TLF Blog

Referrals and good deeds

In the last few weeks, I have been focused on developing new business for The Launch Factory.  Mostly this consists of meeting with entrepreneurs that we think we might be able to work with - usually "over a cup of coffee."  90% of the time we just don't seem to be able to find common ground - usually because entrepreneurs are looking for sales reps all on commission (but that is a story for another day) - which we don't do. 

In our first few years we would have walked away and filed the meeting under "waste of time" or "my caffeine levels are just too low."  That was until we met with an entrepreneur who was just banging his head against a wall with sales and just couldn't see the forest for the trees as to what to do next.  Knowing that we could not extract money for our advice, we decided to just give him our 2 cents.  The good news was that we had a partner in the meeting who witnessed our act of kindness and has, in return they referred business to us.

This has started a theme for us - always leave every meeting having either left some value or have a plan to leave some value.  Over the last few years this has paid off in new business through some very circuitous routes that all had origins in a good deed. 

DC

Opportunities galore ... you just need to look at the trends

More than two years ago, VCs started investing in Alternate Energy companies in anticipation of higher gas prices - little did anyone see this high a price so fast.  So, if we look at other key trends, can we see areas of future growth and investment?  How about these ones:

1. Clean air - This the emerging markets of India and China spewing out pollution (the gas has to go somewhere), technologies to clean the air would be a pretty good bet.
2. Clean water - With the world's populations still growing and water already pretty scarce, "creating water" should be a pretty good bet too.
3. Efficient commercial transportation - Anyone think the trucking industry is efficient?  If not, what will replace it?  Rail is likely but they really haven't done much to improve scheduling and speed.  So, two bets here: better scheduling of transportation (if the unions allow it); new modes of transportation;
4. New (lighter) materials; Any movement of goods and people tend to involve heavy objects - what about making those things lighter (cars, trains, airplanes, etc.)

Keep in touch.

DC

Over engineering your start-up

Every once in a while we work with an entrepreneur that is meticulous in their approach to building a company.  At first this seems like a great idea as there is rigor in the thinking and the approach but what ends up happening is that the planning stage never seems to end as the thinking evolves and evolves.  It is a sort of "Paralysis by Analysis." 

What is the solution?  Sometimes "good" is good enough.  The most important point to understand is that each new business and concept has a limited shelf life before it is 2nd, 3rd or later to market.  Secondly, entrepreneurial talent is used to cutting some corners to get the job done and this highly rigorous approach rubs people that are willing to work under these conditions the wrong way.  Furthermore, part of the team building process is to get new staff to evolve the business - if it is already "thought-out" there is little room for them to add. 

I will be the first to say that entrepreneurial enterprises lack rigor, but for fresh out of the box companies, "good" really is good enough.

DC.

2008, I can't wait!

As I sit in my home office surrounded by pictures of family and friends, I reflected on what went right and wrong in 2007 so that I can learn from it.  Part of that process included reading other peoples' 2007/2008 wish lists.  For the most part, what a load of Bollocks (to quote The Sex Pistols) - So I thought I would go in a different direction - Things that should happen in 2008 but just will not:

10. All politicians will be honest (maybe we need more of these -http://www.time.com/time/world/article/0,8599,1550818,00.html)

9. All advertisements by celebrities will be humorous but ring true (http://www.youtube.com/watch?v=boVhb1lSOkc)

8. A full year without war anywhere in the world (apparently there have been 268 in the last 3,461 years - http://www.global-issues.net/In_Depth/conflict2.htm)

7. Everyone should go on a vacation to somewhere they haven't been before to get a better perspective on the world and what we all have (e.g. somewhere like these luxury places http://www.youtube.com/watch?v=jjOE52qUuUM)

6. More people should learn a second language as Robin Williams has (http://video.google.com/videoplay?docid=3636435540043947603)

5. Every enterprise will get funding

1. Top ten lists should be a few entries short so that at the end of the year you can add more entries that were right to make you look really smart.

Take care and have a great year!

DC

Is "home-sourcing" around the corner?

With globalization we have seen the "off-shoring" (and the creation of a whole new lexicon of terms) of a plethora of jobs from call-centers, manufacturing to software development.  Well, with the dramatic drop in the $US, maybe its time to repatriate these jobs as it makes economic sense.  Add the cost (economic and environmental) of transportation and it certainly seems like manufacturing should be coming "back home."

DC

Tuff waters ahead

The situation that the US Fed finds itself in is quite the pickle: on the one hand the credit crunch is driving down confidence and activity.  On the other hand inflation is becoming a real issue as the price of gas is soaring and imports are becoming increasingly expensive as the dollar dives.  So, I know I found it interesting that the Fed lowered rates to spur on demand and in effect throw caution to the wind.  One wonders what would Alan Greenspan have done?  I suspect, as the master of explaining everything and doing remarkably little, he would have done nothing. Oh how I wish for the good 'ole days.

DC

Sitting at the Grown-Ups' Table

Information week recently ran an article entitled "Down to Business: Solve the Mystery of the Disappearing CIO" which discussed Bruce Rogow's list of 12 reasons why the CIO position seems to falling off the corporate radar. (An aside: I had the pleasure of working with Bruce when I was a partner with KPMG and he was with Nolan Norton & Co. I also had the misfortune of batting behind him on a conference agenda: he was probably the best presenter/ entertainer I've ever witnessed, and the people heading out for coffee during my talk seemed to agree.)

While I agree wholeheartedly with Bruce's list, based on my years as a CIO in the GE organization in the 1990s and my consulting work with a number of CIOs, I think he missed two critical, related points: the failure of the CIO to make contributions in the Executive Committee beyond IT issues, and the concomitant failure to establish close relationships with their peers on the Executive Committee.

Where the CIO position and its incumbent have flourished, you'll find an individual who's been able to bring valuable insights and initiatives to other functional areas. CIOs of this sort understand that it's not enough to be the tech guy/ gal at the table, which marginalizes the position to the extent that the organization under-appreciates the true value that it delivers. When that transpires, it's an easy step to roll the CIO into the CFO or COO organizations.

