Be an Entrepreneur: The Venture Outfits Need You

October 2, 2020

Institutional Investor ran an interesting story. No, that is not an oxymoron. Really. “The Pervasive, Head-Scratching, Risk-Exploding Problem With Venture Capital.”

I noted this passage:

Two-thirds of venture deals fail, researchers have found. With such a high mortality rate, a VC fund’s actual ending portfolio size is merely one-third of its invested companies’. So to arrive at an exposure with 20 to 70 companies, a fund needs a starting portfolio of 60 to 210 startup investments. Very few funds meet this size.

Without wrestling with the assumptions or the math, I thought this statement was fascinating:

Significant portions of the average come from very few outlier deals.

Now the assertion:

The golden rule for investors into the venture asset class must therefore be: Build a portfolio of 500 startups, with 100 companies being the absolute minimum.

Okay, how many venture firms do you know that have a portfolio of 500 start ups?

Then the question, “Why not buy a fund of VC funds?” Answer:

Based on industry studies, funds of funds frequently lack diversification across gender and race.

Nervous? Not to worry. Here’s why:

Is venture capital a risky asset class? No. Most VC funds choose to act in a risky manner by not diversifying, but that does not make the asset class risky. To de-risk venture capital, CIOs simply need to acknowledge that VC math is different from public markets math. The importance of low-probability, excess-return-generating investments means that proper diversification requires a portfolio of at least 500 startups.

But most VC firms don’t have 500 or more start ups in their portfolio? That’s what the write up said.

Does this seem to be reassuring?

Stephen E Arnold, October 2, 2020

Google Decides It Is Time To Play Cards

September 8, 2020

Innovation is part of Google’s mantra. Alphabet Inc. never stops developing ideas, especially when it comes to improving its trademark product: search. Mobile search and having seamless access between mobile and desktop devices is a key selling feature. Google decided to improve its activity cards feature says Engadget in the article, “Google Promises Better Search Results For Recipes, Jobs, And Shopping.”

The activity cards feature allows users to continue searches they started on mobile devices. The feature works like this:

“Let’s say you’re looking for iPad accessories. The shopping card will display products that you’ve been researching, and even some that you haven’t explicitly searched for. If they were featured in a review or a guide, Google might surface them in the card. That could help you to compare all of your options and reach a decision.

The jobs card could make it easier for you to keep on top of new openings in your field. It’ll display relevant job listings that have popped up since you last searched, so you don’t necessarily have to trawl through the same ones over and over.”

The recipe cards work similar by keeping content on searched for recipes updated. The activity cards act like personalized RSS feeds centered on specific topics: jobs, search, shopping, and recipes. They offer a unique and customizable browsing and search option.

However, their subject reach is limited. Dozens of other apps provide the same service, but they are not limited to four topics. The only special thing about Google’s activity cards is the Google name.

How about customizing activity cards so Google users can get the most out of this feature.

Whitney Grace, September 8, 2020

Qualcomm: Tools? Nobody Had Tools.

September 7, 2020

I read “Qualcomm’s Founder On Why the US Doesn’t Have Its Own Huawei.” Interesting viewpoints appear in the article.

Here’s the passage that caught my attention:

Qualcomm, by selling companies a comprehensive chipset that could power a cellphone, actually made it easier for new Chinese competitors to hit the market, because they had the tools to create a product instantly. “Unfortunately,” he says, “nobody in the US has really run with it” and done the same thing.

And then:

Another complicating factor is that governments in China and Europe have had industrial aid policies that helped their telecom firms in a way that the US has not. “Our government has not provided R&D support or other support that Huawei and ZTE (another successful Chinese firm) managed to get from their own government,” Jacobs says.


  1. US companies are as large or larger in terms of access to cash and humans. Those companies have the resources to solve certain technical problems, sustain the ecosystem to support certain technologies, and push technology which will be used by billions. What went wrong? Is it possible the US companies were supplying grain to the highest bidder. These bidders then developed industrialized farms. Looks like an error and finger pointing.
  2. Those who build tools often discover unexpected consequences. As a child I read science fiction books. I recall descriptions of humans building robots and then robots building robots. The story explained that humans were subjugated to their robot overlords who manufactured more and increasingly sophisticated robots. An unexpected consequence?
  3. “Nobody” and the “government” are convenient excuses.

Net net: Significant shift in the balance of technological power seems to be evident and industry spark plugs are not delivering the necessary oomph. Not a flattering look in what should be a public relations extravaganza, not evidence of systemic failure.

