Milestone Group

The Economy, Mobility and Facebook by Gary Cohen

noreply@blogger.com (Milestone Group) — Fri, 30 Jan 2009 15:33:00 +0000

We are the mobile workforce. No other country offers the freedom to move around, search for and grasp at opportunity within its borders like the US. Our migration to any of the 50 states escalated with the recessions of the mid 80’s, early 90’s and blow up of the .com era. This movement affected primarily the end of the Boomers and Gen X’ers. I fall into this group, having uprooted from Denver many years ago to eventually live on both coasts. Career aspirations (directly tied to economics) motivated me to move on and leave the hometown I loved. Ties were broken.

Traditionally, the way to reconnect with those friends from your formative high school years was to go to the once a decade reunion. I look at my dad’s era where most everyone stayed in Denver, and having the 20, 30 or 40 year reunion required little more than: 1) making a few locals calls to pinpoint everybody for an invite, and 2) getting people to drive 2-20 miles to the venue. And while everyone has their own reasons for attending or not, a common rationale is to discover what happened to the people who influenced you.

For my 20 year reunion in 2000, most people could not be found. Some didn’t want to be found while others had no mechanism for plugging in. During that time Classmates.com and later Reunions.com appeared, which charge for services and competed at solving the need for reconnecting student bodies. It seems I have gotten their spam since I first got an e-mail account. Currently, Facebook (FB) seems to be eclipsing them on so many levels that it is incredible and epidemic. Facebook’s registered user base has grown from 50M users at the end of 2007 to over 150M today (www.facebook.com/statistics 1/09). The majority of new users last year were over 30. Did I mention it’s free? I reluctantly set up a FB account about a year ago. Reluctantly because I am the self professed ‘King of LinkedIn’. During 2008, I consciously ignored FB, left it to my kids and left it alone to organically grow by itself.

Then on December 20th the FB siren went off. My old high school friends, flames and fiends began inviting me to be their friends on FB. Within 2 weeks over a dozen connections were made. WTF is going on I thought? I found that the open access to friend lists (of nearly anyone) leads to a viral domino effect of remembering, inviting and growing a base of FB friends. I suspected that it was just “our time” (my class of 1980) to catch the wave. I then shared this observed phenomena with friends in Chicago, Boston and Dallas. To my surprise…the exact same flurry of high school connections were happening to them on FB. Coincidence? I think not.

My theory is that there is a confluence of several factors that is propelling what was a novel social networking tool for primarily Americans 12-29 years old into a mainstream mechanism for communal discourse on FB:
1) The down Economy resulted in a uniquely different Holiday Season
People did not travel like they normally have over the holidays
Resulting in more time on their hands to go on the Internet
2) Easiest Internet Access ever: Broadband and Mobile Internet Access
Facebook saw a fourfold increase in mobile usage of it’s based from 1.2M users/mo. in Nov 2007 to 5.1M in Nov 2008. (According to Nielsen Mobile 1/09)
3) Stage of life for 31-49 year olds: Mobile, Responsible, Concerned

The timing of this mass cyber explosion is not chance. FB is as portable as is one’s music, work-out bag, phone number and garage door opener. Only this hosted bit of technology solves a lower level need that is essential to gaining greater power during times of uncertainty: Belongingness. This is and has been the core proposition of social networking. You can connect back in anywhere at any time. In this real life scenario, you can be an active player in an exclusive community that you are already an honorary member of and have been for 20+ years.

With the sifting sands of our economy people are looking for solid and familiar ground to set an anchor where they can find it. One way to do that is to reconnect with the people that were with you when you started to perceive the bigger world. Those were your high school classmates. While not trying to find answers to the bigger concerns of today (Jobs, Health Insurance, War, Retirement funds, etc...), this segment of America is searching for the answer to: “We all started out in about the same socio-economic class, and how are we doing amidst the concerns of today?” You can wait until the reunion to get a sense of grounding, or you can log in and get it instantly through FB. Because on top of finding out if they are married, divorced, have kids, like where the live, go on cool vacations, you ultimately discover that they are OK. And you know what, you are OK too.

A bright spot for this period will be that FB attains a lasting aura, like that of a well attended reunion which served a purpose not predicated on a predetermined date, but by the needs of a generation.

“Turn the damn thing off”

noreply@blogger.com (Gary Cohen) — Mon, 28 Jan 2008 07:58:00 +0000

In 1986 when I was selling one of the first cellular phones in Denver, a prospect said to me, “I don’t want a phone in my car. It’s the only place where no one can find me.” It actually caught me off guard, but as the months progressed, I got better and better at handling that objection. First I retorted that, “it has a ‘POWER button’ and you can turn it off if you don’t want to be disturbed.” Then I added the all powerful: It is a tool for you to use when you chose to: power it up, power it down, give your phone number out, or don’t give your phone number out.

That helped me sell a lot of phones, along with an ROI that it was giving people the ability to buy more (productive) time. When Caller ID hit in the early ‘90’s, it was fantastic. You could freely give your number out, and then screen your calls. With this capability, nearly all cellular numbers made it onto business cards. By the late ‘90’s cellular became like a garage door opener: once you got used to just pushing the button during a big rain or snow and driving on in, no one ever goes back to getting out of the car to lift the door. "How did you ever live without it?"

Last week, a good friend was lamenting about his newly acquired first Blackberry: It was becoming all consuming to him. I said, “Well, what did you expect? That’s why they’re called ‘Crack’berrys.” He went on and on about going on vacation and constantly looking at it. I said, “Turn the damn thing off and stop bothering everyone else.”

Is History repeating itself? Not exactly: Early cellular was car based. Most people jealously guarded their mobile number. Minutes of Use were 10X the cost or more. It was primarily a local calling apparatus.