And strong relationships with one's peers become vital when the myriad things that CAN go wrong DO wrong in the IT domain. You need to have built relationships beforehand to be able to calm the waters after, say, a lengthy facilities interruption that disrupts production, or a major project delay that loses the company precious time-to-market. Once the shit has hit the fan, it's too late...

Geoff Relph

Stewart's Law

I was browsing a non-digital platform providing a visual interface for cerebral stimulation (an NDPVICS, or a magazine for the uninitiated), and I came across a bit of trivia I had somehow missed in my ongoing laborious search for entertaining, but ultimately useless, facts: Godwin's Law states that "As an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one".

Godwin's law seems particularly applicable to online discussions of politics. Political discourse, particularly in the US, but increasingly so in Canada, has devolved to the point of hysterical, ad-hominem attacks which seem designed simply to raise the blood pressure of the reader, regardless of whether or not he or she was the intended target.

The notion that such "debate" is healthy was dismembered not long ago by the erstwhile Jon Stewart during an appearance, appropriately enough, on CNN's Crossfire. Jon eloquently skewers Tucker Carlson and the infinitely forgettable whatshisname as partisan hacks, and compares their level of discourse to pro wrestling. "You're doing theatre when you should be doing debate...you have a responsibility to the public discourse and you've failed". Watch it here, it's well worth the watch, and hopefully it inspires you to debate with some couth.
GR

Economic Outlook - Enterprise Software

We spend a lot of time tracking the economy and its impact on our clients and prospects.  So, with this year winding down, here are my bold (and not so bold) predictions:

1. The US economy will slow down in 2008 but not enter a recession as the Bush administration fights to keep the economy humming.
2. Software sales activity will be strong as enterprises look for competitive advantages and as they have long consumed their "inventory" of software they bought around 2000.
3. SaaS will continue to be strong
4. Strong markets will be:
    - Healthcare - spurred on by legislative changes
    - Supply Chain - changes in the US$ and the high cost of fuel will spur on domestic production
    - Localized/specialized Social Networks as people understand the value of these networks

DC

Idea for a new "Green" sports league

I am a fairly big fan of autoracing, anything from F1 to Motocross (even though I like cycling better).  Just a short time ago I was reading an article in the Economist about Prince Albert and his green ways when it occurred to me that at least one of these racing leagues should covert to eco friendly (sort of like Nascar meets the Solar car challenge).  What is stopping a company like BP from backing this idea?  Wouldn't technical progress be more focused?

DC

One Laptop Per Child

The One Laptop Per Child project, founded by Nicholas Negroponte, and two years in the making, has been launched. For those of us who believe that feeding the the mind of a child is as important as feeding his or her body, the realization of the One Laptop Per Child project is exciting stuff:

"The individual and societal consequences of this chronic global crisis are profound. Children are consigned to poverty and isolation—just like their parents—never knowing what the light of learning could mean in their lives. At the same time, their governments struggle to compete in a rapidly evolving, global information economy, hobbled by a vast and increasingly urban underclass that cannot support itself, much less contribute to the commonweal, because it lacks the tools to do so. It is time to rethink this equation."

AS

My family's version of the 100 mile diet

If you haven't read about he 100-mile diet, it is a diet based on eating food that has been grown/raised within 100 miles of where you live.  The notion is that food transported long distances wastes a lot of energy and just doesn't taste as good as local food.  Without thinking about it, I have more or less been living by this diet as I regularly go to the local farmer's market with my daughter (family bonding and we got to know many of the local farmers) and go out of my way to buy local produce when I am in the grocery store (I haven't got to know the cashiers). 

But all that changed for one weekend. 

Last week, a relative decided that my wife and I needed to get a (local to her) turkey, some cheese (world champion Gruyere) and various other goodies from stores around her place for a family event to be held at our house.  Not a problem.  We, in our smallish SUV, drove the 40 miles to pick up the turkey (we walked the 30 yards to pick up the cheese), drove the 40 miles back after dropping off the turkey at my in-laws because we didn't have enough room for it at our place.  On the morning of the event, we drove the 10 miles to the in-laws, picked up the bird and some vegetables they bought (mostly local) before driving back.  100 miles!   Somehow this isn't the 100 mile diet I had in mind. 

Next time, I am cooking local Elk with local vegetables.

DC.

Do social networks really help you network?

By now, everybody in the developed or developing world belongs to at least one on-line social network, so the "success" of the category is established (at least by non-financial measures). But riddle me this: what proportion of people use social networking tools to network with people they don't know? It seems to me that tools like LinkedIn and Facebook exist to allow people to remain connected (or reconnect) with people they already know, and impress people with the number of friends and contacts they have. So...they're glorified phonebooks. Not that there's anything wrong that, but it's distinctly underwhelming as value props go. With apologies to Sidney Lumet, "I'm unimpressed as hell, and I'm not going to take it anymore."

AS

Every year the Washington Post has had a competition whereby you enter words that either have alternative meanings (Testicle: a humorous question on a test) or words that you have added or subtracted a single letter.  This got me thinking about words that would work in the start-up milieu:

Startegy: The plan for a start-up firm

Plague-arism: What happens when a start-up gets carried away with copying the marketing message and materials from a competitor in the vain hope that this will lead to sales that exceed the competitor.

Idiotology: (From Ideology) Bad ideas based on bad technology.

DC

Looking to catch-up on new trends the old fashioned way?

Every since I was a footballing youth (pronounced you-ff) in the UK, I have been a huge fan of the BBC with its perspective on world events and news.  Recently I have been watching Click which is a simple way to keep up with technology trends in a 30 minute segment.  If you feel you know everything that is current then this probably isn't for you, but for the rest of us it should work.

The two highlights for me were the segments on 3-D maps from both Google and Microsoft (both fantastic yet different) and the piece on the evolution of streaming video.  Unfortunately the on-line summaries take out the company/site names so the only way to get the full effect is to watch the segments.  I give this site a 3 footballs out of 5. 

 

DC

Flavor Flav and Fish!

