Thursday, July 16, 2009
The difficulties embedded in the Obama administrations Executive Compensation Principles
I sit on two public boards (JDSU and Rambus) and sit on the Compensation Committee on one, and chair it at the other - so executive compensation trends are very important to me. Add that I have been a public company executive several times (although I choose the private company world today) and I am watching the Obama administration's rhetoric with interest.I was sent a briefing recently that outlines the Executive Compensation Principles the administration is espousing - see the description below.
While I am as disgusted as the next shareholder at obscene executive pay packages for failed executives I see two major difficulties with these principles.
The first is the implication that current compensation programs are not set up for the long term. Most good public companies absolutely require their executives (and board members) to hold stock minimums for the long term and many set up objectives to measure long term strategic program investment, not just short term performance.
It's easy to say "reward long term value-creation", but it's an incredibly hard thing to do in a measurable way - and compensation objectives have to be measurable or they are open to manipulation. Compensation tied to revenue is short term, when tied to strategic objectives it's very hard to know which objectives will really have impact in the long term - and yet they are easy to judge in hindsight. Using stock options as the reward works well because they vest over time and they only have value if the stock appreciates - but options have been under attack from the regulators and institutional shareholders for a while now which I think it very short sighted.
This leads to my second concern. Only the CEO and the executive team really know what the critical issues are in a company in depth. Boards do their absolute best to stay on top of the issues, to get briefed, to talk with customers and employees, but as a sitting CEO I know that only I have all the information being processed in one brain. My companies spend a great deal of time to keep me up to speed but it's a continuous, intense investment especially when things are changing fast.
This makes it a significant task for a board to set and review objectives and we spend a great deal of time on this at the compensation committee level. If it's hard for boards - who have all the information not just the publicly filed information, how much harder will it be for shareholders to make a realistic assessment of what are appropriate compensation measures?
Transparency is good. It's essential to build trust with shareholders. But while "Say on pay" is a great solution to the obscene packages, does it makes sense in 99% of the cases which are not obscene? Does it make sense in the cases of highly competitive industries where great CEOs are hard to find, and when you find them you need to pay them well to attract them and compensate them for the hard work and risk they take on as they strive to be a great company CEO?
It seems a crime to me that a handful of bad actors could cause regulatory changes which will hurt good companies ability to pay for performance - to pay significant pay packages for excellent performance. Institutional shareholders understand great CEOs earn their pay packages, and that bad ones should be fired. I worry that retail shareholders (that's you and me not the mutual funds) won't ever think a great CEO is worth $20M+ a year - and yet they may well be based on their future performance - but it can only be measured in hindsight (which means board judgment in advance) and not at the time the shareholders will be asked for approval.
Tough issue, and not one where I think more regulation is the answer. I think the answer is tougher board process and greater and greater transparency into board process in response to shareholder demands - but don't tell boards how to set compensation. Make compensation committees be very very transparent but let them do their jobs.
The Administration's executive compensation principles:
1. Long‐Term Pay for Performance Link
- compensation plans should be designed to reward long‐term value creation for investors, as
opposed to the short‐term focus that doomed financial institutions in the market meltdown. The
administration also emphasized that a broad range of external and internal metrics should be used beyond just stock price, which is not always the best indicator of the long‐term strength of the company.
2. Long‐Term Risk Time Horizon
- that executives maintain strong company ownership through the holding of equity‐based
compensation is one of the best methods to link executive pay with company performance. Compensation plans for both executives and other employees should be designed to match the risk outcomes of their performance.
3. Risk Management
- Committees should include risk‐management in the pay setting process, and conduct the
risk assessment in a public manner.
4. Appropriateness of Golden Parachutes and Supplemental Retirement Packages
- should reevaluate the necessity for golden parachutes and supplemental retirement packages,
and should determine whether their existence will result in pay for non‐performance.
5. Transparency and Accountability in Pay Setting
- Treasury Department plans to require more transparency and accountability for Compensation Committees by legislating Say on Pay and Compensation Committee independence standards.
Friday, July 10, 2009
The balance between marketing and hype with a new product
Sometimes it's hard to contain your enthusiasm when you have a new product to market and the temptation is to get carried away and over hype. It's this behavior that can give engineering a bad rap with marketing and marketing a bad rap with sales.
Here's the classic typical scenario
R&D truly believes the product is way ahead of where it really it. It's ready, it's fast, all the functionality is basically there, it's usable today etc. This comes from (often justifable) pride in the technology that's been developed. Note technology, not whole product.
Marketing, trying to bridge the gap and get revenue going on a new product presents the product to sales as ready to do. You can show it to customers and start them using it, it's got 80% of the functionality and the rest is coming in the next release, yes take it to your best customers and get them using it. Sell it now.
Sales lives with the ultimate reality - what the product actually does, how easy it is to use, how fast, and how much functionality is really ready for prime time. Often sales stubs their toe, has to work through who they can really take it to and who should wait for the next release? Seasoned sales team are naturally cautious.
Typical right?
Sometimes however, it works the other way around and hype can be used as a carefully orchestrated momentum builder - the Steve Jobs reality distortion field is a great example. If you say it enough with enough integrity and conviction it will become truth.
It's the tension between the normal experience sales and marketing teams have with new products, and the extreme of Apple's strong stance on every new product that makes this new video from Palm (below) so funny.
Roger McNamee (a wild and crazy guy - but a really good guy) is known for his hyperbole, especially about the new Pre coming from (his majority investment in) Palm. Jon Rubinstein is ultimate innovator and product designer - the brains behind the iPod - and a much more low key guy.
I'm happy to say that as we bring out our new research engine into the market my team, while human, is working hard to balance the process pretty well and manage our natural enthusiasm for what we think is really big. But it's tempting...
Monday, July 6, 2009
A perfect week in Rome: Vacation report
I took the week before July 4th off in Rome - and posted about it on my personal blog - How to spend a perfect week in Rome - if you are curious or thinking of travelling to the Eternal City.
Tuesday, June 30, 2009
When technology bites - Terminal 5 baggage system
On vacation - trying to take a break from work and the general pressures of running a company. But clearly there is no rest for the wicked.
I left London on Sunday from Heathrow Terminal 5. For the first time in many, many years I checked my bag. I was tired. My bag, although carry on, was heavy. Probably because I had a mobile office in there. I didn't want to have to lift it. Silly me.
I arrived in Rome - not the most organized airport at the best of times - to find 2 hours later that half the bags had not made it onto the flight, mine included. Turns out there had been another major breakdown in the new Terminal 5 baggage handling system. Not only were many bags lost but many flights were delayed and passengers stranded because the whole check in system was suspended.
I'm on day 3, no suitcase, no power, enough pigeon Italian to buy toiletries but it's getting grim. So I did some research on the T5 system so I'd know who to be mad at.
Any guesses? IBM of course. The British Airways site touts the "state-of-the-art baggage system at Terminal 5 was designed by IBM and leading baggage handling experts, Vanderlande. Every effort to has been made to make sure your baggage arrives just where you want it, when you want it."
The opening of T5 was a "national embarrassment" last year - IT and poor training and testing is blamed for the problems plaguing the baggage handling system.
48 hours later and counting. The only phone number I have is in Italy so of course the hours they are open are short and they know nothing - they have to wait for London to tell them anything.
Lesson to self. Technology is a dangerous toy and needs to be tested. A major state-of-the-art new system that can take things away from you is to be avoided until it's been hardened for many years. And never, ever check bags again.
Friday, June 26, 2009
Michael Jackson's death presents commercial challenge
The sad news of the death of Michael Jackson last night not only challenged the emotions of aging forty something pop fans everywhere, but also challenged the ability of the social networks to keep up with the volume, and will lose at least one concert promoter money.