Since then, technology has given us incredible advancements in the cellular networks, devices and software. Given that e-mails, within the broader internet were predicated on a model that had zero incremental cost, and our e-mail could be read anywhere at any time: Everyone has an expectation that you will read your e-mail and respond. Maybe you will do it instantly, or eventually. However since the written medium has more permanence than the spoken word, the record of the request forces an action.

This 'semi-formal record' is what causes the uneasiness and anxiety about Blackberries. Consciously or unconsciously someone has documented an attempt to reach you. Whether the message was sent to your desk, or to your mobile, the sender doesn’t know or care. What weighs on your mind as the receiver, is conscious knowledge that these obligations (e-mails) are building.

Like 22 years ago, my advice is the same. Having these devices allows me to control my time. I think they are great, but I won’t ever let it control me: The Blackberry is my tool to control and not the other way around. Know when to say when and just put it away when appropriate.

There are no bad dogs, only bad owners. It’s not the Blackberry itself that is causing this much stress, it’s their owners.

Sales Force: May the Force be With You

noreply@blogger.com (Chris Kocher) — Tue, 22 Jan 2008 20:09:00 +0000

Last week I had a chance to hear Marc Benioff and his team rev up the SalesForce.com faithful at the Tour de Force in the Palace Hotel in San Francisco. Among the speeches, panels, and even a guest interview with Marc Andreessen (Ning), there were some new products as well as an alphabet soup assault of acronyms like Force.com, Platform as a Service (PAAS), Cloud Computing Architecture (CCA), etc.

Behind the deluge of products there were a few unique announcements and some traces of SalesForce.com strategic directions. Much of the focus was on improved developer tools in Force.com. These are all critically necessary for developers and the ISV community if SalesForce.com is to be successful in establishing itself as a platform player and moving away from being just a CRM vendor. What was unique was making this an on-demand development offering.

What I found even more interesting was the new pricing they announced. Over the last decade software and service pricing has evolved multiple times with more than 15 different models and variations. One of the biggest problems has been value pricing for the use of enterprise applications –specifically for infrequent users. No one has really cracked this nut.

Now SalesForce.com has announced special “per log-in” pricing for apps built on Force.com. The intent is to charge for a person who only logs in to use an application occasionally. These are the “non-power users“ of applications. In the past I’ve referred to this as the Occasional Use Pricing (OUP) dilemma. You want to let people use the product occasionally, but you can’t charge them the full value of the software. And if you lower the price to the level they are willing to pay, you undercharge the power users and leave money on the table. Salesforce may not have completely solved this problem, but they are trying a new approach that could help.

The intent is to charge $5 for each time a user logs in to use an application rather than the monthly dollars per user fee usually associated with SAAS pricing. (As a special introductory offer they are charging only 99 cents per log in.) As Marc pointed out, they expect to learn a lot from this experiment. I’ll also be following this new initiative closely.

This approach really addresses two distinct types of occasional use: occasional users and occasional usage. Occasional users are the ones that use the application on occasion, perhaps a few times a month, but don’t want to pay a high monthly fee. Occasional usage applies to those people who don’t really require ongoing use of the application, but due to a special circumstance have what amounts to a one time need. By addressing these two needs with this new Occasional Use Pricing (OUP), they may be able to attract more users and extract greater value from applications. This should also benefit other ISVs and the developers in the SalesForce.com ecosystem. You can expect to see more of this, even if it is only moderately successful.

Finally, as I step back and look at the overall announcements, I was struck by the breadth of their strategy. SalesForce.com is continuing with their focus on the CRM platform. They’ve moved into offering the platform as a service (PAAS). In addition to bringing out their own developer environment (IDE), they are also entering the utility computing fray with their Cloud Computing Architecture (CCA).

Although I like the direction of the strategy and the strategic adjacency of these new initiatives, I can’t help but wonder if they should ameliorate their risk by partnering with others. Not just with their developers, but some of the other major players. These relationships could speed time to market, further accelerate revenue growth, reduce risk and add credibility to the SalesForce story.

Now, they are competing on multiple fronts with the old line platform vendors (MS, SAP, Oracle), the new platform vendors (Google and Facebook), IDE companies (MS), as well as CRM companies (Oracle, SAP) and utility computing or cloud computing companies like IBM and Amazon. That’s a healthy dose of competition.

So even if this strategy seems to be a stretch, I congratulate Marc on the boldness of his vision. May the Force be with you as you pioneer new aspects of the SAAS model. I just keep thinking there may be lower risk, higher leverage opportunities to partner with key players and turn them into partners instead of potential competitors. Let me know what you think about these strategies as well as their new pricing experiment.

What do Facebook and Muhammad have in common? Well if you can’t bring the mountain….

noreply@blogger.com (Milestone Group) — Wed, 19 Dec 2007 18:16:00 +0000

Recently, I had a chance to sit in on a Digital Media session at the Asia America MultiTechnology Association conference. The panel was led by Mark Stevens of Fenwick and West who did his usual masterful job of teasing out some interesting tidbits from his panelists. They included Tim Kendall the Project Manager of Facebook's recently botched Beacon introduction, Yoon Lee of Samsung, David Richter of DivX and Chris Corvalho of Lucas Films.

Needless to say there were a variety of views represented. They ranged from US and Asian cultural differences that help explain variations in consumer electronics adoption rates, to snide remarks about how this coming CES will once again be the year of the Digital Living Room - something that seems to be a continuously moving target.

Although I found some of these topics interesting, the real morsels of insight came from several points made by Tim Kendall of Facebook. These provided a few key signposts of how we may see Facebook evolve as it attempts to monetize its 58 million users.

