Category Archives: PR

The Oft-Maligned Operating Partner and the Use of Tension Questions in Market Research

This post is going to get a little weird because it’s going to do two things at once.

  • Discuss an interesting, if dated, survey [1] I found on the sometimes tense relationship between CEOs and PE operating partners (and other senior advisors like executives in residence) [2].
  • Demonstrate how it makes great use of tension questions to make the report more interesting and reveal the drama in what could be an otherwise dry subject.

The former should interest executives of VC/PE-backed companies who want to work better with their advisors and, of course, to such advisors themselves. The latter should interest all marketers, but particularly those responsible for the periodic PR market studies [2] that many companies produce (e.g., Collibra’s Data Intelligence Index, Atomico’s State of European Tech, or Pigment’s Office of the CFO Report).

I love these studies because you can get not a two-fer, but a three-fer, in terms of benefits:

  • Thought leadership, via leading discussion of emerging ideas (e.g., ask CFOs about their AI strategy)
  • Increased market awareness, via promotion of the survey report
  • Stronger positioning. For example, Collibra’s index supports their migration from data governance (their historical roots) to a broader and more modern positioning in data intelligence.

And that’s not to mention the MQLs if you use your report as gated asset. Or any proprietary insights you gather from questions where you don’t publish the answers. Goosebumps. I love these things.

This report starts with some gem quotes that cut to the heart of the problem:

Most CEOs have little/no prior experience with this type of relationship. At the extreme, there can be mistrust, miscommunication, competitiveness, and misalignment — all of which distract from the value creation agenda.

Friction between CEOs and operating partners might be an unavoidable human condition. This relationship is unlike any other in the business world. It would be interesting to ask CEOs to draw where the operating partner fits within the context of their organization chart. We all know they are likely to draw the Board above them and all employees below them. But where would they draw the operating partner …As a sub-component of the Board above them? As a peer? As an independent advisor working for them?

But the real strength of this report is its use of tension questions, where you ask two groups about the same issue and then spotlight tensions between them. We don’t have to go far to find one:

They asked both CEOs and operating partners about operating partner NPS. They then compared CEO actuals with operating partner expectations and, bang, right at the outset, we have a gap you could drive a truck through. 39% of CEOs are detractors whereas operating partners expected only 3% detractors. Operating partners think they have a respectable NPS of 41, whereas CEOs report a dismal, actual NPS of -3.

Conclusion: operating partners have no idea what CEOs think of them. That’s a tension question at work.

But we’ve only just started the bus. Let’s back it up over the operating partners by looking at value added.

About 70% of operating partners think they add “significant value” through their work, while only 20% of CEOs do. Zero percent of operating partners think they add only “little value,” but nearly 30% of CEOs do. Brutal as this survey is, they forgot a category that might have made it worse: negative value-add. The minimum value-add from a helper isn’t zero. It’s negative. Some would-be help actually slows you down.

Note that these tension questions are not manipulative or loaded. They’re fair questions that simply shine a bright light on an actual tension. That’s what makes them great.

Now, let’s twist the knife by looking at the cost/benefit of operating partners.

Around half of CEOs think that operating partners don’t bring enough value to offset their perceived cost.  Ten times more operating partners than CEOs think that operating partners bring 10x+ their cost in value.

I’m ready to re-title this report: The Blissful Ignorance of Operating Partners.

They then move on to open-ended questions and verbatim responses. These are an important part of all surveys, but particularly so with tension surveys. We’ve identifed one or more massive gaps. Now, what do we want to do about them?

Here, they ask the CEOs:

What one suggestion would you make to operating partners/senior advisors to help them be more effective in creating value for your business?

And we get some great answers:

Focus on building a relationship of trust with the CEO, not dispensing advice being the deal partner’s operations spy.

Prioritize what actually creates value and listen to what management wants your help with.

They should be a resource to the CEO, not the board.

As someone who works as an advisor, I’d note that you don’t always get a choice in deciding whether the CEO or the board is your customer. For example, in my work with Balderton, I position myself as “a free service brought to you by Balderton Capital,” hopefully clearly communicating that while Balderton is paying me, I am working for you. That said, Balderton is paying me, so if you tell me you plan to destroy the company I may need to mention that to them.

These relationships can be inherently complex. They are simpler on the control-oriented PE side [4], where it’s not, “I work for one of the many investors,” but instead, “I work for the owners.” If you want to eliminate this complexity entirely, you can hire advisors directly, which many early-stage VC companies do [5]. That said, VC/PE advisors are often high caliber, fully booked, and expensive, so working through your investors may be the only way to access the ones you want.

