The official "blog of bonanza" for Alfidi Capital. The CEO, Anthony J. Alfidi, publishes periodic commentary on anything and everything related to finance. This blog does NOT give personal financial advice or offer any capital market services. This blog DOES tell the truth about business.
I don't know whether it's possible to be sarcastic without offending somebody. Alfidi Capital isn't about sexism anymore but it's still difficult to find nice things to say about the human race. If anyone can find the happy medium between human progress and human deficiencies, it would be me, Yours Truly, the greatest Supreme Super-Genius the world has ever known.
Chinese experts predict continued growth for their economy. Someone over at that central bank missed the meeting where the lies about economic forecasts are supposed to be coordinated with lies about past results. Remember the Keqiang Index? Don't worry if you forgot it, because China's own economists are forgetting it too. It's hard to keep the lying up when natural resource exporters like Australia report dropoffs in ore shipments to China. Maybe the Chinese could start exporting baloney to drive their continued growth. Their economists are getting pretty good at spewing it.
Airbnb's business model is on the municipal ballot in San Francisco. The company's business model is at risk and it fought back with some snarky ads that caused a minor sandstorm. Elitist San Franciscans don't mind looking down their noses at less enlightened parts of the country. When a local company gores a few sacred cows by noting how its taxes could fund some of The City's most precious entitlements, people get upset. Well, fellow Frisco people, you've had it coming. If you act like spoiled children then don't be surprised when someone calls you out.
I think a lot of the sensitivity over the Airbnb ads comes from old money San Franciscans' dislike of Airbnb's nouveau riche status. Pedigreed people don't like upstarts tweaking their noses on their home turf. That would be like me attending the SF Opera and Symphony opening night galas and refusing to genuflect when some hoity-toity type tells me I don't belong there. Oh yeah, I've done that. I voted early in these elections and one of my votes was against the ballot measure that would have hurt Airbnb. Cheap tourists may be hurting established hotels, but their demand for unused apartments drives up demand for new housing.
I just threw dirt at the Federal Reserve, the People's Republic of China, and the city of San Francisco. Not once did I use any language that could possibly be construed as sexist. I call that progress.
One particular email spammer keeps popping up in my inbox every couple of months. Asking this entity to remove me from their contact database was a waste, even though they promised to do so. Sending a very strongly worded response the next time they spammed me also obviously has not worked. Marking their endless pitches as junk email had better work, or else I need better email filters. Tech isn't the problem here. Human pathology finds end runs around tech barriers.
I have to wonder about the mental stability of spammy marketers. I grok the entrepreneur's desire to strain the limits of social tolerance in getting a message out. I have pushed my own luck with blog comments, link building requests, and social media blasts. The small number of times that my marketing got me banned from a media outlet were instructive. I pulled back where appropriate and changed my approach to channels that remain perpetually open. I am different from pathological spammers because I quickly learn when some channels are closed.
Enough is enough. If shunning, yelling, and banning don't work on this particular spammer then it's time for a complaint to some regulatory body. Maybe the FTC or FCC will care about a greedy, unscrupulous San Francisco area spammer who just won't leave me alone. Hearing this entity's titular head speak in public was bad enough when the misrepresentations just flowed from his mouth like a raging torrent. I need appropriate and effective means to turn that torrent off. The FTC Complaint Assistant is my starting point for fighting the good fight. Yeah, mister non-funder of people's nonsensical dream projects, I'm talking about you. Here comes the wrath of Alfidi Capital.
Today I completed an Economist Insights survey distributed to business thought leaders. I get these all the time from various media outlets seeking to aggregate my genius with that of other leaders. This one was about LGBT inclusion, something I don't think I've ever addressed on the Alfidi Capital Blog. The world has gone without my awesome wisdom on this topic for far too long. I won't keep you all deprived any longer.
