June 22, 2016
The word “all” in “All the Startups Yahoo Bought in the Last Few Years, and What Happened to Them” turned me off. I persisted and worked my way through the shopping list of outfits purchased by Yahoo since the Xoogler seized the steering wheel. Like Hewlett Packard, Yahoo has found itself in the spotlight. HP may have the marvel of the Autonomy acquisition, subsequent write down, and legal dust up crown. But Yahoo has been more profligate on its multi year shopping spree.
The write up points me to this write up, “Here’s What Happened To All 53 of Marissa Mayer’s Yahoo Acquisitions.” Another “all.” Sigh. The upside of the Xoogler on the bridge was:
When she took over in mid-2012, employees were so enthusiastic about her arrival that one even photoshopped her face on Obama-style “hope” posters and hung them up around the company’s headquarters. Mayer did her best to live up to lofty expectations. She deployed quick fixes to solve Yahoo’s morale problems, including expanding parental leave and hiring high-profile celebrities to run the company’s media division.
The downside? I read:
But what’s clear is that the MaVeNS and acquisitions rescue strategy hasn’t been able to save the company from itself, despite Mayer’s protestations that it was successful. It’s worth looking, then, at exactly why these deals were made, and what has happened since.
Yep, PowerPoint fever, which is a variant of Excel spreadsheet fever. The problem is that the digital representations are not reality.
I learned that the Xoogler took these types of decisions:
- Shut down and “gutted” some of the acquisitions
- Rolled some companies into “existing divisions”
- A few companies are still “kicking”; for example, Tumblr.
I recommend that you work through the companies and the brief commentaries.
The way I read “Yahoo CEO Marissa Mayer Increased Spending after Secretly Agreeing with Investors to Cut Costs” undermines my confidence in the behavior of Xooglers. I thought ethical behavior was a core Google aptitude. Was I incorrect in this assumption?
What’s evident is that some Xooglers are outstanding PowerPoint types. The Excel expertise seems to be wanting. I assume the Board of Directors were convinced by the Xoogler’s digital confections. Savvy folks.
Stephen E Arnold, June 22, 2016
June 20, 2016
Here in rural Kentucky, I thought the Alphabet Google thing had no chinks in its digital armor. Search. Bingo. Loon balloons. Bingo. YouTube videos of cats. Bingo, bingo.
Then I read an allegedly accurate write up called “Huawei Hedges Bet on Google’s Android, Plans In-House OS.” The subtitle hinted as a fork, not a benign open source fork, but a rootin’, tootin’ go-our-own-way change of direction:
Like Samsung before it, Huawei hopes to have a “Plan B” should Android terms go bad.
China has a way of keeping some people alert. There is the communications dust up with Taiwan. There is the island in the sea thing. Then there is the Apple hassle. The middle kingdom seems to be front and center is food fairs too.
The write up reported:
To spearhead the development of an in-house operating system—and improve its Android skin—Huawei has hired former Apple designer Abigail Brody. The report says that the non-Android OS “isn’t far along” and is a “contingency measure” in case Google’s current Android terms become undesirable to Huawei.
Huawei is the number three smartphone OEM, behind Samsung and Apple. The Chinese company isn’t a huge deal in the West, though—a big portion of those sales come from Huawei’s home turf. Huawei is often seen as being in a position similar to Samsung’s, just at an earlier stage of development. Like Samsung, Huawei is a massive company. It’s the world’s largest telecom equipment manufacturer, and it designs its own SoCs. Now Huawei is taking another page from the Samsung playbook and is trying to develop an Android alternative.
The Alphabet Google thing now has to worry about another outfit nosing into the phone operating system business.
My thought is that South Korea is a bit more business friendly to the US than its neighbors to the north.
I am hoping the Alphabet Google thing does not suffer a challenge to its hegemony. After all, what’s the big deal when a US company suggests to a foreign government that it changes its ways. Look at the big picture, not a mere detail.
Stephen E Arnold, June 29, 2016
June 4, 2016
Years ago Steve Ballmer allegedly said that Google was a one trick pony. In my Google Legacy (2004), I identified potential revenue streams for the Web search system. As time unspooled, my nifty diagram became less and less relevant. The early promise of diversified revenue at Google faded. Google, now the Alphabet thing, could not find a substantive stream of non search revenue. I was wrong about the Google. Ballmer, it seems, was spot on in his assessment.
