.

Obviously, that would be a great deal for the customer. Plus, with its cost-of-materials reduced to zero, the company could operate quite profitably while offering its extremely compelling value proposition.

This, in a nutshell, describes the business model of an on demand software vendor using open source technology. By eliminating the cost of databases, operating systems, and other infrastructure components, open source technology allows an on demand vendor to invest more in development, hosting, and services. And by providing software as a service, the on demand model frees customers from the valueless, budget-sucking burdens of IT ownership.

In other words, on demand software delivery is an extraordinarily effective way to monetize open source.

On Demand Applications
To understand how the "water" of open source is transformed into the "wine" of business value, let's first review the case for on demand applications.  Customers are embracing on demand applications because they prefer to spend their money on application functionality (which has lots of value to the business) rather than the ownership of IT infrastructure (which has none). On demand vendors enable customers to achieve this objective by hosting and managing the supporting infrastructure for the application; delivering functionality where and when it's needed via the Web.

The customer doesn't care which operating system or database the on demand vendor is using in the hosting facility, as long as the application is scalable, reliable and secure.  So on demand vendors are free to leverage open source solutions such as Linux, MySQL, and Apache to keep their infrastructure costs, and thereby invest more in important value-adds such as multi-version hosting architecture, and implementation support.

RightNow Technologies
RightNow offers a prime example of how this formula works. We've pioneered a wide range of CRM innovations, especially in the way our software automatically learns about customers from their behaviors. We've built a uniquely sophisticated hosting environment that has supported over 1 billion customer interactions on behalf of our clients in the past few years at 99.98% reliability. Plus, our enterprise-class hosting capabilities let customers upgrade when they want to, unlike other on demand vendors that force their customers to upgrade simultaneously.

We allocate significant resources to ensuring the success of our customers through a highly differentiated engagement model, closely tracking the effectiveness of their implementations and pro-actively pinpointing opportunities for improving their ROI. We've also grown revenue for 31 consecutive quarters and have been profitable since we went public.

All of this has been made possible because we decided to use open source; rather than become just another distribution channel for monopolistically priced technologies from Microsoft and Oracle. As operating systems, databases, Web servers, and other infrastructure components become increasingly commoditized, there is simply no good reason to pay through the nose for proprietary solutions that offer no discernible functional advantages over their open source counterparts.

So, while RightNow is not an open source vendor per se, it's hard to name a company that's more effectively taking advantage of the economics of open source.

Every business should strive to maximize the value it delivers to the customer and minimize the cost of doing so. The combination of on demand and open source allows us to do exactly that.

-Greg Gianforte, CEO and Founder
RightNow Technologies
www.rightnow.com

Greg has written several guest columns for SVW, including:

"Software lemmings head for the platform cliff"
"Most startups should avoid venture funding, not pursue it"
You can also purchase his latest book, "Boot Strapping Your Business,"
through the affilate link.

The remaking of IBM: A chat with IBM chief strategist Irving Wladawsky-Berger

By Tom Foremski, Silicon Valley Watcher.com

IrvingWB1.jpg

It's always good to catch up with Irving Wladawsky-Berger, one of IBM's chief strategists and architect of its Linux and open standards policies.

I used to cover IBM when I was working at the Financial Times. It is a fascinating company because it has managed to adapt to the changes in the IT industry with an agility that masks its huge size. It is the world's largest computer company, it is also the largest IT services company, the second largest software company, and one of the largest chipmakers.

And it was the first to recognize and capitalize on the broad industry move to IT services, and outsourcing IT systems.

Now, it is signaling a new direction: becoming a vendor of highly automated business processes. Companies that need to add a business process within their industry will one day be able to buy one off the shelf, so to speak. IBM is collecting best practices within each industry, within each business process, and using applications, middleware, and its integration skills, to create ready-to-go business process modules that can be rapidly slotted into a company's operations.

This means faster time to market, lower IT costs, and having the most efficient business process without having to do it all yourself. It's a compelling vision and one that fits perfectly into the New Rules Enterprise idea that I've been describing here on SVW over the past year.

Story continues...


A call for a new Manhattan Project on clean energy--continuing the work of Nobel prize winner Dr Richard Smalley

Smalley_Columbia_smaller.gif

I just found out that Dr Richard Smalley, the nanotechnology pioneer had died. I found this out by reading Irving Wladawsky-Berger's blog, in which he wrote a long piece about Dr Smalley, a 1996 Nobel prize winner for the shared discovery of a new form of carbon: buckminsterfullerene, better known as buckyballs.

