Monday, May 04, 2015

The Haiku of Finance for 05/04/15

Throw cash at junk bond
Chase yield right over a cliff
Stupid plan goes bust

Financial Sarcasm Roundup for 05/04/15

In some parallel universe, sarcasm does not exist.  I would hate to live there.  My universe's sarcasm calibration makes life way more interesting.

Warren Buffett cautions against a minimum wage increase.  Every once in a while he spouts some common sense like the small business owner he used to be.  The guy may not be going soft after all in his old age.  He's a step ahead of the federal policymakers who don't read their own CBO and CRS reports showing clear relationships between a higher minimum wage and lower job growth.

Greek bond trading volume just went down a big hole.  No one in their right mind wants to buy Greek bonds while the Tsipras government must go hat in hand to Brussels.  Hedge funds still buying this junk are insane.  The dumbest private investors hope debt relief will hit the troika's Greek bond holdings first.  Good luck with that plan, idiots.  The troika has every right to throw private investors under the bus when the time comes.

The SEC is dragging its heels in paying whistleblower rewards.  That figures.  The SEC couldn't catch Bernie Madoff and other fraudsters, so they spite the ones who do catch them by showing passive-aggressive behavior with payouts.  I can think of a couple of local phonies I'd like to nail if it would get me some of that payout money.  Waiting years for a claim would cramp my style.  That's what they mean by "close enough for government work" when the check clears three years late.

Another bunch of smarty-pants studies show how men and women approach investing differently.  It looks like women have a leg up by choosing target date funds and making fewer changes to their assets over time.  I always like it when women get a leg up, especially when that leg is over my shoulder.  Have confidence in yourselves, ladies, and you'll get rich faster than men.  I look forward to seeing more rich babes in San Francisco who will buy me dinner.

Sarcasm is a freebie, just like romantic dinners from those rich babes.  The Alfidi Capital philosophy incorporates as much free stuff as possible.

Sunday, May 03, 2015

The Limerick of Finance for 05/03/15

Euro bond buying keeping yields low
Longer dated bonds now in deal flow
Creditors are such fools
Getting played like dumb tools
Buying bonds that have no room to grow

Saturday, May 02, 2015

The Haiku of Finance for 05/02/15

Hard core analyst
Consume data all day long
Ignore Wall Street spin

Friday, May 01, 2015

The Haiku of Finance for 05/01/15

Berkshire profit up
Buffett must be happy now
Insurance did well

Thursday, April 30, 2015

The Haiku of Finance for 04/30/15

Oil producers crash
Capacity must shrink more
Hunt for bargain wells

Wednesday, April 29, 2015

The Haiku of Finance for 04/29/15

Founder daily life
Pick great team and work all night
Drive it to profit

Alfidi Capital at BoxDev 2015

I've followed Box periodically since I attended their first-ever developers' conference last year.  I had to check what has changed since then at BoxDev 2015.  Check out my awesome badge photo below, and my even more awesome commentary farther down.  I had a front row seat for almost all of the major talks.

I need to make something really clear right off the bat.  The app Box published specifically for this conference was absolutely atrocious.  The different theme tracks were laid out horizontally for swiping, but the talks that were specific to each track were not lined up chronologically in the vertical view.  I stuck with the Innovate track full of CEOs and other big shots.  The fireside chat with Marc Benioff, for example, was listed way down the page after the closing happy hour.  What's up with that?  A lot of the Innovate talks also lacked detailed descriptions of the participants.  I deleted this app immediately after the conference, but I would have been better off if I had never downloaded it in the first place because it was so useless.

Box executives announced a lot of new products, which I don't use because my enterprise document management needs are very small.  The biggest news from CEO Aaron Levie was their IPO earlier this year (ticker BOX at Yahoo Finance).  A quick look at the stock's progression shows why it got so little attention at BoxDev.  The stock debuted at $22.60 in January and closed at $18.29 on April 22, the day of BoxDev.  It's dropping because Box is still losing money with EPS at -$11.48/share.  This company has been around for a decade and still can't find a profitable niche despite its flashy conferences.  If you leave a cake in an oven for that long, it will probably turn into something resembling a small meteorite.  Do not ever try that yourself.  It's just a thought experiment.