You'd think that LGBT inclusion would now be a given among corporate executives. Globe-trotting honchos are supposed to be some of the most cosmopolitan and enlightened people around. The tone of the Economist survey's questions hinted that executives in some regions are further behind their global peers. Local culture is probably a limiting factor. Imagine writing an inclusive HR policy for a multinational conglomerate only to discover that local government officials in some backwards country won't tolerate contact with an openly LGBT employee.
Catalyst's Quick Take: Lesbian, Gay, Bisexual & Transgender Workplace Issues from May 2015 is the most comprehensive body of knowledge I could find on the workplace value of LGBT employees. They have plenty of buying power but they also face more barriers to advancement. I may not have blogged much about workplace discrimination in the past, but I have definitely blogged about how C-suite personal behavior and HR performance incentives determine the entirety of corporate culture. Change starts at the top because people emulate their leaders' personal behavior and respond to economic incentives. Get CEOs out in front meeting with their LGBT employees' affinity networks, and get their public endorsements of nondiscriminatory HR standards. Advances in ERP knowledge management modules now offer collaborative tools that managers can use to ensure everyone, gay or straight, stays engaged.
I have tried reaching out to LGBT people here in San Francisco. I sat at the same table as a gay man and a post-operative transsexual female during my service on the City and County of San Francisco's Veterans Affairs Commission. I never had any problems with their personal histories, although other Commissioners frequently disagreed with my policy ideas. I may have ruffled a few feathers in 2012 when I declined to endorse one Commissioner's idea to name a US Navy ship after Harvey Milk, because I do not believe in naming warships after politicians of any stripe . . . not even for the USS Ronald Reagan (CVN-76). I stated back then that I would much prefer to see the US Navy name a ship after Baron Friedrich Wilhelm von Steuben, a true Revolutionary War hero who was probably homosexual. If anyone can carry the torch for a group that's been ignored or suppressed for most of human history, it's someone with battlefield bona fides. I'm pretty sure the San Francisco County Veterans Service Office has a record of my Commission statements on file somewhere.
Alfidi Capital is a one-person operation for a single, straight white male (that's Yours Truly, Anthony Alfidi, in case you need the hint). There isn't any internal policy change I could make with this enterprise that would make a difference for the LGBT community because I would only be talking to myself. My so-called white male privilege doesn't help me around the home office if I'm the only one here. Running my mouth to the outside world is a far more effective way to make people change their minds. Hey corporate honchos, lots of your LGBT people are in hiding because they wonder whether their leaders care about them. It's their time to shine after spending forever in the dark.
The Internet's marketing gurus are on white paper production overdrive. I download a few guides every so often to stay current on how content marketers think. A few white papers aren't worth the digits it takes to publish them, but most are okay. The biggest unknown is estimating their shelf lives.
Internet marketing advances at light speed. Tactics that worked last year may be counterproductive today. A white paper describing old best practices may be a waste of time to execute now. Every marketer now rides the content marketing trend. Any think piece that doesn't address how content fills out every layer of the marketing funnel comes up short.
Marketing guidelines that depend too heavily on text are also suspect in an age when Pinterest and Instagram make images central to communication. White papers are fine for deep dives into topics that require step-by-step instructions. Marrying them to infographics that grab attention keeps them relevant.
I have plans for tons more white papers here at Alfidi Capital. The clean look of my main website's new design makes me want to put up a whole bunch more research publications. I challenge myself to write for an audience that I will never personally meet. White paper readers are global. They also exist in the far future. Whatever I write must translate into formats that someone has yet to invent. Publishing grants vicarious immortality.
I accepted an invitation to attend tonight's introductory lecture for NCIRE's annual conference on brain health. Gen. George Casey (US Army, Ret.), former Chief of Staff of the US Army, gave his talk after Medal of Honor recipient Paul Bucha introduced him. One of the people on hand told me that every VA hospital that has some affiliation with a university medical school has a non-profit fundraising entity like NCIRE.
I like what Mr. Bucha said about how integrity builds trust and leads to successful leadership, and that the best leaders are compassionate. It's great that an MOH recipient recognizes things that many military leaders regard as mere lip service rituals. Gen. Casey shared the sobering findings from multiple military health assessments that drove him to change Army practices when he was Chief of the service. The one survey finding I noticed most readily was the disturbing lack of fidelity to ethics among Army people. I learned that firsthand as a lieutenant and captain. Righting wrongs is always the best way to live.