Back to the survey, they then took some verbatims from companies with a good relationships between the CEO and the operating partner. Quotes:

Trust is essential. There are no “go arounds,” no undermining the leadership team.

Operating partners and the CEO talk candidly about the rules of engagement and communication protocols — including what not to do.

Every conversation is confidential and to be kept between the CEO and the operating partner (not shared with the Board or the management team).

Finally, they give the operating partners a chance to tell their side of the working-better-together story. Quotes:

Work collaboratively with the operating partners. [Theres is] zero payback in defending that you are already doing it right.

That we are there to help create equity value, which is in all our interests, and therefore a partnership approach is key — on both sides.

Trust us to have the discretion to keep certain conversations and information privileged.

As an advisor, I think the last point is key and if a CEO is concerned, an explicit conversation can usually help.

As a marketer, I loved this survey. It picked a great topic and executed against it well, with some awesome tension question and well-chosen verbatims. I can only guess why they didn’t run it annually and I personally wish they did — half the fun with this type of survey is watching how things change over time.

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[1] This thing is not easy to find online. You can find some old references to it, but Blue Ridge Partners seems to have archived it off their website. Perhaps they felt it was outdated, or maybe they stirred the pot too hard. Since there is no copyright notice of any kind in the report, I’ve uploaded it here (highlighting mine), so you can see it.

[2] It’s dated (2018) but my hunch is the core issues haven’t changed that much.

[3] I don’t know what else to call them. They are definitionally market research, but they aren’t run with the primary intent of learning more about the market. They are typically run by PR/comms for purely marketing reasons. New insights can be a by-product, but they’re not the primary point.

[4] The side of PE where they buy a controlling stake of the company and which, I believe, is the primary focus of this report.

[5] Often done with equity compensation via a YC FAST advisor agreement to simplify the process.

Four Lessons From the Carta Communications Train Wreck

Carta, an otherwise boring company solving a mundane-if-important problem, managed to get itself in the news this past week for all the wrong reasons. The fiasco was the result of CEO Henry Ward writing a post on recent negative press that was presumably intended to inoculate his audience, but instead backfired spectacularly. Headlines in the past week:

The catalyst for all this seemed to be, in particular, an article in Fortune entitled Inside the mounting litigation and high turnover at startup unicorn Carta.

Because our purpose is to take a few communications lessons from this PR mess, I’m not going to dig into the story itself. Instead, we’re going to study what I guess happened — and there are some big guesses here — and then make four recommendations that could prevent something like this from happening at your startup. Note that these recommendations will work even if my guesses are entirely off the mark.

My Guess as to What Happened

I decided to write this post because the key mistake, the Medium post, is one I could have seen myself making. So I felt some empathy with the author for deciding to write it, if not much agreement with the angle. Why? Because I like learning and then sharing what I’ve learned. I don’t like to gloss over things, I like to go into detail. I like to explain things. Turns out that’s a great habit for an industry blogger, but for a CEO, not so much. There is a standard playbook for communications crises and writing a post like this is definitely not included.

I also felt empathy for the desire to communicate to your employees. This is increasingly frustrating in today’s world because you must assume that any internal all-hands email can and likely will be released externally. Therefore, you need to write any internal all-hands email as if it’s going to be released externally. Now, the dangerous logic: well, if you’re going to write it as if it’s going to be released externally, then why not just publish it yourself? I feel like this is perhaps the path this post took. Quote:

I know other CEOs have to deal with this so I wanted to share what I shared with employees in case it’s helpful for other CEOs thinking through similar problems.

Sharing this with employees was dangerous because it might well have leaked. But publishing it yourself to create a backfire was darn-near (and might well prove) career suicidal. And it’s definitely not helpful for other CEOs. In fact, other CEOs should use it as a counter-example.

But here’s the part where I have zero empathy. Leading with a quote like this:

To anyone sophisticated in communications and when used in this context, this quote means one thing: “I have no idea how to deal with the press and am bitter about it because I keep not getting the result I want.”

Period. That’s all it means.