Twitter had already grown faster than any other site in May but even so was not prepared for Michael's death and is straining under the volume plus the King of Pop brought AOL AIM down for 40 minutes and halted Wikipedia.
It is important to one company though - I was using the new, sizzling hot beta version of FirstRain today to research his death (yeah I know - weird thing to be doing on my vacation - but I never claimed to be normal) and since we are a business research engine found myself reading about all the money that will be lost as a result of his death - not least of which is the exposure AEG Live has to the $85M worth of tickets they have already sold for his 50 concerts here at the O2 arena.
The meltdown of the social networking sites does make me wonder though - What would happen to these services if something really important happened?
I did eventually switch across to read people.com. Billy Jean is, after all, still my favorite song to dance to. RIP Michael.
Intermitent vacation postings
I am on a 2 week vacation (Oxford, Roma and Milano) and had already fallen behind on posting before I left so, gentle reader, please forgive sparsity, or maybe even a lack of business relevance, over the next two weeks.
Friday, June 19, 2009
The analyst and his time challenge
Guest post: Michael Prospero, Director of Research at FirstRain
As an analyst, one of the things I struggled with was the vast amount of information coming at me each day. A large part of my job was to read anything from or about my companies, competitor companies, industry bellwethers, thought leaders and of course the overall economy.
I set up Google alerts, but depending on the companies/stocks I entered I got a lot of junk both old and irrelevant. Also, there still isn’t a way to set up the types of sources you would like to read (e.g., no press releases or wire news) -- the number of sources alerts covered is relatively small. The stated information from Google is that it watches more than 4,500 English-language news sites. and the number of alerts can become annoying if you have large portfolios of companies you’re tracking.
Additionally, I would have my stock ticker service up on my screen with the stock prices of my portfolios and this would provide an icon if there was news on a stock I had set up on the screen. A large part of my day was spent reading financial publications, checking news from the alerts on my companies, talking to customers and companies. When I had time in between those tasks, I spent my time working investment ideas.
As you read, you come up with ideas (idea generation), which leads you to search for other stories to either support or invalidate your theory. To find those stories, you would of course use Google search. Obviously, Google is very good at finding content, but because it’s most every source on the internet, you have to really hunt for something interesting and timely.
Oftentimes, you will find an article that is exactly what you were looking for in your search only to realize that it’s from 2006. Google search is comprehensive, but it’s tedious and extremely time consuming to dig through the clutter of totally irrelevant as well as non-business relevant content.
It’s been nearly three years since I was an analyst now and the one thing that has drastically changed is the number of blogs (and overall number sources on the internet) and their authoritativeness. In the beginning, the number of blogs was sparse and at best the authors of them were questionable. Now, we have blogs from extremely knowledgeable, connected, intelligent people and micro-blogging (e.g., Twitter) is yet the next step in the evolution of news.
So this leads to why I am at FirstRain: I believe if a system could have gathered all of the news that was business relevant, categorize it by company and topically, and allow me to personalize its delivery along with other preferences, it would have helped my process enormously. I could have spent more time on the phone and more time working on idea generation. Time spent on new ideas rather than time spent covering your butt is the way to create alpha.
Tuesday, June 9, 2009
The rapidly changing (reducing) role of the traditional sell-side analyst
I sat on a panel today at NIRI (conference for IR) today in Fort Lauderdale and the topic was the changing role of the sell-side analyst. My fellow panelists represented the differing viewpoints of independent research - and a client - but the consensus was the same. The sell-side is going through radical change.
The problem started 30 years ago with commission deregulation - the day when how much a broker was paid to trade a share of stock was no longer regulated. As you can see from Rick Hanley's chart here -- the price of a trade has dropped continuously. Trading volume and investment banking were the two sources of funding for sell-side research -- for the first the price per trade has plummeted, for the second Elliot Spitzer put up a wall between IB and research -- and so the business model of traditional sell-side research within the big broker dealers is broken.
The net result is, unlike in the internet bubble when sell-side analysts were rock stars, now many of them have left and either gone into the buy-side or have set up their own research firms (or retired). Howard Penney from Research Edge talked about their new independent research model - clients just subscribe to research - no trading. Rick Hanley talked about his new service for management access (and how they partner with us) and Tom Digenan from UBS was the sole representative of the customer side. I was the lone techy (in a service intensive group) but rounded out the picture with the rapidly changing toolsets that are available.
In the end after much discussion and many questions from the IR professionals on how to use the sell-side it became clear that sell-side research is here to stay - but - and this is the but of change - it's only one piece of the puzzle and is no longer the exclusive way to get to management - so IR has to learn to work with the other independent research and technology providers.
It was also clear the sell-side is not being careful enough of their company relationships. One of the IROs in the audience (who is IRO for a major cosmetics company) told me she is so frustrated with the sell-side she is ready to cut them out. Her complaint is that she can't get the meetings she wants, with the investors she wants, through the sell-side because, at the 11th hour, they will swap out the institutions she wants her CEO and CFO to meet with and swap in their highest trading clients: the hedge funds.
There is clearly a role for unbiased management access now.
Thursday, June 4, 2009
Bing for travel - not ready for prime time
I have been intrigued by Bing and used it yesterday to research my blog post - definitely better than Google but still not very useful for research. So today I thought I'd try it for travel.
Normally I use Kayak or Expedia - and today's early morning task was finding a hotel in the Duomo district of Milano for 3 nights in July (I'm going for the U2 concert - yes I know I'm crazy).
Bing just didn't cut it. Kayak gave me 9 hotels to chose from (when filtered by internet being available) and Expedia gave me 34. Expedia was not able to let me chose the distance from the Duomo itself but it has very clear presentation of the basics about each hotel in the summary.
Bing gave me 1 hotel.
Enough said. It's not ready for real usage.
Wednesday, June 3, 2009
The Death of Venture Capital as we know it?
A massive shakeout of venture capital firms has been predicted for years but it is finally going to happen over the next year because of a perfect storm of timing.
There are countless books, a few movies and mountains of silicon valley gossip about the good times of venture capital. Huge returns from the internet bubble bred too many people who thought they were smart because they were rich and it seemed as if new funds were popping up all the time, staffed by VC wannabes from investment bankers to millionaires from companies like Netscape, eBay, and Cisco. As one of my investors said at the time "everyone wants to be a venture capitalist, even the landlord".
But that era came to an end 9 years ago now, and 10 years is the critical period for the venture capital industry because funds are 10 years in length so I predict the decimation will start by the end of this year (although some like Venture Beat are already counting the corpses).
The perfect storm will create an inability for all but the best firms to raise money - and funds need to keep raising money to stay alive - but they face a tempest:
- the 10 year look back will not look good for all but a very few by the end of this year. With the exception of a handful of funds, the great returns came off funds that started before the tech bubble burst. It burst in 2000 so by 2010 the lookback will not include liquidity events in 1998 and 1999. Even some of the best firms don't have great returns over the last 10 years.
- major LPs (limited partners like pension funds and endowments) are having to balance their portfolios away from alternative investments. Imagine you manage an endowment or pension fund that has a restriction on what percentage can be invested in alternative investments (like venture capital) . But the equities portion of your portfolio has dropped by 40% so now your venture capital portion is over your limit. You can't invest more in venture capital even if you want to participate in a new fund.
- for years now about $2B a year in new money was flowing into the venture capital world from new LPs. This was new family money diversifying, or countries bringing a portion of their sovereign wealth fund into venture - but now if you are a newly wealthy South American land owner and have a $100M that you are being advised to invest in higher risk/higher growth you'd look back at the 10 year returns of venture capital and say "no thank you".
- the IPO market is broken so smart investors know that the rates of return for venture capital will continue to be depressed. Being acquired just doesn't carry the same multiples as an IPO - especially now when buyers are taking advantage of the difficulties small companies have raising money in a recession.
