Woe is Media: Lessons from Tidemark’s PR

[Major revision 5/11/14 5:10 PM]

• “There are lies, damned lies, and statistics” — Benjamin Disraeli.

• “All media exist to invest our lives with artificial perceptions and arbitrary values.”  — Marshall McLuhan, philosopher of communications theory and coiner of the phrase “the medium is the message.”

• “Modern business must have its finger continuously on the public pulse. It must understand the changes in the public mind and be prepared to interpret itself fairly and eloquently to changing opinion.”  — Edward Bernays, widely known as the Father of Public Relations and author of Propoganda [1].

• “No one ever went broke underestimating the taste of the American public.”  — H.L. Mencken

• “Don’t hate the media, become the media.”  — Jello Biafra, spoken word artist, producer, and formerly lead singer of the Dead Kennedys.

In this post, I’ll take some inspiration from Jello Biafra, “become the media,” and do some analysis of Tidemark’s most recent PR hit, a story in Business Insider entitled This Guy Arrived in the US with $26, Sold a Startup for Half a Billion, and is Working on Another Cool Company.  Since Host Analytics competes with Tidemark, see the footer for a disclaimer [2].

I’m doing this mostly because I’m tired of seeing stories like this one, where it’s my perception that a publication takes a story wholesale, spin and all, from a skilled PR firm and sends it down the line, unchallenged, to us readers.  I’m going to challenge the story, piece by piece, and try not to throw too many competitive jabs in the process.

Let’s start by analyzing the headline.

“$26”

While this may be true, it strikes me as exactly the kind of specifics that PR people know journalists love and a number that actually sounds better than say $30 or $25.  Perhaps CG (see footnote [3]) actually had $26 exactly in his pocket on arrival, but did he really have no other resources whatsoever on which to to rely?   Let us beware that it is not only the specificity of the $26 that makes the claim interesting, but also — and more importantly — the implication that he had nothing or no one else on which to rely.  Arriving with $26, not knowing the language, and having no friends/relatives is certainly much tougher than showing up with $26, a brother in Brooklyn, and $2,000 in the bank.  Which was the case?  I don’t know.  Given the overall quality of the story, and the author’s general susceptibility to spin (which we will show), I’d certainly wonder.

“Sold a startup for Half a Billion.”

To me, this clearly implies that CG was either:

• Founder/CEO of a startup that sold for half a billion dollars, or
• CEO of a startup that sold for half a billion dollars (while he was CEO)

He was neither.

CG was not a founder of OutlookSoft, nor was he ever CEO. He was CTO.  CTO’s don’t sell startups; CEO’s do.  Phil Wilmington was OutlookSoft’s CEO.

CG had founded a company called Tian Software which, per CG’s own LinkedIn profile, was acquired (not “merged” as the story later says) by OutlookSoft in 2005.

Now let’s challenge the half-a-billion.

My sources say SAP acquired OutlookSoft for $350M plus a $50M earn-out, making the deal worth $400M — not $500M.  This is sort of confirmed in another Tidemark PR marvel, here, which says “short of $500M,” a very nicely PR-packaged way of saying $400M.  A few phone calls to SAP alums and deal-makers in the valley might well have confirmed the lower price.

Net/net:  we have blown the headline to bits.  The $26 claim is suspect (if quite possibly true) while the very impressive “sold a startup for half a billion” is simply false.  It wasn’t half a billion.  It wasn’t his startup.  He didn’t sell it.  QED.

I know that neither CG nor Tidemark wrote this headline.  Someone at Business Insider did — and quite possibly not the journalist who wrote the article.

So perhaps we’re just caught up in headline sensationalism.  The Horatio Alger message still sells well in America and the SEO people at Business Insider know it — the URL for the story is:    www.businessinsider.com/christian-gheoghre-rags-to-riches-story.

Before digging into the story itself, we should observe that this is basically the same story as this one that ran on CNET over a year ago:  Escaping the Iron Curtain for Silicon Valley.  This raises a question that is difficult for me to answer.  It’s a cool story, no doubt, but the tech blogs are news blogs and old stories aren’t news.  So why even write the same story that CNET did 15 months earlier?  Is it possible they didn’t even fact check enough to know?

Let’s dig into some of the lines from the story.

“Today’s he working on his fourth successful startup, having sold all of his previous ones, including his third one, OutlookSoft, to SAP for $500M.”

I count two:  Tian Software and Tidemark.

The story itself contradicts the idea that Saxe Marketing “was CG’s” in saying, “[Andrew] Saxe hired CG” — i.e., if CG was “hired” he was not a founder and ergo the company was not “his.”   The name of company itself — Saxe Marketing, as opposed to Saxe & CG Marketing — additionally reinforces that.

