September 29, 2014
First, navigate to “Another Top Investor Sounds the Alarm: When the Market Turns, a Bunch of Startups Are Going to Vaporize.” No big surprise here. The main idea is, in my opinion:
Over the past few years, it’s been relatively easy for startups to raise money from venture capitalists. In some cases, they’re raising hundreds of millions of dollars to keep their companies afloat. But behind the scenes, they’re plowing through that money either on marketing, overhead, or some other expense, which results in high burn rates. These bloated companies are using their millions to hide serious flaws in their business models.
At some point, those who provide the bucks to the venture firms will want a return. Many of the Fancy Dan outfits are not among the world’s most liquid operations. To raise cash, MBAs and accountants can cook up some quite remarkable solutions. The actions cascade down the line and end up pushing technology companies like those that pitch wild and crazy content technology into an Iron Maiden. This is essentially a casket with spikes protruding into the box and spikes pointing into the box on its lid.
The individual is placed into the Iron Maiden and the door is shut. Ouch.
Now navigate to either the Google book itself or the concepts Web site at http://bit.ly/1mr9OvS. Eric Schmidt argues that businesses should be like Google. You know the moon shots, trying stuff and failing fast (I am not sure how fast Google has failed at social networking, but I don’t want to be argumentative), and value numbers/data over any humanoid subjectivity.
For many search and content processing companies, the senior managers have been failing for years in some cases. I want to make a list of would be start ups and then provide their date of inception. Heck, why embarrass outfits like Attivio, Coveo, Digital Reasoning, Lucid Imagination (now Lucid Works to which I am tempted to add “Really? but I will not.”), and quite a few others.
The point is that we have two somewhat conflicting interpretations of the present business climate. The tweets that inspired the Business Insider write up are taking a hard look at what happens when the money goes away. No money means that affected firms first people, raise prices, and pivot along with a half dozen or so MBA maneuvers before shutting the doors as Convera, Delphes, did Entopia. A few lucky outfits will sell out like Endeca, Exalead, and iPhrase. A few will struggle along sort of open and sort of closed like a number of French search and content processing firms.
On one hand, these outfits are toast if more money is not “found.” On the other hand, forget money. In Google’s world view, these companies need to be more like Google or out Google Google.
The reality is that the contraction of search and content processing has already begun. Some outfits are going to have to find a way to deliver a solution that solves an actual problem and generates sustainable revenue. Companies in this spot include IBM with its Watson project, Hewlett Packard with its Autonomy IDOL technology, and Palantir, a billion dollar baby of considerable note.
My view is that the doom and gloom expressed in the Business Insider write up is more likely to occur than a Google style entity arising from the Google Moon shot and allied suggestions. I am not sure the Google recommendations apply to Google. A company that is 15 years old and has one revenue stream may be a success that fulfills Steve Ballmer’s one trick pony observation.
For search and content processing vendors, there is no easy way out unless money remains plentiful and Google’s advice actually works for an information retrieval company.
Stephen E Arnold, September 29, 2014
September 23, 2014
On LinkedIn I learned about this Pando Daily write up: “How Disgruntled Ex-Employees and Bad Reporting Hung LucidWorks Out to Dry.” I noted the Venture Beat analysis of Lucid Works in my post on September 6, 2014. My focus was the wild and crazy information from an “expert” about various factoids. You can read my reaction to the “Trouble at LucidWorks” story here.
The Pando Daily story comes at the issue in a different way. I was delighted to see that Pando found the “expert’s” comments a bit wobbly. There was an interesting run down about Lucid Works that seems to have come from a different point of view. In a way, the two stories—Venture Beat’s and Pando Daily’s—are a bit like the he said, she said information provided to police investigating a married couple’s disturbing the peace incident. I am no cop, so I can’t figure out who is correct and who is incorrect.
Pando takes this tack:
More accurately: It’s [Lucid Works] a startup, and this shit is hard.
