Alfidi Capital at LicensingLive! 2017

I attended Gemalto's LicensingLive! 2017 conference in Silicon Valley. I have never explored the software licensing ecosystem before, so this conference opened my eyes to a different monetization approach. Please note that Alfidi Capital does not have any software available for licensing. Here's another badge selfie for all of you to admire.

Alfidi Capital at LicensingLive! 2017.

A guru dude gave the first morning's introductory talk on software monetization. One key takeaway is that software licenses are now issued by dongle, enabling a cloud connection. Take heed of the cloud, folks, because Cloudonomics now applies to software licensing. The whole point of standardizing software licensing is to simplify pricing, speed go-to-market actions, decrease customer service touch points that cause errors, and increase revenue recognition. That's a lengthy menu of advantages for smart licensing. Check out Simon-Kucher and Partners' Global Pricing and Sales Survey for more details on how licensing impacts revenue; I can't link it here but you can seek it on the Web if you think it's important.

The conference got me wondering about who in a software vendor's organization should own the licensing decisions. It should probably not be the CFO. There's a case to make for either the CMO (it's part of the sales and customer service process) or COO (some service functions are a back-office process) to own licensing. I would argue that the predominance of customer contact should place it in the CMO's office, with input from whoever in the COO or CIO touches product R+D. Whoever owns product development must have a voice in its delivery decision. If business lines influence a preponderance of IT spending, it is difficult to argue against licensing being a sales and marketing function. Alternatively, the recent trend towards creating "Chief Revenue Officer (CRO)" positions acknowledges that revenue enhancement takes place in functions outside the marketing funnel. Let's see how organizations where CROs own licensing stack up against those where CMOs or COOs own the process. Yeah, I know, it's complicated. That's business.

The subscription sign-up process has friction points that a CRM app can streamline to ease prospect conversion. Subscriptions and licensing are an obvious source of business intelligence (BI), and I suspect that many enterprises do not fully utilize this source. Managing licenses in the cloud means moving the process into CRM but keeping contact with the rest of ERP, another point in the argument for the CMO to own the process. Generic license manager descriptions sure make it sound like a CRM function. One tip I picked up from a LicensingLive! participant is for the license management team (LMT) to "ship through ERP, renew through CRM." I think that says it all. People who live that quote's wisdom moved their licensing function from the COO's ERP into the CMO's CRM. Remember that the customer's CIO is the primary IT buyer in any organization, and they own the software asset management (SAM) practice to keep cost and risk under control. The buyer's CIO should be perfectly okay with vendors who treat licensing as a marketing-owned function, because it's part of a customer service experience they can understand.

I collected some other random LicensingLive! tidbits right here, in no particular order. Subscriptions and licensing can monetize SDKs and APIs. IDC's FutureScapes reports cover software business model monetization, so licensing practitioners may find that relevant. License management systems allow metered usage, time-based licensing, expiration alerts, and upgrade/upsell opportunities. Anyone who uses an antivirus subscription service is certainly familiar with the automated account alerts that such a system generates for each of those functions. I bet blockchain will be the next evolution of license verification. Licensing BI should pull from renewal rates and usage (by device, seat count, software module function, etc.) to discover unmet opportunities.

I had never even heard of Gemalto before attending this conference. Imagine my surprise to learn that they are a big player in cybersecurity solutions and SIM cards. The company's global market leadership position is reason enough for me to keep attending LicensingLive! I am now much smarter about how licensing adds value. Pay attention to what I've said here about BI in bold text if you really care about making money from licensing. I make it so easy for everyone, thanks to LicensingLive!

Alfidi Capital at BoxWorks 2017

Here we go with another very special description of my experience with the Box ecosystem. I'm talking about BoxWorks 2017, of course, and I attended for more than just the free food. Check out my badge selfie below, and then we can get to work talking about enterprise cloud computing.

Alfidi Capital at BoxWorks 2017.

Box CEO Aaron Levie is still as dynamic and charismatic as ever in his public appearances. He had a nice dig at Juicero's failure: "The only sector not disrupted (by digital tech) is juice." I'm glad I never bought a Juicero machine. There weren't any clear breakpoints between the four eras of content management's evolution he described, but the clear driver of progress is the cloud's ability to rapidly scale up processes. Study up on information governance and encryption key management to know how IT pros manage their secure clouds.

The "wow" moments for me came during some of the product demos. Box workflows now enable assigning business tasks to trusted partners outside the enterprise. The BoxSkills video search can map facial recognition by frame, make tags searchable in a content management system, and extract an entire transcript of a video's conversation into text and closed captions. That is a big leap in machine learning (ML). It can do similar things with audio file searches, and it performs a sentiment analysis of the voices in an audio file. Wow, I mean, like, wow.

Airbnb CEO Brian Chesky came out for a chat with Aaron Levie. I did not know that these hoteliers started by selling boxed cereal. Mr. Chesky had a bunch of insights to share on innovation, especially on building a team that actually pushes an innovative project. His description of a handcrafted design thinking process is also covered in Reid Hoffman's Masters of Scale podcast, which used Airbnb as one of its many case studies. Yes folks, I pay attention what these experts broadcast.

Building apps without coding is the future of development. Low-code development platforms (LCDPs) are part of the low-code/no-code (LCNC) movement that enables non-computer scientists to build business apps. Box showed off their LCDPs where an amateur's business apps can integrate with workflows and define triggers for actions. The revelation for me is that any API connection (as a process) can be automated, and even blockchain integration is possible with these homemade apps.

American companies must now prepare for the EU's General Data Protection Regulation (GDPR), a very comprehensive regulation that touches any data process touching an EU nation's citizens. Expect serious fines for even inadvertent violations. Businesses developing binding corporate rules (BCRs) for GDPR compliance will pay premiums for "good practice" (GxP) implementation consultants if they don't have in-house EU expertise. They can start by reviewing the Privacy Shield Frameworks the US has worked out with its European counterparts. Cloud providers in particular will need to implement the BSI Cloud Computing Compliance Control Catalogue (C5) and Trusted Cloud Data Protection Profile (TCDP) if they do business in Germany. Attend BoxWorks and you learn about this stuff.

I had an epiphany during the second day's keynote. We need new metrics to evaluate both revenue per user and the cost of API calls per month for cloud companies and the data sector. It's no longer sufficient to process huge numbers of API calls per month, because call usage must be profitable to sustain the cloud enterprise. These metrics work just like revenue passenger miles in the airline sector and ton miles in trucking. Atomized revenue metrics determine whether an enterprise's assets are adding value at their full capacity.

The fun Crystal Ball keynote used a fake "Space Ham" movie production as a vehicle to Box's planned future product functions. No one outside the company will know whether these dream products make it to market. I was more impressed with the audio and video products they already have. The audience was seeded with Box employees for recognition at the end, and they obviously led applause prompts at key moments. Every aspiring enterprise tech startup should learn how to evenly distribute the ringers throughout their sponsored conference. Enthusiasm is contagious.

