CloudAve http://www.cloudave.com Software in Business. The Business of Software. Thu, 19 Feb 2015 15:06:34 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.1 Copyright © CloudAve 2014 admin@cloudave.com (CloudAve) admin@cloudave.com (CloudAve) http://www.cloudave.com/wordpress/wp-content/plugins/podpress/images/powered_by_podpress.jpg CloudAve http://www.cloudave.com/wordpress 144 144 Software in Business. The Business of Software. CloudAve CloudAve admin@cloudave.com no no Be Careful About Being a Meddling Startup CEO http://www.cloudave.com/36983/careful-meddling-startup-ceo/ http://www.cloudave.com/36983/careful-meddling-startup-ceo/#comments Thu, 19 Feb 2015 15:01:06 +0000 http://www.bothsidesofthetable.com/?p=6494 I recently wrote a post talking about how some VCs meddle in operating company decisions or some executive teams are too reliant on VCs to jump in and make hard calls for them. Fred Wilson also wrote on a similar topic in his usual more succinct manner, with a great quote being: “One thing I […]

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ceoI recently wrote a post talking about how some VCs meddle in operating company decisions or some executive teams are too reliant on VCs to jump in and make hard calls for them.

Fred Wilson also wrote on a similar topic in his usual more succinct manner, with a great quote being:

“One thing I know for sure is that those who advise and invest in startups cannot and should not meddle in the day to day decision making. It’s harmful and hurtful to the startup and those that lead it. So operating at a higher level, helping to set the framework for decision making and then sitting down and watching the game be played, is certainly the way to go.”

Of course I agree with this. In practice it can be a fine line between sparring partner / coach and stepping over the line to brute-force persuasion. And you can easily err the other way of not weighing in forcefully enough. I see this in cases where sometimes board members don’t want to take on the “Pottery Barn Rule” that if you break it, you fix it. And with most difficult decisions being subjective it is also a fine line to walk.

While everybody can easily point at VCs or board members and accuse them of being meddlers, the same is actually true of many CEOs. I speak from experience. This can be even more harmful than the board meddler because the CEO is full time and also has more authority.

CEO’s beware. Meddling in the wrong ways or too often can either produce a culture where people don’t like to take actions because they know you’ll eventually just step in anyways or equally badly the company gets unfocused from the constant interventions.

Here is where I see this really play out:

Product Management
Most CEOs fancy their own product skills and like to weigh in on priorities. I did this. At times I wanted the engineering team to produce features to support our sales efforts to I occasionally leaned on them a bit. Eventually I had a head of Product Management – the best I ever worked with named Tim Barker – politely say to me that this wouldn’t fly any more.

Tim had a great solution. He said that product management would run like “asset allocation” in which we would allocate a certain % of dev to different purposes each quarter and once set they couldn’t be changed. So he would allocate say – 20% to sales, 15% to marketing, 20% to eng priorities, 10% to customer support, 10% to ops, 20% to ‘platinum customers’ and maybe 5% directly to me as the CEO. So I would get ANYTHING I wanted within the confines of my budget. Beyond that he (and thus engineering) could simply tell me, “No.” Those were the rules. Of course by the next quarter if I felt ripped off I could advocate for 7% or maybe ops requirements needed to be upped to 20% for one quarter. But we didn’t have to negotiate constantly.

Allocation planning in product management in ingenious and helps a lot with CEO meddling. CEOs often meddle in products and dev teams hate it.

Sales
Another area we CEOs often meddle is in sales. Of course we fancy ourselves as the best sales people in the company. But as your company grows and you bring in professional sales leadership you can no longer do this. Either your head of sales is the right person or fire him or her. But overriding sales leadership is as destructive as overriding product management.

The way we dealt with this issue is that we took each senior exec in the company (including the CFO and the CTO) and assigned them to important accounts. There was always a sales leader on the account and that person got to decide how to use you. And of course the VP of Sales had the ultimate call. But I was wheeled in to help and I was assigned senior execs to build relationships with.

But where you need to be careful is in either “cutting side deals” with the execs such as huge CEO pricing discounts (unless that’s the agreed sales plan) or committing to features to win a deal. We CEOs like to be heroes and with the power to push through pricing or product we have unfair advantages over the normal process. Your job as CEO is to be “chief adjudicator” not “chief dictator.”

And as I always tell management teams, great CEO’s “Dip but Don’t Skip.” My key quote from this post was:

“Skipping is insidious.  The organization gets used to it and adjusts.  It sets the wrong culture.  Senior management feels undermined.  Staff never knows whom to listen to.  Decisions get overturned at the last minute by the big boss.  People avoid making the tough decisions because they know the CEO is going to step in at the last minute and change everything anyways.  And you build an organization of under-empowered people.

Let information flow up but direct your staff and execute through hierarchy.”

This is the key to being a great CEO as your team grows. When you move from a 10-person startup to a growth company – meddling restricts growth.

(Cross-posted @ Both Sides of the Table)

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Vancouver OpenStack Summit – EMC Federation Presentations http://www.cloudave.com/36994/vancouver-openstack-summit-emc-federation-presentations/ http://www.cloudave.com/36994/vancouver-openstack-summit-emc-federation-presentations/#comments Thu, 19 Feb 2015 14:50:56 +0000 http://cloudscaling.com/?p=7726 Voting for presentations at the Vancouver OpenStack Summit is now open.  Please help us by voting on the sessions submitted by EMC Federation speakers along with any other sessions that cover topics that might interest you.  Please vote at your … Continue reading

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vancouver openstack summitVoting for presentations at the Vancouver OpenStack Summit is now open.  Please help us by voting on the sessions submitted by EMC Federation speakers along with any other sessions that cover topics that might interest you.  Please vote at your earliest convenience since each vote helps!

OpenStack community members are voting on presentations to be presented at the OpenStack Summit, May 18-22, in Vancouver, Canada. Hundreds of high-quality submissions were received, and your votes can help determine which ones to include in the schedule.

PDF containing all of the submissions by the EMC Federation:

https://my.syncplicity.com/share/6ndhnwrkpxkgodp/OpenStack%20Liberty%20Summit%20-%20Vancouver%20-%20EMC%20Federation%20Session%20Proposals%20v2

Here is a list you can click through to vote.

Thank you so much for taking the time to vote on these sessions!

(Cross-posted @ Cloudscaling)

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The Future of OpenStack’s EC2 APIs http://www.cloudave.com/36957/future-openstacks-ec2-apis/ http://www.cloudave.com/36957/future-openstacks-ec2-apis/#comments Thu, 12 Feb 2015 21:29:12 +0000 http://cloudscaling.com/?p=7721 Recently, some more talk was had around the future of the EC2 APIs, beginning with some comments on the openstack-operators mailing list, followed by threads on the dev and foundation mailing list.  This ultimately resulted in a suggested commit to officially “deprecate” the EC2 APIs from Nova.  This commit was rejected, but make sure you […]

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Recently, some more talk was had around the future of the EC2 APIs, beginning with some comments on the openstack-operators mailing list, followed by threads on the dev and foundation mailing list.  This ultimately resulted in a suggested commit to officially “deprecate” the EC2 APIs from Nova.  This commit was rejected, but make sure you read through the commentary if you have time.  Some really great perspective.  If you don’t here’s my basic summation:

  • Many people still very much care about the EC2 and AWS APIs and are quite concerned about their state and the lack of attention to keeping them current
  • Some people are adamant about deprecating and then removing them as expeditiously as possible
  • Others are interested in keeping them around, but moving them out of the default distribution and making sure they have a good home

As many people know, I’m passionate about this subject.  If you missed the blog posting that caused a massive kerfuffle in summer of 2013, now is the time to take a look again: OpenStack’s Future Depends on Embracing Amazon. Now. There was a pretty massive response to that original article, including a very vibrant OpenStack meetup with a debate that was covered live between myself and Boris Renski, co-founder of Mirantis.

I am proud of driving that conversation, but one pushback that arose could be summarized as: “put your money where your mouth is”.  At the time we were already working towards a goal that would have responded to this pushback but it’s taken alot longer than I would like to materialize.

We are finally there.  Let me explain.

The StackForge Standalone EC2 API

It’s taken a while and the entire backstory and history isn’t really relevant for this article, but Cloudscaling (now part of EMC) has been working diligently to build a drop-in replacement for the existing Nova EC2 API. This standalone EC2 API can be found in StackForge. This re-implementation of the EC2 APIs is now ready for prime time and serendipitously you can see from the opening comments that the community is very interested in adopting it.

Some details on the status of the new EC2 API can be found in the initial documentation in the commit.

To summarize, the new standalone API:

  • Is feature complete and at parity with the existing Nova EC2 API
  • Has equivalent or better test coverage to the existing Nova EC2 API
  • Is configured by default on a different port (can be run in parallel to all existing APIs)
  • Included a new set of features in the form of full coverage for the VPC APIs (a subset of EC2)
  • Has been tested exhaustively with the AWS unified CLI tool, a python CLI for driving all of the AWS services
  • Calls the OpenStack REST APIs rather than any of the “internal API” or function calls for a clean separation of duties
  • AWS tempest tests have been expanded, tested against AWS itself as a baseline then used to validate this APIs behavior

This is very exciting and it’s what the community has been asking for.  More importantly, to me, at least, is that the EC2 API could potentially stay in StackForge and become an optional plugin to OpenStack, letting those who care use it while also allowing the team who is maintaining it to iterate at a slightly different speed from the current 6-month integrated release cycle.

For those who are wondering, it’s EMC’s intention to continue to invest into and maintain this API bridge to OpenStack.

The EC2 API Still Matters to OpenStack

During the “debate” that occurred in 2013, I was frequently bemused by the attempts of community members to downplay the importance of the EC2 APIs. I think it’s all settled down now and generally accepted that we want the EC2 APIs to live on and succeed in OpenStack-land and hopefully we’ll even support other APIs down the road.

For those who are still holdouts though, I think the latest OpenStack User Survey data continues to reinforce how important the EC2 and other AWS APIs are:

A Brief State of the Stack 2014 v3 - 2014-11-06 CSH Updates-09.019

What’s enlightening here is that in 2013 I was hearing the constant refrain of “the EC2 APIs are used by only a ‘fraction’ of the community”.  That ‘fraction’ was *merely* ~30-35% at the time according to the user surveys.  As you can see, usage of the EC2 APIs has actually increased since that time and now we’re at 44% for production deployments, a 25% increase in roughly 18 months. This is very important.

It means that usage of the EC2 APIs is increasing, fairly dramatically, over time.

I’ll reiterate again, since folks still sometimes get confused, I’m not advocating dropping the OpenStack APIs in favor of AWS.  I’m advocating embracing the AWS APIs, making them a first class citizen, and viewing AWS as a partner, not an enemy.  A partner in making cloud big for everyone.

This reality inside the OpenStack community is starting to materialize and I need your help.

The Game Plan

Awesome, we have a new set of improved EC2 APIs, a path towards supporting them and deprecating the old.  Whether you love the EC2 APIs or hate them, it’s good for everyone to move them out of the default deployment, create greater isolation between these APIs and OpenStack internals, and to have a path forward where they can be maintained with love.

Everybody wins, even the detractors.

Well, to get this the rest of the way, we need to do the following:

  1. Test, test, test: if you are using the existing EC2 APIs, please give these a try, break them, and file bugs
  2. If you are a developer and want to help cover any gaps in functionality or bugs that have been found, then get involved now; this is a standard stackforge project, so anyone can get in the mix
  3. There are some known challenges in the existing OpenStack APIs that need to be addressed for a more robust solution; these are documented in a new blueprint you can find here
  4. Help update and maintain the documentation so people know that this capability is available for their OpenStack deployments/products, whether DIY or product based
  5. Add a set of testing capabilities to RefStack to test for “AWS interoperability” alongside “OpenStack interoperability”

I really appreciate all of the supporters and also detractors who have been involved in this discussion. I believe that this kind of debate and action, like the Internet before it and the IETF mantra of old (“running code and rough consensus”), is what makes OpenStack great. Completing this project will also provide us a blueprint for how we support the public APIs of other public clouds in OpenStack-land.

Finally, a big thanks to Alex Levine, Feodor Tersin, and Andrey Pavlov, for being the tip of the spear on this work.  Without them we wouldn’t have made it this far.

(Cross-posted @ Cloudscaling)

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Why Most Online Video Companies Will Fail http://www.cloudave.com/36930/online-video-companies-will-fail/ http://www.cloudave.com/36930/online-video-companies-will-fail/#comments Mon, 09 Feb 2015 05:10:33 +0000 http://www.bothsidesofthetable.com/?p=6484 I live in LA and fund startups. So you can imagine that I see a lot of video startups. Most will fail. I repeat the same mantra to every one I see. “You can’t build a large online video company. You have to build a large online tech company that distributes video.” I try to […]

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I live in LA and fund startups. So you can imagine that I see a lot of video startups. Most will fail.

I repeat the same mantra to every one I see.

“You can’t build a large online video company. You have to build a large online tech company that distributes video.”

