May 12, 2015
I read “Database Vendor MarkLogic Joins Billion Dollar Club with New Funding.” The main point for me is that MarkLogic is described as a “database vendor.” MarkLogic has been working hard to explain that it is an enterprise search vendor, a business intelligence vendor, and an XML publishing system appropriate for finance, health care, and publishing. There is MarkLogic DNA in Autonomy.
The headline brushes these assertions away, clearing the path for the unicorn to charge directly in the face of Oracle and maybe IBM.
According to the write up:
MarkLogic in the last few years has gained several new database rivals–including Cloudera Inc., last valued at $4.1 billion; MongoDB Inc., last valued at $1.6 billion; MapR Technologies Inc.; and Datastax Inc.–in addition to traditional competitors Oracle, Microsoft Corp. and International Business Machines Corp. MarkLogic customers include Dow Jones & Co., which publishes VentureWire and The Wall Street Journal. The company said the new money would be used to expand globally across Europe, Japan and Asia and invested in MarkLogic partners and in research and development.
Is this what MarkLogic will do with the money? I thought some of it would be allocated to purchase other firms; for example, companies which allegedly shore up MarkLogic’s content processing gaps. Concept Searching, Content Analyst, Smartlogic? Also, there may be some long suffering investors who want a payback for the millions pumped into the company. I noticed that the lead investor was Wellington Management with some help from Arrowpoint Partners.
Before the current president, I was working for some of the nifty outfits in Sillycon Valley. I learned that MarkLogic had missed some important financial targets. A spin of the revolving door put some new faces in familiar positions.
If one looks for MarkLogic today, the company is findable, but it maintains a comparatively low profile. I dropped the blog from my useful source list. I can’t recall the last time I saw a substantive link to the company in Twitter. I don’t see the company at some of the conferences I attend, but, hey, I attend some very specialized information centric hoe downs.
Oracle may expand on its”we’re a better XML database white paper which you can find here. An earlier paper called “Mark Logic XML Server 4.1” points out some issues which Oracle perceived in the MarkLogic approach. In a shoot out with Oracle, the bullets will fly. Does MarkLogic have the arsenal to deal with Oracle’s cache of armaments?
Will proprietary NoSQL data management systems be able to generate a billion in revenue in the next six or eight quarters? Outfits like Lucid Imagination (Really?) have been running into headwinds, and I think a similar weather system may turn MarkLogic’s sunny skies into a cloudy day. I understand that the Wall Street Journal is a MarkLogic believer? How many more can MarkLogic bring to its picnic? The assumption, I assume, is a lot.
MarkLogic’s core technology dates from 2001. Like many companies from this time period, MarkLogic has to find a way to get that old time start up excitement back. Companies which are 14 years old often continue along the same trajectory in my experience.
This will be interesting and maybe a big payday for the increasingly strapped owners of companies with technology which can caulk some leaks in the MarkLogic lake raft.
Stephen E Arnold, May 12, 2015
May 11, 2015
I read belatedly yet another analysis of the HP lawsuit against Autonomy. “Details of HP Lawsuit against Autonomy Executives” The write up reports that HP is taking “direct legal action against Lynch.” There is nothing like a personal legal action to keep the legal eagles circling in search of money.
The HP position is that Lynch (the founder of Autonomy) and Sushovan Hussain (former Autonomy CFO) overstated Autonomy’s growth and profits. My reaction is “Yeah, but didn’t you guys review the numbers before you wrote a check for $7 or $8 billion?”
The article states:
The acquisition has been seen as a disaster for HP since the tech giant was forced to write down $8.8 billion from the deal in 2012. The $5.1 billion legal claim is one of the largest ever brought against an individual in Britain. HP bases the claim on a $4.6 billion charge linked to the alleged financial misconduct, roughly $400 million connected to shares given to Lynch and Hussain and a further $100 million loss associated with Autonomy that was suspected of being caused by the former executives’ activities, according to the British court documents.
HP may not be a tech leader or even a C student in acquisition analyses, but it is the leader in the magnitude of the claim it is making against Dr. Lynch. If he is found guilty of selling something to HP who analyzed the deal and then decided to buy the company, he will have to pay $5.1 billion.