My background includes some years working in manufacturing environments where being on time was mandatory, so my views on timeliness are somewhat skewed.  Since then, I have worked in and with sales, marketing, finance, legal, HR and other departments where timeliness was less critical.  So I would have to say that I am more open to people being late, ... well a little.  I, for one, still truly do appreciate when people are on time and respect my time.

Some time ago I took a course on customer service (FISH! - an excellent program by the way) where one of the key tenets was that you should treat people you are with, with as much respect as you would the most important person in the world.  This "Being there" philosophy focused on paying attention during all interactions with other people.  As an aside, this was is the same philosophy being preached by Will Smith in Hitch and practiced daily by the Dalai Lama.

So if I had a wish, it would be to have all meetings on time where everyone is paying attention.  Sort of a world with Flavor Flav and Fish.

DC

Cinco de every month!

We spend the majority of our days either directly with Entrepreneurs or thinking about ways through and around their issues.  As a result we have come to appreciate the difficulties that all of them face. 

Frequently each of them is faced with financial worries, often both at work and at home (since most don't draw a salary in the early phases) and depend on their spouses and friends for support.  As a result, many entrepreneurs feel like Pinatas. 

So, in light of this sentiment, and the fact that Cinco de Mayo is a celebration of the Mexican defeat of the French in Peubla in 1862 (a win is a win), we would like to start celebrating Cinco de every month in honor of all the entrepreneurs.  So come next 5th of the month, call an entrepreneur you know and give them some encouragement or better yet, buy something from them.  (Only then you can have a little kid chase them around with a baseball bat).

DC

The Push-me-pull-you company

Some emails just call out to you like one I just received from a well meaning recruiter (spam). It included this fabulous line: “They want people that want to join an emerging, exiting company,…” Talk about a company coming and going at once.

As someone that is detail challenged, I find this a sad commentary on quality and yet I am still empathetic. Does anyone have any tricks that they use to proof-read their work?

DC

Second Life Angel Forums

 I love learning, but it has to be on my terms.  Like most busy people I cannot realistically see myself in a school setting unless it is dropping off or picking up one of my kids.  So I was very intrigued when I discovered that MIT in combination with a small Junior College in Canada (www.loyalistc.on.ca) are now offering courses through Second Life.

This got me thinking, couldn't we use this medium as a way to communicate between entrepreneurs and investors?  Say for example holding an Angel forum virtually so that investors anywhere could meet entrepreneurs.  Obviously in-person meetings would follow (or at least use Skype video, but that is another topic).

DC

A shot out of left-field at CIOs

The life of the CIO has never been particularly easy. Yes, I know that as an ex-CIO I'm biased, but there really is a reason why an anagram of "a CIO" is "ciao", and that it's said that CIO is an acronym for "career is over": there are just so places for a CIO to run into trouble: data security, service interruptions, disgruntled employee sabotage, protracted enterprise software implementations. And so many constituents to (try to) keep happy, namely all your colleagues on the executive committee. Like the life of the CIO isn't burdened enough, the venerable Wall Street Journal (who really should know better) has added to the misery.

It seems that some bright spark over at WSJ had nothing better to do than write an article on how to subvert the standards and safeguards employed by corporate IT groups. Vauhini Vara's "Ten Things Your IT Department Won't Tell You" encourages some pretty silly and potentially disastrous behavior. The author employs a panel of experts to provide guidance on topics ranging from "How to download non-approved software" to "How to search for your work documents from home". Yes, the potential exposures for the techniques are explained, but the whole article still has a "this-is-a-little-naughty-but-go-for-it-anyway" tone, which is all well-and-good for those instructive articles in Cosmo ("Five moves that will drive him WILD" anyone?), but is deeply irresponsible in an well-regarded outlet that business people actually heed the advice of.

As Bob Evans comments in Information Week: "[the WSJ has] perpetuated the small-minded cliche that corporate IT is run by clueless knuckleheads who create pointless policies and are so out-of-touch with reality that they need to be defied and deceived at every possible opportunity".

This is one knucklehead who's glad to no longer be in the line of fire...

GR

"Online thieves try to get at reporter's RBC money"

Okay, I'm pretty easy to flummox at the best of times, but the headline above recently appeared in my local community newspaper, and I have to tell you that my level of bafflement was off the chart. Essentially, this reporter is reporting phishing emails as...as...news. In lieu of any snappy commentary, I'd like to quote liberally from the article, which does a better job of illustrating the ridiculousness of this than I could ever do (note for our American and international readers: "RBC" is the Royal Bank of Canada):

Reporter Carrie Brunet recently noticed a large amount of email from RBC claiming that her online banking security had been breached. In fact, the emails were fraudulent and sent by criminals who were attempting to gain access to her real account information...It was an innocuous email that came on RBC letter head to this reporter's inbox...From all angles, it looks legitimate.

No, gentle reader, I haven't lifted this from The Onion. This is an actual "article", written by a "reporter", appearing in a real "newspaper" printed in 2007, complete with a screen cap, with the caption "Innocuous Email". I'm just floored that a newspaper (admittedly a low-circulation local rag, but a real paper nonetheless) could be so behind the times, so out-of-touch as to print an article that seems to be implying that the aforementioned reporter was being singled-out and targeted by criminals.

The whole thing brings up a special pet-peeve of mine: how clueless mainstream media are when it comes to reporting on technology. Those of us who work in this business and are thus immersed in technology on an every-day basis assume that there's a lot of knowledge and comfort with IT on the part of people in general, but I think that working in this industry inures us to how little most people know about technology. The clueless missives about IT and The Interweb that appear in mainstream magazines, newspapers, and TV and radio programming illustrates -- and exacerbates -- that lack of knowledge.

Memo to editors and reporters who can't tell their elbow from a hole in their firewall: please stick to writing about stuff you know something about, like crooked city councilors and steroid-abusing jocks...

AS

"Where there's muck, there's brass"

The above title is a proverb from the English industrial revolution and it referred to the ability to spot businesses making money by the pollution that they created.  It is quite ironic that the same can be said today but for the opposite reason - where there is pollution there is a business opportunity to clean it up.  From solar, wind and even tidal energy creation to energy conservation solutions, the world is starting to get its act together on energy management. 

