Category Archives: strategy

Here's to Focus: Mark Logic Named Temis Partner of the Year

Posted on September 2, 2009 | Leave a comment

I’m passionate about excellence. Because it’s fun. Because it requires focus and intensity. And because I think it’s the key to success in Silicon Valley.

To me the success formula is simple:

  • Pick a problem domain
  • Solve it better than anyone else in the world
  • Build up and out from there

Bullet #2, of course, is the tricky point. You don’t just need to do it, whatever it is. You need to do it better than anyone else in the world. For real. You can’t kid yourself. You need to do it better than the 20 guys buried somewhere within Oracle, IBM, and Microsoft who inevitably are doing the same thing. Better than the dozen other startups funded by herdish venture capitalists. Better also, perhaps, than an open source community attacking the same problem.

Excellence is how two 27 year olds in France launched a company that beat Oracle in Oracle-based reporting tools: Business Objects. Excellence, for that matter, is how Oracle crushed not only prior-generation DBMSs like IMS and IDMS, but also its relational competitors such as Ingres, Sybase, and Informix.

There’s always a temptation in high-tech to build what I call a “moldly sandwich.” Well, the ham’s a bit old, the mayonnaise is turning, the cheese has little spots on it, and the bread is starting to mold. None of the components are the best, but heck, it’s a sandwich — and isn’t that what people want to buy? Not ham, bread, and cheese. People want solutions.

Well yes. And no. It depends what they’re made of and how hard they are to assemble.

At Mark Logic, to continue my metaphor, we make great ham. My friend Eric Bregand at Temis makes great cheese (text mining). Our other partners make great bread, great mayonnaise, and great pickles. Our services partners are the chefs, putting those ingredients together to make great sandwichs.

That’s why I’m happy to have been selected as Temis Partner of the Year 2009. To me, it’s a testament to focus, excellence, and partnership. Mark Logic, to quote the body paintees at our company picnic, makes the biggest, baddest, fastest XQuery implementation. Temis makes world-class text mining. Together, they’re a great combination.

Is anyone else getting hungry?

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Posted in entrepreneurship, strategy

A Venn Diagram for Business Success

Posted on June 18, 2009 | Leave a comment

I found this great post and Venn diagram on the What Consumes Me blog via O’Reilly Radar.

It’s very simple, very pragmatic, and coincidentally is quite similar to my career planning for individuals: intersect what you’re good at with what you like doing with what provides the level of pay you desire. Here’s the same idea, applied to business.

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Posted in strategy

Things Not To Do: Declare Your Category Dead

Posted on June 13, 2009 | 6 Comments

I was reading this interesting post, Emerging Enterprise Content Management Trends, on the Gilbane Group blog this morning when I stumbled into this rather amazing soundbite.

Jeff Fried, VP Product Management for Microsoft’s FAST search engine actually proclaimed that “keyword search is dead!”

Now, last I checked, Fast was doing around $50M — oh sorry, I mean post-correction of accounting irregularities, $35M a quarter in enterprise search revenue and that Microsoft paid $1B for the company in order to do a “best defense is a good offense” strategy vs. Google.

So regardless of what Brother Fried or his PR mavens think, I can assure you that Microsoft doesn’t think keyword search is dead. Oh, and did I forget to mention, as they say in Brooklyn, Bada-Bing!

One of my pet peeves is people or companies who think it’s cool or controversial to declare themselves dead. Why?

The first time I heard something was “dead” was in 1987 at the original Ingres. The thing in question was the relational database. At one company meeting, our executives patiently explained to us unwashed employees that because of the ANSI SQL standard relational databases were “commoditizing” and ergo that we would be de-investing in the core RDBMS engine and instead investing in application development tools.

I’m not sure there’s a font big enough to write this, but OOPS.

In 1987, the RDBMS market in total was maybe $200M. Today it’s a approximately $10B oligopoly shared by Oracle, IBM, and Microsoft. Application development tools are somewhere between 1/10th and 1/100th the size and a high fragmented market by comparison.

What went wrong?