I understand that search is hard, but is an eight year old company a start up? That time span baffled me. Coveo asserts that it too is a start up. Other search vendors dating from the implosion of the Big Five in 2006 also use the start up moniker.
the article points out that there are happy employees and positive investors. More money is likely to be needed. Pando Daily quotes a backer as saying:
We won’t start looking for an expansion round until early next year.
ElasticSearch has amassed about $90 million in funding. So LucidWorks may be thinking it needs the same scale of investment to take wing.
With regard to management, Pando Daily reports that the new top dog is the type of CEO who can deliver revenues. The new president—Will Smith—is described in this context:
On this point, VentureBeat seems oddly hung up on the idea that Hayes is a first-time CEO, perhaps failing to realize that Silicon Valley was (and continues to be) literally built on the success of first-time CEOs. Not to over egg the point, but Mark Zuckerberg and Steve Jobs were first-time CEOs.
Pando Daily added:
As an early member of the Splunk team, Hayes is certainly more qualified for this job than 99 percent of the candidates out there, and more importantly, given that he didn’t found the company, he appears excited about the category.
Pando Daily reminded me that good start ups fire people. I understand the difference between the Silicon Valley approach to management and that practiced at Halliburton and Booz, Allen & Hamilton where I worked for many years. The idea of stability is not always congruent with the needs of a fast moving, pivoting technology company.
Pando Daily also takes issue with Venture Beat’s report that Lucid Works fumbled deals with some real big companies. Pando Daily asserted:
These accounts may or may not have any basis in reality, but they hardly indicate a failing company. The very nature of sales and business development is that deals fall apart all the time. Sometimes those are big deals, sometimes not. The facts are that LucidWorks counts Apple, Sears, Verizon, ADP, Raytheon, Zappos, Qualcomm, Ford, eHarmony, Cisco, and others among current customers.
My reaction to this is okay, but won’t naming these firms give ElasticSearch and other firms a target at which to shoot. Some content processing vendors like Palantir and Recorded Future don’t provide too much information about their customers.
On the all important revenue front, Pando Daily quoted the new top dog at Lucid Works as saying:
“$12 million in services revenue isn’t worth shit,” Hayes says. “But $12 million in product sales on subscription? That’s a $100 million business.”
I agree. Unless the subscriber terminates the subscription. As the competition among content processing vendors heats up, some firms will be quite aggressive in their attempts to take away business. Amazon, for example, seems to be struggling with search, but it could get its act together and offer both a good enough solution at very competitive prices. Amazon is not the only sharp toothed outfit in the pond.
Pando Daily tracked down its own search wizard. That poobah said:
Not everyone agrees that enterprise search is quite this sexy. One enterprise analyst, speaking to Pando on the condition of anonymity, describes it as “not that big of an end market.” But at the same time, it’s one that’s still out there for the taking. “There isn’t really a single company or set of companies that have dominant products in the space,” this analyst says. Google and Microsoft have entered the market (the latter via acquisition) with low-cost offerings that would seem to make the competitive environment more challenging for LucidWorks and other upstarts. But according to the company’s supporters, these products are targeting different, less big data-centric applications and are thus not a valid comparison.
If you have ever listened to opposing expert witnesses in a legal dispute, the same factoid gets very different treatment by each expert. That’s what makes subjective expertise difficult to interpret. My view is that enterprise search is struggling for credibility. Some of the value for information retrieval has been exhausted by vendors now out of business. These include Convera, Delphes, Entopia, Siderean, and others. Some credibility has been eroded as a result of the Fast Search & Transfer matter. The CEO was hit with a jail term and a ban on working in search for a couple of years. Then there is the on going dispute between Hewlett Packard and Autonomy. IDOL is an aging technology like Endeca. But the mud slinging about search and content processing does not improve the image of those working in this sector.