The Innovate talks themselves were much more useful than the app.  Eric Schmidt from Google came out to praise Box for their work with Google Docs.  The latest canard among Silicon Valley tech giants is that their higher standards for encryption are frustrating the US intelligence community's surveillance efforts.  Yeah, right, whatever; the public is really gullible.  Dr. Schmidt is still fond of small businesses as job creators, which is great for those small businesses Google acquires.  I liked his phrasing of IoT as "Instrumentation of Everything."  His insight that small and medium-sized businesses represent and underserved market for affordable enterprise solutions is useful for startup founders trying to enter an established market.  I was privileged to witness firsthand the value of an experienced tech hand mentoring a young striver.  Aaron Levie joked about selling Box software to North Korea, and Dr. Schmidt pulled him back by remarking that most trade with North Korea is illegal due to US government sanctions.  Dr. Schmidt may have learned his own lesson when he visited North Korea in January 2013.  Entrepreneurs should all seek out such a seasoned mentor.

Box set out a pretty ambitious goal of bringing enterprise-level security to apps.  Great for them if they succeed.  One of their developer people praised some app that allows cats to take selfies.  DevOps people may have too much time on their hands.  I was impressed at Box's claim to have a full-time compliance team building compliance guidelines for health care, finance, and other verticals.  I am not that easily impressed, so I may be slowing down as I get older.  It's cool that two prominent VC firms are committing serious money to companies built on the Box platform.  I'll tell my fellow veteran tech entrepreneurs to go chase it.

Marc Benioff came out to share some bromance moments with Aaron Levie.  These dudes kept poking each other on stage.  I was surprised at Marc's admission that he had only recently started meeting CEOs when touring Salesforce's customers in major cities.  I thought a guy like him would go straight to the CEO every time, but he prefers to meet line of business leaders and CIOs.  Marc laid out his three dimensions of great companies:  align with the next tech (cloud, mobile, metadata); shift from subscription revenue to a deferred revenue model; adopt a philanthropic model like Salesforce's 1/1/1 idea.  Box has made its own philanthropic effort a more prominent part of its public story.

I admire Marc's boldness for wanting to build a corporate culture of philanthropy.  All I can say about the corporate do-gooder philosophy is that it should reflect bottom-line business strength.  Salesforce and Box have both had trouble earning profits over the years.  A company can't do any good if it's broke.  I did not know that Salesforce had invested in Box.  That makes this younger company part of Marc's ecosystem.  Marc is big on ecosystem thinking; he discussed how electing a US president brings that person's entire "ecosystem" of supporters into office.

I always pay attention to the VC panels at tech events.  Box's VC people noted that billionaires became angel investors in the '90s dot-com final blowoff phase, and now they're seeing it again.  D'oh!  I think one of the VCs was skeptical of the phrase "VCs are the new NASDAQ" because it implies VCs know something the public markets don't.  I agree with the panelists that this ignores the huge bubble risk today.  I am not as familiar as these VCs with the nuances of driving a company from late-stage private to early-stage public.  Even these VCs are admitting how late-stage private firms are seeing fictional valuations driven by non-VC institutional investors.  Hedge funds need to quit playing games with late-stage finance just to get the pop from an IPO that they're not getting from the rest of their baloney strategies.

The VCs' revelations make me want to get on my soapbox.  Here it comes, people.  When smart, early-stage investors like these start warning the public about what they see, the bubble game in multiple asset classes is in serious trouble.  The easy availability of capital (thanks, Federal Reserve, for nothing) and anomalous late-stage funding events have skewed many founders' expectations.  This easy money environment for high-risk businesses is very unhealthy.  A cohort of the Valley's hottest Generation Y engineers have been spoiled into thinking this bubble is their birthright.  My Gen-X cohorts learned the hard way back in the '90s how this story ends.

The single best panel comment I heard at BoxDev was from the security panel.  Someone said startups should pick their founding team with care when applying to big accelerators like Y Combinator.  The big idea is to map out everyone's skill sets as a Venn diagram to cover as much surface area as possible.  Wow, that is mind-blowing.  I'll have to try that with the next bunch of floundering founders I meet in my favorite accelerator, the Cleantech Open.