  • Lack of understanding of product differentiation. Yes, the products were arguably becoming more similar due to the SQL standard (e.g., Ingres still primarily spoke Quel at the time), but more similar != identical != commoditized. The possibilities of high-speed, low-cost, parallel-optimized, query-optimized, platform-optimized, non-stop or a dozen other possible bases of differentiation seemed to elude Ingres management. My take: if people can differentiate white rice (e.g., regular, parboiled, in a bag, basmati, jasmine, texmati) then you can sure as hell differentiate technology.
  • Non-observance of industry structure in RDBMS. Product differences is just one piece of “degree of rivalry” in Michael Porter’s five forces analysis. Substitute threats were low (i.e., switching costs were high), buyer power was low, barriers to entry were high, and supplier power was low. By seeing only product and not seeing industry structure, Ingres missed that a huge, oligopolistic market was in formation. (Only Oracle seemed to really get that a landgrab was in progress, that switching costs were high, and that the goal should be to get as much market share as possible in the short term — even at the cost of making a mess — which you could then sort out later.)
  • Missing industry structure in application development tools. The flip-side of the attractive industry structure in RDBMS was a rather appalling industry structure in application development tools. Barriers to entry were low, competitors were numerous, the large number of competitors was putting downward pressure on prices, and the dawn of free runtimes was already under way. Simply put, it’s very hard to make money in tools and that’s one reason why “tool” really is a four-letter word on Sand Hill Road.
  • Confusing being “up the stack” with “value”. One argument is that RDBMS is just plumbing and that tools are higher in the stack and ergo deliver more value and more potential for profit. This is wrong. Why? Because while tools are indeed higher up the stack, profit potential comes from industry structure, not stack altitude. Microsoft makes plenty of profit and they are at the bottom of the stack. The Oracle DBMS business in one level up and is a key driver of Oracle’s 40%ish operating margins. There are many misconceptions about the applications business in this regard, but I won’t go there now. See the Profit Zone for more on this general topic.
  • Too much emphasis on vision. If your vision for the future goes out so far that we’re all dead, then perhaps you should dial it back a bit to make it useful. Yes, we’re all dead in 100 years and one day RDBMS services may be as commoditized as electricity. But, some 20 years later, RDBMSs are nowhere near a commodity and a lot of people have made a lot of money in the meantime. It’s not predicting the eventual end that’s the hard part. It’s figuring out what happens along the way and how to make money during that evolution.

So before you go ahead and declare your business dead, ask yourself some questions:

  • Am I doing this for PR soundbite? If so, is it really the kind of message you want to communicate? Is this the best you can do to sound visionary?
  • If you really believe it, then should you turn in your badge and let someone run the business who doesn’t?

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Posted in ECM, Marketing, strategy

Hard Times Strategies for Publishers

Posted on February 4, 2009 | Leave a comment

I just stumbled into this pithy post from Greenhouse Associates, a boutique strategy consultancy that serves firms in the information and media market. The post, entitled Counter-Intuitive Tactics for Bad Times, lists seven non-obvious tactics that companies should consider when managing through tough times.

The list is below, along with a brief parenthetic comment on each item:

  • Invest in product development, not sales. (We like this one since MarkLogic Server is often sold to publishers as a platform for new product development.)
  • Turn salespeople into consultants. (A good idea at any time, but a necessary one in tough times.)
  • Put your customer first. (Ditto. Information companies have such a long history of product-centricity that the transition to customer/solution-centricity is a big one.)
  • Build value through relationships as well as products. (Complement product with service and the relationships built in the process.)
  • Look for evergreen and counter-cyclical sectors. (Example: bankruptcy and foreclosure lawyers are having a field day.)
  • Cut costs with a scalpel, not a hatchet. (My first reaction to an across-the-board cut is that management either couldn’t or didn’t take the time to figure out a more strategic way to do its job.)
  • Be ready for black swans. (Life is discontinuous. Yes.)

The full article is here.

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Posted in Information and Media, Publishing 2.0, strategy

Surowiecki on Newspapers

Posted on December 26, 2008 | 1 Comment

Continuing my recent rants about newspapers, please see this interesting story in the New Yorker by James Surowiecki, author of The Wisdom of Crowds, entitled News You Can Lose.