Even the best funds are working harder than they have every worked before to raise their new funds. NEA has closed on over $2B of their $2.5B raise, Oak Investments has attracted some negative press but they'll succeed in raising their $1B+ fund because the same small group of partners has been repeatedly successful over more than 20 years - as will the best of the best like Sequoia, Benchmark, Sutter Hill, Kleiner-Perkins et al when their time comes.
But we're seeing a flight to quality as the funding so far in 2009 is down almost 40%. LPs will be ruthlessly selective and this will weed out the new, the small and the weak.
The coming contraction will cause the startup industry to return to fundamentals. Good ideas into vibrant new markets that take 6-8 years to bloom not 2-3. Some in the valley think this will lead to less innovation but I disagree. I think we'll get a higher quality of company because great new companies don't come from the spray-and-pray approach - they come from creative, hard working entrepreneurs working hand in glove with nurturing investors and customers over a considerable period of time.
There are about 700 venture capital firms in the US according to the National Venture Capital Association. I readily admit I'm opinionated and think that probably less than 10% of these are really valuable to entrepreneurs (my friends who are partners in the best firms listed above would say the quality list is less than that!). As I've posted before - all venture money is not equal - pick your investors very carefully.
I predict decimation - but I realize as I conclude that I am not using the word correctly because it comes from the Latin for the destruction of one tenth - but I wonder if one in ten will be left standing? Will there be as many as 70 US venture capital firms two years from now?
Tuesday, June 2, 2009
Sales-Client relations in the 2009 recession
Here's a classic for sales people - how many of you are living this in 2009?
Wednesday, May 27, 2009
The Tale of Two Californias
As Dickens said "It was the best of times, it was the worst of times" and the phrase could be applied to California here in April 2009.
The unemployment data released last week touts California at the top of the jobless lists at 11% - worst in the country - and yet it's not a reflection of reality in California because the sad truth is there are two Californias with very different challenges and for one the problem is a lot higher than 11%.
While the Bay Area chugs along at 8.3% and decreasing unemployment, a slowly recovering housing market and companies still competing for engineers, we have sister counties with unemployment at depression levels and higher. In the Great Depression unemployment in the U.S. peaked at 24.9% in 1933. Imperial County today has an unemployment rate of 26.9% closely followed by counties like Merced and Yuba at 18% - you can see the sobering Central Valley stats here and a map of California's unemployment rate by county here.
It's too easy to forget how close the poorest communities are to the hubbub of a tech world where Facebook raises $200M and NEA raises over $2B for it's new fund (although some do predict the death of venture capital as we know it - more on that later). High end wine stores still do well, and you still can't get a table at the Village Pub without a reservation.
But with the California budget in crisis and the Governor proposing to drastically cut California's Family PACT Program, the most vulnerable members of our community are more at risk now than they have been since the Depression. Planned Parenthood Mar Monte (the largest PP affiliate which is based in San Jose and covers many of the poorer counties in the Central Valley) has seen a 15% increase in the number of visits so far this year because so many people have no other health care options. PPMM provides broad health services (yes, only 3% of the services are abortion - a little understood fact) and families are coming in who have never needed the safety net of PPMM free health care before but they have no choice and no access to medical care.
Now, more than ever, is the time to pay attention to your donations and to give to the communities that support the most vulnerable in our society. And while California may seem like the land of milk and honey and Malibu Barbies on 90210 it's the land of tremendous struggle just 100 miles away. When you are approached by a friend to give to the non-profits trying to help (and for some of you it'll be me) please give.
Wednesday, May 20, 2009
Creating leverage by putting two sales teams together
We have a number of partners into our market now, and we're adding new ones as our popularity grows, but last night we took a new step with one of our smaller partners - Hanley and Assoc. - and brought the two sales teams together for a meet and greet in a bar.
Effective sales team love what they sell, and love to talk about their products and sales process. Let's face it - most sales teams love to talk. Mix that with a few drinks and the energy is buzzing and the stories fly.
We put the FirstRain and Hanley teams together last night in a roof bar in Manhattan on a perfect Spring evening. Our objective was that they get to know one another so when they are working together on a roadshow they have a sense of who is on the other end of the phone. This matters because when Hanley takes an issuer on the road we provide FirstRain both to the issuer and to the institutions that are taking the management meetings. We provide it on a trial basis but long enough that they can make good use of the service to prepare for the meetings.
The meeting was a huge success - and an example of a practice I have used many times when building market momentum. When you have a small company with a new, missionary product finding ways to create leverage can be a big help in creating market awareness of both the company and the capability you provide. So doubling the number of evangelists by cross training the two sales teams benefits both companies - and both sales teams can then evangelize both services.
It's a small investment of time to make the connection between synergistic sales teams and it's definitely worth the focus and time to make it happen - as we saw last night.
Sunday, May 17, 2009
Integrating FirstRain into RMS platforms
The FirstRain application keeps growing in functionality and today we have announced yet another way you can get to it. We've announced our integration with RMS - research management systems.
Todays RMS platforms organize research for the user. Sorting their sell-side research, independent research, internal research etc. into a file folder type of application making it easy to find based on what document is about. Now our research can now be organized and retrieved in the same way.
We have announced our ability to integrate into any RMS platform today - and specifically partnerships with Code:Red and Wall Street On Demand. In both cases, our research results and reports are provided already automatically categorized (tagged) by both the companies they are about and the investment topics they're about so they easily integrate into the user's RMS workflow.
The approach we've taken is a little different in each case though - as a result of what workflow the end user wants.
In the case of Code:Red we provide an XML feed of our research but we have also integrated our user interface embedded into the Code:Red UI. This means a user can pull up windows into FirstRain - looking at company data, competitor data, management data etc. and they are linked to the companies or topics the user has up in Code:Red system. If the user updates the company in Code:Red, the FirstRain windows also update. All very efficient - and this is the way FirstRain is also integrated into the FactSet Marquee platform today.
In the case of Wall Street On Demand, we provide an XML feed of research results, again pre-tagged by company and topic, which is integrated straight into the end user's platform so the results show up natively instead of in a FirstRain window. WSOD builds platforms for their client partners and our results are available to our mutual customers. This approach of taking the FirstRain results and using them natively within the end platform is similar to the way FirstRain results are integrated into the Capital IQ platform today.
Both workflows greatly increase the efficiency for the user if the user wants to use RMS as the primary way to organize and access research.
We did these integrations at the request of several end users. Many firms want RMS to work. They want help sorting through the firehose of research they see every day and having it automatically categorized so they can find it easily saves them time, no question. Many users use their email systems today - Outlook or Lotus Notes - and so we are very interested to get involved in helping users find a better way. These partnerships are an important step forward for us, our partners and our mutual customers.
Thursday, May 14, 2009
Women need to support women at work
Gender stereotypes already make it hard enough for women in the workplace but in tough times how women treat other women matters even more.
Today women make up 50% of managers in companies, but only 15% of executive officers. It's still rare to find women in any executive positions except HR and it's almost unheard of in technology. There was a period with no women CEOs in the top 150 technology companies before Carol Bartz took over Yahoo - and this for an industry that sells to as many women as men now.
Women in senior management are rare at most companies. Their behavior as leaders is scrutinized and it often feels like a no win - we are either too aggressive (feedback I've had) or too timid - held to standards most men are simply not held to. I know that's not going to change any time soon so as leaders we have suck it up, be ourselves, lead and find and empower other leaders in the organization.
But how women behave towards each other often reflects whether they think other women around them help or hurt their chances for advancement. The New York Times last week wrote about women bullying other women at work - reporting that 40% of bullies in the workplace are women - with all the examples being women bullying other women.
This behavior does not make sense. What other minority would do that to each other? The question is - do you believe being in the minority as a woman is an advantage or a disadvantage?