I am fortunate that I do not have PTS from my active duty tour in Iraq. I used to feel some stress when my fellow alumni from the University of Notre Dame and the University of San Francisco told me my military background was worthless. I no longer feel that way because I don't need negative forces cramping my style. Removing bad people from one's life is always the right thing to do.
I can't see a business connection here relevant to Alfidi Capital. Kudos to NCIRE and the VA for inviting private sector partners to participate in their research. The VA's tech transfer program deserves Silicon Valley's interest. I am in no position to fund NCIRE's research, but I'll give them free publicity here on this blog.
My long-planned Web redesign is ready for its public debut. I have relaunched the Alfidi Capital main site, the Alfidi Capital Blog, and Third Eye OSINT with new layouts. I spent long hours imagining the future, and only a couple of hours making that future happen.
The background colors and text colors on all three Web properties now match. White backgrounds and black text have a minimalist aesthetic that makes the sites look like hard copy print. I wanted the design to have the same authority as permanently archived written words. I have always disdained fancy bells and whistles. Now I take that consideration to an extreme. I elevate substance over style.
I may adjust the font sizes and shading in the next few days to make my words easier to read. I am also considering different colors for Web links, but I will likely end up making the link text a classic blue shade. Blue hyperlinks recall the early days of the World Wide Web in the mid-1990s when linked knowledge was a brand new concept. Everything old can be new again.
I made no changes to my social media channels. Those will always be confined to the color schemes and layout of their platform companies like Facebook. I don't need to change them even if I so desired. They work just fine in their present forms.
The most significant change I made is to the narrative content on several Alfidi Capital pages. I altered a small number of sentences to make them more readable. Most importantly, I completely removed any and all text that was sexist, derogatory, or otherwise negative. I now appreciate an imperative to be as inclusive and positive as possible. I may be sarcastic sometimes, but I can do so more gently. Optimism attracts people who want to hear brand new ideas. The words we express reflect our character. I can still be provocative by criticizing things that go wrong in finance. Now I can be original while staying on a moral high road.
I have made an editorial decision not to alter any controversial language on any previous blog posts. They exist in their past forms for a reason, mainly to capture changes in my thinking over the years and my real-time reactions to events. We don't get do-overs for old things in life, but we do get second chances to do new things right. This is Alfidi Capital, version 2.0, more elegant than ever.
The humanities have always needed champions. Rich families like the Medicis were legendary for their patronage of the arts. The catch is that it took huge piles of wealth to sponsor a significant amount of art. The Commonwealth Club's panelists noted the gradual slide of the humanities in university life from a common language of civic engagement in the Middle Ages to an afterthought today. Turning the tide means advocates need evidence that the humanities matter in a modern economy.
One comment about successfully marketing museum visits to families was notable for what it implied about business. The tactic is viable because a live experience with loved ones is immediately shareable with what sociologists call an affinity group. Social media enables individuals to share their atomized experiences, but a photo of several family members allows sharing to instantly cross two or more affinity networks. Hey folks, that's the kind of business insight a non-humanities major like me brings to the table.
There is enough room in the digital age for potentially unlimited attention to the humanities. The panel's Silicon Valley executive who performs commercially viable music after hours brings the quality focus and businesslike work ethic that the rest of the arts community should absorb. People working hybrid careers are the bridges between all of these worlds.
I still think some traditional academics will be very frustrated as MOOCs push traditional classroom education into obsolescence, regardless of whether Common Core's Socratic methods catch fire in classrooms. I'm pretty sure an AI avatar on a tablet can machine-learn its way through enough online interactions to make a simulacrum of Socratic instruction viable in MOOC curricula. I look forward to the first AI-driven MOOC platform that goes IPO. The humanities can finally enable money-making 21st Century enterprises.