No CMO could ever think this way. They wouldn’t last a month in their job. But founders, and some CFOs, think this way: “I’m not the problem. They’re the problem.” Instead of viewing the media [1] as a world they must learn to navigate — and ideally turn to their advantage — they let one or two early setbacks bruise their ego and never get back on the horse. Thus, they never learn how to ride it. [2]

I worked with one, pretty accomplished, public company CFO who’d always say: “I hate the media, they always misquote me.” Which again translates to me as: “I have no idea how to work with the media.” Were you really misquoted or did you actually say something you regret? Did they trick you into thinking the interview was over and slide in one more “what do you really think” question? Did you “buy the question” and end up getting indirectly quoted? [3]

Who hurt you?

Perhaps some have the luxury of writing off the media as “sensationalized noise” written by people with “perversely distorted” incentives. But no CMO possibly can. And no founder/CEO should either.

What should you do instead? Follow these four rules:

  • Hire communications professionals and listen to them.
  • Learn the rules of the game.
  • Use the right spokesperson for the content.
  • Build a few key relationships.

Hire Communications Professionals and Listen to Them

It’s hard to imagine that any communications professional approved of Carta’s chosen communication strategy of attacking the press via a long blog post that calls the press biased, accuses them of doxxing, says they build their careers on company “takedowns,” debates facts on seemingly pending legal cases, and calls a former employee “a misogynist and racist.” Among other things.

This, simply, is not how it’s done. For many reasons. The CEO debases himself, effectively dragging himself through the mud. The attack on the press will limit future relationships with journalists. And I’m guessing the lawyers are not in love with this strategy, either. But more than anything, you amplify the negative story. You give it a second life. A second news cycle. And now people like me are even editorializing about it.

Anyone who says “all PR is good PR,” never worked in public relations. Or they did and tried to use that to dodge an executive screaming at them — as I have been screamed at: “how, how, … how did you let this happen?”

All PR is not good PR. This is not a good story for Carta. With the stroke of his pen, the CEO transformed this story from a sadly mundane “yet another tech sexual discrimination case” [4] to a fiery “CEO writes nutty blog post” [5].

Learn the Rules of the Game

In three words: get media training.

While I generally don’t recommend using your PR firm for media training, you can and should ask them for referrals. The best media trainers are often independents, typically retired journalists who teach you the tricks used on the other side of the interview table. The older and more curmudgeonly, the better. Ask me about the time the media trainer said he tricked a nun into naming a murder suspect by closing his notebook and pretending the interview was over. Yes, that’s who you want training you.

In my opinion, the Brits have the toughest press, so I generally prefer British media trainers when you can find them. Though, that might be over-preparation to deal with the local tech blog.

But no matter who you get it from, get it. Do it every year. Find the firm you like best. Make their program your standard spokesperson certification. But do it.

The most important benefit here is indirect. You’re getting your company to understand and admit that working with the media is playing a game with rules, and the better you understand those rules and the more you practice, the better you play.

That indirectly prevents the Carta rant. You don’t think to blame the media for being the media, because you understand that dealing with the media is part of your job and you understand the rules of the game. You don’t start interviews bitter, you start dialed-in. And you don’t take matters into your own hands to try and right a perceived media wrong. You work with the media.

Use the Right Spokesperson for the Content

Even if there were some big media fuss here, the CEO’s post would still be the wrong answer because you’re not matching the spokeperson to the content.

If there were a pure media problem, the most you should consider is a post from the VP of communications to discuss the Fortune story. (And they’d almost certainly refuse to do it, so see the “listen” part of point one.) But the principle is to match the spokesperson to the content. If we’re discussing a problem in media relations, then let the VP of communications handle it. Perhaps a better example is who should answer an all-hands question about the Fortune story? The VP of communications.

If you’re worried about customers, the most you should consider is an email from your chief customer officer to the customer base saying something like: “you may have seen story X, we take any allegations of Y seriously, we are looking into them and will act accordingly once our investigation is complete. Meantime, we continue to be focused on meeting your needs and building our company. If you have any questions, call your CSM or AE. Thank you for being a customer.”

While I know some CEOs like to be all over everything, in every detail, and show everyone that fact (and I was perhaps one of them), the CEO should address CEO-level issues and other issues should be delegated. The CHRO should address HR issues. The CMO and/or VP of communications should address media. The general counsel should address legal. When the CEO addresses an issue, it has the effect of elevating the issue. That can be powerful if you want to demonstrate your commitment to a new direction. It can backfire when addressing “negative press.” [6]

Build a Few Key Relationships

Finally, once you understand the media game, I think every founder/CEO should “adopt” a handful of key journalists and/or industry analysts. That means they meet with them periodically and work to build personal, long-lasting relationships. They can provide information on background. They can share scuttlebutt. They can get dinner after the meeting or event.