But some companies are trying too hard to get in on the "greening" message.  Take for instance eSurance.com which is now claiming to be environmentally positive because with them you would use less paper.  Give me a break!  Although I am as green as anyone else, but unless your firm truly does have a positive impact, don't go there.

What I am most impressed by are the simple solutions.  Take for example SolarMax, a  start-up with a passive system with only one moving part (the fan).  Now that is green (without the muck).

DC

Improving your web site with "Conversion Results"

Every once in a while you run across a bunch of people that are just really good at what they do and what they do makes a difference.  One such company is Conversion Results.  What they do is help make your website convert the eyeballs that reach your site into leads.  For example if your conversion rate was 1% and for every 10 web generated leads turned into 2 deals, Conversion Results could help you increase your conversion rate to 2% as well as help you drive more visits to your site.  In effect, doubling your web generated deals.

Give them a call.

DC

A George divided against itself cannot stand!

Who else remembers the "Seinfeld" episode where George is worried about his worlds colliding? Where Relationship George and Independent George cannot be allowed to come into contact with one another, lest they both be obliterated. Well, recent blog-chatter about a wholesale abandonment of "business" social networks such as Ryze, LinkedIn, and AlwaysOn in favor of "personal" social networks like Facebook -- as they offer a more complete opportunity for self-expression -- got me thinking about that very same clash of matter and antimatter: what happens when your professional and personal lives collide on-line?

I think we'd all readily admit that we've fabricated very different personas for our professional and personal lives. And I think most of us would be mortified if our personal selves (some would say our "real" selves, but that's another blog post) were exposed to our co-workers, employers, and clients in all their drunken, kinky, Depeche Mode-listening, Yankees-loving, whatever, glory. And yet that's what we seem to be heading toward, which I think is kind of unnerving.

Let me pass along a personal fer-instance: I was on Skype the other day with a good friend who currently lives in South Africa. I don't have a cam on my work PC, so I just have a static picture of myself, lifted from our website. My buddy, expecting to see the picture I used to use on Skype (which, inexplicably, was this bizarre picture of a creepily self-satisfied Glenn Ford smacking Erin Gray upside the head in some forgotten movie called Evening in Byzantium), gave me grief after seeing a picture of the "corporate" me in a shirt and tie. I explained that I was using Skype more and more to talk with clients, and that I was worried that the Ford-Gray picture might offend people (though I guess the cat's outta the bag now). So there I was, editing Private Me for fear of embarrassing Business Me. And it felt distinctly like a visit from Relationship George to Independent George. And just for a sec there, I didn't feel like the master of my own domain... 

AS

Comic book guy and me

About 5 years ago I had the good fortune to be part of a panel predicting what would happen with IT in 5-10 years at a well known convention. As a group we decided to be bold with some of the predictions including that video games would be internet & avatar based (well we seem to be getting one right). At the end of our list, one very vocal person (from a large carrier) said that we had missed the biggest application: email.

Well little did we know then that some one would combine the two ideas into what has been dubbed “the worst software ever.”    

I suggest you watch this short video as it is a great laugh especially the line “Hang out with your email poolside…”  Personally, I don't think the application is horrible (can you say limited market), but the marketing is interesting.

DC

Guilds

I was recently reading about Guilds in the Middle Ages (a book my teenage daughter insisted that I read).  Much to my surprise in the book it talked at length about the diverse nature of these Guilds. For example, Coopers, the people that make barrels, had skills in making staves, hoop production, assembly of the barrels as well as the finishing processes. Often times, various Coopers with different skill sets cooperated to make the process more efficient.

So what does this have to do with technology?

In the technology industry we take it for granted that people with different skill sets work together. For example in software development, architects, product mangers, developers, graphic designers and technical writers often work together to complete an application. In the Alternative Energy field, engineers, materials, production and logistics experts are all part of the delivery process. Are these people part of individual “Guilds” (engineers, developers) or part of a larger “Guild” (software)? Secondly, how do these people find each other?

In the middle ages, Guilds were location based because that was the only way to find other people. Now, with technology that makes it practical to find people of like minds and potentially complementary skills globally, can we not build international guilds?

I would contend that we are entering a new era where we can enable groups of workers to find each other remotely and to work as one entity on projects, or even as a functioning unit for a long time.. The only thing holding back these virtual teams is the ability of the “Guild members” to find and market themselves with little overhead.

The Invisible Man-agement Team

Over the course of working with early-stage companies for the last five years, I've noticed something really intriguing, and puzzling: many -- if not most -- start-ups don't list their management teams on their websites. Why is that?

My first thought was that these companies don't want to expose the shallowness of their teams. My second thought, somewhat related to the first, was that each individual was reticent to expose their own lack of depth. My third was that these companies are run by people moonlighting on their day jobs and don't want to be found out and fired.

Leaving aside option 3, I think that these companies are making a grave error. Companies too afraid to show their faces are squandering the one asset that they possess. Start-ups by definition don't have long client lists nor any real brand value; essentially, the one asset that start-ups have is borne of the experience and expertise of the management team. If you hide that, what's left to prove your credibility?

Early-stage companies seeking clients and funding -- and what early-stage company isn't? -- need to put their management teams front and center. If the team is too weak to expose to the light of day, then Job-1 becomes strengthening the team with some aggressive recruiting. Put another way: if they're a weak team, individually or collectively, then nobody's going to invest or become a client anyway.

DC

Rigidity vs. Rigor

Ken Sharma, one of the founders of i2 Technologies, often admonished staffers that "you lack rigor" (I can't do his squeaky delivery justice, nor can I overstate the loyalty and respect that he engendered amongst the people that worked with him; he was one of the greats of the enterprise software sector). What he was referring to was the lack of research, process and thought put into strategic decision making at many companies. Opinion, conjecture, and what one of my university professors referred to as "pub bullshit" are the orders of the day when it comes to charting strategic direction.