Dr. Neil deGrasse Tyson gave the closing keynote, and he was a knockout as usual. The dude had galaxies on his necktie, which just reinforces my opinion that he should run NASA. I noticed a typo on his slide showing this 2017's Santa Rosa, California wildfires dated "2018," the wrong year. That's a trivial error in an otherwise flawless presentation on species intelligence, global consciousness, and the humility that comes with a cosmic perspective. He got a standing ovation at the end after totally capturing everyone's attention and imagination. Dr. Tyson is definitely qualified for national and global leadership roles.

BoxWorks exceeded my expectations, just like the other Box events I have attended. If you're putting on a tech show, it needs to be big, loud, and most of all packed with expert wisdom. I will see Mr. Levie and the rest of the team in years to come.

Alfidi Capital at DevTech Strategy Summit 2017

I attended the DevTech Strategy Summit in San Francisco. I don't recall ever seeing this event before so I couldn't miss it, especially because it's from the same organizers behind DeveloperWeek. The developers have their own show for practical tools, and this one was for executives bringing a bunch of enterprise functions together. Check out my badge selfie below and let's get to work.

Alfidi Capital at DevTech Strategy Summit 2017.

The dialogue between developers and executives got some needed attention. Developing mobile apps in a vacuum makes no sense if it ignores a market segment's pain points. Imagine how Customer Development works for a dev-focused product, then imagine engaging prospects at different levels of the marketing funnel. Use lots of imagination, or borrow someone else's imagination if you're left-brain dominant and can't compensate.

Developers still get hung up on designing the perfect product if they think budgets are unlimited, which happens when overly generous investors support weak managerial discipline. Project leads must show the Cloudonomics metrics demonstrating the lower cost and higher ROI of their preferred solution. My regular readers know that I have harped on Cloudonomics many times as a proof-of-concept guide, yet many developers dreaming of startup riches still don't take it seriously.

The CIO is still the ultimate purchase decision maker for tech not available in-house. They are especially important in minimizing buys of incompatible shadow IT. The key to their success is evangelizing developers who have the authority to recommend software buys. CIOs need Cloudonomics more than anyone but I suspect most don't even look for the metrics. Computer science programs need to start teaching a business-related elective covering the ROI of project development.

The DevTech panelists came with some best practices for executives. Using searches with Bayesian logic in Stack Overflow can measure developers' engagement with a topic by showing how quickly questions get answered. Tracking GitHub updates and following Hacker News are other ways to assess developers' engagement. Executives could also track my blog, for crying out loud, because I discuss the hottest tech sector developments ever.

The debate on open source versus closed source development got me thinking. I believe a freemium pricing and distribution model precludes a choice of closed-source architecture, but a 100% open-source solution is hard to monetize. Yeah, I know, open-source monetization must really be ad-based rather than fee-based.

The town hall toward the end reminded us that the big software companies carry the lobbying burden. Aspiring tech executives in the room should start building their lobbying expertise now by joining tech trade groups and tracking public testimony offered to regulators. Venture capitalists still don't understand devtech business models, which doesn't surprise me since I witnessed the cloud / mobile / Big Data convergence force multiple startups to pivot. The VCs are reluctant to invest in startups that often see little revenue traction from a large customer base. They do want to see KPIs like customer acquisition cost (CAC) and retention, which enables them to see how a prospective startup investment compares to known successes in their portfolios.

Guy Kawasaki always said sales fixes everything, so I can understand such VC reluctance to go for startups with nonexistent traction. The metrics in devtech also apply to other cloud/mobile app startups, so there's nothing surprising about a corporate VC asking devtech people to justify their CAC.

The DevTech Strategy Summit was a winner for any startup executive running a mature business. Anyone pursuing an acqui-hire as a specific strategy can probably find a niche in devtech. I am now such a regular fixture at Silicon Valley's biggest developer events that acqui-hire entrepreneurs are going to see me. Let me know what's working for you, tech community, and whether you benefit from my interpretations.

Alfidi Capital Visits DeveloperWeek 2016

I did not have time for either the full CTO World Congress or DeveloperWeek in 2016. I had to make an appearance at DeveloperWeek's VIP reception at Galvanize SF because I am a VIP after many appearances at tech events in Silicon Valley. I avoided the sticky badge and went straight for the food and beverages, along with the snazzy brand icon photo below.

I sat for the brief awards ceremony in between my rounds of booze. Several well-funded startups have made a big splash among the media portals tracking software developers. I have always believed that the ultimate success milestone in monetization is actually making a profit rather than impressing tech writers. I hold a minority view as long as VC-backed startups can afford PR in tech media.

Any reception at Galvanize brings out a crowd of people who play at having tech careers but aren't really serious. They were mostly downstairs tonight for another tech reception. These people are usually in the second or third round of hires at VC-backed startups because they enjoy riding the freebie gravy train. The permanent adolescents in The City never grow up. They will still have roommates into their late 40s and will always complain that dating apps never have a match for their personalities. If someone could create a matchmaking app for total losers, the app would find a boatload of beta testers in San Francisco.

Congratulations to the DevOps people who won prizes at DeveloperWeek and other conferences. The hiring mixers are brimming with developers jumping into their prize-winning startups. I can drink any of them under the table if I have free food before social hour begins. Winning at drinking is easy for me even with an empty stomach but I have to let the public think that I at least make an effort.

The Haiku of Finance for 09/30/15

Software on the shelf
Move to share it in the cloud
Pay for subscription

Dreamforce 2015, Day 4: Oceans, Mindfulness, And Wrapping Up

The final Dreamforce 2015 day felt like attendance was dropping off. Maybe people were hungover from the previous night's Dreamfest bash. All of that booze had to go somewhere and it sure didn't go into my mouth. I had three major events on my Friday agenda, besides scoring more free food, and I hit them all.

The ocean innovation panel was totally worth my time. Microplastic concentrations are increasing everywhere and disturbing the ocean's food supply chain. I have been waiting for the "marine industrial revolution" ever since I first noticed a couple of ocean floor mining stocks at the San Francisco Hard Assets Conference a decade ago. Those stocks have always traded in the pennies, and other attempts at ocean mining of manganese nodules, rare earth elements, and other minerals have all fizzled due to prohibitive costs and logistics. The innovators on this Dreamforce stage are mostly focused on gathering data about how human activity impacts the oceans. Crowdsourced Big Data will help us stop fishing piracy and preserve the export income of fishing-dependent emerging economies. I see an IoT theme in the plan for satellites and sensors that can estimate ecosystem size and wildlife migration patterns.