I try to explain this to every team I see and I’m not being flippant. What most people never understood about Maker Studios is that much of their growth came through technology innovation and advantages on our back-end the most people didn’t even know about. There’s a reason that Maker pulled away while most online video companies did not. And it’s not about aggregating traffic better.

Online technology company that distributes video.

I have seen every form of former Discovery or Nat Geo producer who has access to a few famous people with whom they will partner and create online videos. They will partner with every producer of online video software. In my mind they are building the same business as their offline counterparts just with lower CPMs and margins.

I’ve written before about why I believe most Hollywood online video startups don’t get the future (and why most Silicon Valley startups don’t get online video). The former thinks it’s all about the content and the latter thinks it’s all about the tech.

So my advice to many is to study online companies that understand how to use technology for audience development, engagement, viral distribution and subscriptions. Usually I tell them to study Upworthy & Buzzfeed.

Here is an example.

This morning I logged into Facebook. I saw a post from Upworthy about a video showing a dance troop in Australia for large-sized people.

Screen Shot 2015-02-08 at 11.30.30 AM

I was seeing the video because I had previously liked Upworthy. I’m not an investor but truthfully I love Upworthy and its goal is distributing content with a social mission to educate people on complex social issues.

1. Online video companies need to know how to get social followings insider & outside of YouTube

2. They must know how to a/b test headlines to know what is likely to drive clicks. You can’t leave this to chance

3. They also know how to a/b test images. Some images will draw in viewers more than others and as it turns out the headlines & images that convert at different in each social network or distribution partner

As a result of 1, 2 & 3 I clicked. I hate weightism. It’s one of those things that even smart, socially-liberal people fall prey to. They assume that weight is “the person’s fault” and that anybody could choose to be skinny and that this is the only worthy goal. I have huge sympathy for those with weight issues because they receive so much negative bias from society that they are subjected to daily insults and ridicule. So I wanted to see what this was all about.

When you click on the link you realize the magic of Upworthy.

4. They multipurpose video into different formats to make the video consumable for the masses. Let’s face it – not everybody wants to sit through a 5-minute video. So if you clicked on the link above you’d find that they have summarized the video by creating still images of the video and a few GIFs (not pronounced like the peanut butter, no matter what he says) and a summary of the story. They thus massively increase the reach of the video and create more inventory than just the video on YouTube.

5. At the start of the article they encourage you to subscribe to Upworthy. Their goal isn’t to have you as a one-time viewer as is often the case on YouTube. And while a YouTube subscriber is useful it is still trapped inside the platform. When they get your email they earn the right to share more videos with you in the future and they already know something about your interests. It’s why I keep telling people that moving videos online is more like Gilt Groupe selling clothes than like trying to build audiences on traditional TV. Most traditional video producers don’t get this. And if they can’t get you to give up your email address they will encourage you to share the video on Facebook or Twitter.

Screen Shot 2015-02-08 at 6.46.35 PM

6. They have a curator. In this case Matt Orr. And he has curated many stories. I don’t know whether he is paid or not or employed by Upworthy or not. My guess is not but who knows. When you think Huffington Post you realize that many people will create content for the masses to see or read for free. This is simply no different than curating on Pinterest, Tweeting interesting stories, editing on Wikipedia or blogging. Each does it for building an online community either for personal or professional utility. If they got no utility they simply wouldn’t do it.

7. In the end they show you a video. You can watch it natively on Upworthy or click through to YouTube to watch it. Either way it doesn’t matter to Upworthy probably. In fact, it’s not even likely a video produced by Upworthy. But if you ARE a online video producer wouldn’t you want to be able to engage your audience the same way that Upworthy does? In this case – I recommend watching the video. It’s nearly 6 minutes but it will help you understand a different perspective than you’re used to – that all dancers must be waifs.

8. And when all else seems lost they make the last appeal to get you. They pop up a modal, block out your attention from anything else and ask for the order. In this case your email. They do it in a friendly, cheeky way that isn’t too offensive. And since you clicked on this article you’ve at least shown intent to be interested in Upworthy. And they know – just like a gym salesman knows – that if you walk out that door it’s much harder to get you back unless they sign you up now, now, now. Always ask for the order.

Screen Shot 2015-02-08 at 11.14.58 AM

90% of the online video businesses that pitch me do none of these things. It’s why most will grow some revenue but will never truly build large online businesses. They want to be media companies that use the Internet rather than tech companies that distribute video.

(Cross-posted @ Both Sides of the Table)

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Here’s What The @NYTimes Should Teach Its Writers About Social Media http://www.cloudave.com/36847/heres-nytimes-teach-writers-social-media/ http://www.cloudave.com/36847/heres-nytimes-teach-writers-social-media/#comments Thu, 05 Feb 2015 14:33:22 +0000 http://www.bothsidesofthetable.com/?p=6474 Not everybody likes the NY Times. I happen to be a long-time fan and paid subscriber. I mostly read the op eds and have for years. I count amongst my favorite people to read from the left & the right as David Brooks, Thomas Friedman & Paul Krugman (and was a big fan of the late […]

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Not everybody likes the NY Times. I happen to be a long-time fan and paid subscriber. I mostly read the op eds and have for years. I count amongst my favorite people to read from the left & the right as David Brooks, Thomas Friedman & Paul Krugman (and was a big fan of the late William Saffire). I also read almost every Maureen Dowd post even though I don’t always agree with her politics or viewpoints I find it interesting to get other perspectives than my own.

So it’s a disappointment to me that these esteemed journalists haven’t adapted to the modern media – to social media. I think they would all hone their craft if they spent a bit more time engaging in online discussions, reading perspectives of others and occasionally commenting publicly with others. Rupert Murdoch is nearly 84 and he seems to have figured out how to be authentic on Twitter and even engage a bit as you can see if you follow his amusing Tweet stream. That’s why I follow Rupert and none of the journalists. Shame.

Here’s an example from nobel-prize economist Paul Krugman.

Paul Krugman Can't Tweet

He can write well about economics but dude can’t Tweet. If you look at his Tweetstream he basically uses it as a one-way publishing tool for his op eds. zzzzzz. And he follows 2 whole people. It’s as though he doesn’t want to get anybody else’s perspective or engage at all. I of all people know how many trolls exist whenever you publish something people don’t like. But that’s no reason to have zero engagement.

How about the venerable slightly-right-of-center David Brooks? Meh. I love the guy’s viewpoints. I watch him every Friday on The Newshour on PBS along with Mark Shields. But on Twitter? Absolute snoozer. Follows 43 and has Tweet 240 times – I’m sure all are just links to his op ed posts.

Brooks Can't Tweet

You could argue that it doesn’t matter. That these journalists are well established and don’t need online audiences. Perhaps. But I think they’re missing out on the medium that allows you to broaden your scope of thinking, test ideas in an online marketplace and allow fans to have a small sliver of unfiltered access to you. It’s a two-way world. Too many NY Times oldline journos are one-way. Shame. And when you look at the 43 people Brooks follows it’s probably about 35 of his fellow NY Times colleagues. And Marc Andreessen. At least there’s that. Marc, maybe you can break through?

Friedman Can't Tweet

Thomas Friedman may have figured out that The World is Flat. And also hot & crowded. But he hasn’t figured out that media is now two way. For a guy so willing to travel the world and debate foreign governments and people it’s surprising he’s not willing to travel to his Tweetstream to do the same. He contextualizes everything about the world yet nothing about his own job or industry. Following 78. All insular. NYT Prescriptions. NYTimes Autos. NYT Open Source. NYT First Draft. NYT Metro Desk. NYT DotEarth. NYT Learn How to Use Social Media. Please.

Dowd Can't Tweet

Dowd follows 71. She can dish the dirt but she can’t grok the new medium. It’s no wonder Buzzfeed, Vox, Upworthy and others are growing leaps. They get the medium for delivering their content has changed. The NY Times – not so much.

Let me say it again. Unlike some of you I’m a fan on the NY Times. I read it every single day as I have done for the past 25 years. I pay for it because I value journalism. But I promise you that website redesigns, paywalls, apps on my phone – none of these things will help the Times long term if it can’t help itself modernize how its reporters use the Internet and how to use social media to drive consumption and engagement.

The best politicians have figured out how to engage on Twitter or Instagram. See Cory Booker or Eric Garcetti. The best comedians have, too. Sports stars are engaging their fans. Actors, too. VCs who use the medium well have been able to control more mindshare than established VCs who do not. Social media affects all public figures and isn’t something that professionals can shy away from.

The New York Times has some people who really get the medium like Nick Bilton, Mike Isaac and some alum like Brian Stelter and Kevin Roose.

This new medium isn’t going anywhere – it’s time to embrace it.

(Cross-posted @ Both Sides of the Table)

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Roundtrip Revenue: Probably, Just Do It. http://www.cloudave.com/36882/roundtrip-revenue-probably-just/ http://www.cloudave.com/36882/roundtrip-revenue-probably-just/#comments Wed, 04 Feb 2015 23:05:04 +0000 http://www.saastr.com/?p=6649 If you’ve been around since the Web 1.0 days, a certain phrase may send shivers up your spine — “Roundtrip Revenue.”  People went to jail at AOL for this, folks, overstating revenue by as much as $1 billion that wasn’t really real.  It was just matched against AOL purchases, making the revenues in essence nonexistent. […]

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Screen Shot 2015-02-03 at 4.59.25 PMIf you’ve been around since the Web 1.0 days, a certain phrase may send shivers up your spine — “Roundtrip Revenue.”  People went to jail at AOL for this, folks, overstating revenue by as much as $1 billion that wasn’t really real.  It was just matched against AOL purchases, making the revenues in essence nonexistent.

I was reminded of this the other day, just a smidge, when I got a  marketing pitch from a SaaS company with a case study about one of their customers … who also happens to be a customer back.

Turns out, tons of SaaS companies do the same thing :)  Albeit at a much smaller scale, and they aren’t public, so there’s (presumably) no fraud here.

What I mean is tech companies tend to sell to other tech companies, especially in the beginning.  And sometimes, there’s an ask back.  The ask from the customer, the prospect, is to buy their product as well.

I generally said No.  First, I was worried that we often had multiple customers in the same vertical (e.g., we had Eloqua, Pardot, Marketo, Silverpop and more all as customers back in the day) and didn’t want to play favorites.  Second, I wanted real sales.  Having a customer pay just a few bucks for our product, not deploy … meant basically no renewal.  Customers that buy but don’t deploy aren’t worth much because they often don’t renew and certainly don’t create second-order revenue.  And if a customer in a recurring revenue business doesn’t renew, it’s basically like you never had them as a customer at all.  And third, I didn’t want to encourage any games and shenanigans in the sales team, and as a corollary of that, didn’t want to encourage “loss leader” deals where we made no net revenue AND had to pay a sales commission on top of that.

All good thoughts, and sort of right … but … when done right, roundtrip revenue in the early days can be a useful, if not epic, tool:

  •  First of all, especially if the CEOs or VPs of Marketing or whomever know each other … it makes for great joint marketing opportunities.  You can each promote each other’s products and be a case study for each other.  I know, it’s a bit insider-baseball.  But a lot better than nothing.
  • Second, if you can at least get deployed, it’s at least an opportunity to get in ahead of other competitors.  Better you than them.
  • Screen Shot 2015-02-03 at 5.08.37 PMThird, even if they are only partially buying because they want your product today, you can get unique access to these roundtrip customers.  They’ll give you honest feedback, let you drive over and demo them stuff, and in general give you at least certain frank insights you just struggle to get from arms-length customers.

I’m not saying this should be a material amount of your revenue.  But you’re not AOL.  It won’t matter in the long run — this will probably be a tiny percent of your revenues.  And disclose it to your investors, so they know.  If it’s <= 10% in the early days — I say go for it.  Pay the commission.  Don’t overanalyze.  And just make sure they deploy.

Something is better than nothing.  And in SaaS, you want to build long-term relationships early in your 7-10 year journey.  In whatever way you can in the early days.

[p.s. this is not accounting (or legal) advice!  even if you can’t recognize some revenue, in the early days, the 1-2-3 benefits make it still worth it.]

 

SEC roundtrip image from here.  High Horse band logo from here.

(Cross-posted @ SaaStr)

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Ok, We’ve Shut Registration Down at 1,850 Folks for The SaaStr Annual. What You Need to Know. http://www.cloudave.com/36860/ok-weve-shut-registration-1850-folks-saastr-annual-need-know/ http://www.cloudave.com/36860/ok-weve-shut-registration-1850-folks-saastr-annual-need-know/#comments Wed, 04 Feb 2015 18:15:33 +0000 http://www.saastr.com/?p=6637 Phew.  Ok well we went a bit over capacity, but we’ll have 1,850 SaaS founders, CEOs, execs and entrepreneurs at the (first?) SaaStr Annual this Thursday in San Francisco at The Regency Ballroom. A few things to know, if your coming, and if you’re not: > If you’re coming to the day sessions, come early […]

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Screen Shot 2015-02-02 at 7.29.09 PMPhew.  Ok well we went a bit over capacity, but we’ll have 1,850 SaaS founders, CEOs, execs and entrepreneurs at the (first?) SaaStr Annual this Thursday in San Francisco at The Regency Ballroom.