As discussed above, you can’t call OutlookSoft “his,” nor can you say he sold it.

If we said, “CG spent 10 years toiling on two startups, one that got sold to Experian for $32M and one that was acquired by a private company at an undisclosed valuation” — would it have the same impact?  Methinks not.

“Taught himself English by listening to Pink Floyd.”  

I have no doubt that CG listened to Pink Floyd in his home country and that he learned (probably quite strange) words from so doing.  From my experience with second-language songs, it’s actually quite difficult to learn words and much easier to learn pronunciation.  Many of my French friends can sing English songs, but only in a phonetic way.

So, to me, this rings partially true but it also rings as something a PR person would grab onto faster than swimming across the border.  “Wait, you learned English listening to Pink Floyd.  Oh!  We’ve got to use that.”

So, to have some fun with this one, let me imagine the conversation he had with the immigration officer on arriving at JFK:

INS:  “So why are you entering America?”

CG:  “We don’t need no education.”

INS:  “So you’re not on a student visa?”

CG:  “We’re just two lost souls swimming in a fish bowl, year after year.”

INS:  “So you’re coming to to get married, then?”

CG:  “You raise the blade, you make the change, you re-arrange me ’till I’m sane.”

INS:  “Ah, a medical visa, excellent.”

This spin-taking was harmless.

“He taught himself to code by hacking into video games on [a Commodore 64] machine.”  

Frankly, I’m not sure you could “hack into” video games on a Commodore 64, but I guess that sounds better than saying “wrote BASIC programs on a Commodore 64” like the rest of us.  If I had to guess, you probably got the source code since BASIC wasn’t a compiled language so there was no “hacking” to get in.  You were in if you wanted to be.

The CNET story somewhat contradicts this account saying CG “played games on the C64” but he later bought a “Sinclair ZX and taught himself some programming.”

Details, yes, somehow programming a C64 or ZX isn’t good enough for the narrative:  he had to “hack into” them.  All part of the journalist embellishing the (probably already embellished) details in order to make CG larger than life and get a lot of hits on the story.

“[He got] a masters [sic] degree in Romania in mechanical engineering with a minor in computer science. But the degree wasn’t recognized and accepted once he got here.”  

If there were ever a field in which people care about what you can do as opposed to your degree, it’s programming.

Recognized (by whom?) or not, CG was not a limo driver who knew nothing about programming and miraculously started a software company.  He had a master’s degree in engineering and computer science.

“Immigrant with master’s in computer science founds software company” would probably describe about half of all Silicon Valley companies.

Business Insider insists on the Man Bites Dog approach of “Limo Driver Founds Software Company” to the point of explaining away the master’s degree because it interferes with the narrative.

“He launched a second startup, TIAN, and merged it with a company called OutlookSoft.”

Tian was not “merged” with OutlookSoft; it was acquired by them, per CG’s own LinkedIn.  Why the spin?

“OutlookSoft did a form of big data known as business analytics.”

There was nothing whatsoever “big data” about OutlookSoft, which was a business performance management company that did planning, budgeting, consolidation, and analytics.  Gratuitous buzzword inclusion, and nothing more.  Presumably inserted by the PR firm and swallowed whole by the journalist.

“Tidemark also does business analytics/big data, but it’s designed for the modern age: it works on a tablet and runs in the cloud.”  

The Holy Grail of PR these days is social, mobile, cloud.  This sentence scores a 2 out of 3.  For what it’s worth, I actually think this is part of their strategy, so in this case it’s not buzz-wordy journalism, it’s the clear communication of a buzz-wordy strategy.

“More importantly, it is designed to be what CG calls a ‘revolution at the edge’ with a ‘Siri-like interface.'”  

Revolution at the edge is both buzz-wordy and meaningless.  Siri is definitionally not revolutionary because it was launched 4 years ago in 2010 and based upon natural language and speech recognition technology that was more than a decade old.  What was revolutionary about Siri was its inclusion in a mass-market, consumer product.

I’d say a Siri-like interface for BI has been discussed since the Natural Language Inc (NLI) was acquired by Microsoft in the late 1980s.  If nobody’s noticed, it hasn’t worked.  Turns out the specificity of human language is not precise enough to directly map to a database query — even with a semantic layer.   But, hey, let’s go pitch the idea because it sounds cool, the journalist probably has no idea of the history and doesn’t realize that no CFO wants to say “Hey Tiri, I want to hire 3 people next quarter and increase average salaries 3.5%.”

“It’s like Google mixed with Wolfram|Alpha.” 

That’s like saying it’s nuclear fusion mixed with a perpetual motion machine.

While it may indeed do voice recognition like Siri, I can assure you it is not like Wolfram|Alpha (press the link to see just one example).   This seems an easily challenged assertion, but it gets repeated as a sexy soundbite.  Great packaging of the message to just flow through the media channel.