…despite the exponential growth of these new tech formats, the money still lies, and will always lie, in advertising. This was the opinion of Google’s former chief executive Eric Schmidt, appearing just a week after the I/O conference at the Startup Fest Europe conference on May 24, to tell audiences that Google’s revenue stream is never likely to change.
Here’s the allegedly accurate statement I highlighted:
I have been at Google and Alphabet for 15 years and it has always been advertising and I suspect it will always be advertising, because advertising is such a large part of the global phenomena, and because our advertising is more accurate as a return on investment.
What does this mean for the moon shots? What about the myriad efforts to create an alternative to Facebook? Doomed from the start, perhaps?
Stephen E Arnold, June 4, 2016
June 3, 2016
Amazon has artificial intelligence. More important, Amazon has a gizmo which people seem to be buying. Google has artificial intelligence. The Google I/O conference was a litany of smart software choir members. Now Facebook is, according to “Facebook Is Using ‘Near-Human’ AI to Muscle in on Google’s Home Turf,” going to make life tough for the Alphabet kids.
Well, wouldn’t you know it. IBM is in the game as well. “IBM Is building Cognitive AI to Impact Every Decision Made,” which I assume means decisions at Amazon, Facebook, Google, and the other outfits in the artificial intelligence hyperbole parade.
I like the “every.”
According to the write up:
“If it’s digital, it’ll be cognitive,” explained IBM CEO Ginny Rometty in a wide-ranging discussion with Recode’s Kara Swisher on Wednesday during the annual Code Conference.
Another sweeping categorical affirmative. The logic might get a first year philosophy major in trouble, but this is the wild and crazy world of the really, really Big Thing. Big Data and predictive analytics, visualization, and the other faux Big Things have to step aside.
The write up quotes IBM’s chief cognitive humanoid as saying:
You aren’t going to stop it…the trend is gonna keep moving,” she said, noting that she thinks repetitive task jobs will take a hit, but new jobs in areas like data will emerge.As for AI being evil, Rometty said, “What really matters is who teaches these things. Watson is taught. It’s about the data you use and who is teaching.” She added that, in the case of health care, Watson is being taught by the world’s greatest oncologists.
First, Amazon has a consumer product with AI. Second, I thought the Weather Channel delivered [a] data useful to DCGS and [b] new professionals who have more applicable skills than the deadwood terminated by IBM.
Wrong again. I like the “every.”
Stephen E Arnold, June 3, 2016
May 28, 2016
Someone called me to alert me to Hewlett Packard Enterprise was doing the mitosis approach to financial goodness. As you recall, gentle reader, Hewlett Packard chopped itself in half, emulating Solomon’s approach to shared custody. One part was printers and ink. The other part was everything not part of the printers and ink deal.
The resulting non ink outfit was dubbed Hewlett Packard Enterprise. The solution to HP’s revenue problems was to create two companies, make bankers happy, and ponder what to do next. The answer according to “Hewlett Packard Enterprise Surges on Move to Merge Services Unit with CSC,” is to create an HP outfit and a spinoff/merger deal.
The write up states:
The union will create a “a pure-play, global IT services powerhouse,” said HP Enterprise in a statement.
The HPE entity will sell hardware. The HP-CSC entity which seems to be called Spinco. Spinco suggests spin off or spin out and reminds me of PR spin. HPE is now free to become a big dog because the annoying little puppies like printers and ink and the thrilling EDS operation are at a minimum an arm’s length away.
I recall a series of MBA type paragraphs published by ZDNet. Hey, a listicle dragged out over six weeks is ideal for the mobile phone researcher. Navigate to ”Worst Tech Mergers and Acquisitions.” Number one with a bullet was HP and Compaq. HP also made the list at Number four with its purchase of Autonomy. Not bad 40 percent of the top five worst deals of all time in the eyes of the really expert ZDNet researchers.
I once tracked Autonomy closely. I have included information about IDOL in the forthcoming Palantir Notebook we are finalizing. In the last couple of years, Autonomy faded from my radar. Obviously it is not a giant blip on the HPE control room either.