A few things to know, if your coming, and if you’re not:

> If you’re coming to the day sessions, come early for breakfast.  We’ll have a special extra session at 8:00am-ish on how to use debt financing (vs. just selling stock) to grow faster.  It’s 100% tailored to founders and sponsored by SVB.  And yes, there will be breakfast and coffee.

Screen Shot 2015-02-03 at 7.44.18 AM> If you’re coming to the day sessions, DON’T come to all of them :)  I know it’s an amazing line-up, but it’s too much.  We don’t want you sitting in a big room all day.  The downstairs, the big room you enter when you check-in, will be full of space to hang out and meet other founders and SaaStrs.  The sponsors will be there, the coffee will be there, the cocktails and WiFi will be there, and we’ll have couches, lounges, and other great stuff to help you meet new SaaS friends.  My suggestion is come to 60% of the sessions.  Hang out on the ground floor 40% of the time.  We’ll be packed to the gills anyway.  Half the point really is “The Lobby”, not the speakers (hat tip to David Hornik) — meeting your fellow founders, SaaS enthusiasts, and execs.  So hang out there :)

> You can come to the party early — and please do.  We’ll open the party up as early as 5:30, so if you’re coming to the party and want to get socializin’ early, come around 5:30.  The bar and Portlandia-grade organic food will be open, and everyone from the day sessions will already be there.

> Yes, we’ll record as many sessions as we can.  We’ll try our best here.  But streaming is a little too aggressive to pull off this year.

> We’ll have free valet parking from Zirx, but you gotta get the app first.  So download Zirx if you want to valet park.  We’ll all try it together.

> We’ll have a mobile attendee app from our friends at Attendify – let’s try it.  Download it from AppStore or GooglePlay, search for SaaStr.  It should have the up-to-the-minute schedule as well as real-time commenting on everything happening.

Screen Shot 2015-02-02 at 4.20.47 PM> It’s all a big experiment.  I’m not sure there’s been an event of this scale that wasn’t a vendor or industry event, at least in enterprise and SaaS.  So bear with us.  The sessions may not run perfectly.  The drinks may be too strong.  The DJ may be too hip for some of us.  So be a little patient and tolerant :)  But it will be great.

> Out-of-towners informal get-together for the night before.  We have nothing official planned (too much going on), but we’ll have an unofficial, unstructured Wednesday night get together for out-of-towners (or in-towners for that matter) at Redford on Geary around 6pm.

Thank you for coming, if you are, and in any event, for being part of this amazing community.  And pre-thank you both to our sponsors, and to Max and Leah of SalesHacker.com for putting on this event with and for us all.

Screen Shot 2015-01-20 at 11.55.05 AM

(Cross-posted @ SaaStr)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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One Weird Trick to Build a Personal Brand http://www.cloudave.com/36879/one-weird-trick-build-personal-brand/ http://www.cloudave.com/36879/one-weird-trick-build-personal-brand/#comments Wed, 04 Feb 2015 18:10:28 +0000 http://www.bothsidesofthetable.com/?p=6481 My long-time friend Jason Lemkin is on the verge of launching a spectacular SaaS conference called SaaStr this week. What Jason has achieved in no time flat in VC is astounding. Without inventing the browser he has single-handedly created a personal VC brand on a shoestring. And as I’ve written about before – building a […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Lemkin-SaaStrMy long-time friend Jason Lemkin is on the verge of launching a spectacular SaaS conference called SaaStr this week. What Jason has achieved in no time flat in VC is astounding. Without inventing the browser he has single-handedly created a personal VC brand on a shoestring.

And as I’ve written about before – building a personal brand is extremely important in today’s competitive job market. Here’s how he did it.

Oh, but the weird trick first. Jason is a master of communications and that’s what this post is about. I recently saw him Tweet this so I thought it would be a great title for my post on his spectacular early success in building his VC profile and bona fides

First. Some background.

In 2006 when I was a budding entrepreneur building my second startup I ran into a young (ish) enthusiastic founder of an electronic signature company called EchoSign. I was building a document management company and he was building a document signature company.

I know it will be hard for you to believe in 2015 but in 2006 Palo Alto (where I lived) was kind of dead. We had just gotten over the dot com crash and return to normalcy where nobody seemed to give a shit about tech companies any more. And we were just entering the “TechCrunch era” with a little known blogger named Michael Arrington hosting parties at his rental house in Atherton and Robert Scoble first appeared naked in a shower (in this case with Shel Israel – and this was the exact party. So many people I now know were there. I had just moved back from a decade in London and knew nobody. I was Johnny NoMates.

But during that period I got to know Jason. We shared information about building sales teams. Hiring inside reps, how to comp field sales reps and how to balance leads across both. We attended Saleforce.com parties. We were Under the Radar. Nobody knew us. I had been doing SaaS for 7 years. Jason has also done startups for a long time. We chatted about the shitty things VCs did to us. We were in the trenches together.

I sold my company to Salesforce.com and although I didn’t continue my career there I have always held the company and it’s leadership in high esteem (even if I have a few fun private stories from back in the day). Jason sold his company to Adobe. Many years later the companies DropBox, Box & Docusign would emerge as huge industry behemoths. I’m sure we both felt the same. Proud of our accomplishments. Wondering how far we could have taken things. And in awe of those that got to a level higher than we got.

If you’re reading this you’ll now likely know that I became a VC in 2007 with what is now called Upfront Ventures. My long-time mentor – Yves Sisteron – brought me on board and was gracious enough to give me the space to build out my own personal brand without overshadowing his amazing accomplishments. I thought about how I wanted to do that. I thought about the fact that I knew SaaS better than most. Maybe that could be my brand? I thought about the fact that I was starting in LA? Maybe I could be SoCal guy?

I had no idea I’d eventually be boxed out of the SaaS branding by Jason (SaaStr) and the LA branding by my partner Greg Bettinelli with #LongLA ! Both have done an amazing job of defining themselves in venture in a short period of time. At the time both SaaS and LA seemed risky branding to me so I settled on what I felt was most authentic – Both Sides of the Table. I reference to the fact that I had walked in entrepreneurs shoes but now found myself on the other side. And was willing to be as open about it as Brad Feld, my inspiration, was.

Many years later I sat down with Jason again as he was contemplating getting into venture. I have no idea what I said to him but obviously I wasn’t able to talk him out of it and he joined Storm Ventures where he had a long-standing relationship not unlike my own with Upfront.

In all honesty – I think Jason and I are sort of joined at the hip in that way in that we’ve had such a similar journey. And if I didn’t say he took the venture world by Storm I would be remiss (yes, my kids would say “dad humor,” I know, I know).

Jason charted his own course though. I was an early fan and heavy user of Quora back in the day and used to get huge benefit out of the conversations I had there. But Jason took Quora usage to 11. And instantly I had people I had relationships with or even portfolio companies all asking me for intro’s to Jason. Many people knew that I knew him due to our Twitter conversations but also because I had him speak at every one of our conference. He was always one of the most sought after guys.

In a crowded market – venture capital – where it is hard to break out and be noticed. Jason decided to take a position. He would double down on what he knew better than nearly any VC – SaaS. He decided to wrap himself in it, provide unparalleled information about SaaS businesses and push all of his chips into the pile.

Time will judge Jason’s VC career on returns just like it does all of us. But returns are partly a function of whether one can get access to great deal flow. It is a function of whether entrepreneurs want to work with you and seek you out. It’s a function of whether you can help early-stage founders through the perilous early days of hiring your first staff, pricing your product, marketing / branding  and all of the minutiae that determines success and failure.

Jason has build a brand for himself and one that he eventually will have to incorporate into Storm Ventures, which is tricky but I’m sure he’ll manage. There were many years where people questioned whether VCs should build brands. Question not. Do.

On these early signs I’m long Jason Lemkin.

And was fortunate enough to get a reference call from an LP asking me this very question. And I gave enthusiastic support.

Jason. On the eve of your big event I will be sitting in a quite room drinking a small glass of bubbly and toasting your early accomplishments. And waiting for you to send me your Glengarry leads. We deserve to sit on a board together. I think we’d be unstoppable :)

Congrats on your success. Knock ‘em dead.

Editor’s note: Funny to read Mark’s story about Jason.  It’s also Mark’s own story.   I’m lucky enough to have seen both from early stages.  In fact in late 2012 when I invited Jason as guest blogger here, I told him: 

” You’re gonna pull a Mark Suster”.

And he did. :-)

(Cross-posted @ Both Sides of the Table)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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“Vanilla OpenStack” Doesn’t Exist and Never Will http://www.cloudave.com/36862/vanilla-openstack-doesnt-exist-never-will/ http://www.cloudave.com/36862/vanilla-openstack-doesnt-exist-never-will/#comments Tue, 03 Feb 2015 22:32:26 +0000 http://cloudscaling.com/?p=7704 One of the biggest failures of OpenStack to date is expectation setting.  New potential OpenStack users and customers come into OpenStack and expect to find: A uniform, monolithic cloud operating system (like Linux) Set of well-integrated and interoperable components Interoperability with their own vendors of choice in hardware, software, and public cloud Unfortunately, none of […]

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One of the biggest failures of OpenStack to date is expectation setting.  New potential OpenStack users and customers come into OpenStack and expect to find:

  • A uniform, monolithic cloud operating system (like Linux)

  • Set of well-integrated and interoperable components

  • Interoperability with their own vendors of choice in hardware, software, and public cloud

Unfortunately, none of this exists and probably none of it should have ever been expected since OpenStack won’t ever become a unified cloud operating system.

The problem can be summed up by a request I still see regularly from customers:

I want ‘vanilla OpenStack’

Vanilla OpenStack does not exist, never has existed, and never will exist.

Examining The Request

First of all, it’s a reasonable request.  The potential new OpenStack customer is indirectly asking for those things that led them to OpenStack in the first place.  The bi-annual user survey has already told us what people care about:

OpenStack User Survey Fall 2014 v1 copy.001

The top reasons for OpenStack boil down to:

  • Help me reduce costs

  • Help me reduce or eliminate vendor lock-in

Hence the desire for “vanilla” OpenStack.

But what is “vanilla”?  It could be a number of things:

  1. Give me the “official” OpenStack release with no modifications

  2. Give me OpenStack with all default settings

  3. Give me an OpenStack that has no proprietary components

Which immediately leads into the next problem: what is “OpenStack”?  Which could also be a number of things:

  1. Until recently, officially “OpenStack” meant Nova + Swift *only*

  2. The de facto “baseline” set of commonly deployed OpenStack services

    1. Nova, Keystone, Glance, Cinder, Horizon, and maybe Neutron

    2. There is no name or official stance on this arbitrary grouping

  3. Use of DefCore + RefStack to test for OpenStack

This last item is still in motion and is the intended replacement model for #1.  All of this is covered elsewhere so I won’t go into details on what it means here.

Understanding The OpenStack Trademark and Its History

It’s not really a secret, but it’s deeply misunderstood: until the last few weeks, the Bylaw very specifically said that “OpenStack” is Nova plus Swift.  That’s it. No other projects were included in the definition.  Technically, many folks who shipped “OpenStack” without Swift were not actually legally allowed to use the trademark and brand.  This was widely unenforced because the Board and Foundation new the definitions were broken.  Hence DefCore.

Also, the earliest deployments out there of OpenStack were Swift-only.  Cloudscaling launched the first ever production deployment of OpenStack outside of Rackspace in January of 2011, barely 6 months after launch.  At that time, Nova was not ready for prime time.  So the earliest OpenStack deployments also technically violated the trademark bylaws, although since the Foundation and bylaws had yet to be written this didn’t really matter.

My point here is that from the very beginning of OpenStack’s formation drawing a line around “OpenStack” has been difficult.

Explosive Growth of Projects is Making Defining OpenStack Much Harder

There are now 20 projects in OpenStack.  Removing libraries and non-shipping projects like Rally, there are still ~15 projects in “OpenStack” integrated status.  And there are many more on the way.  Don’t be surprised if by the end of 2016 there are as many as 30 shipping OpenStack projects in integrated status.

Many of these new projects are above the imaginary waterline many have created in their minds for OpenStack.  Meaning that for many OpenStack is an IaaS-only effort.  However, we can now see efforts like Zaqar, Sahara, and others are blurring the line and moving us up into PaaS land.

Slide1

So when a customer is asking for “OpenStack”, just what are the asking for?  The answer is that we don’t know and rarely do they.  The lack of definition creation on the part of the Board, the Foundation, and the TC has made explaining this very challenging.

Vanilla-land: A Fairy-Tale in the Making

You can’t run OpenStack at scale and in production, the only measure that matters, in a “vanilla” manner.  Here I am considering “vanilla” to include all three definitions above: default settings, no proprietary code, and no modifications.  The closest you can get to this is DevStack, which is not scalable nor acceptable for production.

Why?

It would really take far too long to go through all of the gory details, but I need to give you some solid examples so you can understand.  Let’s do this.

General Configuration

First, there are well over 500 configuration options for OpenStack, maybe more.  Many options immediately take you into proprietary land.  Want to use your existing hypervisor, ESX?  ESX is proprietary code, creating vendor lock-in and increasing costs.  Want to use your existing storage or networking vendors?  Same deal.