I've seen the best, and the worst, watching women in engineering companies where they are very much in the minority:
- Women who think that more women in the workplace would be a good thing tend to support other women. They'll actively coach, form support and mentoring groups and recommend other women for projects and advancement. This happens when they themselves are not threatened by female competition.
- Women who like being special in a group, being the exception, will consciously, or unconsciously sabotage other women because they don't want to share attention. They like being different and see other women as competition - professionally or socially.
If you are experiencing sabotage or bullying from other women you can change the culture of the group you are in. One way to do this is to get the women in your organization together to acknowledge that you are a group, you are within the same culture, dealing with same stereotype and subtle discrimination issues. You can bring in a speaker to name the elephant in the room and catalyze the discussion -- bring in a dynamic speaker from the outside or a senior woman from your organization. Talk about how much better the workplace is, and everyone's opportunity is if you help each other develop your careers. Getting the discussion out in the open will raise awareness and a sense of responsibility in most people to help each other - I've seen it work.
Women are also rare in the corporate board room - less than 16% of Fortune 500 board members are women. I sit on two public boards and yes, I am the only woman on the board in both cases. When it comes to the substance of the job this is irrelevant - but when I was invited to a working group of women who sit on public boards I was delighted to meet 25 other women who, like me, are in the minority. We discuss substantive issues about being on public company boards and the changing corporate governance challenges; we don't talk about being women, but even so it is encouraging to look across the room and see so many smart, powerful women navigating the same choppy waters.
Clearly I am not advocating unfairly advancing someone based on gender - promotions need to be earned on merit not matter what. But I am advocating paying attention to how you can help other women in your organization thrive - and putting a stop to sabotage.
Thursday, May 7, 2009
Today is Odd Day
Yes we can be a little different in Silicon Valley. Too many nerds. Did you know today is Odd Day? You can read all about Odd Day at the home page of Redwood City teacher Ron Gordon but here's the concept...
"Odd Day is []Thursday, 5/7/9. Three consecutive odd numbers make up the date only six times in a century. This day marks the half-way point in this parade of Odd Days which began with 1/3/5. The previous stretch of six dates like this started with 1/3/1905---13 months after the Wright Brothers' flight."
Only six times a century - makes it a pretty special day - although these would be different days in the UK since there the day is first, then the month, so in England it is 7/5/9 - although by now it's actually tomorrow there.....
We had nachos in the office for everyone for lunch today and one of our engineers proposed that we are celebrating Odd Day.
Tuesday, May 5, 2009
How to identify leaders in your company
Challenge is the crucible of leadership and there is no time like the present to look for the leaders in your organization. So what should you look for - and how can you create the environment to bring out the leaders?
There are many books which have been written about leadership in companies - probably thousands - and they run the gamut of styles: developing leaders through process (a favorite with HR teams), mentoring, motivational etc. But in a small company the hunt for leadership is a very practical one. You need people who can step out of the group to make a difference.
All the books and papers on leadership can be boiled down into a handful of critical behaviors to watch for when you challenge your organization:
- Embracing risk. Future leaders have an appetite for risk (see my post on leadership and risk) and see it as an opportunity. An opportunity to make change happen, to have an impact, to make something new happen. The risk can be personal (looking a fool, failing) or it can be for the company (losing a stretch deal, developing a risky product that never works) but it is the risk itself that will stretch the team and the emerging leader is often the person most comfortable with the level of risk. Conservatives need not apply.
- Having followers. The phrase is old and corny - "the definition of a leader is someone other people are following" - but it's so true in a company. Making new and significant change happen, especially in technology, rarely happens through authority. It happens because someone has an idea and motivates with the idea so others follow. When I am looking into my organization for leadership I look for whose ideas are carrying the day, and how is that person communicating and nurturing the ideas to have other people follow them.
- Lead by doing and succeeding. People want to be successful and they will often follow someone who they can observe being successful, someone who gets things done. The motivation is to learn, to be around a winner, to have the fun of being on a winning team. It's almost impossible to be effective as a leader if you are not effective as an individual and many leaders emerge because they are good at what they do and other people want to work with them and for them to learn themselves (although sadly this is not always the case of who gets promoted ...).
- Putting the company first. This is one I often see ambitious people early in their career forget. Especially in politicized companies or organizations where there is a great deal of personal wealth to be made (think company headed into an IPO or an aggressive bank). But as a CEO my interest is always 100% company first. It's the only way to measure success. So when I see someone posture or behave in a political way for their own gain I don't care how good they are, I can't see them as a leader. One of the five values at FirstRain is "Take ownership for the company's success" and I look for which employees have taken on the company's success as their own.
I don't prescribe to any one style of leadership being better than any other. Society often remembers leaders from the Great Man or Hero theory of leadership - like President Obama today - who use intelligence and charisma to lead. But in a company you need more than great men (or women) because you need to find the ability to lead different skills sets and personalities who will respond to different styles of leadership.
But if you are the leader of a company or a team, whether they work for you or they are a team you are leading across your community, you can find your anchors, the people who you can count on to help you get the job done, by looking for these four simple characteristics: embracing risk, having followers, succeeding and putting the company (or your shared goal) first.
Monday, May 4, 2009
FirstRain Selected as Red Herring 100 Finalist
Yes - we've been selected. Very exciting and a terrific acknowledgment of our technology. As Red Herring says:
" The Red Herring 100 finalists are selected from thousands of innovative firms based on financial performance, technology innovation, quality of management, execution of strategy, and integration into their ecosystem. FirstRain will compete for this honor May 11-13 in San Diego, California. The award has been previously won by firms including Google, Yahoo!, Skype, Netscape, Salesforce.com, and YouTube."
I'm really happy for the FirstRain team - we're working hard on the next revision of our system and so recognition of the existing system is always motivating. Here's our press release.
Friday, May 1, 2009
Follow the money around Swine Flu
There are two ways you can look at swine flu from a business perspective - first how it could negatively affect the economy if it turns into a pandemic - and then the other side is the money and research trail that will follow the fight against it.
We've added Swine Flu into our popular Eye on the Storm report so you can get most interesting information on the financial impact of the flu selected for you - looking at drug pipelines and approvals, research funding, R&D deal making among the pharma companies, drug delivery systems and what the FDA is saying.
If you are interested in tracking the Economic Crisis, Stimulus and Recovery you can sign up for free - it's our community service to help readers make more sense of the turbulence we are all going through.
Here's today's swine flu section - check the report out here and you can sign up here.
Thursday, April 30, 2009
Quality of (re)search - it's all about the Metadata
Your average search engine user has the patience of a toddler – they expect to leverage one or a few keywords to get the answer they are expecting and they’ll only try once or twice before giving up. If the results are bad, they’re not likely to try again – you’ve lost a user, or customer.
This is a hard problem to solve when the user is a senior professional looking for business information about a competitor – or the market trend behind a stock’s movement.
FirstRain is all about only the highest quality, high precision results for professional users and a critical piece of our system behind our results is our rich Metadata library. To put it simply, Metadata is data about data; for us, it’s the information architecture that captures what the documents in our system are about – and they can be about any number of concepts drawn from the thousands we’ve modeled. They can be literal (this is about Apple Computer) or they can be crossed by any number of building blocks (this is about layoffs at Motorola in Illinois).
The base layer of FirstRain is the categorization engine that identifies and tags what an article is about – a company, a market trend, an event. Since these tags determine what users see when doing research in our system (and remember – no patience with poor results), the rules that go into identifying them need to be spot on. For example, it’s necessary to ensure a new video game launch from a company like Electronic Arts is tagged appropriately, but a blog about how to reach new levels in one of their games is ignored. A single web document may have any number of tags reflecting the content in it. The article about Electronic Arts could also mention other relevant information about competitors and partners, as well as trends like video game sales; and it’s important to identify and tag each appropriate facet.