The founder panel was almost as enlightening.  One founder said that good advisers spend seed time with their startups to earn their stock options.  The best example offered was one adviser who came in several days a week, for several weeks.  He brought lengthy checklists of things to accomplish and descriptions of jobs the startup hadn't even thought of hiring to fill.  Here comes another key lesson for any potential founder who wants to grow something big.  The single most commonly cited method from this panel for acquiring early customers quickly was the early hire of a sales or business development person who had an extensive, longstanding network within the startup's target vertical.  The next most effective business development tactic was cold calls to CIOs (with LinkedIn as a good source) using an effective one-line pitch hitting pain points in cost and volume.  I am seriously going to make that part of the repertoire I impart to founders who seek my wisdom.  I knew there was a reason I needed to be at BoxDev.

The final Q+A with Aaron Levie showcased his rapid-fire humor and decision making style.  The dude is just irrepressible.  He revealed a brutal daily schedule of handling people tasks in the morning and afternoon, with admin and strategy tasks lasting through the evening.  His typical 16-hour day at the office ends at 2:00AM.  Founders, that's your life for several years when you grow a startup.  Hey Aaron, if you read this, I'm the guy who sneezed in the front row toward the end of your session, and thank you for saying "Bless you."  Common courtesy matters.

BoxDev 2015 was worth the time I spent just for the insights in the three paragraphs immediately above.  Knowing the secrets of early team design, business development, and founder work ethic gives entrepreneurs a big advantage.  Box also had a lot more food trucks on hand this year compared to 2014.  That honey waffle sandwich with fried chicken, egg, and bacon was unforgettable.  BoxDev keeps inviting the right experts; their wisdom is also unforgettable.

Full disclosure:  No investment position in Box at this time.

Tuesday, April 28, 2015

The Haiku of Finance for 04/28/15

Content management
Spread throughout the enterprise
Structuring searches

Inspiration At IBM Content 2015 In San Francisco

I scored a seat at last week's IBM Content 2015 conference at San Francisco's Palace Hotel.  I expected heavy product pitches because IBM is one of the sector leaders in enterprise content management.  Knowledge managers are drawn to this stuff because both structured and unstructured records end up in unsearchable archives without some architecture to sort them out.  I had to wonder how my own US Army knowledge management experience (Iraq 2009, been there, got the campaign decoration) would have been different if I had stronger search and archive tools.

Former NBA basketball player Mark Eaton was the morning keynote.  I was impressed at how he translated sports lessons into articulate business lessons.  He forever changed my perception of retired pro athletes.  There's a lesson there for military veterans making transitions to civilian careers.  The dude had four basic principles for functioning on a team:  know your job; do what you're asked to do; make people look good; protect others.  I guess pro athletes have something in common with retired military leaders, because both groups could riff those topics for hours.  What made Mr. Eaton's approach different was his storytelling ability that put each lesson into a narrative.  It was more than a rehash of old sports triumphs that made him likeable.  I detected elements of Joseph Campbell's mythological "hero's journey" in his narrative.  Storytelling through archetypes matters in enterprise sales.  It also matters to knowledge managers who have to construct corporate narratives (you know, like product positioning strategies) out of chaotically arranged enterprise content.

The IBM keynote immediately afterwards was another riff on storytelling as a business function.  I did not know that Kurt Vonnegut had three favorite story arcs:  man in a hole; boy meets girl; from bad to worse.  Searching the web reveals both written and video testimony for Mr. Vonnegut's theses.  Right on, narratives rule.  IBM's favorite story arc is "better and better," something we will all presumably hear customers say if we have the right enterprise content management systems.  I don't need to recap the rest of the IBM product seminars and partner pitches.  My business isn't the right addressable market for them anyway and my own content management needs are easily met with desktop solutions.

The final enterprise content management (ECM) keynote was more pitching, with enough "content" to provoke my thinking.  I learned from experience with MS SharePoint that enterprise search results can be either fast or relevant, but rarely both.  There's usually a tradeoff.  Search systems will improve as machine learning habituates them to the needs of a particular enterprise.  IBM sure is proud of its position in Gartner's Magic Quadrant schema of wonder charts.  The hive mind known as IBM's Watson supercomputer will absorb all of the actions IBM's clients take in their systems.  I have no idea how IBM is going to safeguard all of that proprietary information, unless they're only tracking the metadata from actions.  Knowing how frequently users query, share, store, translate, delete, and do other things with documents is enough for Watson to see without peering into things that would destroy a client's competitive advantage if hacked.  I keep hearing the catch phrase "move document capture to the edge of the enterprise" but it's not a cliche yet.  The payment processing sector has that one covered and now the rest of the economy can learn how to convert dirty data from imperfect image captures.  Any vendor that isn't scanning documents at transaction points right now is way behind their competition.