Don’t want to reuse technology you already have?  Then be prepared for a shock about what you’ll get by default from core projects.

Networking

Whether you use nova-networking or Neutron, the “default” mode is what nova-networking calls “single_host” mode.  Single host mode is very simple.  You attach VLANs to a single virtual machine (or a single bare metal host) which acts as the gateway and firewall for all customers and all applications.  Limited scalability and performance since an x86 server will never have the performance of a switch with proprietary ASICs and firmware.  Worst of all, the only real failover model here is use a high availability active/passive model.  Most people use Linux-HA, which means that on failover, you’re looking at 45-60 seconds when absolutely NO network traffic is running through your cloud.  Can you imagine a system-wide networking failure of 60 seconds each time you failover the single_host server to do maintenance?

You can’t run like this in production, which means you *will* be using a Neutron plugin that provides control over a proprietary non-OpenStack networking solution, whether that’s bare metal switching, SDN, or something else.

Storage

Like networking, the default block storage on demand capability in Cinder is not what people expect.  By default, Cinder simply assumes that each hypervisor has it’s only locally attached storage (either DAS or some kind of shared storage using Fiber Channel, etc).  Calls to the Cinder API result in the hypervisor creating a new block device (disk) on the local storage.  That means:

  • The block storage is probably not network-attached

  • You can’t back the block storage up to another system

  • The block device can’t be moved between VMs like AWS EBS

  • Hypervisor failure likely means loss of not only VM, but also all storage attached to it

This is *not* what customers mean when they think about block storage.  What they usually mean is that they want a pooled set of SAN devices providing block storage on demand, where the snapshots are at least shared across the SAN devices or backed up else, and disk drives can be moved from VM to VM.  Whether this is a storage array, distributed software only storage, or whatever, doesn’t matter.

That means in order to meet the actual requirements of the customer they have to load a Cinder plugin that manages a proprietary non-OpenStack block storage solution.  That could be EMC’s own ScaleIO, an open source distributed block store like Ceph, industry-standard SAN arrays like VMAX/VNX, or really anything else.

And if you look at the laundry list of storage actually used in production you’ll see that over half of all deployments take this option.

Application Management

Want your developers to create great new scalable cloud-native applications?  Great, let’s do it, but it won’t be with Horizon.  Horizon is a very basic dashboard and even with Heat, there are major gaps if you want to help your developers succeed.  You’ll need Scalr or Rightscale as cloud application management frameworks (especially if you are going multi-cloud or hybrid cloud with the major public clouds) or you’ll need a PaaS like CloudFoundry that does the heavy lifting for you.

You Can Reduce Vendor Lock-in, But … You Can’t Eliminate It

Are you trying to eliminate vendor lock-in?  Power to you.  That’s the right move.  Just don’t expect to succeed.  You can reduce but not eliminate vendor lock-in.  It’s better to demand that your vendors provide open source solutions, which don’t necessarily eliminate lock-in, but does reduce it.

Why isn’t it possible?  Well, network switches, for example, are deeply proprietary.  Even if you went with something like Cumlus Linux on ODM switches from Taiwan, you will *still* run proprietary firmware and use a proprietary closed-source ASIC from someone like Marvell or Broadcom.  Not even Google gets around this.

Firmware and BIOS on standard x86 servers is all deeply proprietary, licenses strictly, and this won’t change any time soon.  Not even the Open Compute Project (OCP) can get entirely around this.

The Notion of Vanilla OpenStack is Dangerous

This idea that there is a generic “no lock-in” OpenStack is one of the most dangerous ideas in OpenStack land and it needs to be quashed ruthlessly.  Yes, you should absolutely push to have as much open source in your OpenStack deployment as possible, but since 100% isn’t possible, what should be evaluating is what combination of open source and proprietary get you to the place where you can solve the business problem you are trying to conquer.

Excessive navel-gazing and trying to completely eliminate proprietary components is doomed to failure, even if you have the world’s most badass infrastructure operations and development team.  If Google can’t do it, then you can’t either.  Period.

The Process for Evaluating Production OpenStack

Here’s the right process for evaluating OpenStack:

  1. Select the person in your organization to spearhead this work

  2. Make him/her read this blog posting

  3. The leader should immediately download and play with DevStack

  4. The leader should create a team to build a very simple POC (5 servers or less)

  5. Understand how the plugins and optional components work

  6. Commission a larger pilot (at least 20-40 servers) with a trusted partner or set of trusted partners who have various options for “more generic” and “more proprietary” OpenStack

  7. Kick the crap out of this pilot; make sure you come with an exhaustive testing game plan

    1. VM launch times

    2. Block storage and networking performance

    3. etc…

  8. Gather business requirements from the internal developers who will use the system

  9. Figure out the gap between “more generic” and “more proprietary” and your business requirements

  10. Dial into the right level of “lock-in” that you are comfortable with from a strategic point of view that meets the business requirements

  11. If at all possible (it probably won’t be, but try anyway), get OpenStack from a vendor who can be a “single throat to choke”

Summarizing

I am trying to put a pragmatic face on what is a very challenging problem: how do you get to the next generation of datacenter?  We all believe OpenStack is the cornerstone of such a strategy.  Unfortunately, OpenStack itself is not a single monolithic turn key system.  It’s a set of interrelated but not always dependent projects.  A set of projects that is increasing rapidly and your own business probably needs a subset of all the projects, at least initially.

That means being realistic about what can be accomplished and what is a pipe dream.  Follow these guidelines and you’ll get there.  But whatever you do, don’t ask for “vanilla OpenStack”.  It doesn’t exist and never will.

(Cross-posted @ Cloudscaling)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Why CAC is Usually Irrelevant in Early-ish Stage SaaS Companies (vs. B2C Where It’s Critical) http://www.cloudave.com/36839/cac-usually-irrelevant-early-ish-stage-saas-companies-vs-b2c-critical/ http://www.cloudave.com/36839/cac-usually-irrelevant-early-ish-stage-saas-companies-vs-b2c-critical/#comments Fri, 30 Jan 2015 18:04:07 +0000 http://www.saastr.com/?p=6627 I recently meet with a very high-growth “XaaS” company.  Not software as a service, but one that provides some version of humans-as-a-service.  And after huge top-line growth, they were struggling now with CAC.  They’d fueled their hyper growth with a combination of Adwords and Groupons and Facebook Ads and Twitter Cards.  And when that party […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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I recently meet with a very high-growth “XaaS” company.  Not software as a service, but one that provides some version of humans-as-a-service.  And after huge top-line growth, they were struggling now with CAC.  They’d fueled their hyper growth with a combination of Adwords and Groupons and Facebook Ads and Twitter Cards.  And when that party started to run out, and they had to manage their margins, growth started to plummet.

We all get that.  But that ain’t SaaS.  With an S.  That’s just aaS.

Screen Shot 2015-01-29 at 1.14.51 PMNowadays — as my friend and co-investor Christoph Janz of Point Nine Capital noted the other week — most every SaaS founder seems to know the basic SaaS Playbook, or at least how the metrics should be presented and work.  One that everyone presents with deep precision and seeming insight is CAC.

“I’m at $60k MRR, with a CAC or Magic Number or Sales+Marketing or whatever you call it, of 123.6 days.  So we have great unit economics.  We’re so proud.”

Dude — of course you do.

Let’s think about it for a minute.  For most SaaS companies, as you come up on Initial Traction ($1-$1.5m ARR) and beyond here’s what happens:

  • Nothing in “paid marketing” for a business-process SaaS product like Adwords or Groupon or billboards or radio or whatever really performs at this stage, so of course you aren’t wasting (too much) scarce capital there, at least in the early days.  It’s pretty darn hard to “prime the pump” with most paid B2B products.  Later, once you have a Brand, you can do more.  Free products, too this can work early.  But for true B2B SaaS?  Direct ROI is limited for most paid marketing programs in the early days.
  • All of your early customers are what I call “high affinity” customers.  You have no brand at $500k or $1m ARR.  You don’t even have a mini-brand yet (more on that here).  Usually, they find you (vs. vice-versa), even if it’s just from a Techcrunch post or whatever.  And they find you and seek you out because you have something unique or at least highly differentiated that they really, really want.  At least a core feature or two that is.  So your direct marketing costs are basically zero here too.
  • The sales team is pretty darn efficient at $1m ARR.  It has to be.  Because as CEO your cost as a sales rep is “zero”, and you only have 1-2 reps at this stage.

My only real point here is don’t sweat your CAC too much in the early days, at least not usually, at least not in business-process SaaS.  It’s not even really a core metric, not really, until later.  All it will really do is confirm the business is working.

Even usually up to $2m ARR or more, (x) you have no money to spend on marketing, and (y) you barely have any sales reps, so (z) of course your CAC’s going to be low.

Just manage your spend to match your growth and ARR, spend marketing dollars on stuff that performs (even if it’s < $1 to make a $1, up to a point), and pay your reps a % of what they bring in — and CAC usually works itself out.  At least for quite a while.

 

magic number image from here

(Cross-posted @ SaaStr)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Evolution of the Organization Pt. 1 http://www.cloudave.com/36780/evolution-organization-pt-1/ http://www.cloudave.com/36780/evolution-organization-pt-1/#comments Fri, 30 Jan 2015 17:18:05 +0000 http://www.thefutureorganization.com/?p=11501 This concept and visual was taken from my new book, The Future of Work: Attract New Talent, Build Better Leaders, and Create a Competitive Organization. A few weeks ago I introduced the concept of The 14 Principles of the Future Organization which outlines the crucial characteristics that organizations must have in order to succeed in the new […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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This concept and visual was taken from my new book, The Future of Work: Attract New Talent, Build Better Leaders, and Create a Competitive Organization.

A few weeks ago I introduced the concept of The 14 Principles of the Future Organization which outlines the crucial characteristics that organizations must have in order to succeed in the new business landscape that we are seeing emerge. For quite a while now I have been writing about and exploring how employees, managers, and organizations are evolving. To specifically show how organizations are evolving from past to future I wanted to create an image that depicts the “Evolution of the Organization.” This follows the same theme as: The Evolution of the Employee and The Evolution of the Manager

This is part 1 of the image:

The_evolution_of_the_organization_part1

Teams

Jeff Bezos has the “two pizza rule,” meaning that any team should be able to be fed by just two pizzas; if not, then the team is too large. We are seeing a big shift away from large structured centrally located teams to smaller more globally distributed teams which are held together by technology. As long as team members can access to the internet it doesn’t matter where they are located.

Workforce

I may sound like a broken record when I say this, but the future of work is absolutely about breaking down barriers between teams and geographies. Sales should be speaking with product development, marketing should be speaking with customer service and support, and engineering should be speaking solution delivery teams. The traditional model saw only people in the same team or physical location share and collaborate; no more. The organization of the future is a connected organization where information, collaboration and communication happens without boundaries.

Operational Model

There’s a reason why large organizations are stereotyped as being slow-moving, bureaucratic, old-fashioned, and simply outdated…because many of them are. Larger organizations are at a high risk for being disrupted (just take a look at what’s happening with IBM) which means they need to learn how to operate like smaller companies. However, a paradox exists. As organizations grow so does their complexity which results in more sluggishness. However, these same organizations also want more profits which means they have to grow. So, they are stuck with trying to find a way to grow while becoming less complex. I talk about this much more in my book including exploring a few possible scenarios.

Organizational Focus 

Organizations around the world have been making a various dangerous assumption; assuming that employees would work there because they needed to. Years ago this was definitely the case as there was really only one way to make a living. However as Dan Pink rightly commented, “today talented people need organizations less than organizations need talented people.” This means that organizations have to shift their focus from creating a place where they assume people NEED to work there to creating an environment where people WANT to work there.

Adaptation

Going forward “late adopter” means “out of business.” Years ago organizations had the luxury of seeing what their competitors were doing and then quickly following on their heels. Today that is no longer true. Organizations must adapt quicker and more aggressively if they wish to thrive in this new rapidly changing business world.

Innovation and Ecosystems

Innovation was something that used to be done only by a specific department within an organization. Today we are seeing a completely new model of innovation opening up based on ecosystems which includes employees, customers, partners, the general public, and yes, even competitors. Organizations that create these ecosystems will thrive.

Part 2 of this image will be released in the next few days and I will explore these topics in more detail here in blogs, videos, and podcasts interviews. But for now I hope this gives you some food for thought!

(Cross-posted @ The Future Workplace)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Data Democracy: Ready to Transform Business http://www.cloudave.com/36793/data-democracy-ready-transform-business/ http://www.cloudave.com/36793/data-democracy-ready-transform-business/#comments Fri, 30 Jan 2015 17:04:00 +0000 http://www.cloudave.com/?guid=ac3bd262843f2b647fd6d5895b1d8d3c The barriers that have stood between business data – and the true value it holds – are finally coming down. Access to data is finally being democratized within organizations. The access costs and operational and IT silos are coming down, and for the first time any collaborative team, virtually anyone in an organization can get […]

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Shutterstock_162650075The barriers that have stood between business data – and the true value it holds – are finally coming down. Access to data is finally being democratized within organizations. The access costs and operational and IT silos are coming down, and for the first time any collaborative team, virtually anyone in an organization can get the insight they need to make data-enhanced decisions.