I tried to think of ways our ocean innovators could monetize their concepts. I have thus far come up empty. Financial incentives for recycling the floating plastic collecting in ocean gyres would have to include something analogous to carbon credit markets for air pollution. The last big tech idea to solve oceanic problems was to drop iron filings into the deep blue sea to help plankton stimulate the food chain. The science on iron fertilization is incomplete, so science needs the Big Data on ocean conditions pronto.

The Friday marathon themed keynote is usually the least data-driven part of Dreamforce. It's still entertaining but most attendees are too tired by this day to do the heavy lifting of more cloud computing. This year's theme for the fun lectures was "mindfulness," a topic suited to the amorphous spirituality of many San Francisco Bay Area people. Scraping away the pop-culture veneer leaves a core of knowledge comparable to ancient mystery schools. The subject is probably a fruitful training resource for military leaders and intelligence professionals who must think clearly under stress. Now you see my interest in the topic given my background. Namaste, and all that.

The most useful mindfulness speaker was Chade-Meng Tan, Google's Jolly Good Fellow and one of its earliest employees. He developed a mindfulness approach through his Search Inside Yourself Leadership Institute that is part of Google's emotional intelligence curriculum. Engineers approach undefined problems armed with data and principles from modern neuroscience. The data augments the traditional practices of spiritual masters who needed several generations of trial and error to produce personal enlightenment in students. I totally agree with Meng that remaining calm under stress is a leadership skill. I experienced a Zen moment when he described the "Big Sky Mind" concept, so do your Google search of that term and understand that we are not our emotions. Meng found that the best performing leaders score high in affection, and he confirmed this with US military special operators and combat pilots. That's all the confirmation I need.

Padmasree Warrior and Larry Brilliant are probably living national treasures. I will not attempt to restate their wisdom on my humble blog. Their influential writings are within everyone's reach thanks to Google. Highly evolved human masters can speak for themselves. Tara Brach and Jack Kornfield gave us some practical tips on staying calm while solving problems. I like the concept of imagining an enlightened master entering one's body to help accomplish a goal. I would probably imagine a historical figure or modern luminary who actually built something real. Marc Benioff's acolytes in Salesforce would probably imagine him as the Buddha embodiment entering their personas. If it works, use it.

Goldie Hawn was the final mindfulness speaker, pictured above. She was the least professionally qualified person to be on stage for this topic, but she was here because she has been on stage all her life. She shared personal stories of her overly sensitive childhood and anxiety attacks as a rising Hollywood starlet. It was embarrassing to hear her wax ecstatic for the 1970s transcendental meditation movement. She claims we create our reality . . . well, that kind of "woo" sells a lot of books. It worked for Shirley MacLaine when she was pitching New Age stuff in the 1980s.

I really hope Goldie's video from Dreamforce gets a public release. Unserious people should not run large projects. Her educational foundation is a nice hobby for a Hollywood star, nothing more. The lady is not a neuroscientist, psychologist, or even a peer-reviewed philosopher. It's okay for mindfulness programs to employ celebrities as spokespeople because they are great at staying in character. They're just not so great at running programs outside their natural expertise. Goldie briefly lapsed into ditzy blonde mode towards the end of her talk when she tried to explain the brain's amygdala. Goldie has stayed in character her entire career. The funny babe she played on Rowan and Martin's Laugh-In is not just a character, because that's the real Goldie. I prefer to remember her that way instead of thinking about all of the people at Dreamforce who somehow gave her a standing ovation. I also prefer to remember her work in There's a Girl in My Soup, especially the scene where she gets out of bed wearing nothing. I would really like to remember her work in Wildcats, especially the scene where she's in the bathtub showing everything. Goldie still looks great in her older years, but she's not my type. I really am trying to show women more respect here, people. I respect Goldie for what she does best.

Meng Tan joined the other mindfulness speakers on stage and left us with awesome advice: "Be excellent to each other." I had my own mindful quote in my head: "And . . . party on, dudes." Those two lines complete the wisdom of Bill and Ted's Excellent Adventure. The mindfulness marathon was some kind of adventure.

I went over to Moscone West for the final session with Marc Benioff and Parker Harris. I scored a prime seat for the next surprising spectacle, pictured above. Two big guys came out to sing Hawaiian-style songs, although I think the guitarist said he was from New Zealand. Anyway, these guys' warm-up act pumped the crowd with high-energy rhythms. Analysts and VIPs were in a conga line around the stage. A couple of very attractive babes were shaking it right in front of me. I totally respect their enthusiasm.

Marc and Parker answered a handful of tech-related questions about Salesforce products. Marc went gangsta for some sartorial reason but they did not have any epic rap battle. I bet George Zimmer could have set these guys up with some tuxedos from Generation Tux if they needed more style. Anyway, the absolute best moment came when one practitioner criticized immature language in some of Salesforce's marketing as insufficiently respectful of its audience's expertise. She thought that power users deserved more advanced, mature treatment. I was very impressed with the caring way that Marc probed the questioner for one specific improvement suggestion, and she offered it to the audience's applause. Wow. Marc then shared an internal employee consensus that developed on how marketing should address a prospect's CRM/cloud decision maker with a budget. Wow. I had just witnessed a major CEO spend more than 15 minutes in live, extemporaneous problem solving. I can get jaded sometimes, but now I really need to put aside my skepticism. Marc Benioff is the real deal. If he is the same in private as he is in public, then I will be doubly impressed.

Marc and Parker also had some advice for aspiring entrepreneurs. Here it is, paraphrased but unfiltered. Think more about solving problems and finding great people than building tech. Stay focused, work hard, build a great company. Get the timing right. Be happy; get away from unhappy situations (like when Marc was at Oracle). Take customer feedback seriously and adjust the product. Re-ask yourself the hardest questions in a continual process.

I don't think I can add any more to that pile of knowledge. My own knowledge base is now somewhat deeper thanks to Dreamforce 2015. I still plan to hold my own super tech fest someday. I'll invite Marc and crew to be VIP guests.

Financial Sarcasm Roundup for 09/14/15 (special Dreamforce 2015 edition)

I am officially registered for Dreamforce 2015, the annual Salesforce motivational festival. I picked up my blogger badge today and you will all get to see it as I blog my way through the action this week. Here are some sneak previews with today's fun.

I attended one of the kickoff parties that Salesforce's many partners use to show off their products. The booze was flowing and the cheese plates were filled to the brim. Apttus throws a pretty good bash. I went up to the Marriott Marquis' Presidential suite to see what Apttus had to show us all.

Apttus had these cookies laid out, all wrapped up and everything. They were made in the image of Marc Benioff, CEO of Salesforce. I find this both unbelievable and awesome. I ate this cookie plus a bunch of other goodies before I went over to the bar for Jello shots. The cookie was classic sugar shortbread, just like your grandparents used to make way the heck back in ye olden days of yore.