I met Dr Smalley late last year at a large chip conference. He was the lunchtime keynote speaker and on the stage alongside him, sat about 20 distinguished chip industry veterans such as Andy Grove, chairman of Intel. The audience consisted of more than 2000 of the world's top chip experts.

He was talking about energy. He said that the growing need for energy was the number one problem facing humanity. If the energy problem could be solved, by giving everyone the energy they needed, it would solve all the other top ten global problems: hunger, poverty, war, pollution, poor education, lack of clean water...

Dr Smalley impressed me with his eloquence and his directness. He was not afraid to criticize the Bush administration, saying the reelection of the president would not be good for science research.

He called for a new Manhattan project, focused on finding an alternative to oil--which he said was just one month or so away from peak production.

At the press conference

I was sitting with my buddy Mark Osborne, editor of Semiconductor Fabtech, (based in London). Following the speech, Mark and I went to the press conference for Dr Smalley. There were 5 journalists in the room, waiting for him to arrive.

After about ten minutes Dr Smalley walked in and sat on a tall stool. He looked in excellent shape for a man in his early 60s. He looked to be at the top of his form, both physically and intellectually. He sat and answered our questions. The rest of the journalists left after about an hour, leaving just Mark and myself.

We asked more questions, and then more on nanotechnology, and then more on energy. Dr Smalley diligently answered every question, and explained complex issues with patience and thoroughness. And he just sat and talked, and we sat and asked questions. Until finally, we ran out of questions. By that time, it was almost 4pm. Satisfied there were no more questions, Dr Smalley shook our hands and left.

Impressive dedication

Mark and I were amazed at his stamina and his dedication to the subjects of energy and nanotechnology. I learned a tremendous amount about both subjects.

And we were impressed that Dr Smalley did not run out of the room after 20 minutes or so, as is usual in press conferences. He talked until he was satisfied he had exhausted his audience of all questions.

I remember he talked about speaking at conferences on the subject of energy, and how some of the scientists were so inspired by his vision that they would approach him afterwards and ask to become involved in his work.

This was because Dr Smalley had discovered a calling, one to which he devoted a large part of his life. And he communicated that calling through his presence, through his stature as one of the top scientists of our time, and through his passion.

This is what inspired other scientists to approach him and offer their support, and want to join him in his mission. But there was no organization to join, and Dr Smalley said he didn't want to lead one.

I remember thinking that Martin Luther King didn't want to be the leader of his times, he didn't want to be in the front ranks of civil rights marches, facing hails of rocks and men with clubs and dogs.

New leadership

I remember thinking that Dr Smalley had to take on the leadership role directly, because he was the one that raised people's awareness, and communicated his calling to them so strongly that they felt they had to take it up too.

I did not know that he had had a long battle with cancer, and that probably he knew that his battle might be coming to an end. That's why he wanted others to take on the leadership roles.

If you were ever inspired by Dr Smalley's speeches on energy and solving the world's most serious problems, then take any opportunity to carry on his work, in the workplace and in the home place. It is quite probably the most virtuous mission that anybody can become involved in.

- - -

From the Rice University announcement of his death:

"Rick could focus so completely on his goals, and he could inspire his students and his colleagues to a similar focus," said Kathleen Matthews, dean of the Wiess School of Natural Sciences and the Stewart Memorial Professor of Biochemistry. "He had the ability to persuade others with a rare intensity of thought and spirit. He brought both passion and intellect to his work, and he displayed a degree of dedication and engagement that could motivate others to new levels of achievement."

- - -


Please see SVW: Nobel Prize winner Dr Richard Smalley tells SF chip conference of the urgent need for action on energy issues

- - -

Irving's blog:

Energy - the Single Most Important Problem Facing Humanity

I told IBM they should buy SAP-- Kleiner's Ray Lane says...


Ray Lane.jpgI've become quite impressed with former Oracle president Ray Lane and his analysis of the enterprise software industry. From his perch as a VC with Kleiner Perkins, he has developed interesting insights into the sector.



Virsa-logo.gifA few weeks ago I managed to chat with Mr Lane at a dinner for Virsa, possibly the fastest growing private software company today (it provides SOX compliance).

Before the dinner, Mr Lane made it plain he did not want to hear about how the enterprise software industry was now dead because of Oracle's acquisition of both PeopleSoft and Siebel. "Nothing has changed that wasn't the case before the acquisitions," Mr Lane said.

Which is true; but the acquisitions just reinforced and underlined the fact that two companies control all innovation and buyouts.