Tim kicked off with a relaxed apology for the Beacon privacy debacle, echoing some of the points made by Mark Zuckerberg in the press recently. As he said in his mea culpa, "Beacon may go down as Facebook's biggest screw up." He hoped this was the worst mistake they ever make. They certainly learned a lesson from it. You might think this would have damaged Facebook, but so far it appears to be mostly a PR gaffe. As comScore Media Metrix recently reported, Facebook had 20M visitors the week of Beacon’s announcement and 22 million for each of the two subsequent weeks. It then rose to 25 million the week of November 25^th. We’ll see how the December numbers shape up.

One of the key points Tim made was how Facebook will evolve from a community site to a community that you can take with you as you travel the web. Imagine for a minute, as he explained, that you’re a member of the Facebook community. You decide to go to Netflix to pick up a video, say, Tom Cruise in Top Gun. When you land at Netflix you identify yourself with a Facebook ID. Then before you finalize your selection, you decide to see who else in your community has seen the film and what they think of it.Hmmm, more context, more relevance, more ad dollars. Repeat across multiple websites and presto, you have some serious incremental ad revenue.

So "If the mountain won't come to Muhammad, Muhammad must go to the mountain.” Or in Facebook’s case, if we can’t squeeze enough dollars out of our site alone, let’s take our revenue generation engine to the places where we can monetize the community to the hilt.

I’ll follow up in another blog entry or in an upcoming Milestone Group Quarterly with a discussion of 5-6 other key initiatives that Tim talked about. In the meantime, let us know what you think.

Author: Chris Kocher

The Telecom Wallet or “How I learned to live with the Bomb”

noreply@blogger.com (Milestone Group) — Wed, 19 Dec 2007 07:19:00 +0000

A funny thing happened in the communication industry about 10 years ago. A bunch of fancy guys decided that what the country needs is for all telecommunication services to come from each of them: as a single supplier to the consumer. Why fight for a bigger piece of pie when you can fight for the whole pie? In my last blog posting, I spoke about the Quadruple Play, in which Cable Companies and Telco’s, each want to provide all of a households communications services. However, it took mergers, takeovers, buyouts, changes in the Telecom Acts, changes in administrations and many years for policy to allow these companies into a greater diversity of communication businesses. Then the ability to combine those offerings efficiently took billing and customer care advances. But we are there now.

A long time ago, a great friend and mentor of mine, Brad Hughes, introduced me to the concept of the Telecom Wallet. He explained that phone companies were very interested in how much a family spends on all communications within a household each month. The sum of their telecom services was the Telecom Wallet. Since I worked at Telephia (now Nielsen Mobile), this was a great concept to dive into with our survey tools.

One of my epiphanies (while sober) was that when I graduated from undergrad and got my first place, my telecom bill was $30/mo. This covered a residential line and half a dozen LD calls. When I got a steady check, I got basic cable for another $20/mo. My Telecom Wallet was now $50 in 1985. Currently, for my family of 4: its $400/mo. (In 23 years it has increased TWENTY-FOLD!) Believe it or not, I try to be frugal (no Satellite radio, no Onstar, only 1 premium cable channel, no GPS subscription, and TiVo was paid for years ago). My Telecom Wallet could easily grow by another $200/mo. if I took my foot off the brakes this holiday season.

While this is my industry and passion, there is ticking bomb. It lies in the essence of the Quadruple Play strategy. I believe most people in America don’t know what their total Telecom Wallet (monthly cost) is. They never lump all the elements into one pool and really look at it. If they did, they would freak out. An offering of a Quadruple Play forces a focus on the total Telecom costs which do add up fast. This almost always forces the consumer to see the “$300 or $400 light” and do one of the following: 1) Reassess their expenses for Telecom and make cuts, 2) Shop for the best bundle once there is an awareness of bundled offers, 3) Do nothing at all (which is what most people are doing), or 4) Sign on because it will simplify thier life (the path least chosen).

In the end, writing one big check to your Cable or Telephone Company for $400/mo. will negatively alter consumers’ buying behavior away from communication services in the short term. I suggest that the Quadruple play go back in the closet for now. One day soon, all the elements of the Quad Play will flow through a fat wireless pipe; each seperate service morphing into mere applications. At that time, we will pay the meter for what flows through our pipe regardless of the device or location.

Author: Gary Cohen

What is the power of the Quadruple Play?

noreply@blogger.com (Milestone Group) — Fri, 14 Dec 2007 18:32:00 +0000

The first I heard of the Triple Play (Telephone, Broadband-cable modem, Cable TV) was in 1999. I was with SBC sitting in a market-wide (San Diego) meeting discussing our strategic levers across all product lines. I represented the cellular/pcs business unit and the discussion centered on “how to combat the cable company’s Triple Play threat”. Our solution was to have our own “bundle” to compete against theirs. We would use the Telecom Triple Play: Telephone, Broadband-DSL, Cellular as our bundled offering.

Seemed like a reasonable idea. When consumers subscribed to all three services, we would give them a discount, and someday combine it all onto 1 bill. By throwing cellular into the mix, we thought we would trounce those cable guys. The program sunk like a lead weight.

It is 8 years later and I don’t bundle, do you? Qwest Communications (formerly US West, where I got my start) has been clinging to a telecom Triple Play for nearly 6 years, AT&T sends high gloss/high fashion collateral to my house quarterly to pool my services and Verizon has been pushing bundled offering in its Telephone markets forever. In offering a single bill & @10% discounts the Telco’s have not attracted many new takers relative to their total bases over time. While the bundle has proven to be a good retention tool, it is not a net revenue generator at all.