Alright, this personality cult is getting out of hand. That's a Lego sculpture of Marc Benioff's bust. Now I need another Jello shot. I should mention that the Jello shots were made with tequila and garnished with an edible flower. I have made "drunken gummys" myself, which are chemically similar to Jello shots.

It wasn't all fun and games up at the Presidential suite. One of the Apttus reps gave me the rundown of how a customer contact spreadsheet in Excel can immediately update a Salesforce contact record via the Apttus interface. I don't need any CRM in my line of work but a lot of people should pay attention.

The Dreamforce massive tech explosion officially starts tomorrow. I am so totally super-psyched. There are usually lots of hot babes at Dreamforce and I fully expect the single ones to find my manliness compelling. It may take a few more Jello shots but I'm sure I can handle the action.

Listicle As A Service (LaaS) Rounds Out Enterprise Cloud Definitions

Bloggers often employ the listicle device when they have nothing new to say.  That's not how Alfidi Capital rolls.  When a listicle appears on this blog, it will be all about something innovative.  The cloud computing "as-a-service" meme calls for a thematic listicle taking cloudisms to a whole new level . . . the Listicle as a Service (LaaS).

Software as a service (SaaS) is the first part of the cloud stack for those enterprises who prefer a buffet approach to IT purchases.  If you only need to buy a CRM module, then you don't need the whole ERP solution.  Salesforce figured this out first, then Adobe jumped in, and Microsoft eventually figured it out.  Oracle is just now figuring it out.

Platform as a service (PaaS) is the second part of the cloud stack for the operating system, databases, and programming languages that are the exclusive provenance of nerds.  In between configuring PaaS for clients, nerds can be seen running their video games in the background.

Infrastructure as a service (IaaS) is the third and final part of the cloud stack.  The data center's hardware of servers, racks, network connections, and other physical stuff become the rented or shared assets an enterprise no longer needs to own.  IaaS is the nerd version of the sharing economy trend.  Outsourced data centers will see extreme growth as Big Data crowds into the increasingly cramped space of Moore's Law.

Information Technology as a service (ITaaS) turns the IT department from a cost center into a profit center.  That is harder than it sounds.  It doesn't just integrate the three cloud stacks above.  It's supposed to use a bunch of best practices from a proprietary library.  I hope CIOs read about Cloudonomics before they announce an ITaaS strategy.  Lots of IT people aren't natural sales people, so any "products" they create must find a market outside the enterprise.  This requires a huge reorientation in how IT perceives its customers; the buyers aren't all inside the firm anymore.

Desktop as a service (DaaS) is now called virtualization.  It makes your desktop apps look like they run from your local PC, but they really run from the cloud all along.  Desktop PCs are losing market share and they may evolve into very specialized local workstations for a cloud presence at some big piece of physical plant.

Mobile Backend as a service (MBaaS, or just BaaS without the mobile) sounds like it involves a private dance at a gentlemen's club.  It actually leverages the data supply chain of SDKs and APIs to put the cloud's power onto a mobile device.  I'd use an app for purchasing dances in the champagne room if it meant I could see some hot chick's mobile back end.

Data as a service (another DaaS) is just the raw data with no applications to process it.  Big Data and Small Data need someplace to go, and those enterprises still wedded to on-premise software use DaaS just to move the flows to their client desktops.  It's too bad this data DaaS shares the same acronym as the desktop DaaS above.  These things get confusing for anyone who's not a genius like me.

Database as a service (DBaaS) sounds like an interim solution for enterprises that need more than DaaS but aren't ready for a fully mature cloud deployment.  The outsourced database uses management protocols that may or may not include virtual machines.  I suspect DBaaS will evolve into a teaser marketing ploy that cloud providers use to encourage late adopters to gradually enter the cloud stack.

Identity and policy management as a service (IPMaaS) sometimes goes by "access management," according to the results of my Google search.  Enterprises who need to manage policies for both internal users (BYOD) and external users (privacy, regulatory compliance) will need more of this service as their product lines grow in complexity.  Proliferating devices inside the enterprise means the IT folks need to stay on top of single sign-on and universal access.

Network as a service (NaaS) is a model for flexing the three cloud layers as their traffic patterns change.  It sounds great in a marketing pitch.  Making it work means having analytics on the back end to predict demand for nodes in real time.  Accurate predictions need tons of input from domain experts who understand an enterprise's seasonality, geographic presence, and other things unique to its markets.

Everything as a service (XaaS) is all of the above combined in one package, as far as I can figure.  It will probably be the preferred solution for noobs who haven't yet figured out their enterprise needs, or naive gladhanders who think going whole hog into the cloud without a total cost of ownership (TCO) analysis will make them cool.  It will also be the preferred fallback marketing ploy for cloud sector providers who target late adopters.

Baloney as a service (BaaS) is my own term for fly-by-night cloud operators pushing vaporware and empty promises.  There will be plenty of these people running around as the less tech-savvy sectors of advanced economies migrate to the cloud.  There's already a lot of baloney thanks to multiple startups promising miraculous cloud integration with social networks and localization services.  Most of that ground is already covered.  First-mover advantage came and went.  The first-movers who won are massively overvalued after their high-profile IPOs.  The stragglers are about to be vaporized as they wildly spend through their cash.

I just explained everything there is to know about the cloud in this listicle.  Okay, you got me, maybe not everything, but enough to impress dumb (but hot) chicks at a bar.  A finance person like yours truly can only scratch the surface of the cloud.  

Alfidi Capital Observes BoxWorks 2014

BoxWorks 2014 was the latest display of how Box builds its ecosystem.  I attended for insights into the secret sauce of how an upstart gets other firms to adopt its collaborative tech.  I have never used Box but I should probably give it a shot.  Find my original genius in bold text, as always.

The kickoff chat between Box CEO Aaron Levie and media mogul Jeffrey Katzenberg was cool.  They must have played some Disney film score when he came out but I didn't recognize it because I don't have kids to raise.  The big lesson was that a strong mission statement, a powerful brand, and great tech make a successful business model.  Okay, Jeff, but what about human talent?  The gene pool of talented writers and animators is only so deep, so the great tech among media giants will have to develop AIs that mimic those human abilities.  Jeff did confirm that the size of the movie going market and the talent pool of animators are limits on the number of movies that studios can produce.  I was stunned to hear Jeff say that the digital volume of a typical DreamWorks movie is so dense that they have to use collaborative software to track the edits.  I look forward to the rich video and user-driven animation that tech is supposed to unleash, but we get what we pay for.  Many of the amateur mashups on YouTube are so derivative and uninspired that they're not worth watching.  Jeff's best lesson from the start of his career is that exceeding expectations in any job or mission assignment lead to winning.  Okay, Jeff, but I tried that in large financial service firms and it only got me fired because no one would tolerate it.  Jeff got lucky and I did not.