Here are some of the highlights from the dinner:

Please also see: Peoplesoft and Siebel considered merging but leadership issue blocked the deal.

Lots of M&A activity ahead

Mr Lane foresees a lot of M&A as thousands of smaller software companies try to acquire, or be acquired, as a survival strategy. Also, there are still thousands too many software startups that "won't ever produce significant revenues and should be closed down."

IBM should buy SAP

Mr Lane is convinced that IBM should acquire SAP. "Earlier this year I told Sam [Palmisano] that IBM should acquire SAP," Mr Lane said. But the IBM chief rejected that advice.

I pointed out that IBM makes more money out of SAP than SAP, because about one in ten dollars is spent on license fees, the rest is for implementation--the IT services that forms about one-half of IBM.

But Mr Lane believes that IBM needs applications on top of its middleware stack. I pointed out that IBM was terrible at enterprise applications and abandoned the market in 1999. "Well, Oracle was terrible at apps too," he said.

I covered IBM for a long time when I was at the Financial Times. Steve Mills, IBM's software chief, has been executing a strategy that has worked well and makes good sense. IBM found growth in providing middleware components to apps vendors, and not competing with them directly.

Mr Lane believes that if IBM had apps, it would be in a better position to sell more of its middleware components, which is probably true.

I would argue that IBM doesn't need to be in enterpise apps because it can let the developers create apps on its middleware platform and then use its massive IT services group to set it all up for its enterprise customers--that's where 90 per cent of the IT spend goes in such things.

A New Rules Car Corp.

I discussed with Mr Lane my description of what the new type of very successful dotcom organization would be, what I call a new rules enterprise.

These are small, highly agile, first mover companies, whose first rule is that they are new--no cultural battles to fight, and no legacy thinking and infrastructure to carry, etc.

At_the_Races-med.jpgMr Lane agreed, "I think there is a lot to be said for a new rules enterprise. For example, if you were to build another General Motors today, it wouldn't look like GM. In fact, I think it is a great time to start a car company.

You can read more about the rules of new rules enterprises here:

These are the new dotcoms of the new rules economy...]


JotSpot and low end apps tools

Jotspot logo.jpgMr Lane said he was a big fan of JotSpot and other types of software that allowed people/small groups to easily create personalized applications. He also said that Kleiner wanted to invest in Joe Kraus's JotSpot when it had an opportunity, but an administrative snafu lost the deal.

Why should startups take VC funding?

That's a question I like asking, because in my view, VCs were needed when startups needed significant infrastucture, such as data centers. Nowadays that infrastructure is already in place, on demand over the web, at low cost. Today it's all about knowledge capital. You just need to have a small team willing to throw their credit cards into a bowl and work for six to 12 months.

Mr Lane says there is still a role for VCs, and that the VCs provide valuable advice. Well, I can see that having Ray Lane on the board of my software company would probably be worth the 50 pounds of flesh; but otherwise, it's an expensive way to get expert advice.

And I come across an astounding level of animosity towards VCs. Too many entrepeneurs have experienced the shenanigans that go on in the VC sector; and they won't seek funding until they've built up their valuations as far as possible through other means.

I think that it's just a few bad apples in the VC community--but then again, I don't know.

Ray Lane Bio

http://www.kpcb.com/team/bio_detail.php?frm_id=10

Software lemmings head for the platform cliff--a provocative post from Greg Gianforte

A guest column by Greg Gianforte, CEO of RightNow Technologies

Lemming.jpgHow would you feel if your mechanic handed you a 125-piece wrench set rather than actually fixing your car? What if another mechanic then walked up to you with his tools and started arguing with the first guy about whose tools were better? You sure wouldn't feel like either of them was going to help you with your problem, would you?

Yet that's exactly what software vendors are doing today as they engage in platform wars – to the detriment of their customers and the industry.

-Oracle announces its Fusion platform, revealing a grand architectural chart that shows how they will exercise total control over their customers' computing environments.

-SalesForce.com unveils a platform dubbed "AppExchange" that enables customers to engage with unstable, third-rate software vendors more rapidly and conveniently than ever.

Story continues...


A call for a New Rules community platform centered on education and public schools

By Tom Foremski for SiliconValleyWatcher

School Sidecar.jpgI wrote about the issue of Silicon Valley's terrible public schools earlier this year. I got some great responses on the subject. But Dan Gillmor berated me for berating Silicon Valley. "Berating doesn't work," he told me at a recent event.

Well, not berating Silicon Valley doesn't work either then, at least it makes me feel better, if nothing else.