How is this so? It no longer takes six to nine months to build a viable, even merely workable, data warehouse. No longer are teams of data scientists needed to work their esoteric analytical voodoo simply to be able to query the data on the most narrow of questions and scope. The technological foundations are here now, finally, that make it possible for anyone in the enterprise to get the actionable information they need – at any time – and anywhere they happen to be.

This is the democratization of enterprise data. And it’s going to forever change data driven business decision-making and collaboration. It’s certainly taken long enough to get here.

Legacy data analytics tools have fallen short when it comes to the promises made regarding so-called “big data solutions.” These tools have proven themselves to be difficult to use. Too reliant upon on-premises technologies, and they are not available where their answers are needed most: in the field, at customer locations, within the warehouse, before the big presentation, or wherever employees, executives, and teams happen to be when they need answers.

Step-by-step-guide-sales-success

In the typical large enterprise today, delivery of information is performed by a two-step service bureau model. Those needing new business insight tools would a request to their analysts, who then turn to their IT team and ask IT to provision to hardware and data platform and perform all of the associated integration work and schema development. Just building a basic data warehouse can take eight months to a year. In short, they don’t enable people to obtain the insights they need when, how, and where they need them. That’s not good enough.

Fortunately, that’s all changing. And it’s changing rapidly.

For the first time, data analytics tools are fully cloud native. They are designed cloud from the ground up. This is why they are agile. They don’t take months or even years to set up. And they are accessible to everyone in the business, not just a few data analysts.

Furthermore, this democratization is powered by mobile. Workers need access to data and answers to pressing business questions whenever and wherever they are working. The democratization of data means they have access to comprehensive and clear answers to inquiries on the devices they have with them.

That brings up the third foundation of data democratization. The insight provided by data analytics tools is accessible to everyone. With legacy data analytics tools everyday business users simply do not have access to the information they need to most intelligently do their jobs. And, when answers do eventually come, they are so cryptic they are incomprehensible to anyone without a PhD in data science.

Of course, these cloud native, highly mobile, and insight-accessible data analytics technologies are powerful. By leveraging the power of cloud platforms, billions of rows of data can be digested at rates that were never before possible. It’s data that can be surveyed from anywhere, delivered on most any mobile device, and the answers comprehended by anyone. All of this is what makes the democratization of data so powerful.

With this democratization of data, implementing business intelligence solutions no longer takes months or even years. It doesn’t require data scientists to architect complex data warehouses, or design the schemas to make it run as well as the reporting infrastructure that only delivers results data analysts can understand.

Finally, data democratization is delivering analytics in a way that works for today’s workforce. And it finally puts crucial business information in the hands of those who need it. And with this democratization enterprises unleash the data that makes them infinitely more competitive. This intelligent collection, analysis, and mobile distribution of data analytics enables enterprises to not only stay a step or two ahead of the competition, but to leap ahead.

This is how data democracy is transforming business, and it’s about time.

(Cross-posted @ Blog)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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How to Ensure Your First 2 Sales Reps Actually Work Out http://www.cloudave.com/36795/ensure-first-2-sales-reps-actually-work/ http://www.cloudave.com/36795/ensure-first-2-sales-reps-actually-work/#comments Thu, 29 Jan 2015 22:30:40 +0000 http://www.saastr.com/?p=6615 A long-time reader, first time caller recently wrote in to ask a question that pretty much everyone asks some variant of: If you had to force rank these items in terms of what we should primarily be looking for in these first sales reps, how would you rank them? - has sold SaaS before (as […]

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A long-time reader, first time caller recently wrote in to ask a question that pretty much everyone asks some variant of:

Screen Shot 2014-08-13 at 2.16.45 PMIf you had to force rank these items in terms of what we should primarily be looking for in these first sales reps, how would you rank them?
- has sold SaaS before (as opposed to selling media/ads, or some other product)
- has sold something of a similar size ticket/ACV (ours is high..$150k-350k ACV)
- has sold something to the same kinds of companies we are going after
- has worked in a startup situation before
Thanks again, have a great weekend.”

These are the right questions.  You can’t have it all, not only in your first reps, but in any of your reps, really.  What do you look for?

Well, later, you can look for a lot of things.  Once you have some help, a VP of Sales to do the hiring.

But over dozens of SaaS start-ups that have churned through their first sales reps, I’ve boiled the key criteria down to Just Two.  Here’s all you need to know to qualify your first two sales reps:

  • waitingphone#1 — Would YOU buy from this rep?  Later, as you add reps 3-300, you’ll find it takes a village.  And in fact, you’ll find you end up with lots of reps that you wouldn’t personally buy from.  Some are too slick.  Some are too aggressive.  Whatever it is.  And that can work — later.  But not with the first reps.  Because the thing, these early leads, they’re precious.  If you wouldn’t buy from the rep — it will never work.  You’ll never trust her.  And when it’s hard, you won’t know why.  But if it’s someone you’d buy from — you’ll know what to do.  Just help.  Be a great “middler” and let her close.  But if you’re second guessing your first 2 reps, there’s about a 93.4% chance they’ll fail.  There’s just too much uncertainty, and you’ll never let the leads go to a better place.  To a place where they can close at a higher, faster rate.  Don’t let yourself believe sales is some sort of mystery, that some rep you don’t understand knows how to practice.  You know how to sell, at least you know how to sell your product.  You just aren’t great at it.
  • #2 — Does he or she have at least 18-24 months of experience selling SaaS products successfully — on quota?  Later, you can hire all types.  Later, folks that haven’t sold directly before, you can hire them into entry-level roles or SDR roles.  Later, folks that have sold, but not SaaS, you can take some risks there if the rest of the package is strong.  But not in The First Two.  Because the thing is, you don’t know.  You don’t know how to sell SaaS products, not really.  So you simply cannot hire reps that don’t have at least some quota-carrying SaaS experience here.  Later, when you hire a VPS, he or she can mix it up here.

>> So what do you give on then?  The reality is, what you’re probably giving on is The World’s Best Closers.  You may hire very good reps … but not absolute top of the pack.  

And that’s OK, in early days.  Because hiring someone that is Good, that You’d Buy From and Trust, That Has Been Trained in SaaS Sales … is going to work.  Better than the world’s best closer that you wouldn’t buy from, that you don’t fully understand.  As long as they are a good closer, that’s probably much better than you.  Most founders-serving-as-VPS are great middlers, great demo’ers, but mediocre closers.

You haven’t been trained to ask for the check.  And you don’t like to Hear No.   And you’ll leave (lots) of money on the table just to close the customer.

A good rep, that you trust, that you’d buy from, with at least 18+ months of experience — will do better.  They’ll ask for the check now, this month.  They’re ok hearing No.  And they don’t leave as much money on the table.

Boom!  Revenue per lead goes up.  You learn more.  Do this up to $1m ARR, then hire your VPS.

But without #1 and #2 — it’s too risky.  They’ll fail, you won’t trust them or understand them, and you’ll be back to Square One.  You can’t afford that.

(Cross-posted @ SaaStr)

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Jobs-to-be-done | Three tests ALL ideas must pass http://www.cloudave.com/36615/jobs-done-three-tests-ideas-must-pass/ http://www.cloudave.com/36615/jobs-done-three-tests-ideas-must-pass/#comments Wed, 28 Jan 2015 20:40:00 +0000 http://blog.hypeinnovation.com/jobs-to-be-done-three-tests-all-ideas-must-pass People don’t want to buy a quarter-inch drill… they want a quarter-inch hole. Theodore Levitt, Harvard Business School professor You’re awash in ideas. Ideally from running targeted campaigns, but you may be seeing them from other quarters as well. Great, then what? A key activity in the process of innovation is determining which of many […]

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People don’t want to buy a quarter-inch drill…
they want a quarter-inch hole.
Theodore Levitt, Harvard Business School professor

You’re awash in ideas. Ideally from running targeted campaigns, but you may be seeing them from other quarters as well. Great, then what? A key activity in the process of innovation is determining which of many ideas are worth further investigation and development. In the evaluation of ideas, I’ve seen some common tests:

  • Technological feasibility
  • Fit with strategy
  • Financial analysis

These are understandable evaluation criteria, right? Good and appropriate at the right time and for the right innovations. But they’re not the most important ones. Every idea, to be successful, must pass three jobs-to-be-done tests. What are jobs-to-be-done? Professor Levitt’s quote at the top of this article offers a succinct definition. I also offer a more mechanical construction of the concept:

A job-to-be-done is something we want to accomplish. It consists of individual tasks and our expectation for each of those tasks. We rate the fulfillment of the expectations to determine how satisfied we are with a given job-to-be-done.

Is “jobs-to-be-done” essentially a fancy term for customer needs or pain points? No. It’s a more encompassing concept. It does include those things, but its larger sensibility rests on objectives we want to accomplish. When I’m playing Angry Birds or 2048 during some down time, am I fulfilling a need? It’s more of a desire to occupy myself while I wait.

Every idea must address a job-to-be-done to become an innovation.

It’s an intuitive observation that ideas only become innovations if they help customers fulfill a job-to-be-done. Yet, it seems difficult to apply in practice. Research has shown that only 1 out of 9 ideas that go into significant development become commercial successes. If everyone understood the requirements of jobs-to-be-done, shouldn’t that ratio be better?

Three job-to-be-done tests for an idea

There are three facets to evaluating an idea in the jobs-to-be-done context:

  1. Does the idea target an actual job-to-be-done that enough people have?
  2. Is the idea a meaningful improvement over the current way people fulfill their job-to-be-done?
  3. Does the value of the idea to customers exceed the cost of the idea to them?

These three tests are a decision tree:

JTBD_Evaluation_Decision_Tree

 

Individually, each test provides a rich vein of analysis to understand potential innovations. Taken together, they  identify ideas that have the highest potential for success with intended beneficiaries.

#1: Targets real job of enough people

This is the opening acid test of an idea. Does it address an actual job people have? In some ways, this should be the easiest test to pass. First, let’s look at people’s sources of ideas:

Idea_sources

Two of those are related to jobs that people actually have (my own itch; the intended beneficiaries). The other source – imagining the future – is more speculative. My impression is that it’s the inspiration that people commonly associate with Innovation. While they are more speculative, I’d say that even “imagining the future” ideas are grounded in some legitimate job-to-be-done.

But not all are. Here’s an example of an idea that didn’t actually address a true job-to-be-done. A serial entrepreneur Color_App_logolaunched Color, an app that would share your pictures with any stranger within 100 feet of your location. Color received $41 million in funding from some the most savvy venture capitalists out there (e.g. Sequoia Capital). It was a new way to use the hot trends of SOcial LOcation MObile (SoLoMo). But stop and consider what it actually offered: sharing pictures…with strangers…within a 100 foot radius. How many people have that job-to-be-done? Try to think of current cases where you’re sharing things with strangers nearby. Another job-to-be-done Color targeted: creating a visual composite of a particular location through shared images. Sounds cool, right? Again, consider how often you have that job.

Unsurprisingly, fate was not kind to Color. The company is no more.

Which leads to the second part of this test. Is it a job-to-be-done held by enough people? Think of this as rough market sizing. Evaluate how many people have the job-to-be-done. In the early stages of evaluation, this is a t-shirt sizing exercise (small, medium, large). Enough will be relative to the market. If your market is luxury, far fewer people are needed than for an idea targeting low cost mass market.

#2: Idea is better than current solution

After you’ve determining the idea targets an actual job-to-be-done for enough people, the next test: Is the idea better than what people are using today? And not just somewhat better, butmeaningfully better.

Why?

Harvard professor John Gourville relayed this finding about the adoption of innovations:

According to behavioral economist Richard Thaler, consumers value what they own, but may have to give up, much more than they value what they don’t own but could obtain. Thaler called that bias the “endowment effect.”

To address her job-to-be-done, a customer is doing something today. It may not be great, but she at least knows the current solution’s strengths and weaknesses. She also knows the quality of outcomes she obtains in fulfilling her job-to-be-done with the incumbent solution. And plans accordingly.

To get this customer to switch from her incumbent solution, the new innovation will need to significantly enhance her outcomes. Normally, outcomes for a product can be somewhat abstract. However, by thinking in terms of what the customer is seeking to accomplish, not features that are used, the analysis is made easier.

WazeWaze is a mobile driving directions app. Which certainly addresses a common job-to-be-done: driving from one place to another. Providing directions is something that paper maps, AAA and Garmin have provided for years in the U.S. But Waze offered a significant improvement over traditional directions solutions, and even the more recent editions from Google and Apple:

  • Routing you automatically for the fastest trip based on traffic conditions
  • Voice navigation for safer driving
  • Free to reduce costs
  • User-input info about safety or police conditions (e.g. police speed traps, objects in the road)

When you think about your job-to-be-done – moving from point A to point B quickly, without incidents – Waze fulfills that job and the desired outcomes significantly better than existing solutions. Unsurprisingly, Google purchased Waze for more than $1 billion.

When analyzing an idea, you should have a clear and unambiguous understanding for why it’s superior to current solutions. Not in terms of feature comparisons. But in terms of delivering on the outcomes that matter for the job-to-be-done.