Wall Street's top performers usually move around a lot. They jump from one firm to another every few years if the gaining firm finds their high-powered connections or book of accounts desirable enough to warrant a signing bonus. The upside to such wanderlust is a fatter paycheck for a small number of people. The downside is a mercenary culture that rewards greed over loyalty. The future may be different.
A specter of automation haunts Wall Street. Robo-traders can do everything human brokers can do at much lower coast. The AIs fronting automated portfolio rebalancing systems can't jump to rival firms and don't need bonuses. Their programmers and domain experts can jump firms, but there are far fewer of them than today's hordes of financial advisers and investment bankers. The hordes will be gone in a few years and Wall Street firms will be more efficient in their absence.
I used to work at a wealth management firm that tried to pretend its career revolving door did not exist. The "You and BS" people bragged about poaching top earners who brought clients from other firms, but stuck loser labels on their own defectors. Every firm thinks that way, even the once-mighty Merrill Lynch whose "Mother Merrill" culture encouraged people to stick around. I meant what I said when I told prospects I was loyal to my firm. They must have though I was naive not to have a mercenary mindset. That may be why they never wanted to invest with me. Many people really do reward disloyalty, as if it were a sign of maturity.
The most disloyal people end up with the biggest bonuses after years of cheating their teammates. Perhaps that's my bias showing, or just a broad truism. Bonus pay to reward wanderlust may not directly reflect the competence or integrity of a prized hire. If the pay is based on the hire's proven trailing revenue then it has everything to do with the winning firm's revenue. The future of AI relationships means all of a firm's human best practices will be permanently recorded in computer code. No ethically challenged humans need apply. Money formerly earmarked for bonuses will return to clients as saved transaction costs or to shareholders as dividends.
Wanderlust has a point if it diverts performers away from trouble. Sometimes the only way out of a bad job situation is to say goodbye and never look back. That worked for me once I realized that no investment firm or client would ever care enough to pay me for my work. It still works for a little while longer, until AIs copy all of the human skills they need.
I don't always discuss gender seriously on this blog. I usually mention it in the same breath as my awesome manliness, resembling a satirical Stephen Colbert approach to truthiness. A lot of people haven't been getting the joke. I used to think it was because I wasn't funny enough. Now I'm thinking it may not be funny at all. Members of both genders have caused me major problems in my career and that is why I must now work alone. My solitary efforts have provoked plenty of people who certainly deserve ridicule for their poor economic decisions. I have not shied away from criticizing the rich and poor alike. I must now address the unintended consequences of inequitable language.
More men are asking women what they can do to close the gender gap in tech careers. Women experts at the Commonwealth Club in October 2015 let us know what we can do, and I was in attendance to hear the message. Well folks, I am not one to back down from a challenge. If real men are supposed to step up and do the right thing, then by golly I need to be out in front. You won't hear any more sexist remarks on my Web properties in the future. If I need blog photos to illustrate demand for my compelling expertise at tech conferences, the photos won't include booth babes. My raw genius is powerful enough without photographic proof. I will do all that I can to encourage female acquaintances to attend local tech events, and they don't have to thank me. No one ever owes me anything. Paying it forward is supposed to be Silicon Valley's ethos anyway, but a lot of men in the Valley's insular VC culture somehow didn't get the memo.
Revising a few lines of text on the Alfidi Capital main site is long overdue and shouldn't take me more than a couple of days. Making the rest of the tech and financial sectors more accommodating to women will take longer. Men like me who dislike unfairness in business can no longer exclude women who would otherwise be natural allies in changing America for the better. I cannot change our society all by myself. Don't wish me luck; I won't need it. The rest of America needs that luck more.
The venture capital community worries about more than just California's business climate. Tim Draper's plan for Six Californias did not qualify for the state ballot. The proto-state of Silicon Valley would have been the wealthiest and most educated of the six states. That plan reminds me of Tom Perkins' remarks at the Commonwealth Club about the rich getting one vote per dollar of wealth. Wealthy VCs would not mind if Silicon Valley became one giant gated community. I would not mind it so much myself if it meant new states in Southern California had to pay full market price for their water.