Consequently information retrieval companies are working overtime to explain their solutions in terms that do not invoke memories of Convera or Fast Search. Palantir is a data mining company. Record Future does predictive analytics. Coveo is eDiscovery and customer support. Search vendors are using a wide range of jargon to describe findability. Lucid Works is brave in using enterprise search with a dash of Big Data in its marketing.
Pando Daily said:
Journalism is tough, particularly in the technology sector. Reporters in this industry asked to cover complex and rapidly evolving companies that often take on hordes of venture cash and set outrageous performance expectations. Unseemly as it may be, stories of failure and calamity make for good scoops, and in these cases ex-employees and competitors often make the best sources. Unfortunately, they also can be the most biased sources and are often are in the best position to credibly lead a journalist astray. LucidWorks certainly has its warts and its scars. But that doesn’t make it trouble, that only makes it a startup.
One question remains: When does a company cease to be a start up and start to be a viable company? Is it one years, four years, or eight years? I just don’t know, but I think that companies that have been in business for almost a decade may not be start ups. Management with a start up mentality may not want to face the cold realities expected of established, stable firms. With Lucid’s technology originating with a community, management may be the issue to watch at Lucid Works. Good management can produce revenue, happy employees, and contented customers. Its absence is often evidenced by a lack of harmony.
Stephen E Arnold, September 23, 2014
September 23, 2014
I read “An Insider’s Account of the Yahoo-Alibaba Deal.” I found it interesting. The one factor not mentioned was luck. The write up explains some of the deal context. My hunch is that Yahoo was in the right place at the right time with Jerry Yang, who hit it off with Alibaba’s founder. Why discount luck in a Harvard Business Review article? Easy. Few MBAs and their ilk want to admit that chance generated a positive payoff.
What about Yahoo in the post Alibaba IPO environment?
According to another analysis, by Nicholas Carlson of Business Insider, the rest of Yahoo really is worth nothing at all, after subtracting its stake in Yahoo Japan (a separate company) and its cash reserves. What this means for Mayer is that she’s in the strange position of running a company whose core business the stock market values at less than zero. Yet she has a pile of cash and a site that is one of the most popular on the Internet, attracting over one billion visitors per month, and generating $4.62 billion in advertising revenue over the last year.
If accurate, Yahoo may need some more of that rarely mentioned key to business success—luck.
Stephen E Arnold, September 23, 2014
September 15, 2014
If you follow the HP Autonomy firefights, you will enjoy “Autonomy Deal Fallout ‘More Extreme’ Than Hoped, says HP’s UK boss Andy Isherwood:
In spite of HP’s allegations that Lynch and senior Autonomy management inflated revenues with phantom deals and hidden low-margin sales, Isherwood liked what he found. Technologically at least it was a good buy, he insists….We’re seeing clearly a lot more customer buying so it’s not an issue with the product.”
I also noted the positive signal of one percent revenue growth. Mr. Isherwood asserts:
Despite the decline in outsourcing revenues, a global trend, HP surprised Wall Street last month with 1pc revenue growth – its first in a dozen quarters – on the back of increasing share of the PC market. The UK picture was better still, with only outsourcing in decline. After falling last year overall sales here are on track to grow 7pc, says Isherwood.
With this atta boy and positive financials, what went wrong with Autonomy? As Isherwood says:
Unsurprisingly, he has only good things to say about the leadership of Whitman, Lynch’s nemesis. She is nearly two years into a five-year plan to turn the HP oil tanker, with increased investment in research and development, and a focus on the big trends of cloud computing, mobile working and big data as part an attempt to turn HP’s scale and diversity to its advantage. “HP is a broad-based company,” says Isherwood. “Meg understood that immediately. At that time we had said we were going to hive off the PC business, but she came in and said ‘no’, the power is in the broad portfolio.”
If there’s no management culpability, HP wants its money back. Interesting.
Stephen E Arnold, September 15, 2014
September 8, 2014
the Harvard business Review is embracing some of the alleged jargon used by intel analysts, warfighters, and with-it Beltway Bandits. Now the relationship between use of the acronym VUCA and everyday business decisions about toner and where to have lunch is tenuous at best. The term warrants a comment.