#3: Value to customer exceeds its cost

Read this final test closely. At first glance, you might mistake it for evaluating your company’s costs to produce the innovation. But it’s not – such an analysis is done separately in the idea evaluation process. This third job-to-be-done test requires you to step into your customer’s shoes.

Cost is more than just cash paid. It encompasses a range of factors for the customer:

Holistic_view_of_costs_to_customers

 

Cash outlays: Obviously, any  new cash the customer must spend for the innovation is a cost.

Loss of previous functionality: The new innovation may not include a function/service that customers had become accustomed to. Giving that up is a cost in their eyes.

New unwanted behaviors: With a new solution, it’s reasonable to expect new behaviors to emerge. People reacting naturally to the new features/services that are available. But over time, these behaviors may actually become a cost for the customer.

The Pebble Watch is a good example of this. Pebble’s smartwatch provides an ongoing series of notifications about emails, Pebble_Watchtweets, Facebook notifications, texts, etc. It passes Test #1, as it addresses a job-to-be-done (be aware of new items of interest). It’s debateable whether it passes Test #2, where the incumbent solution is the mobile phone. Let’s assume for some segment of people, instant awareness is vital. But there’s a downside to this new functionality. LinkedIn product manager David Breger wrotethat the easy access to constant updates on his watch became a significant distraction:

Because, as much as I was rudely checking my phone before, I was checking my watch even more! Now of course, I know you can turn on and off certain notifications, but to me the whole point of getting the Pebble was to scan notifications quickly and then triage appropriately.

But what I learned was that people DO notice you checking your watch. It ends up being almost as obtrusive as pulling out your phone.

Put yourself in similar shoes. Imagine looking at your watch with every new notification, while trying to engage someone in real life. It would undermine your interactions. This is a cost that customers would have to bear.

Connecting solution to existing infrastructure: Swapping one solution for another may require new connections to other infrastructure and routines. That’s a switching cost.

Giving up the certainty of the current solution: With whatever the incumbent solution is, a customer knows its positives and negatives. She’s developed a confidence for the level of outcomes the solution delivers. Your new solution? Untested. Giving up the certainty of the current solution is a psychological cost the customer bears.

This third test is the one that is hardest to gauge. Because costs are not as explicit as you’d expect. It takes walking in the customer’s shoes.

Importance of experiments and iterations

While the three tests are presented in yes/no format, it’s useful to consider them in terms of degrees of certainty:

JTBD_degrees_of_certainty
In the evaluation of an idea, you’re looking to have a good degree of certainty across the three tests. If you’re not comfortable that you can empirically tally a ‘yes’ with high confidence, a smart approach is to design experiments to test the idea. Disciplines such as design thinking become important here.

The key is to identify points of uncertainty and to resolve them head-on. When you see the evaluation of ideas framed in terms of degrees of certainty, the recurring argument over incremental/sustaining/disruptive/radical innovation transforms into a discussion on levels of certainty. Answers come through experimentation, iteration and idea-killing commensurate with the level of uncertainty.

Job-to-be-done analysis answers the question on corporate innovators’ minds: Do you know when an idea will be successful?

(Cross-posted @ The HYPE Innovation Blog)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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How to Build Online Relationships into Meaningful Networks http://www.cloudave.com/36773/build-online-relationships-meaningful-networks/ http://www.cloudave.com/36773/build-online-relationships-meaningful-networks/#comments Mon, 26 Jan 2015 17:24:45 +0000 http://www.bothsidesofthetable.com/?p=6471 I was waiting for my son’s basketball game to start this morning and with the morning’s emails all drained I turned to Twitter and saw this Tweet from Marshall Kirkpatick Test: open your twitter stream, look at the 1st item in it, think of something to say in response, say it. Theory: it’s really that […]

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I was waiting for my son’s basketball game to start this morning and with the morning’s emails all drained I turned to Twitter and saw this Tweet from Marshall Kirkpatick

I consider Marshall a business friend. A fellow thinker and tinkerer of technology. Somebody I respect. And like. But here’s the thing – I honestly can’t remember how many times I’ve actually met Marshall in person? I know him really through online and from that we’ve had phone calls to debate his business and such.

It’s an online relationship and I actually believe that as of 2015 I’ve met more of my close connections in the past 5-7 years online before offline. Brad Feld. Fred Wilson. Tristan Walker. And many, many more. Some through blog comments – your place or mine. Some on Twitter.

I responded to Marshall’s obvious comment bait :) with “I’m always surprised more people don’t engage.” So many friendships or acquaintances start online.

I was reminded of that when Shafqat Islam weighed in:

It’s true. I knew Shafqat as a reader on my blog and then I was introduced to him on a trip through New York. His personality is infectious and we instantly became friends. I’ve seen him over the years at several cocktail parties and have him on my short list of people “I wish I had known in time to invest in his A-round” but have down to meet early on NextCo.

Figuring out how to engage is tricky. You want to be respectful. You want to say something informed. You want to toe the line between friendly public comment and being smothering.

1. Blog is best
The best way to engage with anybody you want to build an online relationship with is their blog if they have one. If they are not the kind of person that reads their blog comments then they probably aren’t the kind of person who would build an online relationship anyways. Most bloggers I know read most if not all of their comments. I recommend you keep comments brief unless it’s the perfect topic for you and you want to add to the story.

I read almost every comment made within the first week or so (I often don’t go back after a week to see who’s commented). I try to respond to many comments but not all. But over time I’ve seen the same names through the years and I know all of these people by name if not by face. If somebody like Cookie Marenco or Phil Sugar ever pulled me aside at an event I wouldn’t know what they looked like but by name I’d immediately chat with them. I feel like I’ve “known” them for years. Or Fake Grimlock. Or Startup Jackson.

2. Don’t go immediately for the kill
There are times where you don’t know somebody but you engage just to get a conversation started or be polite. Sometimes these people immediately try to friend me on Facebook, send me a deck or tell me they want to pitch me a company. I don’t recommend coming on that strong. You need to earn some name recognition and engagement before moving your relationship to the next level.

3. On Twitter add value, be funny, link or be brief
I like engaging with people on Twitter. It’s a chance to get to know new people and you aren’t locked into a 20-minute conversation to do so. You can watch who comments with whom frequently and get a sense of who knows whom. It’s fun.

I also remember early on Twitter there were some well-known people who never responded to anybody. I felt like they were doing it wrong. Twitter is best when it removes the barriers and the bubble and puts you in direct contact with people who want to know YOU and people you want to know.

As with blogging, there are those who engage from time-to-time that I feel I know. And there are people who come on too strong or pretend they’re your best buddy. I don’t recommend that.

It’s ok to be funny. I recommend being brief unless they talk back at you a lot or if you’re engaged in a good conversation. Respond from time-to-time but not to every one of their Tweets. It’s an art but surely you have enough of a filter to know not to be a creep.

4. Don’t hop into conversations of people you don’t know. 
I saw an interesting respond to Marshall and my back-and-forth from David Senior:

I thought in this case it was perfectly appropriate because it was a public question from Marshall and therefore responded to my response was fair play. But sometimes you might see a conversation between Marc Andreessen, Hunter Walk and Semil Shah on Twitter where they’re clearly talking with each other about a topic. If you don’t know one of them it can be a bit inauthentic to hop in, reply and copy all of them. People do – but it strikes me as in bad form.

It’s one of the things I think Twitter needs to eventually fix. How people have a closed conversation while allowing others to witness the results. It’s really a magical component of Twitter to see public conversations but the lack of tools I believe discourages this.

5. Be subtle, be occasional
Play the long game. Don’t try to be notices in your first engagement. Say something or two and then move on. Re-engage. But it doesn’t have to be every time or all the time. Blogs you can comment frequently but Twitter you need to be careful until you know them better.

6. Don’t assume engagement = knows you
I often find somebody at a conference will say “I comment on your blog from time-to-time.” Usually I will recognize the name and I like that. Or there are the people on Twitter whom I’ve been talking with for years and know their names. But often somebody will approach me and say, “Hey, I’m so-and-so. You wrote me on Twitter.” Crickets. I write lots of people on Twitter. FWIW – I usually click on people’s names and read the bio – which is why it’s worth updating yours. But unless I’ve been doing it for years I simply don’t remember each person I said “hey” to.

7. Find a subtle way to close the loop
Eventually it is nice to close the loop. This can be at a conference, via an intro from a mutual friend or similar. It’s always good when you do this because then future online conversations come from a position of knowing that person better. You don’t necessarily need to spend 45 minutes standing by them at a conference. You just need to close the loop, be subtle, and build the relationship and trust over time.

8. Well known people should engage, too
There are well known actors, musicians, VCs, bloggers, politicians – you name it – who engage with random people on Twitter. Twitter magic. But I see some people in our community who really only use Twitter to publish their media or have a one-way conversation or at best reply only to people they know. I won’t say this is doing things wrong. But this is doing things wrong. I’ve seen it directly through data. Every social media analytics platform, video platform with data or similar that I’ve seen show the same phenomenon. People who publish and don’t respond get some take up. People who publish and respond to “fans” get massive engagement and earn followers. Channel your inner Gary V. He’s the boss.

(Cross-posted @ Both Sides of the Table)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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How To Make 2015 Your Year for Enterprise Mobile Success http://www.cloudave.com/36753/make-2015-year-enterprise-mobile-success/ http://www.cloudave.com/36753/make-2015-year-enterprise-mobile-success/#comments Thu, 22 Jan 2015 20:25:00 +0000 http://www.cloudave.com/?guid=cbd3aef121a0dc58f89a93a6c69cebbf We’ve been involved with thousands of enterprises that have moved to mobile, and we’ve learned quite a bit along the way about those enterprises that are likely to fail at mobile, and those that help enterprises shift from mobile laggard to mobile leader. I hope to share some of those insights we’ve learned with you […]

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Shutterstock_182035286We’ve been involved with thousands of enterprises that have moved to mobile, and we’ve learned quite a bit along the way about those enterprises that are likely to fail at mobile, and those that help enterprises shift from mobile laggard to mobile leader.

I hope to share some of those insights we’ve learned with you in this article.

One of the common threads among organizations that are underperforming is that they now exist now in full reactive mode. They tried to rush mobile solutions without taking the right things into consideration and they are falling short when developing the mobile apps their customers and employees need. Their mobile app efforts are falling down short from both a business and user experience perspectives.

It’s not all glum, however. We do see customers that are driving mobile success. And below are the five most important lessons we’ve learned about how successful, mobile-driven development teams and business leaders engage with their enterprise to drive success.

Start with the right platform

Success with mobile apps depends largely on the quality of the platform on which they’re built, ran, and managed. And building anything on infrastructure-as-a-service takes precious resources just to manage servers and systems. Not only do these efforts not provide value, they distract the enterprise from those efforts that do.

In contrast, the right platform will provide you with a secure and trusted platform, a metadata-driven architecture, and other resources such as mobile-first APIs, a rich marketplace ecosystem of pluggable solutions, and the ability to easily integrate your data as well as your systems of record.

Step-by-step-guide-sales-success

Focus on the mobile “micromoments”

Build the processes your users need in the short moments they need them. Mobile leaders are creating that experience by truly understanding the context of what their end user is trying to achieve at any given moment. This is especially important today as people’s work habits change from sitting down to work for long stretches to oftentimes capturing small 10 to 30 second “micromoments” to complete a task.

By helping users to create or receive value in those moments, you may have to reduce the app from 20 screens down to one. All superfluous content needs to go. Give the user five data fields instead of 100. It’s about completing one task, simply and elegantly, and only providing users with what they need at to complete that one task.

Ship the Minimum Viable Product

Many large enterprises are stuck in their old ways of developing software, and like all dinosaurs they’ll pay the price for failing to adapt. They’re building for the days when software was deployed physically and applications had to hit all of the possible specifications upfront because shipping updates was expensive for everyone.

Mobile leaders turn this around. They ship the minimum viable product (MVP), meaning the app fulfills the minimum requirements of the user. Enterprises then take the near immediate user feedback and iterate improvements from there. In this way, the MVP speeds development time, shortens app’s time to value, and enables the end user to become a central part of developing the apps they use.

In fact, the market now has come to expect that you’re going to be updating apps rapidly. People know that over time you’re going to make improvements, which brings us to a final but very important point on the minimum viable app – and that it’s okay not to ship perfect. Don’t be afraid to miss the mark in your app the first time out. It’s a chance to get a better understanding of what’s not working so you can focus on what’s working.

Prioritize intuitive design

How your mobile app looks, acts, and its workflow is crucial to success: Even at the enterprise level. You need your users to actually want to use the apps you build. And for that impression, you are competing against the experience they have with their other well design consumer apps. Why do people love Evernote, Shazam, and Uber so much? It’s because they are all eloquently designed, do what they do very well, and these apps oftentimes know exactly what the user needs to do next. They don’t drown the user with too many options. And they provide precisely what the user needs to do their job.

The thing is that the expectation around a mobile experience from enterprise built apps is no different than it is with the consumer when you download an app from the app store. There’s certainly no need for a manual to come with it. And it’d better be intuitive, easy to use, and conform with standards for the operating system they’re leveraging, whether that’s iOS, Android, Surface, or whatever mobile platform rises next. 