The Tim Draper philosophy of "venture governance" crowdsourced from highly motivated citizens allows good ideas to get traction. Like every new venture, opportunity also brings risk. Ideas like allowing constituents to simulate votes on Congressional or Legislative bills will probably force more real-time accountability between elections. It also risks annulling the electoral process if lawmakers start slavishly following the popular will instead of voting their conscience or brokering compromises. Too much innovation brings the kind of direct democracy the Founders wanted to avoid by designing a republic.
I don't see how digitizing democracy will bypass special interests. Well-funded lobbies can still run compelling social media campaigns, and those campaigns can decisively influence crowdsourced projects. The Founders warned about "factions" in the Federalist Papers. Placing governance into the hands of a wise elite whose wealth insulated them from outside pressure was the Founders' solution to factionalism. Lobbies targeting single issues make representative governance more difficult.
Devolving governance into crowdsourcing works best if it improves the machinery of government, like speeding the passage of bills or making regulatory compliance easier. The good news in venture governance is that bad policies can be undone when they lose public support. Markets work that way.
My experience at Integrate 2015 got me thinking about how APIs and other elements of the data supply chain can be stand-alone enterprises. I will throw my thoughts from our VC perspectives panel out on the Interwebs to see if any of them stick to entrepreneurs.
The successful API supports an app ecosystem. Other businesses in related sectors code their own apps to share affiliate revenue with the API owner for every transaction their apps process. Airlines and hotels build apps around Uber's API because their customers see value in having a short-haul transportation link. Uber's app ecosystem becomes a durable competitive advantage because the app owners would have to build a whole new app if another virtual taxi company tried to displace Uber. Digital infrastructure like apps impose some switching costs on partners, but those costs are probably not insurmountable for competitors.
One thing making APIs a core business model is the continuing integration of cloud, mobile, and Big Data solutions. Some parts of this convergence are coming along fine, like the analytics suites now part of most middleware. Other parts are not working because venture capitalists have wasted lots of money on startups with lame mobile concepts. Venture funds can force their portfolio companies to pivot from a mobile or cloud solution when something isn't working out. That's how they try to save their investments. Targeting APIs for venture investment means the least successful among them will be candidates for forced pivots.
I like startups that understand Customer Development, the Business Model Canvas, and Cloudonomics. Founders should download those white papers, hit the books, and work the equations. Revising the API business plan after working those three areas shows investors that they take de-risking seriously. Corporate development groups in particular carry marching orders form their enterprise mothership to fund startups that improve their internal KPIs and match their product lines. Startups can use Cloudonomics calculations to prove their APIs are a better investment. Cloudonomics is as compelling for IT as modern portfolio theory is for finance, because it offers a disciplined methodology for allocating limited capital among a potentially unlimited number of investment options.
I do not like startups that do not understand the new opportunities and risks of raising capital under the JOBS Act. The SEC continues to publish new rules defining what private companies can and cannot do to attract investment. Anything I blogged about in the past regarding crowdfunding will likely be obsolete by the end of 2015 as the SEC finishes its unfinished business. Startups will have to engage competent legal counsel earlier in their development process to understand JOBS Act compliance. Founders must meet all of the SEC's compliance requirements before they appear in front of pitch fest panels or hang pitch decks on crowdfunding portals. No one wants to be shut out of raising capital because they did something noncompliant.
Data sector startups can tell their stories more effectively by having a founding CEO who knows sales. It really is that simple. Technical founders love solving technical problems, but they may not know how to solve problems with financial or emotional components if they have never worked in sales. It goes back to the classic split in startup teams between the scientific co-founder who becomes the CTO and the MBA-type serial entrepreneur who becomes the co-founding CEO.
If I only had so much money to commit to a venture investment, I would prefer Big Data and cloud concepts over APIs or IoT. The industry standards for data and cloud are firmer than those for APIs and IoT, so the durable competitive advantages of a given business model will be clearer where standards are firmer.
