Cyclical innovation
Tuesday - August 29, 2006 Filed in: Strategy
| Venture
Capital
To stay in the automotive realm, I often liken the traction achieved by cars on a dirt road (the entrepreneurial path to success) with the need for the driving weels to rotate at similar speeds. If the left wheel represents innovation and the right wheel represents market demand, it is easy to imagine how innovation pays off when both wheels move a the same or rapidly alternating speeds (client-server technology was one of those examples where the wheel of technology innovation was turning much faster than the wheel representing market demand). That uniform cadence provides a fair amount of certainty that the car will follow the entrepreneurial track you intend to pursue.
My point is the following: to investors, I urge you to look at technology and no matter how old, understand how its benefits apply to a changed market (yes, we need more economist VCs). To entrepreneurs, I urge you to look at markets and adjust the innovation (in most cases downplay it) to meet that demand. All of us in the Silicon Valley could use more macro-economic insight to make innovation work. Lets not just drive for short term exit appeal or stuff our own pockets, but create innovation that has a lasting impact on society.
In the interest of full-disclosure, the Citroën DS21 was my first car...
Microsoft is getting it!
This may be my most unexpected subject: Microsoft's
good side. As a forever Mac user I am not a big
proponent of the demi-cartel position Microsoft
instills on the computer industry, yet I realize
that at the same time Oracle pursues a cartel in
the database business and Apple is driving for a
cartel in the music business. So all the major
players deploy the tactics that suit their success
in the market. C'est la Vie.
But my recent observations of Microsoft are very positive. Today I read the XBOX people are prepping tools for individual game designers to build their own games. That is big. Big as in free-markets. The free supply and demand characteristics of free-markets are brought to the gaming industry, absolutely beautiful. Microsoft will be a winner through an effective platform on which both the supply of the Long Tail and the Body (main stream supply) of the gaming market thrive.
Also, interesting has been the personal experience with Microsoft, especially the entertainment group. I am currently positioning a Venture Company portfolio company to Microsoft (full-body gesture recognition), and within less than two weeks they respond, call and are prepared to setup a meeting. Companies like Apple, Sega and many others can learn something from this agile behavior of a big gorilla. Microsoft is truly changing.
But my recent observations of Microsoft are very positive. Today I read the XBOX people are prepping tools for individual game designers to build their own games. That is big. Big as in free-markets. The free supply and demand characteristics of free-markets are brought to the gaming industry, absolutely beautiful. Microsoft will be a winner through an effective platform on which both the supply of the Long Tail and the Body (main stream supply) of the gaming market thrive.
Also, interesting has been the personal experience with Microsoft, especially the entertainment group. I am currently positioning a Venture Company portfolio company to Microsoft (full-body gesture recognition), and within less than two weeks they respond, call and are prepared to setup a meeting. Companies like Apple, Sega and many others can learn something from this agile behavior of a big gorilla. Microsoft is truly changing.
The industry-analyst cookbook
Friday - August 11, 2006 Filed in: Security
I couldn't help but chuckle when I read today's
updated report on the Secure Content Management
(SCM) market by number-cruncher industry analyst IDC.
Having dealt with some of the companies in the
top ten of that report, I can tell you that
the numbers they report to IDC are not only
incorrect but paint a picture of growth and
penetration that could not be farther from the
truth.
Yet, investors and entrepreneurs use this data to engage in new ventures together. Business partners base their strategic picks on it. Customers bet their careers on it. Even the suppliers (of SCM solutions) use this data to prove to their business unit managers how much progress they've made; what was the last time you got away with writing your own report card?
The problem with the IDC analysis is that it pretends to show what the size of the market is, and the operators in it, by simply adding the sum of finagled realizations. But what about the size of the total addressable market? A top down analysis of the market means nothing if it doesn't intersect with a bottoms up analysis (how applicable this technology is to the market). How many computers could be protected with SCM versus how many are? Is the sum of realizations really equal to the sum of opportunities? I don't think so. There is plenty of opportunity for SCM vendors that think different.
So, not only does the analysis of the opportunity stink, the facts are doctored too. Let's be real, Secure Content Management is a bull market with room for 130 competing vendors, sounds like no-one has cracked the code yet. Entrepreneurs should approach security from a new perspective that crosses artificial boundaries defined by the major players, let us know if you need help.
Yet, investors and entrepreneurs use this data to engage in new ventures together. Business partners base their strategic picks on it. Customers bet their careers on it. Even the suppliers (of SCM solutions) use this data to prove to their business unit managers how much progress they've made; what was the last time you got away with writing your own report card?
The problem with the IDC analysis is that it pretends to show what the size of the market is, and the operators in it, by simply adding the sum of finagled realizations. But what about the size of the total addressable market? A top down analysis of the market means nothing if it doesn't intersect with a bottoms up analysis (how applicable this technology is to the market). How many computers could be protected with SCM versus how many are? Is the sum of realizations really equal to the sum of opportunities? I don't think so. There is plenty of opportunity for SCM vendors that think different.
So, not only does the analysis of the opportunity stink, the facts are doctored too. Let's be real, Secure Content Management is a bull market with room for 130 competing vendors, sounds like no-one has cracked the code yet. Entrepreneurs should approach security from a new perspective that crosses artificial boundaries defined by the major players, let us know if you need help.