Stephen E Arnold, September 7, 2020

Interesting Insight Tucked in a Discussion of Corporate Labs

August 21, 2020

The Death Of Corporate Research Labs” is an interesting essay. I found the references to Bell Labs fascinating. My team and I performed some small work for Bell Labs which then morphed into Bell Communication Research. Earlier I had done small work for the old Ma Bell, and it was a person from that company who submitted my name for an ASIS Award.

The write up points out that corporate research and development laboratories became a thing as a result of anti-trust pressures decades ago. Today corporate R&D is mostly a memory. Shifty eyed bean counters and Teflon coated MBAs know when to dump a cost center which does not contribute to the bottom line every 12 weeks.

The essay contains a brilliant observation. I circled this in red:

A surprising implication of this analysis is that the mismanagement of leading firms and their labs can sometimes be a blessing in disguise. The comparison between Fairchild and Texas Instruments is instructive. Texas Instruments was much better managed than Fairchild but also spawned far fewer spin-offs. Silicon Valley prospered as a technology hub, while the cluster of Dallas-Fort Worth semiconductor companies near Texas Instruments, albeit important, is much less economically significant.

Innovation is a result of lousy management.

I have to think about that because many of the high tech companies are not in my opinion well managed. Profitable? Yes. Well managed. Nope.

That raises the question:

If we accept my hypothesis that Silicon Valley high tech anti trust targets are not well managed, why are many of these firms starved for innovation?

Perhaps there is minimal correlation between management (good or bad) and innovation. The status quo suggests that me too thinking is the surest path to “innovation.”

Stephen E Arnold, August 21, 2020

Apple: An Intellectual Property Misunderstanding Resolved

August 18, 2020

DarkCyber is aware of the legal dust up between an electronic game company and Apple computer. However, another facet of Apple’s corporate mindset surfaces in “Apple Ordered to Pay PanOptis $506.2 Million for Infringing LTE Patents.”

The write up reports:

In [the] decision, the jury decided that Apple failed to prove that any of PanOptis’ patent claims were invalid. According to Law360, it also said that Apple willfully infringed on the patents. Notably, the in-person patent jury trial was the country’s first since coronavirus lockdowns began. The $506 million is a royalty of past sales of infringing devices, with the jury finding five of the seven patents in suit were violated.

With interest in next generation wireless technology moving more quickly than the US legal system, will Apple obtain its technology via licenses, good old R&D, or some of the more interesting methods available to the company? There’s nothing like American know how, is there?

Stephen E Arnold, August 18, 2020

Is America Losing its Innovation Edge?

August 6, 2020

Google borrowing money, dwindling university funding, a trend toward working from home, and a less than welcoming immigration policy combine to spell trouble for the United States. The Atlantic tells us why in, “America’s Innovation Engine is Slowing.” Writer and R Street resident fellow Caleb Watney begins by describing a recent event that contributed to doubt in education: ICE’s announcement that, should universities switch to online-only classes this fall, their international students would be booted from the country. The agency has since backed down from that stance, but not before it unnerved many current and potential students that might have contributed much to our nation. Watney writes:

“The visa debacle was only the latest of many ominous signs for the United States, long the world’s primary incubator of new technologies, new drugs, new therapies, and new business models. The coronavirus pandemic and the administration’s botched response to it are damaging the engine of American innovation in three major ways: The flow of talented people from overseas is slowing; the university hubs that produce basic research and development are in financial turmoil; and the circulation of people and ideas in high-productivity industrial clusters, such as Silicon Valley, has been impeded.

We noted:

“All three trends started before the coronavirus arrived, but the pandemic has accelerated them in ways that, if left unaddressed, could cripple the U.S. economy for decades. During the difficult economic recovery from COVID-19, closed businesses will be able to reopen and rehire their furloughed workers, and delayed investments will resume. But if the nation’s capacity for economic and technological innovation is diminished, Americans will feel the loss for decades to come—not just in lower GDP but in slower progress toward a vaccine for COVID-19, solutions to climate change, a cure for cancer, and more.”

Bright students from other countries have sought education in the U.S. over the last century, and many have settled here. These folks have made considerable contributions to our country’s progress and economy. Universities, long the sources of academic research that has propelled us forward, will be forced to shutter their labs as funding continues to dwindle. Finally, the trend toward working from home is pulling people away from central meeting places where great ideas are shared and evolve, often during “off” hours. As we are finding out, virtual meetups just aren’t the same. The article covers each of these three factors in some depth, so navigate there for more details.

Watney paints a pretty bleak picture, but ends with a little hope—we have the power to invert these trends, if we choose. First, he advises, we should reverse the current administration’s immigration freeze to communicate to the rest of the world we welcome their inquiring minds. We should also inject a huge chunk of change into university research labs. Packed central meeting places cannot return until we’ve beaten the pandemic, of course. Once that is done, though, we could set the stage for collaboration by building affordable housing in dense cities, Watney suggests. Will we do what it takes to correct our course and avoid falling behind the rest of the world? We shall see.