No enterprise can ever indemnify itself by outsourcing risk. Trusting an untrustworthy partner brings a boatload of risk assumptions. Outsourcing an API means trusting someone else's coding with no supervisory input. If the API passes dirty or fraudulent data into analytics, the enterprise's compliance regime becomes a target for regulators. Don't ask for trouble by handing off mission critical API management to a third party.
Chew on all that stuff, API people. There's enough genius here for several weeks of boardroom discussions. Barriers to entry in API development are pretty low, just like in gaming, because the only immediate limit is a developer's imagination. The API businesses will be the next big thing in the mobile Big Data cloud.
I scored a seat as a panelist at Integrate 2015, so I had to check out other parts of the conference to see what's new in API World. There's more to app ecosystems than hackathons and gamification. Apps need information fed from the remainder of the data supply chain: data warehouses, SDKs, and APIs.
Deep linking into the app ecosystem is the brand new way of getting content to searchers. I think "discovery service" will be an emerging buzzword for content marketers. App distribution has been one-to-many so far, unlike Web searches matching many-to-many. New app store indexing with knowledge graphs and search will bring apps into many-to-many distribution. The deep linking experts on hand at Integrate 2015 claimed that cheap and free discovery drives app downloads, but they had no examples of success. Paid social media promotion still seems to be a key to driving app downloads. Aspiring startups building APIs and apps must still budget for marketing and raise capital with promotional milestones in mind.
One speaker shared some pretty good insights on the API value chain. Adding details after basic data implies adding value. The API and app have different price points, so the "spread" between them is the added value. The speaker identified different business models based on who pays for distribution. Each model had several different permutations of pricing structures. The cool thing about the broader distribution models is that they allowed for multiple price points. Developers can get paid with affiliate revenue sharing, like the way Uber's API gets revenue when partners in travel and tourism use it to make their own apps. Subscription-based fees for units or tokens tracking API calls resemble the pricing plans we recognize in our smartphone data plans. The acceptance of subscription plans for API calls comes when API providers have large numbers of APIs addressing many segments. The biggest revelation for me was the high cost of hosting APIs in the cloud if they generate high data transaction rates. Hybrid cloud solutions may be best for Big Data providers, with high-volume transactions hosted on premise and other less intense data hosted in the cloud.
The developer experience (DX) is another term that belongs with UX and UI. Cool incentive promotions can generate developer buzz. Displaying an API with pleasing aesthetics means app developers will find it attractive and give it social proof. One piece of conventional wisdom floating around Integrate 2015 is that it's okay to raise prices until some portion of your customers complain, provided you understand your API's sales cycle. I think raising prices until 20% of your customers complain validates the Pareto principle. The other 80% won't notice the price increase because the API relationship isn't significant enough to them.
Proprietary API certification means little if it does not reference some independent computer sector standard. Do a Google search of "API certification" and see the links related to petroleum engineering, not coding. The data sector covering SDKs, APIs, and apps is still so young that it does not have a standards body. The elegant solution would be OASIS standards for API call testing, installation, configuration, documentation, escalation processes, and versioning triggers for re-certification.
API developers must find distribution channels. One successful developer insisted on using a universally accepted protocol. I suppose JSON fits the bill because a lot of developers at Integrate 2015 were enthusiastic about it. Partner networks matter, and so does saying "no" to the wrong partners who want distribution for the wrong business reasons.
I'll conclude with a brief overview of my own participation on one of the panels. I shared the stage with Nicole Bryan from Tasktop and Salil Deshpande from Bain Capital Ventures to discuss venture capitalists' perspectives on investing in API-centric startups. We explored the relationship between monetization and distribution, some changes in the economic landscape that make APIs viable as a core business model, the stories an API startup can tell to make outsiders care, and some standout aspects of an API business model that we would notice in a format like Integrate's startup challenge. The audience of developers and tech aficionados needed to hear the back-and-forth of both genders on a panel representing tech practitioners, venture investors, and the analyst community. I thought our panel was more well-attended than a couple of the main stage headliner talks. Our audience asked sharp questions relevant to launching an API startup. This is the kind of high-level attention developers can get when they attend conferences like Integrate 2015.