Now we are entering the world of the Quadruple Play! Cable Companies have added cellular to their offerings, while Telco’s have been getting into the Media space, both through a variety of partnerships. Did you know AT&T has had this going for 2+ years and some of the cable companies have been offering cellular for about a year?

Guess what? People aren’t biting. Rich people don’t care about a single bill or a paltry discount. Poor people can’t and won’t spend that much money on communications. The middle class is shopping for the best value for the 4 services and saving more money by sending 2 to 4 checks a month to 2 to 4 communications suppliers. They are saving more than the 10% by truly matching services to their needs. The Triple and Quadruple Plays are interesting and logical for the operators, but they don’t seem to get it from the consumer’s perspective. For the rest of the story: Tune in next time to: “The Telecom Wallet” or “How I learned to live with the Bomb”

Author: Gary Cohen

My Best Flight Ever (with wireless access)

noreply@blogger.com (Milestone Group) — Wed, 12 Dec 2007 23:42:00 +0000

When working for Birdstep Technology I needed to travel to Oslo and Stockholm often. Since United’s partners were SAS and Lufthansa, I had to use them for at least the Nordic portions of my journey. I hated this arrangement, because I could never get upgraded and because the Scandinavian airline food, thought tasty to Swedes and other low spice peoples, was horrible to me. Pickled fish and hard boiled eggs with cabbage is Devil’s Island food. However, the cure for my businessman blues was soon discovered.

I digress: on flight to Europe, I could be the spokesman for Ambien. If it were legal to do so, I would set up a kiosk in the SFO International terminal pushing $10 pills that guarantee no jet lag going over. I always dozed perfectly and never remember the long trip east. But on the flight back, I am always wide awake, bored, restless and anxious to get home.

The exception was when I took a magical flight that had high speed internet access. Connexion by Boeing was awesome. I was in a zone of productivity and connectedness that I had never experienced. Since I had my Skype and headset with me, I was making calls all over the world from my airplane seat (seemingly for free: $30/flight) and closing out e-mail threads from the past 3 months. I as amazed by my new capabilities and freaked out all those around me who gazed upon my total bliss. Business Class from Europe on United, became less of a premium than flying a wi-fi plane across the Atlantic in coach. Sadly though, it all went away in an instant.

At the end of 2006 Boeing shuttered the operation due to huge losses to keep the satellite operation going. Too few planes were retrofit with the $650K package, too few airlines signed up and too few people shelled out the $30. It doesn’t seem that my $150 (over 5 flights) to the cause helped.

Yesterday JetBlue introduced limited in plane wireless through a company called LiveTV. They started with only one plane in the fleet, but that should grow in deployment and wireless capabilities. Several other US airlines (but not United) are in talks with Live TV, Aircell and Row 44 for in flight wireless offerings next year. It is all good news. While the general public has never liked the idea of listening to an annoying “loud talker” yak away on their cellphone in the row behind them, seeing a workaholic like me pounding away on a laptop or typing my micro messages into a handheld doesn’t seem to ruffle their feathers while they watch reruns of The Office and savor their 1 ounce of pretzels.

In Fight Club, Ed Norton says: “Business travelers have had disposable experiences when they reach their destination on a business flight.” With an ability to ‘opt-in’ to the world 30,000 feet below, you might view your experience differently when seated in rows 14-46 on a 4+ hour jaunt.

Author: Gary Cohen

Caution: Tough Road Ahead

noreply@blogger.com (Milestone Group) — Tue, 11 Dec 2007 16:22:00 +0000

2008 is emerging to be relatively difficult market conditions for selling tech, and it appears buyers are re-thinking 2008 spending. Seems IT buyers are cautious for a variety of factors. Off the top of my head... oil is approaching $100/barrel, US markets are in financial turmoil (and related sub-prime crisis), there is an unresolved and costly war in Iraq and a very nervous situation emerging in Iran, an election year with a wholly unimpressive and undifferientiated field, and a very weak US dollar... recession anyone?

What to do? Our five themes as we head into 2008 for emerging tech, media and telecom clients:

Focus - Use the 80/20 rule relentlessly - sales organization, customers, product development, cost structure, channel, etc.

Right-size - Align your cost structure with predicted revenues, communicate to your teams another mean season is just around the corner

Delivering - Make some tough choices organizationally who is delivering and who is not

Partnering - Parter 'big'; find larger partners with existing capabilities you envy to access new markets and new channels

Selling - Sell 'value' and 'ROI', get religion about it... Don't pay it lip service, do it!

Thoughts?

Author: Mark Zawacki

Year of Wireless Data

noreply@blogger.com (Milestone Group) — Mon, 10 Dec 2007 16:53:00 +0000

This is finally the “year of wireless data!” As an attendee of every major CTIA show for the past 12 years, I heard that announcement from the podium at every keynote speech since 1999. Eight years later, it has finally come to fruition. But why the seven years of false claims by the sages who supposedly knew the industry inside and out?

Some of it was self-promotion, some it was a true lack of reality, and most of it was wishful thinking. However in all cases, the vision was dead on. The actual turning point was in late 2005 when wireless convergence occurred after 6 year incubation. The availability of: High speed wireless data networks (WWAN’s), Devices (Smartphones, data cards & music phones) capable of operating on such networks that could be provisioned and updated over the air (OTA), and lastly, user friendly and robust applications for consumer and enterprise users. It has taken another two years for most of the network operators to deploy their upgraded 3G networks. In most of the top North American cities (with pops over 250,000) the roll-outs are complete.