The first rule of PR is to have good metaphors and that certainly a good one.  The first rule of journalism, however, should be to challenge what’s said.  How is it like Wolfram|Alpha exactly (and there’s a lot, lot more to Wolfram|Alpha than a question-style interface).

“In the first 18 months since his product became available, his company is on track to hit $45 million in revenue, CG told us, growing 300% year over year. It has about 45 customers so far, with, on average, 180 business people at each customer using the product.”

We’re going to need to analyze this last set of claims one at a time.

• “In the first 18 months.”  Tidemark was founded in 2009, so it’s about 5 years old.  While PR is cleverly trying to reframe the age issue around product availability, you’d think a journalist would want to know what happened during the other 3.5 years.  As it turns out, a lot.  The company was originally founded as Proferi, with an integrated GRC and EPM vision.  When that failed, the company “pivoted” (a euphemism for re-started with a new strategy) to a new vision which I’ve frankly never quite understood because of the buzzword-Cuisinart messaging strategy they employ.

• “On track to hit $45M in revenue.”  Frankly, I have a lot of trouble believing this, but it’s happily stated without a timeframe and thus impossible to analyze.   Normally, when you say $45M, it implies “this fiscal year.”  But it could be anything.   Is it simply “on track” for doing $45M in, say, 2016?  Or, maybe it’s a really misleading answer like $45M in cumulative revenue since inception?   To paraphrase an old friend, saying $45M without a timeframe is like offering a salary of 100,000 but not mentioning the currency.

• “Growing 300% year over year.”  Most journalists and some PR people confuse tripling with growing 300% which is actually quadrupling.  But let’s assume both that the math is right and we are talking annual revenues:  this means they did $11.25 in 2013 and are on track to do $45M in 2014.  To do this in revenues means an even bigger number in bookings (due to amortization of SaaS revenues).  I banged out a quick model to show my point.

• “Growing 300% a year.”  The far easier way to grow 300% year, of course, is to do so off a small base.  If you do some basic math on private company numbers and it doesn’t make sense, you probably shouldn’t repeat them.  Net/net:  a journalist who hears 200% or 300% growth claims should first make sure the math is right, and second default-conclude it’s off a small base until proven otherwise.

• “It has 45 customers so far with 180 [users at each customer].”  Some quick math says $45M/45 = $1M/customer, which is Workday-class large and ergo highly suspect.  Slightly better math (using my quarterly model) suggests $800K/customer in ARR, which is still huge — by my estimates $100-$200K ARR is a nice deal in EPM.   Combining this with 180 users/customer implies an average price of $4.5K/user/year — 150% of the list price of the most expensive edition of Salesforce.com.  ERP-sized deals, deals 4-10x the industry average, deals done at 150% of Salesforce’s list.  It doesn’t add up.

I should also note that LinkedIn says Tidemark has 51-200 employees which is generally not consistent with the numbers in my model.  Moreover, I can find searching for words like “account” [executive] or  “sales” [executive], only fewer than 10 people who appear to be in sales at Tidemark.

Overall, I conclude that the $45M is more like 2014 bookings or maybe cumulative bookings since inception than any annual revenue figure.  The numbers just don’t hang together.  If I had to pick a figure, I’d guess they are closer to $10M in revenues in 2014 than $45M.

But what is a journalist supposed to do in this situation?  I’d argue:  fact check.  Call VCs and get company size estimates.  Use Google to find similar/alternative stories. See Crunchbase for history. Do some basic triangulation off LinkedIn both in terms of numbers of sales reps and size of company.   Ask industry execs for industry averages.  And if the numbers don’t hang together, don’t publish them.

To wrap this up, yes, I dislike this kind of puff-piece, softball story.  Not because it’s friendly — not all news has to be challenging and analytical and the raw material of CG’s story is indeed impressive — but because it seems to take the PR-enhanced version of it, and swallow it hook, line, and sinker.

The media should do better.  The trade press was crushed by the tech blogs for lack of sufficient value add.  The tech blogs are quickly falling into the same trap.

Disclaimer / Footnotes
[1]  I’m told Autonomy’s Mike Lynch was a big fan of this book.

[2] Host Analytics theoretically competes with Tidemark.  Since we rarely see them in deals, I feel comfortable editorializing about their PR as I might not with a more direct competitor.  Nevertheless, I can certainly be said to have a horse in this race.

[3] I refer to Christian Gheorghe as CG both because his name is notoriously hard to spell, but more importantly because this post is not supposed to be an attack on him — to my knowledge he is a delightful and inspiring person — but rather instead a call-out of the publication that wrote this story and the system of which it is a part.