First, however, what does the write up “A Framework for Understanding VUCA” share with the managers of the world? The article defines VUCA as “volatility, uncertainty, complexity, and ambiguity.” Ah, these are the concepts that have launched a 1,000 marketing presentations about search, analytics, and content processing. A fancy new, state of the art, analytics system incorporating entity extraction, faceting, and linguistic understanding will help make VUCA a bad dream. VUCA is like Ebola for an organization. Bad indeed. No reliable cure. High mortality rate. VUGA = Bad.
Next, VUCA makes planning difficult. “Hey, it’s crazy out there.” This seems pretty tricky. The HBR write up suggests tackling VUCA with flexibility. Fight with a quadrant, not the original analytics based Boston Consulting grid. VUCA requires one of those squishy grids with quite a bit of subjectivity.
Also, the HBR content requires reading and a sound function. When I accessed the rich media, I heard nothing. A flaw in my system or a reminder of the challenges VUCA presents to publishers as well as lesser managers.
Second, what’s VUCA have to do with search, analytics, and content marketing. Given the spectacular thrashing over Autonomy and the lesser stomping around about Lucid Works (originally Lucid Imagination), VUCA seems to be a large part of the information retrieval sales process and the management process. Stated another way, search, analytics, and content processing are supposed to decrease VUCA. The reality seems to be that where search, analytics, and content processing are deployed, VUCA becomes a very big deal. It does not work particularly well and there is no easy way to figure out what’s right, what’s incorrect, what’s broken, and what’s actually useful.
So the equation can be modified to state VUCA=Search.
One of the comments to the HBR VUCA analysis is interesting to me; to wit:
The VUCA label is so typical in the business world. The idea
that it’s new is such a load of crap. To use it for an excuse not to develop and execute a strategy or plan is abdication of the highest order. I’d say I have as much experience in this as most. Launching a successful international passenger and cargo airline in an active war zone clearly involved all the elements of VUCA. Your analysis is correct. Any leader must deal with these elements daily. The idea that the world is somehow more uncertain, complex or ambiguous is garbage. Volatility varies regularly over time. You create and execute a strategy in this world the same way you did in the world of yesterday and stop whining.
Why not order up a T shirt with VUCA=Ebola to make the point.
For me, consultants will love VUCA. I can’t wait for mid tier consultants to use this hip military lingo in their content marketing.
Stephen E Arnold, September 8, 2014
September 6, 2014
Another search vendor struggling for survival is not a surprise. What is interesting is that the write up identifies that venture money was needed to stay afloat, a youthful whiz kid cannot deliver revenues, and that former staff say some pretty negative things.
What struck me as interesting was the information smashed into some sentences from a mid tier consulting firm’s search expert. Did you know that Microsoft gives away Fast Search & Transfer technology. This the same code that received high marks in a magic quadrant and contributed to a jail sentence for the founder of Fast Search. Did you know Did you know that the Google Search Appliance was a low cost search option? I did not. In fact, if you look up prices on the US government’s GSAadvantage.gov site, the GSA is a pretty expensive solution. Did you know that make money in open source search is not easy? Maybe not easy but it seems as if RedHat is doing okay.
Why do I ask these questions? I enjoy pointing out that what looks like reasonable statements from an expert may be “out of square.” For color on this reference, see this Beyond Search article.
What about LucidWorks? The company struggled with creating revenue around a layer of software that interacts with Lucene. There were squabbles, turnover in senior management, and pivots.
What is important is that even when a search and content processing company minimizes these and other issues, search is a darned tough software segment to make spin cash.
LucidWorks may survive. But in the larger context of information retrieval, the long shadows cast by Autonomy and Fast Search & Transfer are reminders that painting word pictures about complex technology may be much easier than building a search company with sustainable revenues.