While this lack of rigor is common in organizations of all sizes, tech start-ups tend to be some of the worst offenders. For example, we know an entrepreneur who essentially bases his decisions on the last customer he faced. To give him his due, his business is very nimble, or as we like to say, they've got nimbility. But to make strategic decisions about markets, products, pricing or positioning based on the needs and opinions of the last person that you paid a sales call to is a recipe for disaster. On the other hand, a recent client has, as one of their senior managers expressed it, "all the bureaucracy of a big company with the pockets of a small one." This worst-of-both-worlds scenario is also one that we see played out at a number of firms.

What's so hard about striking the balance between Rigor and Rigidity? We think the essence of it comes down to understanding the difference between process and bureaucracy, and embracing the notion that great process thinking doesn't curb innovation; rather, it creates the circumstances in which innovation actually thrives.

DC

CIO as head window washer

A couple of months back, I continued my thoughts about the role of the CIO ("Plus ca change", 27 February). Well, I come to find that there's a raging discussion taking place, not so much about the strategic significance of the CIO, but rather on whether the CIO's role is more significant than that of a janitor. Hmmm. This is a far cry from my suggestion that the new-school CIO is more "innovation" than "information"

Check out what Chris Andersen, author of "The Long Tail" recently wrote in his blog: "...many CIOs are now just one step above Building Maintenance. They have the unpleasant job of mopping up data spills when they happen, along with enforcing draconian data retention policies sent down from the legal department. They respond to trouble tickets and disable user permissions. They practice saying "No", not "What if...".

I have long maintained that the role of the CIO should be to find innovative ways of utilizing technology to further the competitiveness of the organization. Unfortunately, typically 85% of the IT budget is consumed just keeping the lights on, which severely limits the financial freedom of the CIO. But some CIOs do manage to lift themselves and their departments out of this morass. Despite all the anecdotal reports of idiotic, outdated, control-wielding, power-tripping IT departments, there really are a number of CIOs who understand that they are not necessarily right on top of the latest technologies, and who encourage junior/ younger staffers (who are "senior" by virtue of their technical expertise) to devise new ways of addressing business issues.

George Colony, CEO of Forrester Research, takes a slightly more positive approach when he writes that CIOs must take on the role of teachers to CEOs, imparting the necessary technology for the business to innovate instead of stagnate. "Here's the key: For business executives to effectively drive process change and innovation, they must have a solid understanding of technology. They must be...able to adeptly bring the potential of technology to bear on business change. The goal is to field VPs of marketing, EVPs of strategy, and presidents of divisions who know how to apply technology to get the company to achieve its goals. The CIO must be in the business of educating...the business people so that they can make the leap. IQ and EQ (emotional quotient) must be joined by TQ (technology quotient). And TQ is the province of the CIO."

I understand George's proposition, but I think it's wrong-headed. The CIO has a "double-major", if you will, in business and technology, and with the forging of the right relationships at the CXO table, should be emminently qualified to lead the charge him- or herself. The members of the IT organization generally have a terrific understanding of organizational processes (and in some cases, due to downsizing, the only understanding). To relegate the CIO to the role of tech mentor/ teacher sadly misses the potential of the position.

Carl Howe over at Blackfriers Marketing, steers a middle course: "Network janitor and executive tutor are two possible titles for today's CIO."

My view? The key ingredient for the CIO or any C-level officer is credibility built on results and strong relationships with his/ her peers on the executive team. That relationship may sometimes take the shape of mentoring, and at other times may involve enlisting support for a key project. The CIO need not choose either the Cyber Janitor job, or to be deferential and adopt a passive mentoring role. If there is an obvious opportunity for innovation there's no reason for the CIO to be shy. Step up and lead the charge!

GR   

Vancouver ANGEL Forum - April 24th, 2007

I dropped in again on the recent ANGEL Forum (www.ANGELforum.org), April 24^th in Vancouver. Slickly organized by Bob Chaworth-Musters, it’s one of those speed-dating sessions for entrepreneurs and investors, where it’s quite an art for the former to say everything that they want to say in the time available. But it does force one to really nail the old value prop in as few words as possible.

This year seemed to be pretty solid, with no real clunkers on display and Bob’s acolytes keeping everyone moving along on schedule. I thought that there were a number of interesting start-ups in market niches that should have plenty of potential.

My favorite presentation was from Cambrian House (www.cambrianhouse.com). Under Michael Sikorsky’s direction , the company has become a recognized leader in crowdsourcing, a zippy new term for a business model that depends on work being done outside the traditional company walls. Expect to hear much more about these guys.

A company with big ideas and potentially huge market is Bluewater Technologies (www.bluewaterecotech.com), that will use remotely operated vehicle to harvest submerged hardwood trees.

Genesis Fueltech (www.genesisfueltech.com ), a developer of hydrogen generation and related systems, is clearly in a hot market right now.

OBehave! Entertainment (www.obhv.com ) wins the prize for the cheekiest name. They have developed an amusing  system for young women that allows cell phone photos to be shared and commented on by a group of friends (shoes, guys, clothes). Think of a mash of MySpace and Girls Gone Shopping/Clubbing.

PairCoach.Com (their site isn’t yet live) taps into the considerable market for self-improvement products and services. It is an interactive online life coach that allows pairs of people to coach each other.

Over at Shopster.com (www.shopster.com ), Sarath Samarasekera has developed what might become a quietly subversive concept. Their technology provides retailers with a turnkey ecommerce system which they would not be able to afford and access to thousands of products for resale through a network of suppliers.

I also liked Wireless 2000 (www.wireless2000.com) and Yotophoto (www.yotophoto.com), although both are entering pretty crowded markets.

So there doesn't seem to be any shortage of interesting companies looking for funding, but it remains to be seen whether there is still a strong network of investors that are still in the game. I need to check with Bob to see what deals seem to have a chance of developing from this edition of the FORUM.