In a recent CTIA study, for the first 6 months of 2007, US Wireless Data Revenues grew by 63% to $10.5B over the same period a year earlier. That represents 15.5% of ARPU and nearly double from a year earlier. These numbers are just the “the carrier take” of the pie. When you factor in all the related businesses that also produced revenue off of this evolutionary step (Device Manufacturers, Software, Applications, Infrastructure, Tower and Content), I would estimate that the total ancillary revenue doubles that number just in the US alone for the period.

Is there a “gold rush” to this sector? Absolutely! Have the investments been justified? Most have! Is it too late to get into this game? No. We are only seeing the tip of the iceberg in terms of “the relationship people will develop with their phones.”

Author: Gary Cohen

IBM Bets Big On Security: Question Is How Big?

noreply@blogger.com (Milestone Group) — Sun, 09 Dec 2007 21:06:00 +0000

Talk has been elevated in security circles over the past few weeks since Val Rahmani of IBM announced they will spend $1.5B in the next 18 months on security technology and related initiatives. We believe there are about 2,000 security pure plays globally, so theoretically IBM has a lot they could acquire; but will IBM acquire? This little story popped up out of India today that leads to some speculation they could be building, not buying. IBM has a huge channel, huge brand, near limitless resources, a ton of customers; and if I count correctly 200+ SKUs of security related products. Across security, systems management and networking they've already purchased Tivoli, ISS, WatchFire, Consul and a ton of other stuff. I think $1.5B is better spent on integrating what they have and going to market with a clear and compelling message how it all works together vs blowing their cash wad on a large deal or two.

Thoughts?

Author: Mark Zawacki

#9 - Perspicacity

noreply@blogger.com (Milestone Group) — Fri, 07 Dec 2007 11:50:00 +0000

A few days ago in this blog we kicked off a David Letterman style countdown 'Top 10 Revenue Mistakes Tech Companies Keep Making"....

Drum-roll please... #9.... Perspicacity: Is Management In Touch With It's Customers?.... (huh?)

Management guru Peter Drucker once said that the purpose of business is to create and keep a customer. We've been working with a lot of our clients on this theme, it's a deceptively simple idea. To us, it's basically a question of 'is management in touch with the customers?'

In what we euphemistically call the Litmus Test of Managerial Customer Intimacy, we created a brief checklist below (with examples) to ascertain of management is in touch with customers (or if they're simply faking it)

Percent of Exec Team time spent with customers and prospects? - Take a lead from Dave DeWalt, the newly appointed CEO at McAfee. When Dave took the helm of this $1B security pure play, he immediately embarked on a '100 Customer, 100 Day' road trip. One key result of that initiative was customer feedback about some McAfee product deficiencies which then led to a strategic acquisition.

CEO at Chief Sales Officer? - Look no further than CEO Phil 'Dunk' Dunkelberger at PGP. Try getting a hold of this guy the last month of the quarter (you won't unless you're writing PGP a check); you'll find Dunk on the road pounding the pavement with his team.

Level of 'customer sensory skills' amongst the management team? - Remember the old PC reseller MicroAge? It's now called KST Data and going very strong at $1B/year in revenue. EVP Field Operations Mark 'Eddie' Edson has a reasonably narrow customer base for a company this size and he likes it that way. His team goes very deep with a few few large clients, listens intently, and delivers precisely on customer requests and requirements. The customer sensory skills amongst his management team is unrivaled.

Win/Loss information in excruciating detail? - John Street and Pete Khanna at MX Logic have this one wired. With 20,000+ customers in the SMB space and a very broad channel, they have a wealth of data they regularly pour through and mine for strategic insights how best to grow revenue.

Customer 'fingerprints' all over new products? - Check out CEO Loic Le Meur of Seesmic. From the first day this company launched, Loic and his team have very deliberately and intently designed the product from prospective customer input. Let your customers vote on the next feature? You bet. We don't think a startup has ever driven it's product strategy so deeply by customers than the way Seesmic has.

Breadth and depth of customer evangelism stories? - CEO Terry Gold of Gold Systems is the high water mark here. Each time I visit their Boulder offices I get a tour down several hallways which are literally filled with framed and unsolicited customer feedback stories. It's their 'Customer Wall Of Fame'. Terry has molded an entire company culture around this one very visible manifestation of customer intimacy.

These are great examples of exemplary companies that are exceedingly in tune with their customers and prospects. If you want to be intimate with your customers and prospects, it's simply a checklist if your company is walking the walk. We're proud to work with these companies and to know them.

Stay tuned.

Author: Mark Zawacki

PaddysValley Tour Silicon Valley

noreply@blogger.com (Milestone Group) — Thu, 06 Dec 2007 00:49:00 +0000

Chris, Gary, Krishnan and I just hosted 25 Irish entrepreneurs in the Web 2.0 space who humbly refer to themselves as 'PaddysValley'. They are visiting/touring the Valley this week to network, understand how to best raise capital, how to build/scale their Web 2.0 businesses, how to partner (and to shop given the €/$ exchange rate!) Their trip this week to the Valley includes visits with Microsoft, Google, Facebook, Seesmic, SocialText, Ning... and Milestone Group! It was really exciting to hear how switched on and plugged in this group was. I applaud them all getting organized to coming across and making the investment, it'll pay dividends for all of them in the months and years to come. I got a Guinness out of the deal, t-shirt that is. Next time I'm in Europe, I'm definitely making a trip to Ireland to meet up with this group again, and collect on a 'real' Guinness, the one with the fancy shamrock foamy bit on top! Good luck PaddysValley, you're all on the right track!