Stephen E Arnold, September , 2014
August 26, 2014
I read “U.S. Judge Casts Doubt on HP-Shareholder Settlement in Autonomy Lawsuit.” The write up seems to point to another chapter in the Hewlett Packard Autonomy litigation. If the article is spot on, I learned:
U.S. District Judge Charles Breyer said the settlement contained a “potentially fatal” provision, under which HP would hire shareholder attorneys to pursue claims against ex-Autonomy executives. He said that provision may prevent his approving the deal.
Assume this is correct. HP would have to go back to the drawing board with regard to a shareholder allegation about the deal. Instead of putting Autonomy on the hot seat, HP may have to deal with shareholders who see HP management as having some flaws.
Instead of reading about Mike Lynch, we would be getting some insight into what the HP board and folks like Meg Whitman were thinking about search and content processing.
My view is that enterprise information retrieval is shadowed by a somewhat gray cloud. If search is the Big Thing, the value of these systems should be evident. Instead we learn that search is a contentious issue. I am curious about the reasoning HP used to justify buying an enterprise search and content processing system that was 15 years young? Once that decision was made, what MBA magic was at work to produce the purchase price? What was Meg Whitman’s contribution to this deal when it took place?
Do other search vendors benefit from the notoriety of this search deal? My hunch is that the flailing many search vendors’ marketing demonstrates is that search is not an Emmy winning solution.
Search is easy to misunderstand and difficult to covert into a money machine. The HP Autonomy matter is a living, breathing case study of that does call attention to the challenges search presents. For those seeking cases studies about search, the HP Autonomy matter is a headliner.
The matter is a reminder that search which everyone thinks he or she understands may not be quite so simple.
Stephen E Arnold, August 26, 2014
July 7, 2014
Here’s a gem. The source is “Google Employee Blows the Whistle on Search Giant’s Problem with Over-Confident ‘Geek Types Living in a Bubble‘.
The quote is from Avery Pennarun, a Googler (maybe soon to be a Xoogler) who allegedly said:
Smart people have a problem especially when you put them in large groups. That problem is an ability to convincingly rationalize nearly anything.
I must admit that here in Harrod’s Creek, Kentucky, rationalizations are not as popular as brawls and shouting.
I don’t understand the “Impostor Syndrome”, but I accept that I don’t get quite a few aspects of the modern world.
I would be happy if search results were focused on precision, recall, and similar old-fashioned ideas. I wonder if the Googlers in Mountain View have ever walked around East Palo Alto and checked out the housing, the stores, and the quality of life? Does a Google Maps search show details in East Palo Alto? Cuba Libre in Washington, DC, was unfindable and it was only a couple of blocks from Google’s DC office.
Stephen E Arnold, July 7, 2014
May 8, 2014
RSuite content management users can now can tap into TEMIS, we learn from “RSuite CMS Leverages TEMIS’s Content Enrichment Capabilities to Deliver a Powerful Semantic Solution.” The partnership makes TEMIS’s semantic enrichment capabilities available to RSuite’s customers in the publishing, government, and corporate arenas. The deal was announced at this year’s MarkLogic World conference, held April seventh in San Francisco; both companies are MarkLogic partners.
The press release elaborates:
“RSuite CMS provides an intuitive user interface that minimizes actions required to execute complex searches across an entire set of content. The solution can globally apply metadata, dynamically organize massive amounts of documents into collections, package and distribute content to licensing partners, and enables customers to meet their multi-channel publishing goals.
“By leveraging TEMIS’s Luxid® Content Enrichment Platform, RSuite CMS can enable customers to automatically enrich their content with domain-specific metadata directly within their publishing workflows. This enables faster and more scalable content indexing, improved metadata consistency and governance, more efficient authoring, and more powerful search and discovery features within customer applications and portals.”
With its focus on publishing and media, RSuite strives to meet today’s ever-evolving publication challenges. The company serves such big names as HarperCollins, Audible, and Oxford University Press. RSuite was launched in 2000 and is located in Audubon, Pennsylvania.