Chief knowledge officers and their chief information officer friends will either earn their pay or get themselves fired once they commit to branded ECM software.  It's all going to the cloud even if Watson didn't exist.  Building a hybrid cloud and keeping key developmental projects under wraps will be hard for anyone who hasn't learned about Cloudonomics.  The ongoing fight in ECM won't be pretty.

I'll close with one more lesson from Mark Eaton.  He said that if enough people tell you you're suited to do something, you should listen.  That's how he got back into basketball and found his optimal position on the court.  Well, you know something, a whole bunch of people have told me over the years that I have a natural voice for narration, and they ask me if I've worked in radio.  I'll take that as a pretty strong hint that I should add voice work or webcasting to the Alfidi Capital tradition of excellence.

Full disclosure:  No position in IBM at this time.

Financial Sarcasm Roundup for 04/27/15

This particular burst of sarcasm draws inspiration from the Commonwealth Club's "Week to Week" political panel.  I attended because I had some rare white space on my calendar.  Yeah, folks, I really have been that busy lately and that's why I only had time to blast out haikus last week.  Anyway, the Club panel covered the topics below and the usual brain-dead losers in the audience thankfully remained silent.

The Trans-Pacific Partnership trade agreement is still controversial among people on the far Left and Right who flunked both math and economics.  Knitting our largest trading partners together is a no-brainer.  Two decades of economic data from the success of NAFTA ought to convince naysayers but some people just prefer illiteracy.  President Obama remains well-liked among his base and probably has the political capital to spend on fast-track approval authority if he so desires.  I concur with the Club's panelists that he was never as progressive as his early rhetoric led some to believe.  He has governed like a center-right President for most of his tenure (much like Ike or JFK in their time).

The Club's panelists are political junkies and watch every turn in the 2016 Presidential race as if it matters.  Folks, nothing matters at this stage except fundraising and the "invisible primary" of early party endorsements.  The serious candidates are obvious, and the unserious ones are usually corporate executives who have never spent time in Washington, DC.  Launching a Presidential campaign as a stalking horse for a Cabinet position makes no sense.  Presidential transition teams have their own vetting process for those jobs, and said process has everything to do with sending a message about governance priorities.  It has nothing to do with rewarding primary season opponents.

It makes little sense for our local pundits to lament the influence of money in politics.  America has always been a stealth plutocracy and the Founders were the wealthiest people of their time.  Billionaires don't always get what they want out of elections.  Gambling mogul Sheldon Adelson backed Mitt Romney in 2012 and got nothing for the money he spent.  The Koch brothers' influence is similarly overblown.  I can't take the Kochs seriously when their family patriarch's first political project was the John Birch Society.

Local ballot measures promoting bond issues for BART and school districts are in danger of stepping all over each other.  Voters can never remember how much they approved in previous bond issues.  Read what I wrote about some recent transit studies that debuted at the Commonwealth Club to see just how much voters need to know before they pull the lever for more bonds.  I see no solution to the funding problems facing Bay Area public schools that does not involve eventually winding them down.  The various gifted programs for Sacramento public school students worked fine for me, but that was the 1980s.  The public school era in our nation's history is probably closing as MOOCs offer vast course arrays free of charge.

Finally, someone mentioned a new local initiative that landlords have launched to give military veterans a break on market rents.  These breaks are supposed to go where they do the most good.  Homeless veterans should be first in line.  I need to remind my readers that not all veterans are homeless.  I am a veteran, and I pay my rent and taxes just like the rest of you.  I was never issued a begging bowl in the Army.

Have fun next time, Commonwealth Club kiddos, and don't forget to play my "Commonwealth Club Matching Game" available on the Special Reports page of my Alfidi Capital website.

Monday, April 27, 2015

The Haiku of Finance for 04/27/15

Greek uncertainty
Hard to pick Grexit timing
Many still pretend

Mobile Monday's Geospatial Big Data In Silicon Valley

I trekked down to Silicon Valley last week for my regular taste of Mobile Monday.  The Silicon Valley campus playing host to this particular event had one of these post-modern water sculptures out front.  I see these things so frequently now on such "campuses" that I'm pretty sure the big tech firms are trying to subtly outdo each other with understated water installations.  The drought is still on in California but these displays all claim to use recycled water.  Okay, whatever.  I did not take any photos of the water display or its sponsor.  You'll just have to believe me when I say I was there.