Several questions/observations are warranted:
- Is it now time for the top brass at HPE to withdraw from the field of battle now that the corporate aircraft carrier has been refitted and once again sea worthy?
- What happens to those luck licensees of various Autonomy technologies?
- Will HPE continue to grow its revenues and once again hit the $100 billion in revenue mark?
- Will People Magazine cover the party the legal eagles, accountants, and financial institutions which worked on the deal will hold at the La Quinta in South San Francisco?
From my vantage point in Harrod’s Creek, Kentucky, I am not sure that the newly painted HPE will be able to match the performance of other, more modern money machines.
Stephen E Arnold, May 28, 2016
May 24, 2016
I read “Palantir To Buy Up To $225 Million Of Stock From Employees.” I am not too interested in a company trying to provide cash to workers who have to buy food in Sillycon Valley. The main point of the write up from my vantage point in wide open Harrod’s Creek is that the source of the information is a memo. I assume that outfits providing certain government agencies with services some are not supposed to know about or talk about are water tight.
Here’s the passage I highlighted in “loose lips sink ships” red:
The so-called “liquidity event” will be held at a price of $7.40 per share, Palantir said in a memo to staff that was obtained by BuzzFeed News.
Yo, dudes, passive voice. How? Some color, please. Also, who exactly is leaking or hacking what? Was this an encrypted message, a clear text message on a password protected system? Was the message sent using a special “channel”, available to some government contractors.
Several questions fluttered through my mind this fine May morning:
- What is Palantir doing which allows memos to find their way into the outside world?
- What about the security for some of the projects which Palantir pursues for certain government agencies?
- If Palantir itself is leaking information into Sillycon Valley channels, what’s up with the firm’s management?
- Is governance an issue at Palantir post i2 and post HBGary?
I have a compendium of 100 pages of Palantir information I have compiled from open sources. I cannot recall an internal document in my collection of research. I may offer this round up of Palantirist factoids and opinion in a for fee Cliff’s Notes-type of PDF. Want a copy? Write email@example.com, please.
What’s changed at Palantir Technologies, home of the Hobbits, keeper of the seeing stone. Perhaps the seeing stone cannot perceive security issues as well as some assert. The situation reminds me of my comments to the Google about the flow of information about its projects which found its way into open source channels. The Googler with whom I spoke seemed indifferent to the issue. I concluded, “Hey, that stuff does not happen to Google.”
Stephen E Arnold, May 24, 2016
May 16, 2016
Google is innovating again. Perhaps the company will boost its revenues with a new line of T shirts. An outfit like Tauck Tours might pay to show the well heeled traveler real data center art?
My thought is to reduce overhead and concentrate on products and services which generate meaningful revenue. Will other cloud centric outfits spring for wraps or pimping their industrial facilities?
Stephen E Arnold, May 16, 2016
May 13, 2016
I love the Google. Sorry. I love the Alphabet Google thing. I read the Google invention explaining how I could have a computer implanted in my eye. The Alphabet Google thing has sufficient time, talent, and money to move beyond Dr. Babak Amir Parviz’s contact lens invention. Amir Parviz or Amirparviz has left the Google building and the problem of cooling a computer in an eye for others to solve.
Alphabet Google can solve some problems; for example, Loon balloon drifting and making it difficult for me to locate information directly relevant to a query I pass to the Google search systems. Management glitches? No problem. Solve them with personnel shifts and reorganization.
From my perspective, the search giant turned Leonardo can envision with the best mankind has offered. The challenge seems to be finding a way to keep the online advertising machine pumping money.
I read “Is the Online Advertising Bubble Finally Starting to Pop?” This is an interesting question. The write up presents some data which make clear that Google is generating less revenue per click than it did in 2014. I looked at a chart which shows a decline in the “cost of ad space per dollar of revenue.
If the data are accurate, erosion of Google’s ad revenue is now a problem for Google to solve. The write up opined:
We estimate that the online advertising market has been artificially inflated since the end of 2013, and is much more mature than its pundits are claiming. 90% of Google’s revenues come from advertising. We expect Alphabet’s share price to go down by 75%…
The article concludes with a list of other sources which suggest that Google’s ad revenue is “crumbling to the ground.”