On the source of the problems:

There’s no mystery as to the source of all the trouble: advertising revenue has dried up. In the third quarter alone, it dropped eighteen per cent, or almost two billion dollars, from last year. For most of the past decade, newspaper companies had profit margins that were the envy of other industries. This year, they have been happy just to stay in the black. Many traditional advertisers, like big department stores, are struggling, and the bursting of the housing bubble has devastated real-estate advertising. Even online ads, which were supposed to rescue the business, have declined lately, and they are, in any case, nowhere near as lucrative as their print counterparts.

While I’ve always seen publishers, and newspapers in particular, as challenged with The Innovator’s Dilemma, before reading this article for some reason I’d never associated them with another of my favorite essays, Marketing Myopia (PDF for sale), by Harvard marketing guru Theodore Levitt.

From Surowiecki:

Levitt argued that a focus on products rather than on customers led the companies to misunderstand their core business. Had the bosses realized that they were in the transportation business, rather than the railroad business, they could have moved into trucking and air transport, rather than letting other companies dominate. By extension, many argue that if newspapers had understood they were in the information business, rather than the print business, they would have adapted more quickly and more successfully to the Net.

While I love Levitt’s thoughts on marketing, the usual objection to Marketing Myopia is: say Penn Central Railroads had fully envisioned the future — just because they successfully ran a railroad, do you actually believe that Penn Central Airlines would have been a big success? Even fully informed, can you get there from here? Put differently, seeing the future and having the core competencies to compete in the future are two different things.

I have a similar objection on behalf of newspapers. It’s one thing to anticipate the whittling away of your classified ad business. It’s quite another to have the skillset and Internet savvy to come up with Craigslist. In fact, if you could travel back in time and tell the Tribune Company about their future, how much do think they could have changed?

I hate to be fatalistic here and yes, they wouldn’t have let themselves get involved in a highly leveraged buy-out — but financing strategy aside — do you think it would have changed much? Even with a fully informed visitor from the future whispering in their ear, do you think they ever could have made a Tribuneslist successful? And even if they could, what about economics. Craigslist runs a nationwide classified advertising platform and does it with about 25 staff.

Back to Surowiecki:

The peculiar fact about the current crisis is that even as big papers have become less profitable they’ve arguably become more popular. The blogosphere, much of which piggybacks on traditional journalism’s content, has magnified the reach of newspapers, and although papers now face far more scrutiny, this is a kind of backhanded compliment to their continued relevance. Usually, when an industry runs into the kind of trouble that Levitt was talking about, it’s because people are abandoning its products. But people don’t use the Times less than they did a decade ago. They use it more. The difference is that today they don’t have to pay for it.

He continues with a great soundbite:

The real problem for newspapers, in other words, isn’t the Internet; it’s us.

We want access to everything, we want it now, and we want it for free. That’s a consumer’s dream, but eventually it’s going to collide with reality: if newspapers’ profits vanish, so will their product.

This argument is right in line with the “free ride” concept that I blogged about a few days ago. He concludes:

For a while now, readers have had the best of both worlds: all the benefits of the old, high-profit regime—intensive reporting, experienced editors, and so on—and the low costs of the new one. But that situation can’t last. Soon enough, we’re going to start getting what we pay for, and we may find out just how little that is

The complete New Yorker story is here.

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Posted in innovator's dilemma, Marketing, Newspaper, strategy, Wisdom of Crowds

CMS Watch 12 Predictions for 2009

Posted on December 17, 2008 | Leave a comment

Well, it’s that time of the year: prediction season. As we traverse it, I’ll highlight some of the better predictions lists that I encounter. The first one I’ll pick comes from CMS Watch.

Here are their predictions (the bolded points are their predictions, quoted excerpts of the copy beneath each prediction are theirs, and my commentary appears prefaced by DK):

1. Open source ECM players get an initial boost

DK: I agree. I think Alfresco is leading the way here, bringing an elegant and simple approach to a market that’s overloaded with complexity. It’s telling that the Wikipedia entry for ECM is a disorganized, kitchen-sink list of features, which includes BPM which in turn includes BI (suggesting absurdly that BI is part of ECM), and is prefaced by: “All or part of this article may be confusing or unclear.”