Anyway, geospatial is shaping up to be another next big thing now that all the other next big things - Web 2.0. cleantech, social/mobile/local - have run their course.  The leading geospatial player on my radar is DigitalGlobe.  You may have seen their work cited in open sources when US military officials with NATO used DigitalGlobe photos to bolster their argument that Russia was using military force in Ukraine.  The DigitalGlobe rep who spoke at Mobile Monday made a clear case for mining geo-linked data sets.  Making those data sets available to retail users in real time will take a lot of bandwidth.  Fortunately for DigitalGlobe, plenty of users love playing with high-resolution maps.

The experts on hand discussed geotagging as a user engagement strategy.  The good news for them is that incentivizing users to tag images is easy with some gamification experience.  Users who score can unlock "expert geoanalyst" badges and build their reputations in open-source imagery analysis.  Geodata startups should pay attention to exploiting all the free labor they can get in finding a mass audience for their analytical solutions.  The best freelance analysts will eventually demand to be paid premiums, much like programmers who become repeat hackathon winners.  You heard it here first at Alfidi Capital.

I am not aware of any accelerators specifically focused on geospatial startups.  I expect that to change as companies like DigitalGlobe succeed in monetizing crowdsourced geodata.  One of the expert panelists mentioned how years of map data add context to whatever users do with a download.  I would add that years of embedded links from news articles and social media feeds can add more searchable context if the download sets were amenable to enterprise knowledge management solutions.  The difference between layering and filtering data matters little to retail users but becomes more salient for knowledge managers farther up in a large enterprise.

It's time for some personal stories that add color to the geospatial sector.  My own experience with geotagged image data dates to 1996, when I was on active duty in the US Army.  In the '90s I worked with systems that used scanned 2D maps overlaid with crude geotags.  The geotags did not connect to embedded data and the maps were poor simulations of 3D terrain features like elevation changes.  The military systems I worked with since 2008 showed vast improvements in both 3D rendering and embedded links.  I know from experience how enterprise search offers a compelling way for geodata to add value.  In other words, I know what right looks like.

Here come my predictions for the geospatial sector.  I expect crowdsourced geotags will be worth more if they are segmented by user competence.  Data providers should ask taggers to initially self-identify their expertise in recognizing image anomalies or data elements.  It's worth investigating to see if gamifying mass involvement will truly identify skilled analysts.  I expect data purveyors to pursue bifurcated pricing models, with one payment track for enterprises and a much cheaper track for individuals.  It will look like software pricing strategies that chase seat counts, but the winning startups will know how to cover the variable costs of processing and storage.  Geodata startup founders must read Cloudonomics if they want to win.

I would not be surprised to see the emerging relationships between geospatial sector firms and Big Data firms to lead to mergers.  The VCs chasing geospatial startups are going to be disappointed once they discover the very high costs of putting satellites into orbit.  The only possible entrepreneurial disruption available there would be from some space launch technology that does not use a traditional multistage booster to escape earth orbit.  Rocket sled launch technology would be great if it relied upon a railgun for its initial propulsion.  I respect SpaceX for getting the conversation started but I don't understand why they still seem stuck on rocket boosters as their tech mainstay.

Geospatial enterprises will be fun to watch in the next few years.  Lots of startups will jump into it thinking they have some app that DigitialGlobe or Google would love to acquire.  If said app reduces the cost and speed of processing embedded map data, they just might have a chance.  A bunch of VCs will throw money at any startup with "geo-something" in the first line of their business plan because chasing fads is in Silicon Valley's DNA.  I'll be around to laugh at the VCs who fund the worst ideas first, and to congratulate the best ones that win.

Full disclosure:  No position in DigitalGlobe (ticker DGI) at this time.

Sunday, April 26, 2015

The Limerick of Finance for 04/26/15

Central banks will continue to meet
Policy is no longer discreet
Growth cannot be pumped
Hyping stocks to be dumped
Stimulus only helping Wall Street

Saturday, April 25, 2015

The Haiku of Finance for 04/25/15

Amazon earnings
Web services quite healthy
Time to spin that off