My reaction is that Alphabet Google’s business model pivots on the Overture/GoTo.com pay to play model. Google and now Alphabet have tried for decades to find another source of revenue which would prove that Steve Ballmer’s “one trick pony” observation was not accurate.
How have those revenue initiatives worked out? Google remains dependent on online advertising for the bulk of its revenue. The desktop search approach is not the principal method of obtaining answers to questions for most mobile users. Facebook, it appears, is more successful in providing must have information to users who will put up with Facebook’s revenue methods. Amazon, despite its woeful search systems, generates money from a couple of talented ponies, not one.
What’s going on? Here’s my view:
- Google’s vision was to build a better Alta Vista and generate revenue with online ads. That model is the foundation of the Alphabet Google thing and a digital straitjacket which Google-dini cannot escape
- Alphabet Google is a combination of science club projects and me-too innovation. Without something “new,” the GOOG is a bit of an artifact for many users. Convenience is one thing, and revenue is slightly different. A mismatch perhaps?
- Google is distracted. There are legal hassles. There are staffing hassles. There are competitive hassles. Is the pony addled by crowd noise in the online circus ring?
The Google is not going away quickly. Messrs. Brin and Page need to find the imitative magic that created a better Alta Vista. Then that “new” thing has to produce sufficient revenue to add some meaningful revenue to the company’s financials.
Is Google “feeling lucky”?
Stephen E Arnold, May 13, 2016
April 30, 2016
It looks like Paris Hilton might have a new sibling, although the conversations at family gatherings will be lackluster. No, the hotel-chain family has not adopted Watson, instead a version of the artificial intelligence will work as a concierge. Ars Technica informs us that “IBM Watson Now Powers A Hilton Hotel Robot Concierge.”
The Hilton McLean hotel in Virginia now has a now concierge dubbed Connie, after Conrad Hilton the chain’s founder. Connie is housed in a Nao, a French-made android that is an affordable customer relations platform. Its brain is based on Watson’s program and answers verbal queries from a WayBlazer database. The little robot assists guests by explaining how to navigate the hotel, find restaurants, and tourist attractions. It is unable to check in guests yet, but when the concierge station is busy, you do not want to pull out your smartphone, or have any human interaction it is a good substitute.
” ‘This project with Hilton and WayBlazer represents an important shift in human-machine interaction, enabled by the embodiment of Watson’s cognitive computing,’ Rob High, chief technology officer of Watson said in a statement. ‘Watson helps Connie understand and respond naturally to the needs and interests of Hilton’s guests—which is an experience that’s particularly powerful in a hospitality setting, where it can lead to deeper guest engagement.’”
Asia already uses robots in service industries such as hotels and restaurants. It is worrying that Connie-like robots could replace people in these jobs. Robots are supposed to augment human life instead of taking jobs away from it. While Connie-like robots will have a major impact on the industry, there is something to be said for genuine human interaction, which usually is the preference over artificial intelligence. Maybe team the robots with humans in the service industries for the best all around care?
April 25, 2016
In the heady world of the unicorn, there are not too many search and content processing companies. I do read open source information about Palantir Technologies. Heck, I might even wrap up my notes about Palantir Gotham and make them available to someone with a yen to know more about a company which embraces secrecy but has a YouTube channel explaining how its system works.
I was poking around for open source information about how Palantir ensures that a person with a secret clearance does not “see” information classified at a higher level of access. From what I have read, the magic is in time stamps, open source content management, and some middleware. I took a break from reading the revelations from a person in the UK who idled away commute time writing about Palantir and noted “On the Road to Recap: Why the Unicorn Financing Market Just Became Dangerous for All Involved.”
I enjoy “all” type write ups. As I worked through the 5,600 word write up, I decided not to poke fun at the logic of “all” and jotted down the points which struck me as new information and the comments which I thought might be germane to Palantir, a company which (as I document in my Palantir Notebook) has successfully fast cycles of financing between 2003 and 2015 when the pace appears to have slowed.