Author: Mark Zawacki

#10 - Precision and Practicality

noreply@blogger.com (Milestone Group) — Tue, 04 Dec 2007 14:39:00 +0000

My colleague Chris Kocher and I were having lunch the other day with a prominent VC at one of those swanky Bay Area eateries only the in-the-know crowd have programmed into their iPhones. Talk turned to revenue and how VC's continue to be frustrated that 50% or more of all venture money ultimately gets spent on sales and marketing efforts. This VC asked us, "so what are the revenue related mistakes you see tech companies continue to make as they try to scale?". Funny you should ask that Mr. VC, I just gave a presentation on the East Coast a few weeks back on that very subject.

In the spirit of a David Letterman-like 'Top 10' list, we'll periodically post in this blog a countdown of the 'Top 10 Revenue Mistakes Tech Companies Keep Making". So without further adieu...

#10 Precision and Practicality: 'Common Mistakes In The Pipeline' - Any quick review of a sales pipeline can typically reveal a myriad of problematic issues. (Lack of) Precision and Practicality, we call it.

Little (or no) persistence in demand generation capability

Lack of understanding how long the sales process really is (and it varies by vertical)

Not correctly aligning a 'sales process' (yours) to a 'buy process' (who you're selling to)

Inaccurate/incomplete qualification process - failure to qualify out!

Poor forecast methodology

Overly optimistic sales teams

Channel conflict

The disconnect between a companies revenue plan and what's actually in a pipeline can often times be a very large delta. The seven items above, if properly managed, can yield dramatic performance improvements in the pipeline.

Stay tuned.

Author: Mark Zawacki

Taking Advantage Of A Weak US Dollar

noreply@blogger.com (Milestone Group) — Sat, 24 Nov 2007 07:55:00 +0000

I'm here in London for a few days and I held my annual MAZ Margarita Mixer on Thursday (Thanksgiving) evening; 50+ clients, entrepreneurs, investment bankers and VCs all gathered, networked, and drank. (not necessarily in that order!) Topic of conversation soon turned to the current US tech business climate and general trends for US tech companies expanding abroad, specifically into Europe and the UK. Clearly, the UK has historically been a leading beachhead for early stage US tech companies expanding into Europe. One recruiter indicated that pay packages for VP's of Europe for early stage US companies are in the £200k to £220k range (USD $411k to $452k), at the current £/$ 2.056 exchange rate. Note, these figures are a combination of base salary and expected base bonus.

The good news is that now a great time for US tech exports! The strong purchasing power of Sterling and Euro's simply buys more in dollar terms and that is terrific news for any US based company looking to expand into Europe at the moment. Yes, the costs of doing business will be higher, but we strongly believe the benefits of top line revenue growth - if managed well - will more than compensate.

Reactions?

Author: Mark Zawacki

Any Real 'Value' in Software M&A These Days?

noreply@blogger.com (Milestone Group) — Tue, 20 Nov 2007 15:22:00 +0000

Today's Wall Street Journal has an excellent article entitled As Software Firms Merge, Synergy Is Elusive. Conventional wisdom (and a popular quote) for the past 20+ years has been that 70% of all M&A activity 'fails', i.e. fails to ultimately deliver shareholder value. In the 90's my former firm CSC Index double-clicked on the statistic and found there were three fundamental reasons why M&A activity fails:

Poor Intent - strategy to do the deal in the first place was flawed
Poor Deal Making - terms of the deal were not ultimately favorable for the buyer, buyer overpaid, etc.
Poor Post-Merger Integration - buyer and seller could not realize the efficiencies/synergies

The law of large numbers is certainly driving a lot of large tech buyers to continue buying; IBM, Oracle, SAP, Microsoft, Cisco and others need to continue to do big deals in part for solid top line revenue growth.

Takeaway: Our view is that large tech companies are failing to realize post-merger integration synergies. Ultimately CIOs will continue to deploy SaaS, open source and a myriad of other strategies as a means to avoid vendor lock in.

Author: Mark Zawacki

Microsoft, Musiwave, Music, Mobile...

noreply@blogger.com (Milestone Group) — Thu, 15 Nov 2007 19:00:00 +0000

In another not so surprising M&A move, Microsoft announced this week it's intent to acquire Musiwave SA, a Paris based Openwave company.

Zune isn't (and shouldn't be) at the center of MSFT's music strategy. Any product that comes in the color brown for a consumer electronics device might not be a leader.
If MSFT wants to compete against Apple in music, it's two strengths must lie in finding the right partnerships (both with the music industry and handset manufacturers) as well as in leveraging their software expertise (can anyone say iTunes killer?)
The broader answer for MSFT lies in the fact that it's mobile strategy includes Windows Mobile, MSN, Zune, Live and components of S+S.
MSFT will also need to radically re-think the business model (a free ad supported Zune anyone?) or possibly an ad supported music model (Peter Gabriel's WE7 anyone?)

Overall, this is a brilliant move by MSFT. Remember, Microsoft isn't typically first to market, but is world class and being second...

Author: Mark Zawacki

IBM/Cognos - What's Left?

noreply@blogger.com (Milestone Group) — Mon, 12 Nov 2007 22:11:00 +0000

Not surprisingly, IBM announced plans to acquire Cognos today. Our immediate reactions:

Although everyone is denying it, certainly feels responsive and "me too" to SAP/BOBJ and ORCL/HYSL.
At $5B, it's the largest software acquisition by IBM, and in fact greater than IBM spent in 2006 on all 16 software acquisitions it did.
IBM has been in the BI space for a long time, it'll be interesting to see if they can extend this into a broader Performance Management play, of which they have been late to the game. Also, watch what they do with SaaS and BI.
While the big get bigger, we continue to see tremendous innovation around the BI stack, particularly with open source, i.e. Paris based Talend.
MicroStrategy anyone?

Thoughts?