But I also realized that there is a lot of work being done by leading Silicon Valley companies such as Cisco, Sun, HP and many others, around the subject of education. And they all seem worthy projects, yet the results of all that do-gooding are hard to find.

Here's my take for a "new rules" philanthropic education effort, (and it means we ditch the non-profit company approach, even if it means losing that tax deduction, I'll explain.)

And please, take the following and add to it, or change it, or whatever else needs to be done to change things, these are just a few ideas to maybe develop an open source business model that will make a big difference in our communities, and become a blueprint for other communities too. This is a work in progress:

New Rules Community Platform

Story continues...


Cisco chief says Silicon Valley public schools are an embarrassment. . .

. . . and names education and healthcare as the two largest issues facing US businesses

By Tom Foremski for SiliconValleyWatcher

Public_Schools-Emb.jpgI was on a very interesting panel Wednesday morning at Cisco. With 12 panelists, it could have been a bogged-down-and-dreary-event with much waffling about "virtuality" and how it will boost healthcare and education.

Instead, it turned into a very spirited discussion, as the journalists on the panel took on some of the sometimes empty rhetoric of corporate-market-speak from the heads of three large US technology companies: Cisco, NASDAQ and VeriSign, and startup RelayHealth. And in the process, some of the corporate-market-speak at times gave way to a real discussion.

Wendy Kopp, the charismatic founder of Teach for America, made some good observations given that she admitted that she had not a single minute thinking about tech. And Jim Goldman of CNBC rolled with the flow as the panel's moderator, keeping things moving. I know I took away a lot more than I expected from the event. In a first for Cisco, the event was podcast as well as webcast.

[Panelist list is at end of post, along with a link to the podcast.]

The event was to discuss "virtuality" and how this technology would improve healthcare and education.

After ten minutes it became clear that "virtuality" was one of those words that had yet to crystallize around an agreed upon definition; so it virtually disappeared from further use, and the group moved onto a much broader discussion about why public education is so bad, and why the healthcare sector has resisted investments in technology.

Carrot-N-Stik.jpgMr Chambers initially presented a rosy view of a healthcare system making use of computer technologies to save lives, and the cost savings they would recover. However, a carrot also comes with a stick, and during a further conversation he warned that large corporations would force changes on healthcare providers.

He said Cisco's healthcare costs had skyrocketed over the past five years - "and we're a relatively young company." It is a burden that cannot be maintained and it requires exposing the healthcare system to direct market forces, instead of the insurance companies. That would then encourage healthcare organizations to invest in IT for the cost savings.

At one point I complained that if Silicon Valley wants to be seen as the premium brand of global innovation, that this is the place where the future is invented, it had better make sure its public schools are showcases, not basket cases.

John Chambers, chief executive of Cisco agreed, saying it was embarrassing that the K through 12 public education system is broken in Silicon Valley.

Mr Chambers has put a lot of work and money into political campaigns around educational issues, such as school vouchers, a sometimes controversial method to prod schools toward higher academic performance.

He admitted that technologies such as distance learning, had not proved themselves as expected. But he said Cisco studies showed they did have value in short 10 to 15 minute online lessons, along with other educational materials.

Story continues...


A community of thought leaders---more thoughts on new rules enterprises

. . plus more thought leader columns from others are on their way

By Tom Foremski for SiliconValleyWatcher.com

New_Rules_Currency.jpgIn January, I started writing about the "new dotcoms," the ones that will eat lunch, this time around, in the new Internet economy.

The new dotcoms are not technology companies, necessarily, but they are all "technology enabled" companies. And they will play by whole sets of new rules, many of which challenge the old rules, the established notions of business reality.

I call these new dotcoms new rules enterprises, or sometimes I call them newrules ventures [I can't decide which one to use.]

There are new rules enterprises of various sorts, and their distinction is in which new rules they embody, and how many of them. There are already some newrules ventures around, and more are on the way.

They share some of these characteristics: most are small, they have a large impact, and they are very profitable — you have no idea how much money they are making.

They are private, and will remain private, they have first mover advantage, and they innovate through technology enabled business processes.

And they capitalise themselves through creating and selling businesses.

The rules

I don't know how many new rules there are altogether, but I know what some of the rules are, and some of my readers have told also me about some of them.

Here is one of the original new rules of the newrules enterprise, and some from our community of contributors. And please, contribute your new rules, too. Remember, you get a byline and a date stamp!

When you contribute ideas there will always be a permanent link to your words of wisdom. This means you should contribute often :-)

First rule

Story continues...