I don’t have a dog in this fight. But it seems to me that HP reviewed Qatalyst Partners’ financial presentation about Autonomy. Then HP analyzed the numbers. Then HP involved third parties in the review of the numbers. Then HP decided to buy Autonomy. Then HP bought the company. Then HP found that Autonomy is not exactly a product like a tube of Colgate Total toothpaste. Then HP fired, forced, or tasered Lynch and others out of the HP carpet land. Then HP tried to convert the technology into some sort of cloud based toolkit. And finally HP decided to go after Dr. Lynch. You don’t have to like him, but he is a bit of a celebrity in the Silicon Fen, holds an Order of the British Empire, and he is quite intelligent, maybe brilliant, and in my experience, not into dorks, fools, goof balls, losers, or dopey managers. Your mileage may vary, of course.
I am sufficiently experienced to know that when a buyer wants a product, service, or company, craving—nay, lust and craziness—kick in. “Yo, we’re 17 years old again. Let’s do it” scream the adrenaline charged experts. This is a slam dunk. We can take Autonomy waaaay beyond the place it is today. Rah, rah, rah. Get ‘em, team.”
Autonomy’s management and its advisors knows that PowerPoint dust can close deals. The blend of blood frenzy and the feeling of power one gets when taking ownership of a new La Ferrari is what business is about, dog. Smiles and PowerPointing from Autonomy played a part, but HP made the decision and wrote the check. Caveat emptor is good advice.
Frankly I see HP as the ideal candidate for a marvelous business school case. The HP Autonomy story is better than the Yahoo track record of blunders and blind luck. The management of HP believed something that has never ever ever been done: Generate billions of dollars in new revenue quickly. Google generates billions from advertising. Autonomy generated hundreds of millions in revenues from the licensing of dozens of products. HP got its wires crossed in reasoning which does not line up with the history of the search and content processing industry.
Billions do not flow from content processing and search technology. Investors can pump big money into a content processing company like Palantir. Will these investors get their money back? Don’t know. But to spend billions for a search and content processing company and then project that a $600 million or $800 million per year outfit would produce a gusher of billions is a big, but quite incorrect, thought.
Never has happened. Never will. It took Autonomy 15 years, good management, intelligent acquisitions, and lots of adaptation to hit the $600-$700 million plus in annual revenue it generated. Only energy drinking MBAs with Excel fever can convert 15 years and multiple revenue streams from dozens of quite different products into one giant multi billion dollar business in a couple of years. The scale is out of whack. When I visited the store in Manhattan with the big crazy pencil and the other giant products I could see the difference between my pencil and the big pencil. HP, I assume, would see the two pencils as identical. HP, if it purchased a big pencil, would sue the shop in Manhattan because the big pencil would not fit into a Panasonic desktop pencil sharpener. Scale of thinking, accuracy of perception—They matter to me. HP? Hmm.
This is not bad business on HP’s part. This is not flawed acquisition analysis on HP’s part. This is not HP’s inability to ask the right questions. This is medieval lunacy with managers dancing on the grass under a full moon. Isn’t HP that company which has floundered, investigated its own Board of Directors, chased good managers from one office in Silicon Valley into the arms of a competitor based on the old Sea World property? Maybe. Maybe HP is a fully stocked fishing pond, not a water deficient stream in Palo Alto?
My personal view is that HP has itself, its Board of Directors, and its advisors to blame. I find it very difficult to believe that as talented as Dr. Lynch is that he could spoof HP’s Board, HP’s financial professionals, HP’s advisors, HP’s lawyer, and HP’s Meg Whitman. Hey, the guy is talented, but he is not Houdini.
Well, we have a show, gentle reader. We have a really big show. Where is Ed Sullivan when we need an announcer?
Stephen E Arnold, May 11, 2015
May 5, 2015
I read “IBM Creates Power Systems Servers for Big Data Crunching in SAP HANA.” The story line is easy to grasp: Struggling IBM has purpose built fast servers for the IBM like SAP. According to the write up:
BM has expanded its partnership with SAP by creating Power Systems server configurations specifically designed to enhance the way SAP HANA is deployed for big data projects.
IBM said its Power Systems Solution Editions for SAP HANA will allow users of IBM’s Power8 systems to deploy the in-memory database management platform faster and in a more cost-effective manner.
What’s interesting is that both companies have compute intensive content processing systems. The challenge of making sense of structured and unstructured information is a need IBM and SAP customers have.
The fix is big iron. Crunching large volumes of data in real time appears to be an issue both IBM and SAP wish to resolve.