2. Office14 casts long shadow on SharePoint

The build up to the next major release of SharePoint — hitting beta perhaps as early as the end of 2009 — will rightly focus on its deep relationship with Office 14, but will also yield a collective pause among customers as the year progresses. Those that have run wild with SharePoint as a potential ECM replacement throughout the enterprise during 2007 and 2008 will be reassessing their strategies.

DK: I’m more bullish on the replacement of classical ECM systems, such as EMC Documentum, with cheap and cheerful alternatives like SharePoint. To me, ECM is a classic bloatware market, with too much functionality, too much complexity, too many failed projects, and too many unhappy customers. I think it’s begging for a return to simplicity and a focus on what matters: dynamic delivery of content to users (or, to cliche it, delivering the right content to the right person at the right time).

3. “Taxonomies are dead. Long live metadata!”

You should be able to get to information the way you want, which may be different from your colleague’s approach. We still need controlled vocabularies. We still need to tag content. Text mining and auto-tagging software is gradually improving, and extracted terms can be applied as metadata. But that metadata needs to be a lot more fluid, cloud-like, and by no means fixed in a single hierarchy.

DK: we love metadata and we think XML is the right way to represent it. And we think that rich XML content is stored in no better place than MarkLogic Server. By the way, aren’t taxonomies just one form of metadata?

4. Regulatory-compliance concerns reignited

5. Renewed interest in pro-active e-discovery

6. SaaS vendors expand offerings

Many Software-as-a-Service (SaaS) customers across a variety of content technology segments — from WCM to social software to e-mail archiving and document management — are asking for more than just technical services from their SaaS providers. Customers will continue to view SaaS vendors as extensions of their internal teams and will increasingly look to them more as one-stop consulting services, rather than just the system used to manage their content and visitor interaction.

DK: I like SaaS and I think both SaaS and perpetual software play a role in the future. Using Geoffrey Moore’s terminlogy, SaaS is for “context” and custom apps built on perpetually-licensed platforms are for “core.” See more of my thoughts in this post: To SaaS or Not To SaaS.

7. Oracle falls behind in battle for knowledge workers

But 2009 will expose Oracle’s weakness with front-office applications at a time when Microsoft, IBM, and many smaller players are fighting for the hearts and minds of knowledge workers.

Customers are already feeling indigestion, as different Oracle teams market overlapping and often incomplete solutions. For example, Oracle is struggling to combine four different enterprise portal offerings, and many customers are chafing at the financial and architectural challenges of aligning with the putative winner, Oracle WebCenter Suite (OWS).

DK: In the spirt of one of my favorite quotes, “when did we become our parents,” let me ask: “when did Oracle become CA?” It’s happened over the last 5 years, almost without noticing. First, they put bankers in charge. Then, what we saw as a new era of software consolidation was in reality little more than a CA replay: Oracle did for the client/server era companies what CA did for the mainframe era ones.

In the end, I think “indigestion” greatly understates the massive integration problem that Oracle has signed up for. A friend once quipped: “I met the chief architect at CA, and that must be one hell of a job, …”

Today, you could say the same of Oracle. In reality, I don’t think they’ll ever integrate. They’ll simply ride the maintenance revenue streams into the sunset and, once a given stream becomes unprofitable, they’ll force migration to a related one.

8. New emphasis on application search

In a world where system users increasingly evaluate the efficacy of their applications by the quality of the underlying search mechanism, vendors have to make adjustments.

“Faceted search” will become an RFP checkbox feature and this, among other things, will cause Web CMS, Portal, and ECM vendors to reassess their bundled search solutions. Expect to see OEM partner relationships get juggled around. For example, some existing OEM deals with FAST and Autonomy might not get renewed.

DK: I agree, and I’d note that Mark Logic’s OEM business is booming. MarkLogic easily enables the features described above (e.g., faceted navigation) and, particularly where the content is stored in XML, MarkLogic can be an ideal enterprise search alternative.

So I’d add MarkLogic on the XML side, and Lucene on the open-source side, to the list of competitors vying for replacement of traditional enterprise search engines, such as Verity, in OEM — and for matter, SaaS –applications.