Author: Mark Zawacki

Bubble 2.0 - Sell Out Before We're Found Out!

noreply@blogger.com (Milestone Group) — Wed, 25 Apr 2007 19:55:00 +0000

Bubble? What bubble? All data points suggest it's a frothy early/mid stage investment market, and a very frothy M&A market as well. Google, Microsoft, Salesforce, Comcast, ESPN, Infor, Oracle, Cisco all very active snapping up a myriad of software assets, large and small. Talking to a VP at a well known Web 2.0 company this morning; they've built massive brand and user traffic over the past 12 months. Troops are getting quite nervous about their equity and concensus is now is the time to sell. Their internal mantra? 'Let's Sell Out Before We're Found Out!"

Author: Stephanie Clark

Software Truth Commission Subpoena's Software Execs

noreply@blogger.com (Milestone Group) — Wed, 22 Nov 2006 04:51:00 +0000

I gotta admit, this is some of the funniest software exec video I have ever seen (that I can talk about anyway). Our former client BigFix has rolled out a new viral series called Software Truth. Come see James Smith, software sales exec, testify nervously before the Software Truth Commission. Hilarious!

Brilliant - witty, entertaining, memorable and makes the point.

Author: Mark Zawacki

The New (Old) Buzzword: InnovationIs it me, or has everyone else sensed the impending blitzkrieg of the jargon word 'Innovation' quickly coming back

noreply@blogger.com (Milestone Group) — Wed, 01 Nov 2006 04:01:00 +0000

Is it me, or has everyone else sensed the impending blitzkrieg of the jargon word 'Innovation' quickly coming back into vogue again?

Monday I was on the SFO/BOS flight. I love it, because it's 5+ hours of uninterrupted time to clear down the inbox and catch up on the reading. Anyway, the lead article in the November 2006 Harvard Business Review is entitled 'Innovation: The Classic Traps" by famed management guru and HBS professor Rosabeth Moss Kanter. Scattered amongst a plethora of non-tech examples, she cites IBM, Microsoft, Apple's iPod and AT&T's WorldNet all as innovative tech companies.

Tuesday morning bright and early I report for conference duty at the beautiful Marriott Long Wharf, right on the Bah-ston Hah-bah; another week, another industry event. this one put on by one of my favorite research/analyst firms, The 451 Group. Title of the conference? 2006 Enterprise IT: Innovation Summit. Ahh, the next two days locked in a stale hotel ballroom of thirty- and fortysomething predominantly male techno-weenies talking about vague notions of innovation, et al. (on the other hand - could be worse - could be a REAL technical conference filled with REAL technical peep's talkin' dolphin - J2EE, BPEL, SOA, ESB, DSDL, WBXML, WSDL, XBRL, XML and other Snizzle Drizzle...)

OK, Tuesday noon and I'm getting a good dose of 'innovation', almost Sam Adams dizzy-like. Better cut out at break and check email.

There in my inbox is an email from ComputerWeekly. Title? IT Greats: Innovation Is The Key To Greatness. Nice. How are you going to argue with this prophetic statement? Motherhood, apple pie, fluffy kittens, sunshine... and innovation is the key to greatness... BTW, their top ten list of the most 'influential' technology companies (where innovation played a role) are Apple, Microsoft, IBM, Intel, Xerox, Cisco, HP, DEC, ICANN, Amdahl. GOOG, SAP and ORCL get footnoted mentions...

Better check voicemail and escape this avalanche of innovation...

Dr. David Sutherland called... David is the Founder of the Launch Institute, great guy and great firm. The Launch Institute has done some remarkable consulting work for AOL, Nokia, BMW, Sony, Pfizer and many other multi-nationals. David and I go back 15+ years; he once wore a kilt to a company Christmas party we both attended in London (but now I digress...) David called to follow up. Guess what? We met in our Palo Alto office a few weeks ago and together outlined a new Milestone Group service offering... Helping larger tech companies innovate...

If only I could innovate my way out of a bunch of work left to do tonight before I go to bed, instead of posting this blog....

Author: Mark Zawacki

How To Deal With A Departing Salesperson?

noreply@blogger.com (Milestone Group) — Tue, 10 Oct 2006 03:35:00 +0000

What's the right thing to do when one of your key contributors decides to depart? The "old school" approach is to "walk them" right then and there.... that is, to escort them out of the facility once they've communicated their intent to leave... and to let them know their relationship with you and the organization is now forever changed.

Should you feel betrayed? "Ditched?" Disappointed? Hurt? Vindictive?

Why not take the "high road," and show him or her that you appreciate what they did while they were with you?

Most companies will take immediate action, and "walk" the employee. That's not wrong. But consider one company's approach to the situation: Ask the individual to transition his or her work appropriately, with your direction, then pay him/her for two weeks after his/her last official day on the job.

Why? Think about his for a moment. And before I go on, let me say that this is not an original thought... Someone far wiser than I suggested this to me, and it makes sense: If you demonstrate by your actions and your policy (they're the same, right?) that you A.) value the individual's contribution, and B.) expect an orderly and professional transition, and C.) will reward both with a two week "severance," even when it's your salesperson's decision to depart, you send a message to the rest of your sales team.

If executed properly, you'll most likely avoid the situation where you're "left holding the bag..." In other words, you encourage effective and productive transition from all your people, as a hedge against those that decide to leave, perhaps, before you had wanted them to.

...Makes sense to me.

Author: John Meaney

Digital... Virtual... Personal... Mobile

noreply@blogger.com (Milestone Group) — Sat, 17 Jun 2006 17:24:00 +0000

I listened to Carly Fiorina speak the other day at a gathering of IT Industry folks who share, perhaps, some common political interests as well. In my opinion, she's a pretty interesting speaker, and obviously quite intelligent. We heard some references to Carly's tenure at the Hewlett-Packard Company, and there were certainly some not-so softball questions about the results of her work there. But she handled it all quite easily, and I think most would say, with aplomb.