But just tagging the data to the right topics is only half the magic. Imagine what you can do if you can also analyze the frequencies of the Metadata. Keep in mind we have millions of documents in FirstRain, each containing numerous tags telling us what it’s about and where it’s from. Go back to the Electronic Arts example: FirstRain can identify the number of times EA is mentioned in conjunction with any related topic, such as new products, or any other company. We highlight spikes in these counts for our users and so show up emerging trends in number of mentions above or below their competition. These counts can give great insight into what a company is doing, or is about to do.
By treating the Metadata as a database in itself, and analyzing it for spikes and patterns we can identify emerging trends for users that they simply could not see from even the highest quality individual search results.
Friday, April 24, 2009
Investor Relations, the Web and Blogs - it's an opportunity
It's clear to me that many companies are missing powerful opportunities to communicate richer information with their investors through their web sites because rules around new media are new - and I think it's a wasted opportunity. I had the opportunity to sit on a NIRI panel in New York last week to discuss new technologies and how they can help investor relations professionals (NIRI is National Investor Relations Institute) and through the questions I received during and after the panel the lack of confidence around the issue really surprised me.
The problem starts with the SEC who haven't been a big help in this area so far. The SEC first provided guidance on the electronic delivery of documents in 2000 and then gave an update August 2008 - yes an 8 year gap at a time when the technology, and investors use of technology, exploded in sophistication. But now the SEC has provided guidance and it's straightforward (you can read the Commission Guidance on the Use of Company Web Sites - it's readable).
In simple terms - provided that the company makes sure investors know that information is being published on company web pages - and that the company web site is a recognized channel of distribution - then the information is considered public for Reg-FD purposes. In fact the SEC "recognize[s] the enormous potential of the Internet to promote the goals of the federal securities laws." It's the ultimate information-level-playing-field since 99% of investors will have access to the internet.
Nowadays many company CEOs have blogs but few have been as courageous as Jonathan Schwartz of Sun Microsystems who pioneered meaningful communication with his market through his blog. Most public company CEOs err on the side of caution and their web sites are marketing brochures not disclosures, probably at the urging of their general counsels. They don't really engage the market - consider the CEO of Thomson Reuters - Tom Glocer's blog where he posts about once a month and "shy's away from subjects too close to the business of Thomson Reuters, in part to avoid 20 pages of risk factors in each post"
I understand the conservatism, but are CEOs and the IR heads missing an opportunity to engage their shareholders in meaningful discussion about the progress of the business and the decisions being made? When communications are limited to earnings calls, press releases, presentations at (closed) conferences run by the banks and private meetings the discussion is bound to be either un-nutritutious to the retail shareholder with lots of questions, or boring at best. Even with some CEOs who have tried to embrace Twitter they can turn into "flat out commercials" as Business Week posted about Ford's CEO yesterday. The best Twitter CEO user I've seen is Tony Hsieh from Zappos who puts company culture first and uses Twitter as a way to communicate with employees and customers alike - and is a comedian too.
There are ways to use new technology to help CEOs and company management engage their shareholders without breaching the many controls of the SEC. The August 2008 guidance "encourages" the use of company sponsored blogs and electronic shareholder forums - while of course making it clear that communications through these forums are subject to the same antifraud provisions of the federal securities laws.
So back to the NIRI opportunity. The train is coming down the tracks one way or another. Blogs written by product consumers (customers), industry observers and employees are growing every day - we know because we track and tag them for our customers. At a minimum the IR team needs to know what's being said about the company and what investors are seeing so they can get ahead of sentiment and respond to questions from shareholders.
But that is only the first step. The bigger opportunity is to set up well regulated, interactive, on-line communication with shareholders and greatly improve the shareholders understanding of the company strategy, culture and market. Obviously confidential subjects like M&A and deal negotiations don't belong in these forums because the discussion itself can queer the deal, but aside from critically confidential negotiations and employee confidentiality, so much about what a company is doing and why can only help understanding.
Many things drive investors views of companies - but understanding is at the heart of investor confidence. I think this is a terrific opportunity for companies to embrace the new communication mechanisms and have better investor relations, especially retail investor relations, as a result.
Monday, April 20, 2009
FirstRain selected by Newssift of the Financial Times Group
Last month's announcement by Newssift (part of the Financial Times Group) of its meaning-based vertical search engine was an important new way to look at search for business professionals – you can quickly see how it’s different if you try it at www.newssift.com.
Wednesday, April 15, 2009
Technology, not War, is the solution to publishing
The global publishing giants have declared war on the new technology generation of content distributors - but they have lost sight of what consumers value and how they want to get to the value. It's time to separate content creators from distributors. It's time for a new business model which requires technology understanding and leadership to develop - and one that new generation search applications like Google News and Digg for the consumer, or FirstRain for the professional investor, can sign up for to get the right news to the right people at the right price for them.
Local publications like The Boston Globe are teetering on the edge of bankruptcy, others such as The Seattle Post-Intelligencer are moving exclusively online after 146 years in print and global giants like the Associated Press and Wall Street Journal are trying to fight back. But the reality is this is too little, too late and effectively going to war with your customers is a fatal strategy as Arianna Huffington posted a few days ago.
Face it – the consumers of news have changed – dramatically. We no longer read multiple news sources on the hope that we’ll find something interesting, most of the younger of us don’t take a daily physical newspaper and as services like Facebook, Digg and Twitter have shown, we expect the most interesting news to find us. It’s not that we believe news should be free – clearly there is discovery, research and production cost, but it should be allowed to roam freely across the many channels the web enables and still maintain proper attribution.
Our customers at FirstRain have shown us over the past three years that the authoritative news is no longer only found in the WSJ, FT et al. Instead it’s media like the DailyKos, Gizmodo, Consumerist, and In the Pipeline that are increasing the size of the news market pie and creating a huge demand for such obscure, on-the-edge news. In addition, the value of each piece of news varies by who’s reading it and what they plan to do with it. What a college student reads about Apple, Inc. on an obscure blog may be informative and help him plan on his next iPhone purchase, but to a portfolio manager at a Hedge Fund, that same information may be the bit of news he’s been looking for to insert into his model and make a multimillion-dollar trading decision. In both cases the news has value but the value, the search technology to find and rank the news and the delivery model is different in each case.
The critical issue still stands though - original investigative reporting is a public service that we, as a society, cannot do without. Journalists are our educators and our whistleblowers , our eyes and ears on the ground.
The news industry needs to find a recovery path through innovation and collaboration. As Scott Karp points out in his article in Publishing 2.0, this is a technology issue that is outside the comfort zone of traditional publishers. Here are three steps the AP and its 1,500 U.S. daily newspaper members and the Newspaper Association of America (NAA) need to consider in creating a viable business model for themselves and their customers:
* Protect the original content creators: Grant original content producers the opportunity to file as nonprofits under the same laws and protections offered to the Public broadcasting companies as supported by Senator Benjamin Cardin, of MD.
* Track the content: Work with aggregators like Google News, Yahoo, MSN, as well as NYT, WSJ, and the like on developing a new HTML standard that can be inserted into the original news articles to enable the tracking of news throughout its lifecycle.
* Develop a fee-sharing business model: Work with content distributors on an appropriate fee-sharing model to enable the distribution of originally published news through the various niche channels as diverse as Google News, Bloomberg, FirstRain, and even a locally-published community paper.
These options would give content producers multiple channels to sell through, and the ability to charge a real market price based on each distributor’s reach and depth, while at the same time providing an opportunity for smaller players writing original content to distribute their content through major channels for added revenue, outside of Google Adwords.
Then the AP and NAA would create a competitive environment and a generation of startups through which news is distributed to consumers and business professionals. And better yet, this would drive the separation of content creation from distribution – and set up a long term sustainable business model which is what the publishing industry so badly needs.