9. Social computing dif
fuses into the enterprise

There is a growing debate about the relevance and advisability of enterprise investments in social software during an economic downturn that is supposed to focus everyone back on “the basics.” Yet, social software will not fade away, adoption will continue regardless of enterprise policies.

DK: I think social softare is here to stay. While Mark Logic is not currently focused on Enterprise 2.0 applications, we do most certainly make it easy to build web 2.0 style apps (e.g., tagging, annotation) which most of our Information/Media and Government customers do.

Simply put, public websites now set the expectations for functionality and user interface for most classes of software.

10. Long-awaited consolidation comes to the WCM space

11. Mobile and multimedia web analytics become key requirements…and disrupters

DK: Sitemeter, Feedburner, and Google Analytics work just fine for me.

12. Buyers remain in driver’s seat

In the current economic conditions, this leverage of the buyer will remain stronger than ever in 2009. Buyers will be placing more emphasis on researching the vendors and products. There will be a renewed emphasis on identifying a vendor and product’s associated levels of risk.

DK: I have mixed feelings on this one. While the economy suggests reduced IT spending which in turn should increase buyer leverage, let’s not forget the other side of the equation: consolidation greatly reduces buyer leverage. Let’s not forget that both effects are at work.

For example, if you’re a pure Oracle shop and you want ECM, then you are either (1) going to use Oracle offerings or (2) use someone else’s (e.g., IBM, Microsoft) but increase entropy by bringing in another supplier. Since mega-sellers know that most CIOs are (perhaps wrongly) trying to reduce entropy by cutting the number of their suppliers, the net effect might well be to increase seller leverage.

I’ve been noodling on this idea for a while because the herd mentality of IT tends to reduce buyer leverage in the aggregate over time. For example, early on, buyers had quite some leverage on Salesforce. But now, if Salesforce came along and wanted to increase rates 30%, what exactly would you do about it? Other than hold your breath and get angry, you don’t have many alternatives. And the reason you don’t is that everyone else did what you did.

Similarly, if you’re a pure Documentum shop and EMC wants to give you xDB “for free” as part of a big enterprise license, have you (1) gotten a good deal on an piece of technology or (2) reduced your buyer leverage with EMC by increasing your dependency on them and condemned yourself to use an inferior XML Server at the same time?

I think I’ll do a future post on this topic.

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Posted in ECM, strategy

Slides from My Presentation at the Plug and Play Tech Center Collaboration Event

Posted on October 21, 2008 | Leave a comment

Yesterday I spoke on a panel of international software companies at the Plug and Play Tech Center’s Acceleration and Collaboration Track event in Sunnyvale, California.

I was invited not to discuss Mark Logic’s success (we are a US-based company), but to discuss my experience prior to Mark Logic as a key member of the executive team that grew Paris-based Business Objects from around $30M to more than $850M during my nine years there.

Other panelists included:

  • Marten Mickos, CEO of MySQL (now SVP of the database group at Sun Microsystems), a company originally founded in Sweden and Finland
  • Eyal Hertzog, co-founder of video site Metacafe, a company founded in Israel
  • Kurt Hemecker, SVP of business development at Echovox, a company founded in Switzerland

Here are the slides from my presentation on the panel.

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Posted in Business Objects, France, strategy

Happiness as a Business Model

Posted on June 23, 2008 | 1 Comment

Just a quick post to highlight an exceptional PowerPoint deck (that I suspect is making the viral rounds) on happiness as the first-principle from which you can create a successful business model. It’s by Tara Hunt, founder of Internet consultancy Citizen Agency, and author of a blog called HorsePigCow.

I like the deck not only because of the psychological first principles from which its drawn, but also because it is an A+ demo of what I’d call “the new PowerPoint” style.

People are so burned out on old-school PowerPoint that I see many people make one of two mistakes: (1) throwing out the baby with the bathwater, dispensing with slides altogether or (2) forgetting that slides are a useful medium for creating “written presentations” — i.e., decks that stand alone, intending to be read / clicked-through and not necessarily as materials to support a live presentation.

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Posted in strategy

Google Launches Google App Engine

Posted on April 8, 2008 | Leave a comment

Yesterday Google launched Google App Engine, a platform that lets people create web applications and run them on Google’s infrastructure. It’s a direct competitor to Amazon Web Services (AWS) such as EC2, S3, and SimpleDB but, unlike AWS, it’s free for small web apps (where small means about 5M pageviews per month) and it seems more integrated as an end-to-end service.