The implication is that cloud services like those available from Amazon and HP are not up to the task. The tie up sounds good. The article references content processing as well:
Powering big data analytics and database management appears to be a major part of IBM’s strategy. The company recently entered the healthcare big data market by creating Watson Health after snapping up big data and cloud startups. Big Blue is also teaming up with Twitter to analyze big data harvested from the social network.
One minor point: Will customers be able to realize cost savings? Are IBM and a company with IBM’s DNA cost effective? “Cost savings” are easy to say and sometimes difficult to deliver. I assume one can ask Watson.
Stephen E Arnold, May 5, 2015
April 30, 2015
Nope, Amazon is not playing games. With its cloud services getting some love, the company wants to wallow in affection. I read “Amazon Pays $20M-$50M for ClusterK, the Startup That Can Run Apps on AWS at 10% of the Regular Price.” Who knows if the 10 percent figure is fudge.
I believe that Amazon’s cloud competitors will perk up. Hewlett Packard, IBM, and Microsoft have big cloud plans. Microsoft advertises a cloud that endures tough weather. Okay.
But the issue is cost. Microsoft gives stuff away. HP does the mitosis thing. IBM pumps out PR for Watson authored cookbooks AND quantum computing chips.
Amazon, on the other hand, continues to push for the undisputed crown as the digital Wal-Mart. My hunch is that price competition may be more important than the cloud prices its competitors are offering. Perception is important. Do you want lower costs or free Word, two HPs, and one collection of IBM financial reports. I go with lower costs.
Stephen E Arnold, April 30, 2015
April 29, 2015
I think we tweet stories posted to this blog. Don’t know. Don’t care. A while back someone sent me an email pointing out that I was promoting a naked Miley Cyrus. Odd. I write about online information and content processing. Not much about naked. Not much about Miley Cyrus, a Disney confection, right? When I think of Disney, I recall a conversation with one of that outfit’s senior managers. The message conveyed to me was that Infoseek was the greatest thing since sliced bread. My analysis was different. Fortunately I think the invoice cleared. Maybe not. Disney is not an IT outfit at its core. But Twitter somehow had connected Beyond Search with the aforementioned Miley person. I think we had to call some folks we knew. Even then, Twitter required several weeks to figure out how Miley and me became digitally connected. Shudder.
I read with considerable amusement “How One Tweet Wiped $8bn Off Twitter’s Value.” Compared to other high tech issues, the single tweet thing is indicative of the importance of a single action. According to the write up, Twitter did something. Nasdaq did something. A filtering outfit did something. Bingo. Stock goes down. The write up stated:
It has all left Twitter, which did not have great news to share with investors anyway, somewhat red-faced.
Yep, Twitter seemed concerned that whatever happened was not so good. Twitter did not demonstrate the same concern and alacrity when Beyond Search and Miley were exchanging bits. Why am I not surprised. A single tweet is really important when it costs Twitter money. Other misconnects in the Twitter system are not quite as important in my experience.
Stephen E Arnold, April 29, 2015
April 28, 2015
I read “Google Offers Cash Support to Europe’s News Groups.” The idea is that Google will invest $163 million in journalism start ups. The write up points out that “The Financial Times, the Guardian, Spain’s El Pais and Germany’s Die Zeit are among those backing the initiative.”
The BBC, an organization with some experience in conflicts, points out:
Google has also pledged to:
- work with European publishers to discuss ways to boost revenues via the use of ads, apps, paywalls and analytics data
- pay for three of its own workers – based in Paris, Hamburg and London – to provide digital skills training to journalists
- fund research to investigate how people consume news and find new techniques to crowdsource information
Is there any connection between Google’s European challenges and this action? Google set up a similar program in France. Google and France have an interesting relationship with regard to digital information and services. Like Google’s new patent purchase service, there is probably some other motive operating other than helping out start ups. I will leave it to you, gentle reader, to speculate on the “value” of strategic investments.
Stephen E Arnold, April 28, 2015
April 24, 2015
Short honk: I read several articles about the financial reports of Facebook, Google, and Yahoo. I enjoyed the explanations about the revenues and profits. Here are the write ups open on my desktop monitor at this moment:
- “Despite Headwinds, Analysts See Even Larger Facebook Upside Into 2016”
- “Google Caps Costs as Growth Slows” for which you may have to pay to read.