Monday, April 13, 2009
The inability to unplug
What is it that makes us stay so connected during vacation? Is it just that we have responsibilities that continue whether we are in the office or not, or is it a deeper level of co-dependency?
I took a few days off two weeks ago and found myself stressed if I could not stay connected and this caused me to examine what was going on with me and my teammates when we take time off.
I break the reasons to stay connected into three buckets
1. You have real work to do. This particularly happens to R&D. There's a major project under way (we have a fantastically exciting one coming up right now), you are responsible for a critical piece of design or implementation and the team can't wait for you. In this case we'll work at night or early in the morning on our vacations because the work is just too important to slip a day.
2. You need to keep other people moving along. This happens to sales. You've got business moving through the pipe, you want to keep the user evaluations going and if you're working paperwork for an order you want to keep your buyers on their toes and not delay the order. You may think me a hard driver, but when my sales guys take a vacation I ask them to stay connected with their pipeline and to keep their orders moving along. Since this affects their commission I rarely get any push back.
I also find myself in this mode for major projects. By staying on top of progress, reviewing documents, asking questions, I can keep the company's major activities running remotely.
This category is much more apparent in a small company than in a large company. When I ran a large business at Cadence I had a number of very senior people working for me (including YY who is with me at FirstRain) who kept everything moving without me, and the ship was so large, with so much inertia, nothing major would go wrong if I took a couple of weeks off. I remember taking 3 weeks one summer and telling the CEO I wouldn't be checking in but I was confident everything would be OK, and it was.
In a small company checking out completely is much more risky because everything is moving so fast and you don't have mass and inertia on your side. There just are major decisions every couple of days - strategy, design or deal related - which we make quickly by talking to each other frequently as the parameters of the decision make themselves visible to us.
So then that leads to the third reason
3. Peace of mind. This is probably the one that holds me to my iPhone/PC more than anything else when I am on vacation. I have hundreds of balls in the air at any one time with customers, partners, distributors, board members, projects and people and if I am out of contact and unable to practise #2 above I get incredibly stressed. Sad I know. On our college trip 2 weeks ago my husband and daughter dropped me at a Starbucks in Pomona for 2 hours so I could work and chill out.
I love what I do. No question. But I would like to learn the art of vacationing while running a small, rapidly moving company. I'm taking a week in Rome this summer with a friend who calls me on my b.s. We'll see how much of my stress she'll take before she ditches me in a Roman internet cafe.
Friday, April 10, 2009
The downside of Twitter
We recently brought up FirstRain on Twitter and have been writing tweets about new functionality and interesting research we've found through our system. But when I was sent this YouTube link- while it made me laugh - it did continue the doubt in my mind of whether Twitter is ever going to be of real use.
The Twouble With Twitters
Wednesday, April 8, 2009
Change in focus from alpha to beta predicted
Today was a big day for the independent research industry - Investorside hosted its Fifth Annual Independent Research Conference where everyone who’s anyone in independent research got together at Bloomberg’s flashy headquarters to discuss the industry.
The keynote speaker was Suzanne Duncan from the IBM Institute for Business Value who shared findings on their financial community research over the last 18 months.
According to their research, this economic crisis was much more intense than prior crises over the last 100 years because of the high growth of integration and instrumentation over the last two decades – ie. it’s the technology. The bad news is the sophistication we now have is expected to result in more frequent and deeper crises in the future, particularly in the banking sector. (It’s real - check out the amazing article in New York magazine about the guy who wrote the software that caused the crisis when it outstripped the human’s ability to understand the implications of the instruments)
If this isn’t alarming enough, she outlined problems that have been brewing in the financial world for a while - prior to this current crisis. For example, the critical brand promise of client focus, agility and stability has been broken for some time. There’s been a growing trust gap between providers and clients because of the disconnect between the value providers thought they were delivering and what they were actually delivering. The sell-side thought acting as a one-stop shop was what clients wanted but what they really wanted was unbiased, high quality research, client service excellence and convenience.
IBM's research conclusion is that there will be consolidation in areas with too much capacity (e.g. investment banking, asset management, wealth management) and a shift towards specialization in their core competencies. The implications in the investment world are that investors will move away from alpha seekers and towards beta – i.e. shift their mindset from outperform to diversification.
What does this all mean for alternative research providers such as FirstRain? If the research is right then as our clients move away from alpha and towards beta they will need unbiased, high quality research to help them allocate and weight their portfolios. They’ll switch their attention from traditional one-stop shops to specialized research companies who will help them uncover topics and trends - and so help them hone in on well-educated decisions. (Although frankly I think there will still be plenty of alpha seekers on the buy side – all the smarts and testosterone have not gone, they’ve just been driven underground for a while.)
But the continuing weakness of the banks and the sell side, and the need for quality research will play right to our search application and technology strength – and also to the pure-play specialized research shops. Trusted, high quality and relevant research on the companies and trends they care about, and in our case fast and efficient too.
Tuesday, April 7, 2009
Cloud pioneers continue to predict the end of software
When I first came to FirstRain I knew nothing about On Demand or SaaS systems and so I set out to learn as much as a I could as fast as I could -- and I was lucky enough to be introduced to Timothy Chou over coffee (the wonders of the Silicon Valley network) who gave me a rapid primer in the wisdom of the on demand software model.
Timothy is well known in the on demand software world. He built Oracle online, long before on demand was fashionable, and he wrote a terrific book called The End of Software which I read cover to cover many times. He makes a very compelling argument not only for the improved user experience but also of the profound difference in cost model for both customer and supplier in an on demand, or SaaS model.
Now he's written a new book called Cloud which comes out on April 15 - you can guess what that's about. He wrote a guest post as a cloud computing pioneer on deal architect today that is a precis of his position and interestingly enough he still believes the biggest barrier to all software moving into the cloud model is not technology - it's people and their resistance to change.
I made the decision at FirstRain in mid 2005 to go 100% on demand and never install software, so clearly I am a believer, but, as Timothy's post says "Never underestimate the power of the white corpuscles.... Will all business software move to being delivered as a service? The only debate is about the rate of change."
Monday, April 6, 2009
Why can't Netsuite and Salesforce update their CRM to invoice us correctly?
We are delighted users of both Salesforce (for our CRM) and Netsuite (for our financial systems) - but we are very amused that neither firm seems to be able to use their own systems to get our invoicing right.
We moved offices, less than a mile, in May of last year (2008). And this is where the story starts.
With Salesforce we updated our new address online with them in June. Because we pay annually, we expected our invoice in January but it was sent to the old office. Once our rep contacted us we explained that we needed to make changes to our contract to change the number of users and get the locations right so we only pay online sales tax in New York, not in California. Seems simple right?
Well after several conversations they still can't get our invoice right. Today, my controller was called by the Salesforce collections department wanting to know why we hadn't paid our January invoice and I listened to Eugene (over my cube wall) as he patiently explained that we had moved, that we had changed our configuration, and he patiently gave them the new address.... again.
Netsuite is just as amusing. But in this case we want to buy more and we still have issues! We upgraded our Netsuite system in late summer last year to add some modules, told them about our new address and yet... they were still sending quotes (made a correction here - my Netsuite sales team asked me to update this to quotes not invoices , my mistake) to our last controller (who left 2 years ago) at the old address!
And now we've asked for a proposal for more functionality, but 2 weeks after the demo and our asking for the proposal we've still not heard from them. I guess they must have too much business? (Update: The proposal came right after this post).
I realise we are a small customer but come on guys - you've built your businesses on SMB (small and medium sized businesses) - and we'd like to pay you. Can you tie your CRM systems to your accounting systems so we can help you out?