I had to peek inside BoxWorks 2015 in San Francisco this week for more than my share of free food and drinks. Box continues to shake up the enterprise file management product universe. People are groping beyond the clunky offerings in typical word processing and spreadsheet action. Box is here to migrate those legacy cubicle habits to the cloud, where Dilbert and crew can collaborate online while the pointy-haired boss watches.
The Developer pass is a legacy of my attendance last year when they announced a blanket special deal for prospective attendees. I still think Box should give me an Analyst pass instead because I don't code for a living. I have to convince these people that I know how to write. There was a lot of space available in Moscone North between the small number of large partners who ponied up for booths.
Aaron Levie, CEO and Cofounder of Box, was kind enough to pose for a photo with me. He is the star of this show. Someday I will learn to take a proper selfie by looking at the tiny camera lens instead of the shutter button. The company's C-suite honchos were really keen to wander the trade show floor and meet the little folks like me.
Tim Cook took an hour out of his busy schedule running Apple to chat with Aaron in the first keynote. A show of hands in the audience revealed huge iOS use. I was impressed. Cutting-edge techies still love Apple. Tim acknowledged Apple's early buildouts of enterprise software features and looked forward to something beyond today's early stage of enterprise mobility. If mobile is really forcing radical rethinking, maybe Apple could go ahead with the launch of self-driving cars that so many people in Silicon Valley are wishing for the company. Aaron didn't ask Tim about potential Apple cars so we all still have to wonder. The audience laughed when Tim implied iOS was a better product than Android. You just have to love spontaneity in techies. Writing iOS apps requires Mac hardware, so app adoption drives Apple device sales. That's a nice touch. I hope analysts pick up on that synergy instead of wishing for Apple automobiles.
I like the quiet genius Tim exhibits. His stage presence is reserved but he clearly commands respect without being emotionally expansive like Marc Benioff. Tim smiled when Aaron suggested Apple price all of its hardware upgrades into subscription services. The audience gave me the impression they would welcome such a move. Here's validation for a contention I've heard among some Valley people that subscription services will drive future recurring revenue models. Tim threw a few bones to the do-gooders in the tech community by mentioning Apple's work for society's betterment. Being on the right side of environmentally benign energy and human equality matters to the talent pool circulating through the Bay Area's biggest companies.
The big Box product update keynote was all about cheerleading. Every company needs to hear its top people evangelizing the public about their great products. Uncle Sam will thank Aaron for mentioning FedRAMP compliance. The product demos showing Box integration with Microsoft Office were cool. Microsoft is obviously repositioning Office as SaaS. No one can stay out of the cloud any longer. Push a button on the menu bar and your Excel spreadsheet becomes part of a shareable workflow in Box.
I really liked the VC panel's perspectives on innovation. I always follow the money. Whenever I wonder why VC firms never hired me, I remind myself that my military background must have made them think I was illiterate or homeless. Venture partners love their work. I would love it if they would pay me to do something. One panelist had a lot to say about an alleged gap between public and private market valuations for companies. He thought the public market is more efficient at price discovery and offered employees more liquidity options, while the private market only allows a "marginal buyer" (I assume the next round's venture investor) to determine exit valuations. I agree with the panel that leading private companies are probably overvalued, and their lesser-known competitors are undervalued. No one mentioned unicorns but I think that's what they meant.
I'm just going to keep on rolling with the VCs' lessons because they were all pretty sharp. My recollection of the overcapitalization discussion is that startups who raise too much money can raise employees' expectations too early. Early hopes get dashed before the startup's financial success can justify high compensation. I also think early employees in VC-backed companies get spoiled by gourmet food and game rooms thanks to overcapitalization. Finding huge scalable solutions is still a hard part of a VC's job. I hate to think these VCs make it harder on themselves by giving too much money to startups that have yet to scale.