Aaron and his top Box people had more announcements to share.  Their new Box.org platform offers content management to non-profits.  That follows the latest trend in Silicon Valley enterprises.  Enterprises want to do well by doing good.  Box has been in mobile file sharing since before smartphones and cloud servers made it easy and cheap.  It's only fair that non-profits now get in on the action.  The big product announcements were Box configurations for individuals using MS Office, cloud multi-users, and an upcoming annotation feature in 2015.  I have seen other purveyors push routinized workflow products and now Box Workflow is coming in 2015 for rule-based routinized operations.  I was quite impressed with the look of these products; the MS Office compatible Box display looked better than SharePoint as a knowledge management solution and the workflow looked like a wise use of BRMS.

The special surprise guest at the keynote was Oscar-winning dude Jared Leto.  I had never heard of the guy.  He brought his Oscar to pass around in the audience, as if a bunch of tech middle managers had something to add to his artistic ability.  Aaron compared the Oscar favorably to Box's Crunchy award and said it must be the height of Jared's career to appear at a software conference.  Jared stayed in character as himself throughout this cameo at BoxWorks, and endorsed Box's ability to share artists' content.  One audience member asked an excellent question about how the cloud can impact older art forms that are not digitized.  Aaron and Jared think it will help older art find new audiences.  I had a mental image of a bunch of artists around the nation collaborating on a sculpture in real time, directing some robotic arm in a studio by uploading diagrams into a Box workflow engine.

I spent some time at the 1st Annual Box Partner Summit that ran concurrently with the first day of the main conference.  The main theme of "commitment" was everywhere in the quotes from senior Box people.  I expect banality at most conferences but I did not know enterprise software managers were deep enough to quote Sartre.  Box leverages its partners' domain knowledge to identify pain points of prospective enterprise clients.  Properly incentivized partners of all sizes are willing to refer enterprise clients to box for SaaS solutions.  Partner rebates are great if they grow earnings first and revenue second.  That may be hard for some growing cloud companies to swallow because they need to impress Wall Street with pro-forma EBITDA if they want to go public.  I wonder how CMOs and CEOs calculate the effectiveness of such incentives.  Good programs should have upsell options with measurable ROIs.  Kudos to Box for positioning its offerings partly as KM solutions for knowledge workers.

I had to explore the finance and legal workshop because I know startups that need to collaborate in those areas.  Permissions management in box sounds a lot like SharePoint, which is really more a policy issue than a tech issue.  I am not clear on how Box is different from SharePoint or Google Drive.  It obviously does document management, file synchronization and sharing, and workflows.  I suspect the Box advantage is its API allowing custom-developed apps that do what competitors cannot do.

The keynote and fireside chat with Jim Collins was phenomenal.  He thinks senior corporate leaders will increasingly come from CIO and IT ranks because enterprise computing has become so important.  I only agree with him if he means the software sector; I'm pretty sure CEOs in manufacturing and energy need to know how to make physical things work.  He organized his talk around ten major questions, which I won't repeat here because the background he presented on each one is in his body of work in Good to Great and the works on his "Tools" page.  His bonus question was inspired by advice Peter Drucker gave him to think about being useful to the world.  Jim's answer was to give moments of kindness and encouragement to others.  Changing others' lives and making people better mattered to Jim.  That may be why the audience gave him a standing ovation.  I have never seen a standing ovation for a guest speaker at a business event.  Wow.

Aaron Levie's chat with Jim explored more of this work.  Jim thinks Information Age management science means different applications of the same principles he studies.  Selecting people matters more and leading a network has a less formal power dynamic.  Jim talked a lot about how enterprises must always adhere to their values.  That's great but I've always known that a company's stated values are less real than the values top executives model in their daily behavior.  Aaron Levie comes across as engaging, irreverent, and intelligent.  If he and his top team exhibit those values when they're not in the public eye then Box is on the right track.

The CIO panel reminded me of the work I avoid by being in finance.  They all thought that business process transformation opens a huge market for unmet needs in enterprise collaboration.  I have never worked on a waterfall chart-driven process but that's okay, because these folks say requirements-driven planning moving from waterfall iterations to collaborative iterations.  I need to see evidence that corporate boards demand more tech-savvy directors who can evaluate enterprise risks.  I think that may be just psychological projection coming from CIOs who aspire to board memberships.  All of the anecdotal reviews I've read on board performance is that they are mostly lap dogs asleep at the wheel, selected specifically because they won't challenge management.

The VC panel on innovations was my next stop.  Professional board membership must be lucrative for VCs and others, but it comes with the caveats I mentioned immediately above.  The VCs mentioned traits like effective communication ability and other successful things that mark good leaders.  They did not mention honesty and personal integrity as desirable executive traits, but they did admit the necessity of firing any key executive who does not embody a firm's core values.  One key insight for tech startups is that lead scoring algorithms now generate significantly higher yields from marketing spending.  I was stunned when someone said tech megacorps (i.e., Google, Facebook) spend $10B on a buyout just to defend their $100B market cap.  That blew my mind.  This amazing insight implies headline deals are driven partly by celebrity billionaires defending their net worth with mergers and acquisitions.  Their parting thought was that investors should favor startups where the cost of capital and other macroeconomic conditions won't affect a business model.

The health care sector still has an innovation curve even after the ACA, according to the next panel.  I do not understand how the ACA's payment reforms will work unless they are intended as a stalking horse for a single-payer system.  I learned that the government pays hospitals to adopt digitized record systems, which is probably more costly than a simple regulatory mandate for any provider who wants to access the Medicare or VA payment networks.  Like I said, I just don't get this kind of reform.  The biggest insurance plan underwriters are able to drive demand for optimal payment networks.  They can identify high quality, low cost providers and eliminate variance from their PPO networks.  Data on these pricing variances in treatments allows buyers to eliminate sub-optimal choices.  The private sector makes that efficiency work because competition for services remains strong in a free market with many choices.  It will be less efficient in a market dominated by government-backed exchanges.  This is one reason why providers can't prove whether they save money by using Medicare's Accountable Care Organizations (ACOs).  This may have been the only panel where none of the panelists mentioned Box, knowledge management, shareable content, or collaboration.  The experts were so contentious because the ACA has politicized health care and skewed the sector's natural tech evolution toward choices that favor top-down intervention.

The retail panel sounded interesting because it's a sector I rarely explore.  The panelists said they want real-time data from all channels on all platforms, and that's a big market opportunity for SaaS.  It was depressing to hear someone admit that most retailers still live in a company-driven data model (internal focus) and not a customer-focused data model optimized for mobile (external focus).  Retail or any sector reacting to real-time data must have a fast DevOps cycle.  Predictive analytics adds value in DevOps by showing where proactive IT fixes should focus.  The weakest link in any retail business model is the high-turnover, low-wage workforce.  The best IT innovations must reduce the cognitive load on those low-skill workers so they make fewer mistakes.  That's why automation will eliminate many fast-food jobs.  Bring on the social CRM and get rid of the minimum-wage workforce before unions can organize them.