Note:
Both Salesforce and Netsuite are SaaS vendors (Software as a Service - like us) which means we access their systems through a web browser, we can use them anywhere, and total cost of ownership is lower than buying an installed system. And as I said we really like their systems so this post is a gentle poke, not a major criticism.
Postscript: The Netsuite sales team got very proactive after this post - scheduled a call with me, made sure I understood what had gone wrong and why and reassured me it won't happen again. Silence from Salesforce. Wonder if their PR guys read blogs the way the Netsuite guys do?
Friday, April 3, 2009
The next crisis is commercial real estate and maybe life insurance?
The commercial real estate crisis has been looming for months and it looks as though it's being held back by a finger in the dam.
It starts with the low mall occupancy rates. We're already seeing store closings like Circuit City and if you walk around any but the most successful malls you'll see closed storefronts aplenty. This trend is now flowing into the firms which own the malls, for example the current poster child General Growth.
General Growth has a mountain of debt and would, under normal circumstances, have filed for bankruptcy by now. From the Wall Street Journal: "Creditors so far have been willing to let deadlines pass because they believe there is little to be gained and much to be lost through a bankruptcy. General Growth's mall operations are stable and many bondholders hope for a greater recovery outside of bankruptcy court.
"This is really rare," said Kevin Starke, an analyst at CRT Capital Group LLC, a research company that tracks distressed securities. "It is corporate-bond limbo like I've never seen before."
So how long can this hold out last? How long until the finger (not forcing debtors into bankruptcy) is pulled out of the dam? There is definitely a difference of opinion on whether the problem is the business of the malls themselves, or just too much debt burden - read some point, counterpoint from the UK on this here.
And worse - what will the fallout be beyond commercial real estate? We have many clients using FirstRain in the REIT (Real Estate Investment Trust) research process and as I used FirstRain to understand more about the commercial real estate market my interest was caught by the connection between life insurance and commercial real estate outlined by the Jutia Group. This Crisis is Just Starting to Hit the Headlines where the author predicts the fall:
Take MetLife for example. MetLife has $36 billion worth of direct exposure to commercial real estate… and less than $19 billion of tangible equity. A 25% drop in the value of its commercial real estate holdings would cut tangible equity in half. That would crush the stock.
MetLife isn’t alone. I’ve got my eye on 13 North American insurance companies. And all of them will take large writedowns due to commercial real estate and variable annuity exposures. At least one of them will fail over the next year.
I wish I were wrong about this. And I have nothing against any of the companies involved. Many are well run and, until now, had decent track records as good investors.
But they simply can’t get out of the way. They’re like giant hotels sitting on a sunny tropical shore… with an enormous tsunami headed straight for them.
Right now, it’s time to go short on the biggest U.S. life insurance stocks.Definitely a trend to watch.
Thursday, March 26, 2009
Classic example of brand land grab with Sony, Google and Amazon
If you're a reader you have probably considered buying one of the new electronic book readers. There are two leading choices today: the Amazon Kindle and the Sony Reader and while good stats are hard to come by for Amazon sales, it appears that each have sold hundreds of thousands but more importantly that Amazon is leading in "cool factor".
But Sony is, like Apple, a master of the global brand and so their announcement with Google last week was a classic brand land grab. Sony and Google announced a partnership where Google's 500,000 free electronic books are now available on the Sony Reader. But unlike Apple which rigidly used iTunes to teach people to buy music for 99 cents , Google is known for free content so their role is very disturbing to publishers.
Books, like music, are critical to the rich, imaginative life we live in our heads. Authors, like singers and songwriters, need to get paid. Newspapers are in crisis because they did not work out a healthy online business model early enough. I hope the book business learns from the newspaper's mistakes so that it survives.
Disclosure: I have a Kindle 2 and love it. The cell network connection that allows me to buy a book anywhere and at any time feels like freedom to read whatever and whenever I want.
Tuesday, March 24, 2009
Celebrating Anita Borg on Ada Lovelace Day
I never met Anita Borg while she was alive - but I serve on the board of the non-profit that bears her name and so I am reminded of her legacy frequently.
The Anita Borg Institute for Women in Technology is about the impact of women on technology and the impact of technology on the world's women. It was originally set up by Anita to bring women together and advance them in technology and when she died it was renamed in her honor -- it's a testimony to Anita that the institute survived her. As happens with many non-profits, the future without the founder was unclear, and I was recruited right at that moment by two friends on the board. I watched as Anita's friends and admirers: professors, CTOs and VPs of engineering at the largest technology companies, came together to put a healthy funding model and growth strategy is place. ABI is now funded by world leaders like Google, IBM, HP, Intel, Microsoft and Cisco to name just a few.
Now, 5 years later, the institute serves thousands of women each year with conferences like the annual Grace Hopper Conference, the Systers online community and training programs like Tech Leaders.
Anita's direct impact is well documented - especially at the ABI site. I am celebrating her on Ada Lovelace day not only because of how she impacted women in technology during her life but also because she found a way to leave a long lasting impact on the world's technical women through her institute.
Friday, March 20, 2009
Signs the economy is turning
While our congress is distracted killing capitalism in our banking system (and driving out the talent at the same time), the economy is showing signs of turning. Not only do we have two more weeks of drop in the US layoffs news (you can read about the trend on my previous post and see the updated chart every week on FirstRain) -- but smaller, thoughtful publications are starting to write about the turn.
From TradingMarkets.com "A senior economist for Wells Capital Management sees some positive signs the economy may be bottoming out and ready to take a turn for the better."
From Investor's Business Daily -- definitely worth a read for the litany of evidential points -- "Don't look now, but the economy is starting to turn. Recent data suggest it may start making up lost ground as early as the third quarter. A triumph of government policy? Hardly."
and including
• A surprising 22% surge in February housing starts to a seasonally adjusted annual rate of 583,000 units.
• A back-to-back jump in retail sales ex autos, in both January and February.
• A return to profitability at several major banks, including Citigroup, Bank of America and JPMorgan.
• A doubling in the obscure but important Baltic Dry Index, a key indicator of global trade flows.
• An upwardly sloping yield curve, which Fed research suggests all but ensures a rebound by year-end.
From WSOCTV.com reporting on a University of North Carolina at Charlotte professor's analysis "A new forecast by a local economic expert predicts that recovery is just months away.University of North Carolina at Charlotte economist John Connaughton said Tuesday the recession is just one to three months from being over. He said recover in 2009 will be modest, but it will be strong in 2010."
It may take a while for our national papers to pick up on the trend since writing about disaster and the angry mob sells more papers/ads, but I think we are only a couple of months away.
Thursday, March 19, 2009
Gotta love great customer service
There are good days and bad days running a small company, and then there are great days that make it all worth while. I received the following email from a customer today about one of our support guys - this is what we aspire to for every customer!
Hi Penny – I hope you are doing well. I have been a customer of FirstRain, for the past several months. I just wanted to drop a line and let you know what an excellent job your team is doing. In particular, C*** has been extremely helpful in setting me up and working with me on some sophisticated searches. As someone who deals with a multitude of vendors, I am exposed to a wide range of customer service – I must say that C*** is at the top of my list. His is extremely responsive, very professional and, most of all, effective. Thank you again for your help and I look forward to a strong relationship with you and C*** moving forward.
T***
Tuesday, March 17, 2009
Tough real estate crisis trends show up in web traffic volume
Like the US layoffs post I wrote a few days ago, one of the thousands of topics we are tracking is the real estate crisis by state. As you'd expect, the stats over the last 2 months by state point to the crisis in the Sun belt - Florida, California, Arizona and Texas, but they also point to New York which has gone through a dramatic rise in foreclosure rate, ahead of the rest of the country, as reported by the New York Post.
It's interesting to see that the total number of unique stories being written on the web about the real estate crisis has been steadily climbing (except for the last week) as the foreclosures cascade through the country because of job losses and families not being able to make their mortgage payments any longer.