Avoid the false dichotomy: IT vs. design

UntitledThere seems to be a false dichotomy of choosing between IT departments and effective design. It’s one of the reasons why we are working with so many companies and modernizing the experiences they’ve built several years ago. Whether it’s a call center operation or a European accounts payable system, we’re spinning what they’ve built upside-down to focus on the persona and the user and the process they follow to do their job.

What we learned most importantly was that design and IT are not mutually exclusive. It’s essential to get them to work well together today. That requires a healthy respect for the job that each does. It’s not necessarily easy, and it’s taken us a long time to get to the level where the technology teams want to see great experiences and the people building the great experiences appreciate watching great technology perform.

It’s important to note that great design needs to be integrated into the overall experience that you’re creating, and it’s especially critical in a mobile device. There’s no getting around the fact that people expect apps to work as well as any app does when it’s downloaded from the app store. You don’t get a pass because your app is designed in-house.

Make sure IT has a seat at the table

With that previous lesson in mind, it’s important for other reasons to always include IT. Marketing organizations have been notorious for completely sidestepping the IT department and reaching out to consultants to create that end-to-end solution without regard for IT’s needs (compliance, security, business continuity, etc.) and the value it brings to these efforts.

We see very clearly that IT needs a seat at the table, especially when you’re talking about enterprise content and enterprise data. This includes security and regulatory compliance mandates. You not only need to create a great experience beyond the firewall – you need to take security in mind when extending out to mobile. We’ve seen what damage a single breach can cause. And it’s not just a security issue. IT is also crucial to governance, scalability, performance, and capabilities issues.

Perhaps, most importantly, IT organizations need to be able to support the business in a way that isn’t strictly beholden to outside firms to deliver on outcomes. It’s one of the reasons why we see companies building centers of excellence around mobile and with the best practices we’ve discussed here that incorporate design and technology and security and strategy all into one group. This way, companies can deliver on that value that they’re looking for quickly. But, to succeed, you need to take all of these lessons to heart. You can’t skimp on any single one.

 

(Cross-posted @ Blog)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Consumer adoption of Bitcoin | A jobs-to-be-done analysis http://www.cloudave.com/36732/consumer-adoption-bitcoin-jobs-done-analysis/ http://www.cloudave.com/36732/consumer-adoption-bitcoin-jobs-done-analysis/#comments Wed, 21 Jan 2015 15:02:37 +0000 http://bhc3.com/?p=8694 Venture capitalist Marc Andreessen recently did one of his tweetstorms on the topic of Bitcoin, a technology he avidly supports. In 25 tweets, he talked about criticisms people have of Bitcoin. Including this one (#18) about “use cases”: 18/The third critique I call the “innocent” one — “Are there enough sufficiently compelling uses cases for Bitcoin […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Venture capitalist Marc Andreessen recently did one of his tweetstorms on the topic of Bitcoin, a technology he avidly supports. In 25 tweets, he talked about criticisms people have of Bitcoin. Including this one (#18) about “use cases”:

Let’s acknowledge this: When you’re talking currency and payment systems, the use cases and relevant users are enormous. The
whole planet, really, and all manner of transactions. Lots of places where Bitcoin could theoretically make an impact. In this post, I wanted to think through the consumer payment market, one of the bigger targets there is. According to the Federal Reserve, a U.S. consumer makes around 69 payments per month (pdf). Fertile ground for exploiting underserved jobs-to-be-done.

A powerful way to analyze any idea is to apply jobs-to-be-done analysis. Specifically, apply three jobs-to-be-done tests:

  1. Does the idea target an actual job-to-be-done that enough people have?
  2. Is the idea a meaningful improvement over the current way people fulfill their job-to-be-done?
  3. Does the value of the idea to customers exceed the cost of the idea to them?

In the above linked post about the three tests, I note that the output of the tests are really degrees of certainty about an idea. You can think of it as meters:

JTBD degrees of certainty

The more uncertain you are, the higher the adoption risk of the idea by your intended beneficiaries.

For this analysis, we’ll target a specific set of possible beneficiaries:

Bitcoin will become a frequently used currency for U.S. and European consumers, displacing dollars, euros and pounds.

Ok, on to the adoption analysis. Each test includes an assessment of its certainty.

#1: Targets and actual job-to-be-done of enough people

We long ago left barter behind as a primary basis for goods and services exchange. Currency offered many advantages: a way to exchange with you now, even if I don’t have a good you want; store of value of that outlasts many goods; ability to build up a supply of currency for larger purchases; immediate trust because the currency is known, as opposed to the risk of a receiving a deficient product in trade.

Currency won out over barter for many reasons. And to that end, Bitcoin addresses an actual job-to-be-done: a measure of value that can be exchanged for goods and services.

The level of certainty for this test:

Targets actual job-to-be-done
of enough people
Certainty meter- targets real JTBD enough people

 #2: Better than current solution

Any new thing has to provide better outcomes than the incumbent solution. And not just a little better. Studies show people will undervalue the benefits of a new offering, and overvalue the benefits of an existing solution. This reflects the varying degrees of the Possibility Effect and the Uncertainty Effect people have. Providing a strong improvement in outcomes is needed to overcome the inertia of the Early and Late Majorities.

Put yourself into the shoes of a typical consumer:

  • I need to pay for groceries
  • I need to pay for my Amazon purchases
  • I need to pay for school tuition
  • I need to pay for gas
  • I need to pay for rent

All these activities happen today with dollars, euros, pounds and so on. In what way does paying by Bitcoin provide better outcomes for my payment needs than the currency I use today? Among the Bitcoin improvements I’ve seen described:

Payment cannot be repudiated: The blockchain technology locks in the transmittal of the payment. There’s a full record of payment offered, payment accepted. Which is great as a record for the transaction. Except repudiation isn’t a material issue for consumers for today. They by and large don’t feel pain from it.

No centralized government control over the currency: Bitcoin is a distributed currency, with no central authority overseeing and manipulating it. The implied value is that issues like devaluation, inflation and governments tracking your spending are finally put to rest.

But stop and think about that. Who cares about these issues? Go find 10 neighbors. Ask them their level of concern that the money in their wallet is managed by a central authority. Find out what they think about the traceability of their spending. Many payment services companies actually offer traceability as a feature, not a bug (e.g. Mint, Yodlee, American Express, etc.). I haven’t heard much outcry about payment traceability among the general public.

Reduced identity theft fraud: Credit card numbers can be stolen and used by thieves. Marc Andreessen asserts that Bitcoin greatly reduces this risk. And I suspect he’s right, as far as we understand the risks today. But already, creative thieves are figuring out ways to steal Bitcoins. Innovation at its finest.

But getting better about reducing identity theft is a clear opportunity for better outcomes. Credit card companies have become quite advanced with this via big data algorithms, which spot out-of-norm transactions and flag them. Companies are also good at covering the losses resulting from payment identity theft.

Because Bitcoin is still experiencing losses due to fraud, it’s not clear in consumers’ minds that it’s less risky than current currency and payment methods.

The level of certainty for this test:

Meaningful improvement over
the current way people fulfill
the job-to-be-done
Certainty meter- meaningful improvement over current

#3: Value to consumers exceeds costs of new idea

In this test, you’re asked to look holistically at the costs of a new idea. Monetary costs, yes. But also other costs, such as:

  • Connecting the new solution to existing infrastructure
  • Loss of features you enjoy in current solution
  • Giving up the uncertainty of the current solution
  • New unwanted behaviors

Given the low (non-existent?) value of Bitcoin over current currencies, pretty much any cost will cause a high level of uncertainty for this test.

And Bitcoin has costs. Its current volatility makes it tough to rely on a consistent store of value. You receive $10,000 worth of Bitcoin today, what will that be worth in a month? There’s a learning curve for usage. You need to know how to operate a Bitcoin account, and retrain yourself to think in terms of Bitcoin values (like when you travel abroad and have to mentally calculate the local currency price into your home currency to understand what something really costs).

To the extent that economic cycles will inevitably continue, you need to get used to no central authority intervening to help stabilize things. It’s not clear what a Bitcoin-dominated world would look like in terms of economic stability. Likely, though, this uncertainty doesn’t weigh into consumers’ calculus of costs.

The level of certainty for this test:

Value to consumers exceeds
the cost of the new solution
Certainty meter- value exceeds costs

Wrapping up

It’s hard to see how Bitcoin becomes a regular currency used by consumers. It doesn’t offer sufficient improvement over incumbent currencies and the cost is hard to overcome with any potential value. One possibility: if the lower fraud rates associated with Bitcoin are reliable, perhaps merchants will offer discounts for use of them. That could spur some people to switch to Bitcoins.

The bigger story of Bitcoin is actually the blockchain technology. The ability to ascertain easily, without an intermediary, that a transaction (e.g. document signing, receipt of something, etc.) has occurred seems to offer tangible value over current solutions. That may be Bitcoin’s true legacy.

 

(Cross-posted @ I'm Not Actually a Geek)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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The Most Misunderstood Facts About Building a Business on YouTube http://www.cloudave.com/36708/misunderstood-facts-building-business-youtube/ http://www.cloudave.com/36708/misunderstood-facts-building-business-youtube/#comments Tue, 20 Jan 2015 18:12:40 +0000 http://www.bothsidesofthetable.com/?p=6469 Any reader of this blog for a period of time will know that I’ve been long YouTube for years. Along with Greycroft, I was the first institutional investor in Maker Studios (sold to Disney for nearly $1 billion) and am still the largest investor in Mitu Network, the largest online video producer of Latino content. […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Any reader of this blog for a period of time will know that I’ve been long YouTube for years. Along with Greycroft, I was the first institutional investor in Maker Studios (sold to Disney for nearly $1 billion) and am still the largest investor in Mitu Network, the largest online video producer of Latino content. We have made 5 online video investments in total – some we will talk about later this year.

The reasons I have been long on YouTube specifically are very simple:

  • YouTube now has > 1 billion uniques / month. This is 14% of world population and 33% of all people online.
  • A new generation of content producer and video style has emerged that is distinctly different from what you see in TV. 40% of all of YouTube is viewed on mobile devices and of high-quality content I believe it is between 60-70% based on my insider data.
  • The stars of tomorrow are being built on these short-form formats. It’s hard to understand this until you attend something like VidCon and watch youth interaction with their “stars.” You have an “Elvis Presley like moment” where you realize the next generation is already consuming different media than our tastes might appreciate
  • If you want to build a large business in video you need to fish in a pond where the fish are. That is YouTube today.

The arguments from any detractors of building a business on YouTube are:

  • The CPMs are too low (< $2 per thousand impressions for YouTube tonnage vs. $18-25 for many online media or $40+ for TV)
  • YouTube takes too high of a revenue split (45% vs. 30% that Apple and many other distribution companies take – FWIW, YouTube argues this is because their costs are much higher since they host and stream the video)
  • You can’t build a brand on YouTube
  • Content is a “hits driven business” and therefore you can only invest in platforms not media

I think most arguments miss the mark. The point isn’t to “build a business on YouTube” but rather to use YouTube as a marketing platform to build a video business that works across many platforms. If all you ever do is create YouTube content then I agree – that’s not a viable startup business. But if your goal is to develop an audience that can be monetized in other ways, I’ll repeat my argument “you need to fish in the pond where the fish are.”

I’ve given some specific advice on how to do this before. Notably I said:

  • You have to have owned & operated websites (O&O) to drive traffic to. You should be able to convert at least 5-15% of your audience
  • You have to have some of your own content formats and not just be an aggregator of talent.
  • You must invest in technology. If you’re just a content company your advantages are too small to win on the web
  • Your tech needs to add value to content producers, the audience and advertisers
  • Best is if you have a combination of ad revenue, sponsorships and some forms of non ad revenue (subscriptions, merch, music sales, etc.)

But here is the most misunderstood fact about YouTube that I think most smart business people have missed in their rush to criticize revenue splits* or CPMs.

  • Almost every online business I know (eCommerce, online software, mobile games) invests heavily in “customer acquisition”
  • This includes investments often not properly measured (SEO, PR, Social) as well as costs that people measure more precisely (advertising, SEM, FB CPA/CPI ads)
  • Take for example, an eCommerce company. They might spend actively on SEM (Google AdWords) if they can prove that the CAC (customer acquisition cost) is lower than the LTV (lifetime value) of a customer and the payback is < a given time period (say 1 year) or set number of purchases (1-3) until break-even. This kind of spend happens all day long inside startup companies and 100% of the spend on attracting customers is a cost.
  • But think of this. If you’re a video company your goal is to “acquire customers” to your website that you can eventually engage with and monetize. But you don’t need to spend money on SEM. You can spend money building audiences on YouTube. And here’s the thing … YouTube PAYS YOU to develop these audiences.
  • If you think of it as a “YouTube business” you’re doing it wrong. YouTube is a distribution and marketing channel like any other. It just happens to be large, dominant and willing to share revenue with you. And given that Facebook and Twitter currently pay you zero for content marketing and Google SEM charges you for customer acquisition – what exactly are you bitching about? If you don’t know what you’re going to do to develop your audience beyond watching your videos on YouTube … that’s on you.