- “Yahoo Q1 Results Miss Expectations on Both Lines”
Is there a message to be decrypted from these data? Yep.
Stephen E Arnold, April 24, 2015
April 21, 2015
I read “IBM Sales Fall for 12th Quarter, Currency Weighs.” Nary a word about Watson. I then read “IBM Operating Profits Rise, but Strong Dollar Takes Toll.” Again a subject about which I sought information was not included. (The New York Times, April 21, 2015, business section, dead tree edition).
I learned that mainframes are still selling. I learned that not much else is selling. But the fact I wanted was missing.
I must conclude that sales of Watson’s cook book are not sufficient to bolster IBM’s financial results. Maybe next quarter along with Watson Health’s revenues.
One fact did stick with me. IBM has reported revenue declines for three years in a row. What advice does Watson offer? Also not reported. I hear a voice whispering, “Patience, grasshopper.”
Got it. Patience.
Stephen E Arnold, April 21, 2015
April 8, 2015
When a bean counter tallies up the cost of an enterprise search system, the reaction, in my experience, is, “How did we get to this number?” The question is most frequently raised in larger organizations, and it is one to which enterprise search staff and their consultants often have no acceptable answer.
Search-splainers position the cost overruns, diminish the importance of the employees’ dissatisfaction with the enterprise search system, and unload glittering generalities to get a consulting deal. Meanwhile, enterprise search remains a challenged software application.
Consulting engineers, upgrades, weekend crash recoveries, optimizing, and infrastructure hassles balloon the cost of an enterprise search system. At some point, a person charged with figuring out why employees are complaining, implementing workarounds, and not using the system have to be investigated. When answers are not satisfying, financial meltdowns put search vendors out of business. Examples range from Convera and the Intel and NBA matters to the unnoticed death of Delphes, Entopia, Siderean, et al.
Search to most professionals, regardless of occupation, means Google. Bang in a word or two and Google delivers the bacon or the soy bean paste substitute. Most folks do not know the difference, nor, in my view, do they care. Google is how one finds information.
The question, “Why can’t enterprise search be like Google?”
Another question, “How can a person with a dog in the search find search-plain; that is, “prove” how important search is to kith and kin, truth and honor, sales and profit.
For most professionals, search Google style is “free.” The perception is fueled with the logs of ignorance. Google is providing objective information. Google is good. Google is the yardstick by which enterprise search is measured. Enterprise search comes up short. Implement a Google Search Appliance, and the employees don’t like that solution either.
Inside an organization, finding information is an essential part of a job. One cannot work on a report unless that person can locate information about the topic. Most of the data are housed in emails, PowerPoints, multiple drafts of Word documents stuffed with change tracking emendations, and maybe some paper notes. In some cases, a professional will have to speak face to face or via the phone to a colleague. The information then requires massaging, analysis, and reformation.
Ah, the corporate life is little more than one more undergraduate writing assignment with some Excel tossed in.
April 3, 2015
Here’s the passage I noted:
An Oak spokesman was just learning about the SEC charges when contacted by Fortune, and did not yet have any comment. Among the open questions not only are if Ahmed will be a partner on the future fund, but also if he’ll remain a board member with existing Oak portfolio companies like Attivio Inc., Circle Financial Kenet LLC and Nomorereack.com.
I have mentioned that firms requiring repeated injections of venture funding are under considerable pressure to produce returns. I find it interesting that Attivio, founded by former executives at Fast Search & Transfer, had a board member who allegedly requires investigation. I wish to note that Fast Search was investigated by Norwegian authorities, and John Lervik, the founder, was saddled with formal punishment.
Attivio is a variant of Fast Search’s aspirations to deliver an enterprise wide unified information access platform. Dr. Lervik and his team had the ability to see what enterprise customers wanted. The technology fell short of the mark and some fancy financial dancing ensured. Attivio’s founders left Fast Search before the investigation spooled to high RPMs.
Search remains a difficult sector in which to produce the types of returns venture firms and angels expect the investments to generate. Is the SEC investigation an indication that extra ordinary measures are required to make some of the these investments pay off?
My view is that it is desirable to offer a product that customers want to buy, grow by making sales, and avoiding the lure of geysers of venture capitalist money. Others have a different view. That makes horse races. Who would try to fiddle with a horse race? Good question in Kentucky.
I wonder if any of the Fast Search team are on the Attivio Board of Directors.
Stephen E Arnold, April 3, 2015