I'll be tracking this data so we can see when it turns, as I am doing on US layoffs. You can see the US layoffs chart (which continues to trend down - so far so good) now updated weekly on FirstRain's open site.
Monday, March 16, 2009
Teaming up to make management-investor meetings more nutritious
There's a sea change happening in how management teams meet with investors these days. It's being driven by a couple of trends: the sell-side continuing to lose good people and credibility and so becoming less valuable to company management, and the buy-side wanting confidentiality around who they talk to and what they talk about.
We found a new firm tapping into this trend - Hanley and Assoc - which confidentially brokers meetings between company management and the buy-side and puts their effort behind making sure everyone gets what they need: the right meetings with the right types of investors with efficiently planned timing. This may not matter to Fidelity and Capital Group because the CEO is going to make the time to see them anyway, but for the middle tier institutions an independent meeting broker can be incredibly valuable both to the institution and to the company.
So we've teamed up with Hanley to make our service available to both investors and the company IR teams in the lead up to a meeting so that they have comprehensive coverage on the company and the market trends impacting the company -- packaged to get them the data fast and efficiently. The first meeting we're working on at the end of March is for a huge food company and we'll be supporting the IR team headed into the meeting and making FirstRain available to the institutions taking the meetings for a few weeks in advance. We expect to learn a lot and hope to make the whole process much more nutritious for both sides.
Here's our press release:
FOR IMMEDIATE RELEASE
FIRSTRAIN AND HANLEY & ASSOCIATES FORM STRATEGIC ALLIANCE
Firms team up to provide management meeting preparation using FirstRain search-driven research service
San Mateo, Calif., March 16, 2009 - FirstRain®, the leader in search-driven research for investment professionals and executives, and Hanley & Associates, LLC today announced a partnership designed to both reduce the cost, and enhance the depth of research available in advance of meetings with company management. This new partnership will provide the FirstRain reports and search-driven research services to Hanley & Associates’ institutional clients and to companies for whom it is organizing institutional management meetings.
In today’s turbulent market, primary research such as meeting face-to-face with company management is critical for investors as they conduct their investment research due diligence. Hanley & Associates provides an innovative approach in which it acts as a confidential broker of information exchanged between a company’s executives, its IR team and institutional clients – offering value and efficiencies in the organization and execution of meetings. However, identifying and reviewing key supporting facts and trends necessary for analysts and portfolio managers to get the most value from these management meetings is excessively time consuming and inefficient. The web holds deep and broad qualitative information on a company, its competitors and its market and yet is prohibitively costly to mine without specialized research technology.
As part of this partnership, FirstRain will optimize management meeting preparation by offering, comprehensive, highly tuned web results and analytics on the target company, its competitive landscape, and management to Hanley & Associates’ clients. This service will be delivered in the following forms:
- The FirstRain company report – a summary of recent, filtered web information and management analytics – will be provided to all Hanley & Associates’ institutional clients as an aid to their analysis on whether to request a meeting with company management.
- The FirstRain service – the full research service configured for the company in question and its ecosystem: market trends, competitors and supply chain -- will be provided to Hanley & Associates’ institutional clients who are participating in an upcoming management meeting.
- The FirstRain service will also be provided to the target company’s IR team prior to the meeting so they can similarly prepare for questions that may result from the portfolio managers and analysts’ meeting preparation.
Management meetings are typically organized by sell-side research analysts as a service to their institutional trading clients. However, changing industry dynamics necessitate a conflict-free approach to the information exchanged between companies and investors that optimizes the time and resources for both parties through management access services as offered by Hanley & Associates. As an additional part of this partnership, Hanley & Associates’ database of upcoming management meetings will be available to the FirstRain search engine so FirstRain clients will be automatically notified that a management access event is being conducted and a company meeting can be requested through Hanley & Associates.
Thursday, March 12, 2009
China's thriving cat meat industry
When I use FirstRain I often find articles and trends that are interesting to me and lead me off on a research path that is stimulating. Rarely is it upsetting. But today, while researching food and beverage pricing trends for this blog, I came across this Sky news article about the thriving cat meat trade in China. Not only is cat meat an inexpensive delicacy, but many of the cats are stolen domesticated cats. The video is worth watching too, but only if you have a thick skin, especially watching a waitress play with a cat before it's to be slaughtered.
Wednesday, March 11, 2009
Celebrating Holi
Today is the Hindu spring festival Holi - or the Festival of Colors - and since we had one of our lead Gurgaon folks over in our California office for the week we decided to celebrate the festival with face painting yesterday. Unfortunately I missed it because I am working in New York this week, but the team took lots of photos and here are some examples of how a nerdy bunch can get creative with a box of face paints.
Ranjeet and Michael
Thursday, March 5, 2009
Evidence the U.S. layoffs trend has peaked
There's a turn in the U.S. employment market happening - there's evidence that the number of layoff announcements and reported layoff events has started to drop. This does not mean the number of job losses will drop yet since announcements precede the actual elimination of jobs, but it is a leading indicator of the turn in the employment market. 
But I've also been watching the statistics to look for a turnaround in the trend - and it's started. There is no way to know if this is the turn or a turn in the trend but it is a compelling change in the data and could be a leading indicator of a change in the way companies are dealing with the crisis.
The data shows that the number of layoff announcements and reported events climbed through to the end of November - dropped back for the holidays - and then went back into a steep climb with the worst week being the week following the inauguration. This is because between October and January companies realized things were getting very bad very quickly and many acted decisively to manage their businesses in the face of the economic crisis. The report published by Watson Wyatt last week also corroborates that companies have made the sweeping deep cuts and the majority are now focusing are local management measures such as salary freezes and cutting 401(k) contributions to further manage costs.
Note: The FirstRain data is a count of unique articles on the web about a reported layoff event or the announcement of a planned or actual layoff - it's important to count just the original stories (we use technology to do this) because stories get copied, repeated and changed as they ripple through the web.
Wednesday, March 4, 2009
Does the simplicity of the Bloomberg model make it vulnerable?
We've been hearing from an increasing number of customers and prospects that they are not only trying to reduce their budget, but specifically trying to reduce their Bloomberg costs or replace Bloomberg altogether and I'm curious as to what's really going on behind this.
Bloomberg has the premier platform today. It's known for the deepest quality of data, having the best sales force, being the hardest to use, but also being the hardest to give up. The terminal has cachet. User's have told us they feel as if their firm thinks less of them if they don't have a Bloomberg terminal and it's their link into their IM network. And yet for many of the users in our target market - we're talking fundamental equity research guys - they only use a fraction of the functionality and in many cases they only use Bloomberg news.
The Bloomberg business model is very simple and consistent with a premier brand. One product, one non-negotiable fee of $1500-$1800 per month and for major accounts services are provided at no additional cost provided the total terminal fees are high enough. And they sell 2 year contracts and won't cancel them even if the users have left. Makes good business sense.
So what's a firm to do that has reduced the number of users and wants to dramatically reduce platform costs? What we are seeing is that as firm's contracts with major high-end (i.e. expensive) vendors are rolling off they are looking at ways to swap the platforms and services out for less expensive ones. This risk/phenomenon is well captured in the Silicon Alley Insider's The Bloomberg Terminal Stands On The Precipice.
And what it means for FirstRain is we are in an astounding number of conversations now, either alone or with one of our partners, with customers who are looking to replace Bloomberg. Because of the simplicity, and yet rigidity, of the Bloomberg model they are looking to replace it with a less expensive solution, especially when the users are only using it for news, and we help our partners provide a very rich news platform by mining the web for alternative research.
That said, we are careful to be respectful of everyone and not get between two large players because in the end what we offer is different and complimentary to all the platforms today - it's a sales balancing act!