With its collaborative platform, TEMIS adds domain-specific metadata to clients’ data, allowing publishers to supply more relevant information to their own audiences. TEMIS maintains several offices across Europe and North America.
Cynthia Murrell, May 08, 2014
April 25, 2014
Google was into social networks when Orkut Büyükkökten cooked up the site after he joined the GOOG in 2002. Not long after Orkut became available, an outfit called Affinity Engines initiated an allegation that Mr. Büyükkökten was inspired by InCircle code. Imitation is the sincerest form of flattery, but Affinity did not buy my mother’s catchphrase.
There were some alleged and interesting coincidences between the InCircle code and the Orkut code; for example, eight or nine allegedly identical bugs. Well, Google and InCircle worked out their differences, but Orkut was off to the races. From Brazil to India, Orkut became popular. Some of the uses of Orkut were surprising to me. In 2008, Orkut had become a hit in Brazil and India. In the US, not so much. Orkut has been tweaked, redesigned, and relaunched for more than a decade. Orkut added some nifty features like video chat. There were allegations that some users were engaging in anti-social behavior. Brazilian authorities showed interest in the service due to allegations regarding some Orkutians use of the service. Surprising to some is the fact that Orkut was a pioneer of sorts. I find the trajectory of Orkut to be an early example of Google’s approach to “obvious” Internet services: An inability to avoid legal hassles and generate sustainable, substantive revenue.
Cracks in the off ramp to Google from the Information Highway. Image source: http://en.wikipedia.org/wiki/Earthquake_engineering
Enter Google Plus or Google+, essentially an unsearchable name for an online service. (I am intentionally skipping over Wave and other socially innovations.) In 2011, Google rolled out another social networking service. Google executives suggested that Google Plus was the “new” Google. Over the last two years, Google hooked Google Plus into other Google services. The nature of online and other types of electronic services is that monopolies are a natural phenomenon. Google Plus, then, was the glue that would help hold together disparate services in one “new” Google. Identity, advertising, and integration were the drumbeats pounded out by the GOOG’s marketing band.
Well, how is that working out for some of the Google’s best and brightest?
I read various reports about the departure of Vic Gundotra, the face of Google Plus. See, for example, “Google+ Is Walking Dead.” With dozens of enthusiastic analysts providing their views of the shuffle, there is not much left for a hopelessly confused old person in Harrod’s Creek, Kentucky, to add.
I did jot down three ideas about this ripple in the alleged future of Google.
First, Google is focused on keeping its revenues flowing in order to have cash to do the many different things that Google deems important. The shift to mobile is stressing the GOOG. The upheaval at Google Plus is one more signal that the clarity of mission evident in the period from 2002 to 2006 has become like Seinfeld’s puffy shirt.
Second, after decades of effort, Google is pegged to its implementation of the GoTo / Overture revenue model. Where’s the revenue come from? Search. But as mobile search puts pressure on Google’s GoTo / Overture desktop search inspiration, tensions are likely to continue to rise among the senior managers at Google. That will definitely improve the working relationships within the Google universe.
Third, Google Plus, like Orkut, demonstrates that Google can spot a good idea, emulate it, and then struggle with execution and monetization. Effort upon effort have preceded the Google Plus kerfuffle. More will follow? Will the next big thing be Loon, Glass, or yet another reworking of YouTube?
From my point of view, Google has, in the words of the Righteous Brothers’ song:
You’ve lost that loving feeling, oh that loving feeling
You’ve lost that loving feeling, now it’s gone, gone, gone
Do the founders of Google and the firm’s senior management team have this golden oldie on their Android phone? A Google search won’t answer this question. Come to think of it Google search has become so unwieldy for certain queries that I cannot find an answer. As the song lyrics remind me,
Bring back that loving feeling, now it’s gone, gone, gone
And I can’t go on, no oh oh
This sounds like a sentiment I should post on the Beyond Search Facebook page.
Stephen E Arnold, April 25, 2014