[thoughtleaders] Most startups should avoid venture funding, not pursue it

A Silicon Valley thoughtleaders column by Greg Gianforte, CEO of RightNow Technologies, for SiliconValleyWatcher

Raising venture capital for early stage start-ups seems to be the prevailing path for most entrepreneurs; however, most would-be founders should reconsider.

Here are some reasons why:

Story continues...


Silicon Valley should fight laws controlling innovation, says veteran valley entrepeneur

By Tom Foremski for SiliconValleyWatcher

StraightJacket.jpgSilicon Valley could face additional laws limiting technology innovation unless it gets active in politics and lobbies hard to protect its digital freedoms. That was the view of Joe Kraus, a Silicon Valley veteran and an avid angel investor.

Lunch with Joe is always a treat, not just because he picks up the tab but because I get to pick his brains about all sorts of issues and trends. As a veteran of the first search engine wars, when he co-founded Excite, and now heading a corporate wiki company JotSpot, Joe sees a lot more than many, and he has a lot invested in Silicon Valley innovation through his angel investments.

One of the things on Joe's mind is how cleverly Hollywood managed to control innovation. What do you mean by "control," I asked?

Story continues...


IBM is preparing to launch a massive corporate wide blogging initiative as it seeks to extend its expertise online

By Tom Foremski for SiliconValleyWatcher

Updated


IBM Crier.jpgIBM is planning to introduce what could be the largest corporate blogging initiative so far, in a bid to encourage any of its 320,000 staff to become more active in online tech communities.

The world's largest computer company has prepared a broad range of programs and online materials that staff can access to find out how they can start to blog. The move would help establish IBM's "thought leadership" in global IT markets.

The IT industry continues to suffer from lower levels of corporate spending following the boom years of the late 1990s. IBM's most recent quarterly financial report missed Wall Street expectations and led to announced layoffs of 15,000, with more than 13,000 of those lost jobs in Europe.

The company said that the blogging initiative was not related to its recent cost cutting measures and had been planned for several months.

Story continues...


[thoughtleaders] Exclusive--RightNow Technologies CEO Greg Gianforte has become our first management columnist: Serial advice from a serial entrepreneur

By Tom Foremski for SiliconValleyWatcher

gregrightnow.jpgI've met Greg Gianforte several times because my friend Annie Kim used to work at RightNow Technologies before leaving for business school at MIT. As founder and CEO of RightNow, Greg loves to talk about his enterprise "software as a service" company. But if given the chance, he really loves to talk about entrepreneurship and how to build companies.

Greg has a book coming out in September called "Bootstrapping Your Business." His management advice comes from his experience in five startup ventures.

I shared some of Greg's management advice about a month ago, and the feedback was excellent. Greg agreed to contribute more nuggets of wisdom on a regular basis and I promise to deliver them to you in short question/answer format segments.

Greg kicks off our thought leaders series, which will mostly appear on Thursdays, featuring top-notch advice from our Silicon Valley/global business leaders and tech gurus.

Please send questions (tom at foremski dotcom) for Greg. Your name and company affiliation can be withheld from publication if you are more comfortable that way. To get things rolling, I'll start him off with a few questions this Thursday.

Some earlier posts:

Secrets of starting and growing a company


Tales of the newrules enterprise

[thoughtleaders] Doc Searls on blogging made easy….

[thoughtleaders is part of a new series consisting of vignettes of advice and observation]

By Tom Foremski for SiliconValleyWatcher
Blog-Diver.jpg
It was a pleasure to meet Doc Searls recently. Doc is what I call a "big link" in the online world: one of the early bloggers, a pioneer of online marketing concepts, co-author of the popular 1999 book "ClueTrain Manifesto," and senior editor at Linux Journal.

Doc said several interesting things during his presentation at a recent Bite Communications sponsored seminar. Doc: "I blog about an hour a day; and I find it easy."

This is an excellent observation on blogging. Doc is right, blogging should be easy. It should be as easy as writing an email to a colleague or buddy. It's not so easy breaking stories, writing news, interviews, analysis and features --the type of journalism that we also have on SiliconValleyWatcher; but the blogging part, like this entry, should be easy. This is my "blog voice," and it is very similar to my "email voice." My blog voice, however, does change according to mood, and how late I stay up blogging (!)

If any one of you is hesitating about writing/starting a blog because you are not yet "ready," I suggest you jump in anyway. It is a forgiving environment; few will read you initially anyway, which means you can experiment with the format and build your readers one by one. And you will understand what this blogging fuss is all about :-)
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