My favorite panel was on government innovation, and not just because hot Box.org babe Karen Appleton was the moderator.  The federal government's approach to data management and innovation varies by agency.  The FCC wrestles with over 200 legacy systems while it maps broadband capability for the public.  DOD's high-cost early adoption of tech still makes waves when program expenses draw scrutiny, so other agencies should jump on board that gravy train while it's still on the tracks and ask to share in DOD's tech bounty.  Federal law hobbles innovation by classifying an agency spending money on another agency as a felony if said spending does not benefit the original agency.  Wow, that's depressing.  No wonder every agency has internal counsel.  The FCC panelist was extremely thought-provoking by wondering whether public scrutiny in a democracy combined with social media can harm risk-takers who might otherwise have productive government careers.  He said it's also worth wondering whether authoritarian governments can capitalize on high tech faster than democracies because they are under less scrutiny without checks and balances.  Wow, heady stuff.

I sat front and center for that government panel because I had to ask them my only question of the conference.  I asked the panel for their thoughts on two government programs with the word "innovation" in them:  the NSF's Innovation Corps and the use of the Presidential Innovation Fellows (PIFs) in GSA's 18F incubator.  Aneesh Chopra, the former White House CTO on the panel, loved both programs.  The I-Corps trains people in Steve Blank's methods to commercialize the vast research produced in the Federal Lab Consortium.  The PIFs in 18F have built some interesting tools for other agencies and anticipates the creation of the US Digital Service.  The panel experts had done tons of thinking on driving government innovation; now the world gets to hear my ideas for Uncle Sam to use.  I want to see these innovators push more agencies to advertise their needs on Challenge.gov.  DOD should use it to farm out simpler fighter aircraft concepts that won't violate Augustine's Law #16 on astronomical costs.  It would also be great if FedRAMP used Cloudonomics metrics.  Oh yeah, let's get veteran-owned tech startups into I-Corps' pipeline so they get the inside track on tech transfer to the marketplace.

I caught the tail end of Aaron Levie's chat with Vinod Khosla before everything ended.  Vinod thinks Jim Collins' work is bull-stuff.  Funny!  He advises people not to try to predict the future.  Just go out and build something.  I hope he means "fail fast" and move on.

I was pleased to notice that the Box employees working as show floor guides included some very attractive women in tight jeans and purple Box t-shirts.  I was hoping to see some more of that kind of box but did not get the chance, if you know what I mean.  I also prowled the show floor and asked several booth sponsors whether they thought the iCloud celebrity photo hack was a wake-up call for cloud security.  The collective shoulder shrug I got in response told me that I may have been talking to salespeople instead of DevOps people who fix security holes.

Box did very well with BoxWorks.  I did not have time for the Jimmy Eats World concert but that's okay.  Plenty of youngsters got to have fun.  I'll have more fun at BoxWorks next year.  

Box Dev 2014 Flew Drone Cam For Cloud Enterprise

Box held their first ever developer conference last week.  I dutifully attended Box Dev 2014 thanks to a hot ticket from Angel Launch.  My favorite people always hook me up with multiple blessings.  The free food was of course a major incentive.  Breakfast bagels, Off the Grid lunch trucks, and spicy dinner entrees were enough to get me excited about hanging with cloud enterprise developers.

I sat very near the front for the early talks and I checked out the folks at the so-called "media" tables.  They didn't look like they were banging out too many articles on the event or even taking notes.  That's why I take these events seriously.  Silicon Valley can always count on Alfidi Capital to pay attention when everyone else is falling down on the job.  Slackers checking email and Facebook can hang out somewhere besides the media table.

The CEO of Box is quite a charming fellow.  His cloudy socks and bright sneakers reminded me of Marc Benioff's fancy high-tops at Dreamforce 2013.  Cloud entrepreneurs have a thing for wild wardrobes.  Box is convinced that the addressable market for mobile information workers is larger than the market for people chained to a desktop.  They have tailored their cloud enterprise offerings accordingly.  I think Dropbox is an obvious competitor, but when I heard Dropbox's CEO discuss his company with Marc Benioff at Dreamforce 2013 I don't recall whether he spent a lot of time emphasizing mobile.  These two box-related companies are going to fight it out over enterprise sharing.

Entrepreneurs also have a thing for wild stunts.  Box's SVP for development came out to chat up their ability to connect the enterprise to all kinds of things.  Lo and behold, Skycatch flew a drone out to the strains of Darth Vader's theme music and took a digital image of the audience.  Drones now have an undeniable cool factor.  The drone is in the photo just above.  I was impressed that it could navigate the confined space of those curtains adjoining the stage without becoming unstable.  Photos come with metadata that Box aims to capture.  Image metadata has obvious uses in GIS for identifying frequent locations of system failures, sales calls, and other things that will drive enterprise revenue and costs.

Entrepreneurs can capture a few more lessons from Box's success than the implications of image metadata in GIS.  Sales is still the most important traction metric, but efforts to grow a startup's numbers of third party developers, API downloads, and SDK uses are worth doing if they drive some buzz.  Even page loads and white paper downloads generate metrics for startups desperate to hang their hat on something.  Cloud platform providers should also think about having more than one pricing model.  Pay per user (accommodates seat count changes), pay per time (accommodates seasonal surges), and pay per capacity (accommodates an expanding enterprise) all have their place somewhere.

The fireside chat with legendary tech star Ben Horowitz gifted the audience a free copy of his book The Hard Thing About Hard Things.  I have to love a show that gives me both free food and free books.  Ben liked Intel's approach to growing its market beyond memory.  I did not know that the "cloud" term came from Bell Labs' technical descriptions of telecom connections.  I thought some marketing pros dreamed it up.  Ben's favored technique for a package software company (read Microsoft) to turn itself into a cloud service company (read Salesforce) is to acquire a cloud startup and promote that startup's founder to CEO of the acquirer.  I don't know of any case where that succeeded, which is probably why Ben thinks such a transformation is so hard.  I was very disappointed to hear that Ben was bullish on Bitcoin.  His VC firm Andreessen Horowitz is making big bets on Bitcoin.  I'm pretty sure they're going to lose it all, but I won't guess about the timetable.

Palantir's founder got some stage time with one of the hottest female tech journalists I've ever seen.  War stories about PayPal are part of Silicon Valley's lore.  I was more intrigued by the guy's pro-market opposition to rent control and desire to unskew the asymmetrically high compensation in the finance sector.  This wasn't the first time I've heard entrepreneurs warn that large firms use regulatory capture to make business hard for startups.  I wish I could get as excited as him about AI and VR but those things have been five years away for the last twenty years.  The hype about AI and VR reminds me of the perpetual hype for nuclear fusion.  It keeps the research money spigot stuck in the on position with no commercial success stories.