Cynthia Murrell, August 6, 2020

Zoom: The Google Response Includes Me Too and a Multi Warhead Strategy

May 12, 2020

Zoom became an overnight sensation. Now Google and Microsoft are waking up to the buzz the company is generating. Where there is buzz, there is money to be made.

Google is notable for having numerous products and services. It has a reputation of abandoning projects when Googlers lose their enthusiasm for a product or service that will not advance their career.

Google Meet vs Google Hangouts vs Google Duo: What’s the Difference?” asks a good question. The article does make clear that Google offers three services. Presumably Zoom will find itself surrounded and either sell out or just be squashed by the increased competitive pressure.

According to the Verge (a publication which combines wit with Harvard Business Review advice), “Google unifies all of its messaging and communication apps into a single team.” The new Zoom killing initiative will be guided by Javier Soltero, the person who developed the mobile email app Acompli. Soltero worked at Microsoft and is credited as making Outlook what it is today. (What happened to Messrs. Bhatia and Smith, the creators of Hotmail who had some influence on the fine Outlook system?)

From our redoubt in rural Kentucky, does Google need three services to deal with Zoom? Zoom is not a newcomer. The company was set up in 2011. In that period of time, Google had its own array of video meeting services, chat apps, and messaging services. Frankly, I cannot differentiate among Google’s offerings. Maybe sometime in the future enlightenment will arrive.

In terms of financial commitments, will Google consolidate its messaging products and services in order to reduce costs? Will Google innovate so that children of Google engineers will abandon their use of Zoom? Will Google gain organic traction in the video meeting space? Will Google stick with video meetings or abandon them as it did the Toronto smart city play? Will a user know to use Chrome to make group calls in Google Duo? (Even the question can make one’s head spin.)

These are questions which are difficult to answer. Google’s sudden focus on video meetings supports three observations:

  1. Google failed to develop a video meeting service with the organic popularity of Zoom
  2. Google’s response is a classic knee jerk reaction
  3. Google needed to hire a person to try and bring order to the Google entropy generating approach to product and service innovation.

Should Zoom be worried? Yes.

Will Microsoft step up its efforts to deal with Zoom and put speed bumps in front of Google’s information highway? Will Amazon become more active in video services?


What’s this mean for Zoom? DarkCyber thinks that life for Zoom will become more challenging.

What’s this mean for Google? Whatever the company does, the actions may fan the flames of regulatory probes into the company’s practices.

Microsoft will thrash, and probably execute another Skype play? Skype, you remember, the dropped ball.

And Amazon? The Bezos bulldozer will grind into the space crushing those not agile enough to climb aboard or avoid getting mashed into the dirt.

And Zoom? I will think fondly of the company, its inept customer support, its icon litter, and its zero privacy approach to video services.

Google’s and Microsoft’s approach to innovation and competition are at least semi-amusing. Zoom, however, may not get much of a chuckle out of the stepped up competitive pressure.

Stephen E Arnold, May 12, 2020

Intelware/Policeware Vendors Face Tough Choices and More Sales Pressure

April 20, 2020

The wild and crazy reports about the size of the lawful intercept market, the policeware market, and the intelware market may have to do some recalculations. Research and Markets’ is offering a for fee report which explains the $8.8 billion lawful interception market. The problem is that the report was issued in March 2020, and it does not address changes in the financing of intelware and policeware companies nor the impact of the coronavirus matter. You can get more information about the report from this link.

As you know, it is 2020. Global investments have trended down. Estimates range from a few percent to double digits. Now there is news from Israel that the funding structures for high technology companies are not just sagging. The investors are seeking different paths and payoffs.

Post Covid-19, Exits May Seem Like a Distant Dream But Exercising Options May Become Easier” states:

With Israeli tech companies having to cut employees’ salaries by up to 40%, many have turned to repricing stock options as a means of maintaining their talent.

Repricing means that valuations go down.

Gidi Shalom Bendor, founder and CEO of IBI Capital subsidiary S-Cube Financial Consulting, allegedly said:

You can see the valuations of public companies decreasing and can assume private companies are headed the same way,” Shalom Bendor said. Companies that are considering repricing have been around for several years and have a few dozen employees, so even though an exit is not around the corner for them it is still in sight, he explained. “In some cases, these companies have even had acquisition offers made, so options are a substantial issue.

Ayal Shenhav, head of the tech department at Israel-based firm GKH Law Offices, allegedly said:

Pay cuts and the repricing of options go hand in hand.

Let’s step back. What are the implications of repricing, if indeed it becomes a trend that reaches from Israel to Silicon Valley?