This is all part of a broader trend towards platform as a service (PaaS) which includes AWS, Google App Engine, Salesforce’s Force.com, and the Facebook platform. (Though I don’t think Facebook offers hosting as do the others; KickIt, for example, runs on a server in Mark Logic’s data center.)

In the emergent strategies department, I’m told that Amazon moved into the platform business because of the seasonality of retail. Basically, they built an infrastructure capable of handling extreme load the week before Christmas, but found that infrastructure idle the other 51 weeks of the year. I think Google motivation is different; it’s part of their broad attack on Microsoft who, far as I can tell, hasn’t even thrown its hat into this particular ring.

Here is a video of the launch that explains the offering. It’s about 6 minutes long and well worth watching.

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Posted in Amazon SimpleDB, Amazon Web Services, Facebook, Google, Google App Engine, PaaS, strategy

QlikView: A Return to Simple

Posted on March 31, 2008 | 6 Comments

I’ve been hearing more and more from my old friends in the business intelligence (BI) world about a product called QlikView, from a Swedish company, QlikTech, that was founded as a consultancy in 1993 and launched its product in 1997.

QlikTech’s war cry is one word: simplicity. And I like it.

Most mainstream enterprise software packages have been around roughly 15 to 25 years. Over those years two things invariably happen:

  • The usual cycle of feature creep which, while well intentioned, results in hard-to-use bloatware.
  • Massive, multi-level market consolidation

When you take these two factors in combination, it’s scary.

Business Objects, for example, was founded in 1990, starting as a PC tools company. Then the web came along and we created a fairly separate web version of the product (WebIntelligence). Then enterprise reporting became important and, lacking the ability to build a nice enterprise reporting product, we bought our way out of the problem with the $1.2B acquisition of Crystal Decisions. Then software consolidation started big time and the company (I left in 8/04) bought I’d guess a dozen or so additional companies/products such as Acta, SRC, eXcelsius, and Cartesys.

Thus, when SAP bought Business Objects last year, they didn’t buy one company / product; they bought literally dozens, each presumably with its own cycle of feature creep and none of them terribly well integrated. And if you think that’s scary, then think about the state of affairs at Oracle, who’s been much, much more acquisitive.

As I’ve ranted in this blog, I think the industry is starting to resemble the conglomerates of the 1960s. That leaves room for innovators of several types:

  • Business model disruptors. People like Salesforce.com and the SaaS crowd. Or people like MySQL, Alfresco, and the open source types.
  • Focus disruptors. People who want to do one thing very well. QlikTech is here, and I’d say that Mark Logic is as well.

The focus disruptors offer a different value proposition than the modern enterprise software “value proposition” which, sadly, has devolved to something like:

We have a suite of stuff that we’ve accumulated over the years and across the board it does a pretty good job of covering everything you want, most of it not too well, and in many cases we actually have 2-3 different things covering the same space and our consultants can figure out which you need, and yes there’s a lot of redundant infrastructure that we’re slowly eliminating and no, no one will be left behind, so we’re going to maintain all those code lines for years, and because of that innovation will be pretty slow, but that’s OK with us because we bought all our competitors, and you shouldn’t worry because everyone’s using our stuff so you will neither get, nor generally lose, competitive advantage by working with us.

I sometimes wonder on the personal front: “when did we become our parents?” At work, it’s: “when did our industry become the mainframe business of the 1980s?”

I’m a big believer that much as a backlash erupted from the 1980s-era mainframe business so will a backlash (continue to) erupt from the current enterprise software business. Open source is part of it. So is SaaS. And I think focused best-of-breed product vendors will increasingly be part of it as well.

It’s working for QlikTech. In 2007, they say they grew 80% to $80M in revenues and have 7,306 customers in 82 countries. And it’s working for Mark Logic as well.

For more on QlikTech’s thoughts on simplicity, check out the blog on SandHill.com that prompted me to finally write about them — Simplicity: What’s Next in Business Software.

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Posted in strategy