There is no direct connection between the On the Road to Recap article and Palantir, and I certainly don’t want to draw explicit parallels. In this blog post, let me highlight some of the passages from the source article and emphasize that you might want to read the original article. If you are interested in search and content processing vendors like Attivio, Coveo, Sinequa, Smartlogic, and others of their ilk, some of the “pressures” identified in the source article are likely to apply. If the write up is on the money, I am certainly delighted to be in rural Kentucky thinking about what to have for lunch.
The first point I noted was new information to me. You, gentle reader, may be MBAized and conversant with the notion of understanding the lay of the land; to wit:
most participants in the ecosystem have exposure to and responsibility for specific company performance, which is exactly why the changing landscape is important to understand.
Ah, reality. I know that many search and content processing vendors operate without taking a big picture view. The focus is on what I call “what can we say to close a deal right now” type thinking. The write up roasts that business school chestnut of understanding life as it is, not as a marketer believes it to be.
I noted this statement in the source article:
Late 2015 also brought the arrival of “mutual fund markdowns.” Many Unicorns had taken private fundraising dollars from mutual funds. These mutual funds “mark-to-market” every day, and fund managers are compensated periodically on this performance. As a result, most firms have independent internal groups that periodically analyze valuations. With the public markets down, these groups began writing down Unicorn valuations. Once more, the fantasy began to come apart. The last round is not the permanent price, and being private does not mean you get a free pass on scrutiny.
Write downs, to me, mean one might lose one’s money.
I then learned a new term, dirty term sheets. Here’s the definition I highlighted in a bilious yellow marker hue:
“Dirty” or structured term sheets are proposed investments where the majority of the economic gains for the investor come not from the headline valuation, but rather through a series of dirty terms that are hidden deeper in the document. This allows the Shark to meet the valuation “ask” of the entrepreneur and VC board member, all the while knowing that they will make excellent returns, even at exits that are far below the cover valuation. Examples of dirty terms include guaranteed IPO returns, ratchets, PIK Dividends, series-based M&A vetoes, and superior preferences or liquidity rights. The typical Silicon Valley term sheet does not include such terms. The reason these terms can produce returns by themselves is that they set the stage for a rejiggering of the capitalization table at some point in the future. This is why the founder and their VC BOD member can still hold onto the illusion that everything is fine. The adjustment does not happen now, it will happen later.
I like rejiggering. I have experienced used car sales professionals rejiggering numbers for a person who once worked for me. Not a good experience as I recall.
I then circled this passage:
One of the shocking realities that is present in many of these “investment opportunities” is a relative absence of pertinent financial information. One would think that these opportunities which are often sold as “pre-IPO” rounds would have something close to the data you might see in an S-1. But often, the financial information is quite limited. And when it is included, it may be presented in a way that is inconsistent with GAAP standards. As an example, most Unicorn CEOs still have no idea that discounts, coupons, and subsidies are contra-revenue.
So what’s this have to do in my addled brain with Palantir? I had three thoughts, which are my opinion, and you may ignore them. In fact, why not stop reading now.
- Palantir is a unicorn and it may be experiencing increased pressure to generate a right now pay out to its stakeholders. One way Palantir can do this is to split its “secret” business from its Metropolitan business for banks. The “secret” business remains private, and the Metropolitan business becomes an IPO play. The idea is to get some money to keep those who pumped more than $700 million into the company since 2003 sort of happy.
- Palantir has to find a way to thwart those in its “secret” work from squeezing Palantir into a niche and then marginalizing the company. There are some outfits who would enjoy becoming the go-to solution for near real time operational intelligence analysis. Some outfits are big (Oracle and IBM), and others are much, much smaller (Digital Reasoning and Modus Operandi). If Palantir pulls off this play, then the government contract cash can be used to provide a sugar boost to those who want some fungible evidence of a big, big pay day.
- Palantir has to amp up its marketing, contain overhead, and expand its revenue from non government licenses and consulting.
Is Palantir’s management up to this task? The good news is that Palantir has not done the “let’s hire a Google wizard” to run the company. The bad news is that Palantir had an interesting run of management actions which resulted in a bit of a legal hassle with i2 Group before IBM bought it.
I will continue looking for information about Gotham’s security system and method. In the back of my mind will be the information and comments in On the Road to Recap.
Stephen E Arnold, April 25, 2016