It's cool that these VCs still think their job includes helping startups recruit employees, making introductions to customers, and being a CEO's sounding board. That's what I would do if I ran a venture fund. I have done similar things free of charge for startups I mentor, and it has never benefited my career or wallet. I guess having a VC pedigree really matters when it's time for venture advice to pay off. I knew what the VCs meant when they discussed portfolio construction in a high-risk macro environment. Everyone sitting on serious money is wondering how hard and fast the next recession will hit after years of Federal Reserve monetary stimulus. Any VC with a portfolio exposed to social media or cloud storage is going to get smacked in a downturn. Recessions always hit advertising budgets and IT capex budgets hard, so there will be lots of pain in social media and cloud storage. I still hold to my conspiracy theory that VCs force their losing portfolio companies to pivot to other parts of the cloud sector they think they understand. I have held this theory at least since GMIC's 2014 conference. Ironically, GMIC was holding its annual conference at the same time as BoxWorks. I had to align my week carefully, and BoxWorks won over GMIC because I knew I'd get free food.
The security panel was a blast. Aaron Levie convened several CISOs to give the subject a level of attention it has long deserved. State-trained security specialists can moonlight as freelance hackers for hire. The CISOs know their threats better than app developers. I have long marveled at app developers' preference for performance over security. Developers need to pick up the new buzz terms for behavioral detection, high-risk workflows, and single sign-on the CISOs shared on the panel.
Each cloud stack layer presents different security challenges. The CISOs noted that API activity generates data for behavioral analysis. The good news is that containerizing data can block some attacks. The bad news is that large-scale data migration opens attack vulnerabilities. One panelist had an awesome quote: "Move from a governance and audit model to a risk-based model" for security, once you assess critical assets first. I am totally with the panelists on the importance of partnering with law enforcement. Enterprises should collect the forensic data on attacks, but leave prosecution and retaliation to the US government.
I need to share some more of my own thinking after the security panel. Here's your access to my genius. I would like to see a UN convention on data privacy standards that would force governments to acknowledge cyber security norms. The nations that don't sign up become obvious rogues. Tolerance for data piracy in violation of international agreements will drive foreign direct investment away from those renegade nations. I noticed that none of the panelists discussed formal risk assessment guidelines. I have long believed that enterprise risk managers should build 2x2 matrices for the probability and severity of attacks. CISOs should build such a matrix for each layer of the cloud stack and plot incidents in the matrix that could impact their most critical assets. Assigning a dollar value to each incident's damage will drive priorities for security budgeting. The matrix will be different for every firm and even every industry, because enterprises have different cyber exposures based on their data use and network geometry. I've got this all figured out. I would make a great CISO but I'm really busy being a CEO here.
I was on the fence about going to the conference's after-party at the Bill Graham Civic Auditorium. I made the right call by attending. Indeed, free food and booze was there after all. These analyst gigs are great. OneRepublic rocked the hall with hits that we all remember from the past couple of years. I chowed down on hot dogs, corn dogs, and a salty pretzel that absorbed my booze. The pinot noir was really nice.
The DJ took over after OneRepublic signed off for the night. The photo above is what a hip-hop / house dance party looks like, for the benefit of those of you who do not attend top-notch corporate events in San Francisco. Software developers were going nuts on the dance floor. The small number of very athletic people on the dance floor competed with a large number of uncoordinated people. I made my way to the bar without getting kicked in the face. One gal convinced me to join her on the dance floor but I did not have the coordination to do much besides wander around. Lots of otherwise introverted people were bumping and grinding towards the end of the night. I am neither a bumper nor a grinder.
BoxWorks is living up to the reputation and expectations of one of its investors, namely Salesforce. Cloud computing cultivates a hip culture to attract young programmers. The flower of youth is the right demographic for all-night coding marathons. We interrupt this coding marathon for a flash mob dance party with booze in the middle of the week. Even dedicated nerds need an intermittent reward pattern. I am one nerd who needs to be at conferences like BoxWorks.