This has two benefits. First, it helps the founder/CEO develop a deeper understanding of the media world, such as the pressures and constraints of the journalist or analyst job. Second, it helps build a relationship that might buy you a reference or a quote in a story, a mention in an analyst report, a few millimeters on a quadrant or wave, or simply the benefit of the doubt when the company is under attack. As well as a friend with whom to have a beer twenty years later — as I still do with a few.

In this post, I’ve offered four recommendations for how your startup can run a better communications program and avoid problems like those currently faced by Carta. I hope you follow them.

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[1] By media here, I mean to include not only the traditional press and blogs, but also industry analysts and thought leaders, and eventually financial analysts. Basically, anyone thinking about, speaking about, and/or writing about your company.

[2] I’ve been blessed to have worked with some great media trainers over the years, including Martin Banks and David Tebbutt. I also took the Salesforce media certification program whose final exam rivaled only the road test for my French driver’s license in its degree of difficulty and anxiety production.

[3] Buying the question refers to letting the journalist put words in your mouth. Example: “Dave, so are you saying that Oracle is evil?” Any answer other than a clear, “no” will likely result in an article that says Dave said Oracle was evil. Note the absence of a direct double-quote, the hint that I didn’t actually say it. (Yes, that’s fair under most rules of enagement.)

[4] I don’t subscribe to Fortune so I’m assuming that’s the story based on the lede. And no, societally, it’s not a good thing that such stories are run-of-the-mill. But from a Carta PR perspective, it could have been. Think: “oh, another one did it.” That’s not breaking news. That’s not man bites dog. Unfortunately, “CEO writes story that fuels negative news cycle” is.

[5] These are not actual quotes. I am using double quotes to contain the story concepts.

[6] Note that I’m making a deliberate distinction between “the Fortune story” and “the allegations within the Fortune story.” “How did we get bad press and what are we supposed to say about it,” is a media/comms question and questions about allegations of sexual discrimination and/or harassment are a CHRO issue. Personally, I think culture is a CEO issue, so to the extent the allegations are cultural more than episodic, they quickly become a CEO issue for internal comms.

Marketing Targeting: It’s Not Just Where You Fish, It’s What You Put on the Hook

Back in the day I was taught that marketers do three things, memorized via the acronym STP:  segment, target, position.

  • Divide the audience into different segments.  For example, dividing consumers by demographics or dividing businesses by size or industry.
  • Select the segments that the company wishes to target for its marketing.  For example, choosing small and medium businesses (SMB) as your target segment.
  • Position the product in the mind of the consumer, ideally in a unique way, providing differentiation and/or benefit [1].  For example, positioning your offering for the SMB segment as easy to deploy and inexpensive to own.

I’ve always thought of targeting as the answer to the question, “what list do I want to buy?”  Do I want buy a list of marketing directors at SMBs or a list of chief data officers (CDOs) at Fortune 1000 companies?

The list-buying metaphor extends nicely to events (what shows do these people attend), PR (what publications do they read), AR (to which influencers do they listen), some forms of digital advertising (e.g., LinkedIn where you have considerable targeting control), if not Google (where you don’t [2]).

For many people, that’s where the targeting discussion ends.  When most people think of targeting they think of where on the lake they want to fish.

While an angler would never forget this, marketers too often miss that what you put on the hook matters, too.  Fishing in the same part of the lake, an angler might put on crayfish for largemouth bass, worms for rainbow trout, or stinkbait for catfish.

It’s not just about who you’re speaking to; it’s about what you tell them — the bait, if you will, that you put on the hook.

Perhaps this is too metaphorical, so let’s take an example — imagine we sell financial planning and budgeting software to businesses and our target segment is small businesses between $0M to $50M in revenue.  Via some marketing channels we can communicate only to people in this segment, but through a lot of other important channels (e.g., Google Ads, SEO, content marketing), we cannot.  So we need to rely not only on our targeting, but our message, to control who we bring into the lead funnel.

Consider these two messages:

  • Plan faster and more efficiently with OurTool
  • End the misery and mistakes of planning on Excel

The first message pitches a generic benefit of a planning system and is likely to attract many different types of fish.  The second message specifically addresses the pains of planning on Excel.  Who plans on Excel?  Well, smaller businesses primarily [3].  So the message itself helps us filter for the kind of companies we want to attract.

Now, let’s pretend we’re targeting large enterprises, instead.  Consider these two messages.