The VC panel tried to make some five year predictions for mobile, VR, and other enterprise tech but I don't think they got any farther into probable successes than the Palantir guy.  They did make a worthwhile observation about how SaaS contracts favor short-duration pilot terms with cancellation options.  That goes back to my own thoughts above about having a diverse pricing model.  One client that cancels a short contract is welcome to consider a surge capacity contract.  These VCs claimed that some startup types cluster in certain cities.  That's true in niche sectors like agriculture, which is so far clustered in Northern California.  I've noticed that many mobile and social startups pop up in all the big cities.

I don't think these VCs have many blind spots.  They ought to see the disruption potential in capital-intensive verticals with long sales cycles.  Startups can capture that by breaking up SaaS sales packages into piecemeal iterations.  Salesforce did that with functional modules.  Go back to my pricing model notes above and figure out where to start.  The "grow fast" go-to-market strategy of consumer SaaS is not the same as the enterprise SaaS strategy of proving speed and agility in overcoming friction.  The panelist VCs know this and startups should know it before they design for one market at the exclusion of another.  The VCs measure the density of a SaaS solution's network connections by stickiness, virality, symmetry, and intraenterprise strength.  In plain English, that means enterprise SaaS is more likely succeed with very dense connections that encourage KM collaboration.  Know your monthly recurring revenue (MRR) and its churn before you pitch a VC, and don't pitch standing up when the VC asks for a sit-down conversation.  The venture investing community can be finicky.  I know they read my blog.

The CIO panel repeated a lot of things I've heard before at tech conferences.  Every IT leader wants to jump on the innovation bandwagon because running a cost center is a career dead end.  I did not know that the security landscape is evolving faster than the rest of the tech sector.  Maybe all of the warnings about app security are finally turning into action.  This poses good career opportunities for white hat hackers who can find and plug security holes.

Jerry Yang moderated the CEO panel.  The other CEOs on the panel sounded like they really grok CustDev.  They should get along well with the earlier CIOs who said they like startups that solve problems.  These CEOs admonished the crowd not to sell something they don't already have; apparently a lot of techies need to be told that only established companies can announce vaporware.  Their descriptions of reward systems that incentivize adherence to company values reminded me of things I've blogged before about corporate cultures.  Folks need to know that the CEO's personality and the HR compensation structure will determine everything.  That's Alfidi Capital wisdom.  I agree with the CEOs that their job is to tell employees they're doing a good job, and that no one will tell the CEO whether they're effective.  That is why KPIs tell CEOs whether they're succeeding.

I gave Jerry Yang a thumbs up as he walked out of the Fort Mason Pavilion after his panel.  He's the one on the left in the photo above.  I will always be grateful for his second stint running Yahoo because his resistance to Microsoft's buyout offer in 2008 opened a decent arbitrage opportunity for me.  I made some money on the differential between the two companies' short-duration options even though the merger deal wasn't consummated.  Thanks, Jerry.

The final fireside chat between legends Phil Libin and Steven Sinofsky was the stuff of legend.  Techie culture supposedly encourages internal teams to borrow each others' ideas during the SDLC, but I wonder how many companies practice what they preach.  Phil said in no uncertain terms that Evernote employees who make PowerPoint slides are unwelcome.  That is stunning, and awesome.  He correctly places slides in their sales role because he wants a higher cognitive model for engaging teamwork.  His vision for workflows that transition seamlessly between mobile and desktop is the kind of sea change forcing packaged software sellers to move their products to the cloud.  I do not agree with his prediction that the touchscreen interface will replace the keyboard/mouse setup simply because it's more comfortable for natural human hand movements.  Knowledge workers still need to input data somehow and touchpad reticles can't do the whole job.  Let me summarize this conversation's brilliant closer, driven by Facebook's acquisition of Oculus Rift:  "Oculus is something you put on your FACE.  It was bought by a company called FACE-book.  We'll see thing like Box-FACE in the future."  That had the audience rolling.  Great stuff.  You had to be there to see tech genius at work.

I have no idea what Box's platform does for clients.  They put on a really high-powered developer conference where I scored free food and wisdom.  Their CEO can mount a stage at a running leap, so maybe he ran track in high school.  They should hold a hackathon at their next conference to motivate developers to build Box stuff.  I'm impressed enough with everything to return next time.  

Alfidi Capital At K-TECH Conference For Latest In Software Innovation

I attended the K-TECH Silicon Valley 2013 conference this month.  The organizers had a full agenda of exhibitions and speakers for me to check out.  They also had free food, which I never turn down.  I had to see what South Korea's KOTRA and NIPA wanted us all to learn.  I managed to capture myself in the hallway mirror as I snapped my traditional self-aggrandizing conference photo of my name badge with the conference banner.  I must be getting twice as good at everything I do.

The introductory speakers announced the results of the US-ROK ICT Policy Forum.  I'll bet this will make it even easier for Samsung to sell Android smartphones here.  Samsung is also building an R&D center in San Jose, which means we can look forward to even more H-1B Indian tech workers taking jobs that American engineers are qualified to fill.  I like Korean FDI in the US if it means more hot Korean women come here to manage the assets.

The Samsung keynote on innovation in a connected world reminded everyone of something I already knew, namely that battery capacity isn't keeping up with smartphone performance and that batteries can't scale up because of their obsolete chemistry.  My regular readers know that I have already identified mobile device power management as a pain point begging for disruption.  Samsung pays attention to the potentially disruptive research from academia.  I do too, which is why I attend technology transfer conferences and subscribe to TVC's Innovation magazine.

Microsoft's keynote on the future of software development was understandably silent on the disappointing sales of its own mobile devices.  They must know Android owns this market but I heard no hint of a new mobile strategy.  Their new search strategy is to have Bing display results from algorithms, machine learning, and friends' opinions in different panes but I can't see how well that translates into a mobile display.  I just don't believe Microsoft is capable of truly embracing the disruption that further progress in mobile and cloud integration will bring.  Their product managers are notorious for killing ideas that threaten to cannibalize their sales and Microsoft's acquisition strategy partially reflects these internal politics.

VentureBeat moderated a panel of Asian hands on the future of Big Data and cloud.  I like this quote the best:  "Data is the new oil because you can generate wealth when you drill for it."  Some ambitious analytics pro should use that quote in their CIO's next all-hands IT meeting when someone asks for a Cloudonomics calculation.  I'm now sufficiently intrigued by Stanford's US-Asia Technology Management Center to consider attending their seminars.  Their representative on the panel made Korea's dilemma quite clear; Korea has a national desire to avoid domination by foreign software firms but its own big companies have difficulty with open innovation.  I must admit that Korea gives us an interesting national case in why Big Data adoption has been so slow.  Big business' internal culture resists it and startups aren't culturally favored enough to push innovation.  IMHO it will fall to non-Korean firms that have a Korea presence, or Korean firms with a Silicon Valley presence, to truly drive full Big Data / cloud integration in the Land of Morning Calm.  The panel got really contentious towards its end when it considered whether Korea could truly leapfrog a generation in consumer tech or would lag in enterprise tech.