There was a lot more to Ms. Fiorina's message than technology and industry. There have been a number of rumors floating around over the last year or so that she will enter the political arena. Carly's message last week indicated to me that she's heading there post haste. Without divulging my political orientation - anyone that knows me has no doubt about that - I have to say that I agree with what she said, and I liked what I heard. It is refreshing to hear an industry leader with a consistent political view. I believe I've heard many whom seem, at times, to be contradictory.

One of the views presented was in regard to the accelerating pace of outsourced business offshore -- There are many Americans who have voiced strong opposition to this trend. While I'd like to see my fellow citizens all happily at work, I think outsourcing is good for our economy - particular for the IT Industry. As Carly said the other day - We need to encourage those who come to the U.S. for their higher education to stay, and to contribute to our ability to innovate and grow -- that's the ticket!

Author: John Meaney

Join Krugle, Get A Free House

noreply@blogger.com (Milestone Group) — Tue, 25 Apr 2006 01:09:00 +0000

Wow, getting rough out there to find top technical talent. Any developer with any sense at all would want to join Krugle 'cause it's a hot company, just closed it's B round in record time and is solving some very important/big problems, but I think the guys have lost it. They are actually giving away a free house to anyone who joins the company.

Check it out here.

Author: Mark Zawacki

Is There an "Ideal" Salesperson?

noreply@blogger.com (Milestone Group) — Mon, 17 Apr 2006 21:22:00 +0000

“How would you describe the ideal salesperson?” When someone asked me this recently, the best answer I could come up with was “it depends.” So often, companies don’t take the time to profile their customers before they think about profiling their salespeople. And of course, there is a chicken-and-egg dilemma here—hard to profile the customer if you don’t have any because you don’t have any salespeople.

However, you do know what your target market is; you know your ideal customer. I try to think about how that customer likes to buy and extrapolate that to try to figure out the type of person that they will buy from. Do they want to have a business conversation at their desk? Do they just want to spec and order their products over the internet? Do they want someone to understand their business? Do they want someone who can speak deeply to the features and functions of the product they are purchasing?

It’s too easy to say “yes” to all these questions. Not all these things typically come in one packaged salesperson, nor would you want them to. I’m a big fan of what I call the “sales continuum.” What I mean by this is that there are all kinds of sales situations during a company’s lifecycle, and each has different needs.

At the beginning, the need is for customers. Pure and simple. The mission is to go out, find someone who will buy this product, implement it and validate our existence. Then do that again. Several times. What kind of salesperson do you need for this? You need a hunter. A hunter will go knock on doors, nay kick down doors, until someone answers and says “yes, I’ll try it”. That guy is not afraid of having people tell him no, is not daunted by the fact that so far nobody has bought this product, and is a quintessential sales hero.

Fast forward a year or so. Now, you’ve got momentum. You’ve got customers. All kinds of customers. You’ve seen some highly unusual implementations of your product, and you’re starting to see a pattern. Despite thinking you think you have a repeatable model you’re seeing lot of “one-off’s”, not the straightforward, repetitive implementations, that make your professional services department happy. Who’s your ideal sales guy or gal now? It’s the individual who can go out into the world and describe to new prospects how it’s been done in the past; why other customers are using your product, and why they should, too. Here is where you need the persuasive, business oriented salesperson, who isn’t knocking on every door, but is selectively choosing his customers and closing highly profitable, repeatable deals.

Fast forward again. You’ve got enough traction now that you should segment the market and go broader and deeper. You have a repeatable model, and now you’re looking for proliferation within enterprises, and larger, more complex deals. Guess what? Now you need a different set of skills. Your ideal salesperson now is a strategic thinker who looks at an account and sees a myriad of possibilities, and has the expertise to call high and move from division to division and department to department. He’s not knocking on doors at all….he’s leveraging relationships he’s built within the organization to introduce him and the product into the next arena.

So it’s not always simple. It’s situational. As a company and product matures, its sales force must grow and change as well. Sometimes that means painful choices; the sales force that puts a start-up on the map isn’t necessarily the sales force that takes it to world domination.

Author: Kathleen Gilligan

Is anyone really wondering at this point?

noreply@blogger.com (Milestone Group) — Sun, 16 Apr 2006 17:55:00 +0000

At M.R. Rangaswami's Software 2006 last week, I participated (merely as a facilitator) in a breakout session that included a number of companies currently outsourcing their software product development. Motorola, Microsoft, Openwave, Mirapoint, and Zinnov were the companies represented.

What's interesting today vs. just a few years ago is that it's not an issue of whether to outsource product development or not. It's a matter of with whom and where, and for what. There is a tremendous amount of competition for this work today -- several offshore product development outsourcers were not only present at Software 2006, but actually sponsors. This event can certainly be the kind of place where the outsourcers have a feeding frenzy. Software companies of all shapes and sizes, disciplines and focus are all in attendance.

So are there then any software companies today that are actually wondering whether they should outsource? I can't imagine it. In fact, if you take a look at the enterprise, virtually every Fortune 1000 company in America is looking at the same thing. These folks write a lot of their own software, and it's a significant cost to corporate America.

The battle for outsourced software development has begun. There are many, many players. The big guys have taken notice, and they're in the game too. It will be interesting to see which companies emerge as the leaders and winners. One thing to take notice of: Those that focus soley on software product development, as opposed to the others that outsource anything you might want to do (from business process to IT to Marketing to...) should have a leg up. Building software requires some highly refined processes and a significant amount of discipline. Focus should determine the winners.

Author: John Meaney