YouTube Funnel

This is why many traditional video producers (from cable TV, music videos, etc.) won’t build large online video business: they lack the tech skills to engage, activate and retain online audiences cost effectively. Yet to develop audiences you also need to understand: compelling content, sound, special effects, etc which is why most online video startup digital media companies are in Los Angeles or New York and not Silicon Valley.

Only modern thinkers about the new nature of online video audiences will build big businesses online. I’ve written about that, too.

Summary: YouTube as a customer acquisition tool to building great online businesses is unrivaled today. YouTube as a platform in which to build your entire business is naive. Plan your business wisely.

*******

post-script. I know that some people will point out that widely read presentation on YouTube on Sept 2013 criticizes YouTube for its revenue split. I think that is one of the most misunderstood points I’ve ever made.

I wasn’t arguing that this meant not to build on YouTube. For me this was a simple market analysis. I believe that the high revenue share YouTube takes encourages platform competition. In a rush to improve margins, MCNs want to cut deals with other video networks which both reduces YouTube platform dependency and gives you deals with players eager to cut content deals on more attractive margins.

If YouTube had cut revenue share for large MCNs it would be harder for competitors to entice them. I think the market is playing out exactly how I expected and you’ll see increased competition from Amazon, Facebook and Twitter in the years ahead and possibly Tumblr, Vimeo and Pinterest, too.

 

(Cross-posted @ Both Sides of the Table)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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Five big themes driving enterprise data and app development in 2015 http://www.cloudave.com/36677/five-big-themes-driving-enterprise-data-app-development-2015/ http://www.cloudave.com/36677/five-big-themes-driving-enterprise-data-app-development-2015/#comments Mon, 19 Jan 2015 14:40:31 +0000 http://www.cloudave.com/?p=36677 f you read most of the prediction articles for 2015, it’s pretty clear that the conventional thought is that enterprise IT will continue to grow more collaborative with organizational phenomena such as DevOps becoming more common, that mobile computing will continue its ascent, and of course cloud computing will continue to augment and in some […]

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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The Swamif you read most of the prediction articles for 2015, it’s pretty clear that the conventional thought is that enterprise IT will continue to grow more collaborative with organizational phenomena such as DevOps becoming more common, that mobile computing will continue its ascent, and of course cloud computing will continue to augment and in some cases displacethe traditional data center.

 But let’s face it: no one is really going out on a limb with those predictions, and I’m not going to say that they’re wrong. They’re not. But there’s more going on under those mega trends.

 I talk with a lot of enterprise customers who are trying to get to the next level of what they should focus on, and how to invest time, resources, and investments. Here are five of the top themes beneath the big themes that I hear from customers all the time.

 

Theme 1: Savvy enterprises will fully realize that access to data is central to enterprise app success.

Sure, cloud platforms are about all of the things we discuss all the time: ease of development, availability, security, scalability, and extensibility — but they’re also very much (centrally so) about the data.

 In fact, the database should be thought of as part of the cloud platform so that the data are accurate, up-to-date, and always available. For too many cloud platforms, the data layer is considered separate from the cloud platform, not an integral part of the platform itself. More enterprises will find this type of platform causes too much effort to be spent in integrating data and keeping it in sync. The result is cloud silos.

 

Theme 2: Users will simply not tolerate sub-quality enterprise apps.

User tolerance toward low quality apps is only going to decrease. What was tolerated before when it came to poor user interface and design absolutely won’t be tolerated anymore. How apps look and their workflow (especially mobile apps) are both crucial to success. This has always been true for consumer apps and has more recently become true for enterprise apps. Going forward, that won’t be so, especially as more and more millennials enter the workforce.

The expectations when it comes to the enterprise app experience are now no different than those for consumer apps. The app better be easy to use and intuitive, and if it’s mobile, it better be able to capture data within seconds as well as display relevant data instantly.

 

Theme 3: In 2014, enterprises came to fully understand how important the user interface is; in 2015 this understanding will shift to action.

There’s no reason why IT departments can’t provide apps that are effectively designed. My colleague Robert Duffner recently wrote a column on  The Six Habits of Successful Mobile First Enterprises. In it he, explains how design and IT are not mutually exclusive and that it’s essential that they work well together today. 2015 is the year they will. More companies will learn how to integrate design teams with development teams and to mature their development efforts so that great design is integrated into the overall experience that they’re creating.

 

Theme 4: Tools get put into use that empowers data analytics for all users

Historically, data analytics tools have been difficult to design, build, and maintain. But this year, we start to see fully cloud native data analytics tools that are designed cloud from the ground up. They’re agile and can be set up with a tap of button. And instead of being accessible only to a handful of data scientists, they are accessible to everyone in an enterprise.

By leveraging the vast amount of data deliverable by cloud, more relevant, actionable information can be instantly visualized than was ever before possible.

 

Theme 5: Cloud Identity moves center stage and context redefines the network perimeter.

The typical enterprise worker is using dozens and dozens of apps, and many of them are cloud-based, with more becoming cloud-based every week. This means the perimeter is disintegrating into the fog of the cloud – but fortunately user identities don’t have to.

 In fact, the interaction with authorized users and data is where we find the modern perimeter. This means it’s no longer viable to simply trust users once they are authenticated to a network and then allow them to do whatever they wish once inside. Today, for proper identity management, it’s important to understand what exactly users are trying to achieve when accessing an application. And, by understanding the past behavior of each specific user, what is known of his or her activity histories, the data and resources the user is currently attempting to access, and when a high degree of assurance of the user’s identity is possible, smart authentication and access control decisions can be made instantly and anywhere.

In fact, by placing access and authentication in their proper context, enterprises can redefine their enterprise IT perimeters in terms of business process, data, where the data can flow, and what users are permitted to do. With all of that context, smarter decisions now can be made about what users are permitted to do.

 

Certainly, not all of these themes will be embraced evenly throughout enterprises. By the end of 2015, you will see that more enterprises take the availability of their data in the cloud as a critical requirement, that subpar enterprise apps are largely left ignored by users, that big data analytics tools become more accessible to more users in more enterprises, and that cloud-based identity is increasingly embraced.

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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All These Enterprise IPOs: Why It’s Just Getting Good. Why These are The Best of Times for SaaS. http://www.cloudave.com/36675/enterprise-ipos-just-getting-good-best-times-saas/ http://www.cloudave.com/36675/enterprise-ipos-just-getting-good-best-times-saas/#comments Mon, 19 Jan 2015 14:20:49 +0000 http://saastr.com/?p=3535 Reading the tech press you might get the sense that The Enterprise is something they are sort of forced to write about because it’s having a good run.  We had a great Consumer run, a nice set of Multi-Billion Dollar deals around Social Networking, a WhatsApp/Snapchat fad around mobile messaging, an Alibaba, Instacart, Fab-ulous e-commerce […]

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Screen Shot 2013-05-23 at 2.31.14 PM

Reading the tech press you might get the sense that The Enterprise is something they are sort of forced to write about because it’s having a good run.  We had a great Consumer run, a nice set of Multi-Billion Dollar deals around Social Networking, a WhatsApp/Snapchat fad around mobile messaging, an Alibaba, Instacart, Fab-ulous e-commerce run … and now it’s the Enterprise’s turn.  With Enterprise IPOs left and right, with more coming up soon. Marketo, Zendesk, Hubspot, Tableau Software, etc. with their Billion+ Enterprise IPOs.  Splunk at a $7 billion market cap after its IPO.  WorkDay at $14 billion.  Yammer and Eloqua sold for $1b+, Etc. etc.  Box debuting at a unicorn market cap.

Here’s the thing.  It’s nothing new, as anyone in SaaS and the Enterprise can tell you.  Because it takes, in the Enterprise, 6-10 years to build something real, something ready to IPO.  So what seems faddy today is in fact just the start of a 2.0 SaaS/Enterprise wave that started back in ’04-’06.  In fact, what we’re seeing today is really just The Last Generation.  The guys that are now getting to $100m+ ARR today.  That’s old stuff, really.

In fact it’s just getting to the good part.  Why?  What’s going on?

First, nothwithstanding a fall in absolute enterprise/SaaS multiples since 12 months ago … Wall Street is buying into Enterprise recurring revenue models.  The reasons include the rare combination of predictable revenue + high growth.  Usually high growth carries high beta, but that’s much less the case with annual SaaS contracts with their extremely high renewal rates.  And Wall Street has good comps to look to now, multiple successful billion dollar valuation leaders at high multiples.

But Wall Street is just a financing and liquidity vehicle.  It’s not the explanation for Why It’s Just Getting Good in Enterprise IPOs.

There are three key factors that are driving the dramatic acceleration in the Business Web and SaaS — and thus this and the next wave of Enterprise IPOs:

1.  Number One, The Markets are Exploding and Growing Faster Than Ever.  Let’s look at the #1 leader in SaaS, Salesforce.com.  It wasn’t too long ago that Salesforce hit $1 billion in recurring revenue.  Now, it’s well past a $5 billion run-rate.  Next up: $10 billion in ARR.  It’s not that far off.

Now yes, Salesforce is executing to perfection.  But fundamentally, they are solving the same problems, with basically the same core software and features, that they did at a $500m run rate, a $1b run rate, and now a $4 billion run rate.

What’s happening?  There are just so many more businesses, and so many more customers, moving more and more of their businesses processes to the web.  Every day.  Customers that weren’t ready to use Salesforce, or Marketo, or Box, or Any Leading SaaS Service just a year or three ago … are ready.  And even more will be ready next year and the year after.

Beyond that, SaaS is just starting to hit the mainstream phase outside of the U.S. and the U.K.  International growth is just starting.  And mobile enterprise is likewise just kicking into gear.  On mobile, the enterprise is about 2-3 years behind the consumer web.  The growth there is almost entirely ahead of us.

Generously borrowed from Tomasz Tunguz http://tomtunguz.com/zendesk-ipo/

2.  Second, You Can Scale Much Faster Now (Though It’s Still Very Expensive).  Because the markets are larger, you can scale faster.  Eloqua, as noted, above was founded in 1999 and was acquired by Oracle for $1 billion in December 2012.   It’s arch-rival, Marketo, founded in 2006, hit a $1 billion market cap in May 2013 — in half the time.  And adjacent competitor HubSpot hit $60 million+ in ARR in 5 years and its own billion+ IPO in late ’14.  The idea that Yammer could be acquired by Microsoft for $1.2 billion just a few years ago would have sounded like a delusional fantasy.  Now, it’s only half crazy that Slack got that same approximate valuation just 12 months after it starting collecting revenue.  Because it got from $0-$10m in ARR in single digit months.

Bigger markets mean that if you hit the market just right, with the right team and the right product … you can get to scale so much faster and stronger than just a few years ago.

3.  Competition is Much, Much Fiercer.  And This is a Good Thing.  Even just 5-6 years ago in the Enterprise, the truth is, you could launch a half-decent product that did something truly innovative and still get traction.  If you take a look at the Box of 2006, or even my own EchoSign in 2006 … the 2006 versions of these products are, to be charitable … primitive by 2015 standards.  And there are at least 30x-60x more entrepreneurs founding companies in the broad Enterprise/SaaS space today.  Maybe more.

Competition accelerates change, strengthens the products — which further accelerates market adoption and growth.  The frenetic pace of Consumer Internet hasn’t fully reached the Enterprise.  But it’s getting there.  In another 12-24 months, the Enterprise will be just as rapidly innovative and competitive at a product level as Consumer Internet is.  It’s close already.  We won’t have to talk about the Consumerization of the Enterprise anymore.  Because it’ll be a fait accompli.

4.  The Next Wave is Coming.  A long pipeline of potentially Billion Dollar+ high profile IPOs, both those with a consumer-esque aspect like Box, Evernote and DropBox, and more true business-process Enterprise, like MobileIron, Veeva Systems, Zendesk, Hubspot, and others have paved the way for the ’15+ batch.

But that’s still the last generation, the guys from ’05-’11, who’ve done an incredible job building their businesses, in many cases relatively quietly by Consumer Web standards, over the past 4-10 years.

There’s far more innovation happening now with second and third-generation SaaS and Enterprise veterans and next generation plays — and new markets.  That’s when it get’s really good — once you actually know what you are doing, and Go Big from Day 1.   First, we’ve been doing this long enough for the second-timers to be at their second at-bat.  WorkDay was an early example of a hyper-successful repeat Enterprise play.  But there are many others.  The second and third generation list goes on but really, is just getting started.  More on the second-timers here.

Perhaps more importantly, there are so many new markets that are SaaS-ifyng.  From browser-based call centers to search-as-a-service, to grab-and-go eDiscovery to web-based HR training and employee onboarding, just a few years ago these would have seemed too small.  Not today.

So it may seem a touch frothy.  It may seem au courant.  But trust me.  The Return of the Enterprise (really, it’s the rise of SaaS and the democratization of B2B) … it’s just getting started.  It’s just getting good.

Hold on for what’s going to be a wonderful and rather dramatic ride.

(Cross-posted @ SaaStr)

CloudAve is sponsored by FinancialForce.com, Salesforce.com and Workday.

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