The next panel on hot software trends was the VCs' turn to tell entrepreneurs what they want to see from startups.  They observed that brand new markets from brave innovations create many more multiples of value than better / faster / cheaper incremental innovations.  I agree, but those innovations are so much rarer than incremental improvements and the opportunity set of pain points from incrementalism is quite large.  In other words, I say the serial entrepreneur who pursues the low-hanging fruit of small changes will experience more chances for exit events.  I see nothing wrong with getting paid a few million bucks every two or three years for running great acquisition candidates.  I was intrigued that the panel thinks Twitter is an A/B testing vehicle in CustDev, where startups ask their many followers to pick their preferred product style.

These panels start to run together after a while and I wasn't quite sure what to make of the one on software convergence and industry advancement.  Feel free to visualize software comparisons at Information is Beautiful while I figure out what else they wanted to show us.  I don't agree with the idea that scaling complex hardware from "zero to billion" valuation is getting faster.  Hardware is harder than software, not easier, and it takes longer to fix.  They pointed to ISSIP's goal of connecting entrepreneurial teams at many universities but IMHO that isn't going to make hardware development any faster until they all get some hands-on skills in rapid prototyping.  I do like one very brilliant thing the panel said about a startup's ecosystem.  They advocated thinking of who else in an ecosystem makes money when a startup sells its product.  Consultants, system integrators, and vendors all stand to gain and acquirers want to massively increase their own value by introducing an entirely new ecosystem to their own ecosystem.  That's the kind of analysis that reveals the value of a startup in an acquisition.

A former Army officer turned VC moderated the next panel on new business opportunities from mobile evolution.  I had to leave early and didn't get much from this one other than identifying eMarketer as a source for mobile market segment data.  I will never understand the "freemium" monetization model in gaming or why so many programmers think they can mint money by marketing another arcade-style game for mobile.  Tons of those things already exist and hardly any of them will make it.

The second day of the conference brought out some more keynote speakers and panelists in addition to the startup pitchfest.  I think a lot of these Korean startups are going to have a hard time in Silicon Valley for the cultural reasons I mentioned further up this article.  They will have to seek sponsorship from corporate venture arms.  I also wonder why more Korean startups don't try to first penetrate the large Korean-American population in Los Angeles.  That's an excellent test market to assemble use case data before pitching for funding in Silicon Valley.  I also noticed a generational difference in the way native Koreans now address public audiences.  The older Koreans who worked for their government's agencies would bow to the audience in the traditional style before beginning their scheduled talk.  The younger Korean entrepreneurs did not bow at all to the audience.  Korean culture is changing right in front of my eyes.

One of the pitchfest panel judges revealed something anecdotal about the finance sector.  He bemoaned that many people who work at a particular corporate venture arm only got hired there because they knew someone on the inside, not because they had VC experience.  He also said that he knew someone who was hired to be a senior investment banker at a well-known investment bank just because he had dinner with another senior i-banker and came across as likable.  I have no idea who these people were or whether the stories are true, but it just makes me shake my head because it matches what I experienced in wealth management.  People in high-powered finance make hiring decisions based on likability and familiarity, not competence.

The final panel gave me an opportunity to ask my only question.  I wanted to know whether the fashion community's accelerators were working with the tech community on wearable tech.  I may not have been clear enough in getting my question across because one panelist thought I was making a statement rather than asking a serious question, but the answer seems to be an affirmative that the fashion sector will build a business around a good tech idea.  The other panelist remarked that an Indian conglomerate is putting sensors into jewelry.  I'll also note their mention of Guidewire Labs' G/SCORE assessment method for startups.  That reminds me of the US government's technology readiness level (TRL) system.  I'll bet using the G/SCORE and TRL together in a pitch would make a big impression on savvy investors if they prove a startup takes itself seriously.

The K-TECH show was also my chance to get some refresher education on transfer pricing, which will be a subject for another article.  I also got my first interaction with a human-sized touchtable that allowed users to try on virtual fashions.  That's coming soon to a clothier near you.  Once the system is perfected, you'll never order clothes off the rack again because mass customization will stitch a perfectly fitted garment just for you on the spot.  I'm too cheap to pay a premium for instant clothing so I'll wait as long as it takes for the prices of 3D printed garments to come down to my level.  Kamsa hamnida, Korean tech folks.

The Haiku of Finance for 11/12/13

Open source platform
Back-end innovation space
Disrupting data

Rackwise (RACK) Racks Up Losses

Here comes another mailing-inspired blog article.  I just got a teaser brochure from Tim Fields Untapped Wealth.  Most of you know where I'm about to go with this now that you've seen the promotional source.  This brochure touts Rackwise (RACK), some kind of provider of data center management (DCM) software.  I don't focus on the software sector, but that doesn't give me a disadvantage when I need to screen out stocks that should never become candidates for my capital.  All I have to do is look at fundamentals.

Rackwise should not have gone public based on their fundamentals.  They lost more than twice as much money (i.e., negative net income) in 2011 as they did in 2010.  Their executive team is a mixed bag; the CEO and CFO have little direct experience running software companies but other team members have held a variety of positions in growth-oriented software companies.  Their 10-K from March 2012 mentions their significant operating losses and expresses doubt about their ability to continue as a going concern.  BTW, multiyear losses would be tolerable in a tech startup focused on spending to grow revenues, but the 10-K admits they've cut back on some promotional expenses to conserve cash.  That 10-K also mentions a master licensing agreement with Intel to deploy Rackwise's DCM software in all of Intel's data centers.  The agreement was completed in November 2011 but I'm not clear on whether Rackwise will realize significant revenue from this development.  Meanwhile, Rackwise's CEO was awarded stock options that vested at $1,527,000 as a reward for this transaction.  Well, that's just great work (and great for my sarcasm too).  Whether this massive options expense is justified by bottom line success remains to be seen.  

BTW, their product isn't very original.  I've known about data center power management since at least 2009, when I was partly responsible for running a data center in a large enterprise.  My team monitored the diagnostics constantly and they noticed that the temperature in the server room was approaching an intolerably high level due to a cooling system failure.  They shut down the servers immediately and kept them offline until the cooling system could be restored.  Rackwise's system is not really a big improvement over the tech we used three years ago.

Rackwise might have a chance if their Intel license develops into some kind of JV.  Right now they have no chance of impressing me until they can turn a profit.

Full disclosure:  No position in RACK at this time.