GR

Reflections on the Second Goldrush, Part 2: Living with BigCorp

When we last saw our heroes in the first installment of this serial about the experience of living through the technology goldrush of the late ‘90s, the company had started to move towards consummating the deal we had struck to be acquired. The due diligence process began. Strangers began poking their noses in our books. Lots of meetings and lots of questions. Did we have any skeletons in the receivables closet? Any exposure to legal actions? Unbilled work-in-process that might not be billable? Too much business with one client? Strength of the management team?

We must have said and done all the right things because things moved forward, and the deal was signed. Turns out that it was a most unlikely takeover organization: a nationally recognizable telco (let’s call them BigCorp).

(Incidentally, if you’ve ever been in this situation, you know how critical it is to make sure that the management team has it’s A-game going in all meetings. The scrutiny of every detail is intense, and begins from day-one of due diligence).

The deal came with some pretty aggressive revenue and income targets to meet if the principals were to make their individual comp packages. In fact we had to take our revenues from $19 million to $30 million to maximize our performance bonuses. Worse still, there were thresholds that had to be met completely or no bonus accrued. So the heat was really on. Luckily the market was still red hot.

In light of the massive changes that were underway, we of course assured the staff that nothing much was going to change! “BigCorp will let us operate the way we had thus far. Our management will still be calling the shots”. Which of course really didn’t turn out to be true, because BigCorps don’t operate that way. However, at the time we really thought it would be possible. Ah, the naivety of (relative) youth…

We started the process of meeting with the board member of BigCorp assigned to oversee our progress. These meetings started out as love-ins while the market was strong and our margins were great, but as the market evolved to be more challenging, the meetings became a whole lot more hard-edged. Suffice to say that monthly performance reporting became a lot less pleasant!

In that first year under new ownership, there was an exhilaration driven by the need to make the performance targets. We were pulling out all the stops and working crazy hours, but it didn’t seem to matter. We did whatever it took to close and execute new development contracts.

As it happens, we made our upper performance targets by the slenderest of margins. As the deadline approached the atmosphere got really tense because there was so much at stake for the principals. But it could easily have gone the other way which would have been a real back-breaker if we had fallen short.

However, not long afterward was the nosedive of the marketplace after 2000. The demand for custom development came to a screeching halt. Soon we had as many people on the bench as we did at clients. We were doing more unexciting projects for BigCorp than outside client work which was generally more stimulating.

From takeover to the downturn of the market, there was a gradual erosion of the entrepreneurial feel of the company (a phone company will do that; they’re not exactly bastions of entrepreneurialism). There was the obvious loss of our freedom to make decisions, especially as our results deteriorated. We became more and more subsumed into the processes of BigCorp. There was the feeling of the gradual tightening of the restraints from the mothership.

Finally, downsizing of the staff had to begin. We all struggled hard with layoffs because this was all new to us, having spent our whole history expanding. The notion of contraction just wasn’t in our business vocabulary. Morale inevitably began to erode as the team began to shrink.

So what did we learn?

Things are never, ever the same once control passes from your firm. In this case it was a buyout (later compounded by a merger with another firm). It would likely be the same for an IPO.

It is well-neigh impossible to keep the small-firm, entrepreneurial feeling going within a large bureaucratic company. Just doesn’t happen. The old “snap, crackle and pop” just disappears. You just cross a line and there is no going back.

Of course, you tell yourself that while that cherished entrepreneurial feeling has been lost, you’ve gained the deep-pockets and presence of the acquiring company. In our case (and many others that I’ve been told about and read about), the expected extension of our market reach never happened because BigCorp’s salesforce didn’t really understand our products and services. And invariably the quota/compensation system got in the way.

Ultimately, the acquisition never netted the benefits that either company had hoped for, which underlines the need for due diligence beyond that done by the accountants. The senior management teams of both companies need to clearly conceive of what strategic value the relationship is intended to create. If they can’t, then the marriage will undoubtedly sour for both parties.

GR

Plus ca change...

I wrote some time ago about the notion that "CIO" should really stand for "chief innovation officer" (I put that in lower-case because some people think I am literally advocating the title! Though I have seen worse...). I felt this way 20 years ago when I was in the CIO role at some fairly large, complex organizations, but the message was not well received in those days. Most CEOs were strictly interested in IT cost reduction, assuming they were interested in IT at all...

Just when it had started to believe that things had changed, I saw an interesting couple of blog posts at InformationWeek. The first was about Randy Mott, CIO of HP. This is a guy who really has got the byte between his teeth (oh, my sides!) and is going all out to invert what i call the I/R ratio -- the ratio of resources spent on Innovation versus resources spent just keeping the shop Running.

Randy says, "We are trying to get on a path of global and common applications to where we can focus on new capabilities, new features, and new functions...We've put some very aggressive goals in front of our people to manage our way out of that." This is a guy who clearly sees IT as more than a cost center.

Soon after that, I read about HP CEO Mark Hurd's "formula for fixing IT". As reported here, Mark's got four simple IT objectives for Mott, the first of which is to reduce the cost of IT. My heart sank. Plus ca change...

GR

Making or Breaking the Deal

The good people at Alloy Ventures, a Bay Area VC firm, have compiled a really insightful list of the "Ten Things That Can Make or Break a Deal". This is a compilation of the ten elements that entrepreneurs should bear in mind when pitching to early-stage investors. It’s a good read, and well worth your time to read it in its entirety. Their list:

1. Referrals - will you be on top of the pile or the bottom?

2. Management, Management, Management - do you have the athletes?

3. Sustainable Competitive Advantage - what about the 800-pound gorilla?

4. Business Model – if you don’t have “paying” customers, you don’t have a business!

5. Momentum - are you giving them more reasons to say "yes"?

6. Recruiting - a measure of quality!

7. Executive Summary - your first and often only impression!

8. Portfolio Fit - Babe Ruth, Ted Williams or both?

9. Partner Politics - are you dealing with a democracy or dictatorship?

10. Location - if it takes too long to get there, I'm not interested!

The only things we would add:

1. Valuation - Go in with a realistic notion of what your company’s valuation might be. We’ve seen too many entrepreneurs with fanciful ideas as to what their business might be worth on the basis of a) what they’ve heard about the valuation of venture-backed companies whom they perceive as inferior; b) the amount of blood, sweat and tears (not to mention credit card debt) that they’ve expended in getting their business to this point; c) what their significant others think is reasonable. Things have changed drastically since the bubble, and though it may seem unfair that people that sold dog food on the web had pre-money valuations in the tens of millions, the investors in those businesses are eating their own, ahem, dog food now…

2. Crispness – Investors don’t expect entrepreneurs to have all the answers; by definition, early-stage ventures are defined by uncertainty. However, they do expect that reasonable questions about use of funds, competitive offerings, financial milestones, margins and so on will be met by more than blank stares, hand-waving, the fumbling through papers, and feigned illness in order to run to the bathroom to call one’s CFO. Be prepared and be succinct in your responses. When confronted by a question that defies a simple answer, be ready to walk through your company’s collective wisdom about the issue in order to demonstrate that you’re prepared to grapple with the inevitable hurdles that come with the territory of launching a company.

AS

Reflections on the Second Goldrush, Part 1: Selecting a Suitor

I was reflecting the other evening -- wearing a satin smoking jacket and sucking thoughtfully on a pipe, while my hounds Castor and Pollux warmed themselves by the fire -- about my time at a small applications development firm during the heady days around the turn-of-the-millennium. Ahh, those really were the days. I joined some time after start-up, but still experienced the same highs and lows and feel of the small entrepreneurial group of guys and gals struggling to make an impact in the market.

It was a time when our biggest problem was hiring enough people fast enough to keep up with demand. Times have changed in the IT field.

The principals of the firm had always thought that a purchase by a larger firm was the exit strategy. As we went about our business we couldn’t help speculating about firms that might be a potential buyer. What we never saw coming was the purchase by a most unlikely firm (a telco!). In fact, looking back it is clear that it would have been so easy for us to have been tripped up as many other emerging firms were. So many accepted deals that contained a substantial stock component of the acquiring firm which a short time later plunged in value.

I have to admit that I had identified a firm that I thought was golden and encouraged the founder to entertain discussions. Which he did, but remained unconvinced. And thank goodness, because my pick crashed and burned in a few years.

It really wasn’t that easy to spot a winner at the time. Losers were sometimes obvious. Firms that wanted to buy the whole company and then discard the bits (mostly people) that didn’t align well.

Sometimes you got blindsided. I remember one time, I was in a meeting in the U.S.with a large professional services firm that was intended to iron out the details of a subcontracting arrangement. After exchanging pleasantries the CEO unexpectedly joined the meeting and without much ado suggested that things would be a lot easier if we just figured out how they might buy our company! And they were dead serious. This one didn’t work out because they turned out to be a pretty arrogant bunch and wanted to break up the company.

Eventually, the acquiring firm found us, rather than the other way round. Pretty well out of the blue and right at the time that corporations’ acquisition hormones were raging out of control. The deal was a combination of cash and paper, but the latter turned out to be rock solid and even appreciated post-closing.

Lessons learned? Well, three things stand out. First, the task of compiling lists of potential acquirers is valuable mostly in that it forces one to understand the dynamics of the marketplace, and how to position the company so that it’s a critical component of success of a number of companies in the space. The likelihood of your eventual purchaser coming from that list is small however.

Second, ascertaining the cultural fit of your company and that of the buyer is a critical activity, and is one that is inexact and that will test your confidence in your gut feel, as that will be largely all you have go on.

Third, in weighing the pros and cons of a deal, you have to strike a balance between bloody-minded maintenance of your fiduciary responsibility to your shareholders on one hand, and your desire to protect the interests of your employees and customers on the other. If you’ve never had to walk that tightrope before (and, heck, even if you have) you’re in for sleepless nights weighing those often-conflicting demands.

Next time I'll write about what transpired after the deal was done. As one can imagine, the transition from start-up mode to corporate mode held its own unique combination of challenges and adjustments.

GR

Remembrance Day

Hey, here’s some free investment advice: on Saturday November 11^th take just two minutes out of your day. Invest your first minute to thank the life-force of your choice (God, Allah, Brahma…) that you were never required to be harm’s way with people shooting real bullets at you, and that your son/daughter was never sent to fight.

Invest the second minute in thanking those who were killed on the beaches or the forests or the jungles of a foreign country, and those that did receive a telegram telling them that their 18 year old child had been killed.

Think of how we have lucked out. We managed be born at the right time to avoid most of the sacrifice. Sacrifice a bit of time and thought to that notion.

Wonderful spam!

First, a promise: this will not turn into a rant about spammers and phishers and how they should all be tossed into Turkish prisons. I’ll muse about all the deliciously evil things that could befall them in said prisons another day when I’m feeling more morose and vindictive.

No, this entry concerns itself with a basic question: do spam and phishing work? Because if they do (and everybody seems to think that they themselves cannot be fooled by the stuff), then the notion of the internet as enabling a perfect market must be wrong.

My assumption here is that everyone who has an email address actually uses it to communicate with the outside world, and not as some sort of e-echo chamber. So as connected people, e-mail address owners are aware of the fact that the wares of spammers and phishers represent, in the words of economists, negative economic value. Essentially, a perfect market exists with respect to information about the value of spam and phishing emails.

So if everybody’s aware that spammers and phishers are up to no good, why do the practices continue to exist? Put another way, if no one is accepting the call to action presented by these emails, then spammers and phishers would move on to some other socially reprehensible activity, like mugging old ladies. But they haven’t, at least not if I judge by the volume of emails I get everyday promising small-caps that will turn into large-caps, and small pe – well, you get the idea.

Obviously, the constructs of the problem, as I’ve laid them out, are flawed. Perfect information does not exist; enough people are out there being hoodwinked into giving out their banking pin numbers and buying mail-order Cialis that the spammers and phishers are encouraged to continue their activities. But the question gnaws at me: if people can’t be trusted to delete this stuff given all the evidence that it is likely harmful to them (or more precisely, their bank accounts and their privacy), then exactly how do economists conclude that the internet can help enable perfect markets for goods and services? It seems to me that imperfect markets are alive and kicking.