  • End the misery and mistakes of planning on Excel
  • Integrate your sales and financial planning

The first message, as discussed above, is going to catch a lot of small fish.  The second message is about a problem that only larger organizations face — small companies are just trying to get a budget done, whereas larger ones are trying to get a more holistic view.  The second message far better attracts the enterprise target that you want.  As would, for example, a message about the pain and expense of budgeting on Hyperion.

I’ll close in noting that marketers who measure themselves by the number of fish they catch [4] — as opposed to the conversion of those fish into customers — will often resist the more focused message because you won’t set attendance records with the more selective bait.  So, as you perform your targeting, always remember three things:

  1. It’s about where you put the boat
  2. It’s also about the bait you put on the hook
  3. It’s not about the number of fish you catch, but the number of the right fish that you catch.

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[1] The decision to emphasize differentiation or benefit is covered in The Two Archetypal Marketing Messages:  “Bags Fly Free” and “Soup is Good Food.”

[2] In a B2B sense, at least.

[3] Amazingly, a lot of large and very large businesses also plan on Excel, but let’s not confuse the exception for the rule or the point of the example — different messages attract different buyers.

[4] Either literally by putting KPIs on high-funnel metrics such as MQLs or, more subtly and more dangerously, by getting too much inner joy from high-funnel metrics (“look how many people came to our webinar!”)

Why Can't PR People Do Math?

I think in today’s world that we need to ask PR people to be not just literate, but numerate.  What does that mean?

  • They need to do basic math correctly.  Most PR people think that going from size $100K to size $700K is 700% growth.  It’s 600%.  I cannot tell you the number of times I have caught this error.  Growth % = ((year N+1 / year N) -1).  2.4x is 140% growth.  1.3x is 30% growth.
  • They need to understand the law of small numbers as well understanding the scale of large ones.  It’s not hard to grow 1000% off a tiny base.  And the typical reader response to mega-growth claims is not “wow, look how big you are this year,” it’s “oh, I didn’t know how small you were last year.”  In addition, PR needs to understand the scale of large numbers — i.e., that 10% growth off $1B is $100M.  Technically speaking whenever company A is growing faster than company B, company B is losing relative market share.  However, remember that if you compare a $10M startup that doubled to a $1B that grew 10%, the latter company still had 10x the new sales of the former.  So you need to be careful making claims in that light.
  • They need to understand how people will react to the numbers.  There is tendency in PR to throw out any numbers you can because, sadly, much of the Silicon Valley trade press will consume them wholesale.  But PR needs to be careful.  Some analysts (e.g., the 451 group) are famous for detailed note-taking and cross-checking and will challenge you if your own figures are inconsistent over time.  In addition, there are fairly normal ratios for, e.g., sales/salesperson or revenue/employee so saying one thing definitely implies another.  Savvy readers will try to triangulate things like revenue, bookings, or cashflow based on the tidbits you hand out.  And if the triangulation produces inconsistent results, it’s going to be a headache for your company and drive credibility questions about the figures and your claims.
  • They need to understand what metrics mean.  One favorite PR trick is talk about undefined metrics like sales (e.g., “company reported that sales grew 57% last year”).  It sounds good.  But wait a minute — what’s “sales”?  Do you mean revenue (and if so, why not say it) or bookings (and if so, how you define it).  Another is to discuss poorly defined product-line growth rates, where companies try to classify anything they can as related to the BNI (big new initiative — e.g., cloud at most mega-vendors).  What do those numbers actually mean?  If a purchase order has products 1, 2, and 3 on it and has $100K at the bottom, how does the company allocate the sales across product lines and does it do so consistently over time.  Product line sales figures might sound meaningful but they are often not.  Another favorite is three-division company growing 10% where each division says they’re growing 30%.  Hey, wait a minute — that’s not possible.

If you net all this out, the best advice is that PR needs to become more like IR (investor relations).  IR people know their numbers.  They’re consistent about what they release over time.  They understand how people will triangulate and the implications of so doing.  And they ensure consistency of the message as told by both the English and the math.
[Rewritten and decomposed from a prior interim version, focusing the content to better align with the title.  I removed the “beware of SaaS Companies talking bookings” meme as, while it remains a great topic that raises interesting yellow/red flags, it’s not one you can reasonably expect a PR person to understand or control.]

Woe is Media: Lessons from Tidemark’s PR

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

  • “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.


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:

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.

Tidemark analysis

  • “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  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.