First, the long sales cycles for certain specialized software puts more financial pressure on the vendors. Providing access to software is not burdensome. What is expensive is providing the professional support required for proof of concept, training, and system tuning. Larger companies like BAE Systems and Verint will have an advantage over smaller, possibly more flexible alternatives.

Second, the change in compensation is likely to hamper hiring and retaining employees. The work harder, work longer approach in some startups means that the payoffs have to be juicy. Without the tasty cash at the end of a 70 hour work week, the best and brightest may leave the startup and join a more established firm. Thus, innovation can be slowed.

Third, specialized service providers can flourish in regions/countries which operate with a different approach to funding. Stated simply, Chinese intelware and policeware vendors may be able to capture more customers in markets coveted by some Israeli and US companies.

These are major possibilities. Evidence of change can be discerned. In my DarkCyber video for April 14, 2020, I pointed out that Geospark Analytics was doing a podcast. That’s a marketing move of note as was the firm’s publicity about hiring a new female CEO, who was a US Army major, a former SAIC senior manager, and a familiar figure in some government agencies. LookingGlass issues a steady stream of publicity about its webinars. Recorded Future, since its purchase by Insight, has become more vocal in its marketing to the enterprise. The claims of cyber threat vendors about malware, hacks, and stolen data are flowing from companies once content with a zero profile approach to publicity.


Sales are being made, but according to the DarkCyber research team the deals are taking longer, have less generous terms, and require proofs of concept. Some police departments are particularly artful with proofs of concepts and are able to tap some high value systems for their analysts with repeated proofs of concept.

To sum up, projections about the size of the lawful intercept, intelware, and policeware market will continue to be generated. But insiders know that the market is finite. Governments have to allocate funds, work with planning windows open for months if not a year or more, and then deal with unexpected demands. Example? The spike in coronavirus related fraud, misdirection of relief checks, and growing citizen unrest in some sectors.

Net net: The change in Israel’s financing, the uptick in marketing from what were once invisible firms, and the environment of the pandemic are disruptive factors. No quick resolution is in sight.

Stephen E Arnold, April 21, 2020

Small and Possibly Irrelevant Factoid: Chinese Patents

April 16, 2020

The truth and trust outfit Thomson Reuters published “In a First, China Knocks US from Top Spot in Global Patent Race.” The write up reports:

The World Intellectual Property Organization, which oversees a system for countries to share recognition of patents, said 58,990 applications were filed from China last year, beating out the United States which filed 57,840.

So what? This is allegedly a 200 X increase. Also interesting is the assertion that more than half of the patents in the sample originated in Asia.

Important? Probably not. Patents are not “real” innovation. Patents are words and weird diagrams.

Stephen E Arnold, April 16, 2020

A Rose by Any Other Name Is Google Meet or Google Chat or Google What?

April 11, 2020

Slashgear published “Google Meet Is Hangouts Meet’s New Name, Everything Else Is the Same.” I don’t use any of the Google “talk” services. I don’t want to talk, chat, receive text messages, or get phone calls. Why? If something is important, a person will send me a letter or maybe a FedEx. Anyone remember those?

But many folks younger than 76 are into chat et al. The write up states:

It is perhaps a running joke by now that Google just can’t settle on a single messaging app or service for long. It has gone through quite a number of them, enough to confuse even the most ardent of Google’s followers. That has happened yet again now that Hangouts Meet, G Suite’s video conferencing product, has officially been rebranded to Google Meet, perhaps with the ironic goal of making things less confusing.

This is no joke. The organizational approach at Google is based on high school science club management methods. This obvious guiding principle is overlooked by many, including the Google Board of Directors, most Googlers, most pundits, and, of course, those seeking Google’s mouse pads, LED pins, T shirts, and other assorted tangible evidence that proximity with the GOOG took place.

The write up states:

The Meet part of the Hangouts brand is being renamed to a more identifiable Google Meet. The logo, however, remains the same and Hangouts Chat remains untouched.

Yeah, okay.

If these services worked, why was it necessary for Google’s HSSCMM team to forbid Zoom on Google laptops?

Perhaps the answer is, “Zoom sort of worked.”

How does this relate to the name confusion, the multiple ways to exchange information, and the incredible confusion of numerous products and services which function like a 1960’s Bell labs TV phone?

Gentle reader, may I submit that Google does one thing well: Relax the precision of search results in order to burn through ad inventory. Google is not making much headway in its non ad businesses. Google is ads.

HSSCMM are now on display. Perhaps everyone can try to join a Hangout, do a chat, or send an email to Google customer service?

One last question, “Are there ads on the Loon balloons?”

Stephen E Arnold, April 11, 2020

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