AS

Shredding and the Art of the Start

As I was panting my way up “The Walrus” a favorite trail on Vancouver Island that I ride with some friends on Sunday mornings, I began to ponder that starting a technology venture and mountain biking are kinda similar. How so? Consider the following shared principles:

Mo is your friend. On a bike, faster is better than slower when you want to clear obstacles; you’ve got to keep moving or you’re going to get pitched off-course. Same thing with a young company. You’ve got to maintain your momentum in getting your product to market. No time to be polishing the last obscure feature on the product to make it perfect. Get it to market – now – before your novel idea suddenly has nine new competitors.

You’re gonna fall. Assuming that your cycling adventures entail more than just poking over to the local Starbucks, you’re going to be falling down – a lot. Usually small, but sometimes big (couldn’t clip out in time, wheel slide, big endo). Same deal for the entrepreneur. The big prospect says “hi” but never arrives at “buy”. That funding from your girlfriend’s university roommate who now works for a VC…never materializes. Your genius chief architect goes back to Obscurevakia (or was that Obscurestan?). What to do? Anticipate catastrophe. Suck it up and deal with it with a stiff upper lip when (not if) it happens. If this was easy, everybody would be doing it, right?

See the line. Half the key to cycling is seeing and taking the right line. Through a seriously steep loose rock bed, around high-speed corners and riding hard up-hill on loose surfaces. Same thing for the start-up. You have to be able to look ahead and anticipate what is going to be the expedient route to get to market. The right alliances, the best sales channel, the best timing for capital injection.

Don’t look down. When you’re half way through a high, narrow, rain-slicked wooden traverse, you can’t look down and ponder the consequences of a fall and curse the bright idea of doing this North Shore route; you’ve just got to look up, stay steady and pedal. Same thing applies to the entrepreneur. You can’t focus on how financially extended you are, how people are relying on you, and the customer commitments to be honoured. Just look up, stay steady and keep the dream alive.

Watch this space for more clever analogies, as I’ve also concluded that snowboarding is like setting up a wireless router, and that rock-climbing is like baking a soufflé...

GR

The businessmen will talk in numbers, and the princess will wake up from her slumber

I spent a day last week at an angel investment forum in Vancouver (http://www.angelforum.org/). It’s an event that has been run successfully for many years now by Bob Chaworth-Musters. Bob brings together fledgling companies and serious investors (who are pre-qualified prior to the event) in an intensive one-day courtship.

There was a stark contrast in what was showcased, both from a polish/ preparation standpoint, and from the perspective of old, hackneyed business models and fresh innovative ones. Some presenters understood the task before them and had clearly done their homework about who they were presenting to, while other put their heads down and fired through their presentations like bulls in an Apple Store, oblivious to the pained looks on the audience's faces.

Some of the fresh ones? I really like the look of MovieSet (www.movieset.com) a social networking site that allows movie fans to watch and participate with movies as they are being made. Also Paramagnus Developments (www.paramagnus.com) who use the term “conversational software”. That’s a new one. Paramagnus has a hosted solution that makes podcasting easier and more affordable for smaller users. BroadMotion (www.broadmotion.com) also seem to be onto something. They JPEG2000 video format will be used for the future digital distribution of all major motion pictures. Broadmotion manufactures a box that will enable movie theatre owners to cost-effectively deploy a digital movie system.

Then there were a bunch of ho-hum presentations that even if you were charitable could hardly have raised the pulse-rate of the investor folks in attendance. (Outsourced this and that, software in an already crowded space, yawn) I’m not about to name names, because that’s unkind, but goodness you realize how introspective and unobjective you can get when you put your head down. Mind you, that’s what the entrepreneur has to do, but you better make sure your idea has legs before you get the blinkers on (holy mixed metaphors, Batman!).

It all reminded me that I liked Rick Segal's entry the other day (“Selling Kool-Aid vs. the Spreadsheet”, October 28^th, www.ricksegal.typepad.com). Rick has a very robust blog which gives a far ranging view of life from the perspective of a successful VC. He even offers free advice. The blog in question is a very useful (and, as always with Rick’s writing, entertaining) elucidation of the stark difference in selling reality (the spreadsheet) and selling a dream (the kool-aid). Like most things in life, it boils down to knowing your audience: pitching a dream to a quant-jock, or speaking-in-numbers (as Van Morrison once memorably described it) to a dreamer will only end in frustration for both parties. Some of the presenters from the Angel Forum should give him a call…

GR

Equal and opposite reactions

Once upon a time, I was a CIO, and as such I used to lose more sleep over loss of continuity of operations than data security because we used to have all the data locked up in one spot and only allowed very limited remote access. Continuity of operations was a different matter.

I was awaken one night by my pager when a farmer a few hundred miles away from our facility decided to bury a cow and severed a critical fibre-optic line (yes, Virginia, truth is indeed stranger than fiction). On another occasion we had a two-day outage when a processor problem occurred after the supplier changed its circuit board washing process during manufacture. And I almost came to blows with our SVP of Sales and Marketing when our connection to his biggest retailers cash registers went AWOL just before Christmas. I could regale you with more, dear reader, but you get the picture.

Well the world has changed, and security in all its forms has become the greater issue. Corporate data is now spread all over the place, and the opportunities for malfeasance, or at least mischief, abound.

Why am I musing on this topic? Because I just got a letter in the mail from one of America’s largest corporations, for whom I previously toiled, informing me that “…an employees laptop computer was recently stolen (and) your name and U.S. Social Security number were amongst the data stored on the computer…”. Insert stream of expletives and vitriol here.

Now I am wondering what the odds are that the data has been stolen by some ne’er-do-well who is now going to systematically pillage my life savings.

I am tempted to go into a huge rant and demand answers to questions regarding encryption, adherence to corporate standards, immediate firing of the CIO and senior IT staff etc.

But, you know, I’ve been there and done that, and I know how hard it is to safeguard data and networks 100% of the time. Technology marches forward, but for every clever software developer