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Articles filed under 'Tools'

Bringing corporate governance into the digital age

You may have noticed, I haven’t been posting much here lately.  It’s not that I don’t have anything to say, probably just the opposite (!) but have be full out from dawn until dusk working on a number of exciting new projects including our own development (more on that in a few weeks.)  One project that has been front of mind the past few weeks is a new company we are developing that is directly inspired by Paul Graham‘s great advice to “solve problems that affect you directly”.

A bit of background.  When I was in banking, one of the achievements I was most proud of was effectively using web technology to transform how (debt) capital was raised (at least in Europe*.)  At DrKW, we built what for many years was the state of the art capital raising platform, whose core product was our eBookbuilding platform (now in Commerzbank yellow!)  It completely revolutionised what had heretofore been a disjointed, manual, somewhat ad hoc process into a seamless, collaborative, mostly painless process.  Initially it met with enormous resistance from other (much bigger and more successful) banks and syndicate managers, who as ‘guardians of the temple’ jealously guarded their power, derived (in their minds) from the information asymmetry they enjoyed (vs issuers and investors.)  However – and despite being at best a middling player in the fixed income new issues market – our disruptive technology was such a big improvement on the status quo that eventually the market adopted our standards (with everyone then rushing to build their own analogous platforms.)  In the spirit of making sure these platforms could ‘play well together’ we even published our XML-Schema for new issues and invited all our competitors to contribute to it and use it. (Which had the effect of basically freaking out our competitors.  They thought we were crazy – like Ali – because they didn’t have the slightest idea what it means to compete in a world of information abundance and platforms, but that story is for another day…)

Anyhow, when I became seriously and then professionally active in ‘venture capital’ or more generically speaking, in investing in private companies, the lack of technology available to manage workflows surprised me;  I was particularly puzzled because ostensibly this was a world populated with techophiles, early adopters and people who ate disruption for breakfast (quite unlike the world of institutional capital markets).  Further, there is much talk (and consensus) around the fact that it is hard/impossible to scale venture investing.  And while I think this holds at some level, it struck me that a significant number of the gating factors limiting the ability to scale could be vastly improved.  Not to infinity but substantially, perhaps by an order of magnitude.  Pulling out an example from my old career, when I started life as a bond trader 20 years ago (ack!) the number of bonds that a typical good trader could manage numbered in the dozens at best (and even then, you would find that a trader really traded 10 to 20 bonds 80% of the time and sort of went through the motions for the other bonds hoping most of the time not to trade.)  Then came Bloomberg.  And excel spreadsheets.  (And later bespoke pricing and analytic tools and platforms.)  And all of the sudden, a trader could manage a book with hundreds of securities.  There was still a degree of 80/20 but everything was an order of magnitude bigger.

I don’t know if our new initiative will definitely achieve that degree of change in the private investment market, but we are convinced that there is a better way and having a fit-for-purpose platform to help company management, non-executive directors and investors communicate, collaborate and manage their positions and responsibilities would be a huge step forward.  It’s not that nothing currently exists, but I would say we are at the ‘excel spreadsheet’ phase to use my bond trading analogy – with many firms and people starting to use things like Google Apps or Basecamp and the like to better manage information flows and collaboration.  But while this (and excel for traders) is (was) a good start, the real juice comes when dedicated, purpose-built platforms emerge.  If you have a screw that needs driving, a hammer is better than nothing (or a rock) but a screwdriver is even better!  (A power screwdriver better still!)

So we conceived of (what has been provisionally named) CiRX – the corporate director and investor relations information exchange:

CiRX is a purpose-built platform enabling private companies, directors and investors to communicate and collaborate more efficiently saving time, money and effort.  By streamlining processes and connecting stakeholders in an intuitive and context-rich environment, CiRX offers a tailored yet consistent solution to the challenge of managing information and documentation flows, reducing administrative burdens and creating opportunities for a richer, more dynamic and flexible approach to corporate governance and strategic management.

Over the past few months, we have been developing the concept, the business model and have done a significant amount of macro research to identify the potential size of the market opportunity and now have started to take the next step and ‘talk/think details’ as they say.  In order to support this next stage of development, as we are poised to start ‘cutting code’, we wanted to get more direct feedback from the community – of company executives and founders, non-executives, angel and institutional investors – to better understand how their experiences and perceptions were both similar and different to our own.  To do so we created a short(ish) survey and have sent it to a number of our contacts across all these communities, but if we missed you and you are a company founder or non-exec director or investor in one or more private companies and you are interested in contributing your views, you can find the survey by clicking here. (We’ll leave the survey open for a couple weeks probably but if you are so inclined to complete it, we are excited to be presenting CiRX at mini-seedcamp London next week so would be great to have as much feedback as possible before then.) Of course you are also welcome to share your views – good, bad and ugly – in the comments below.


* That e-bookbuilding (generic) never gained acceptance in the US (at least not while I was still in the market) is in my opinion a telling manifestation of the oligopoly of Wall Street (which gives us things like 7% IPO fees with the spooky consistency of North Korean election results) which absent the pressure of competition, allowed the dominant underwriters to resist this change tooth and nail.  It was even more glaringly apparent when these same US firms operating in Europe adopted e-bookbuilding as strongly as everyone else once it was obvious it was an evolutionary winner…

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Our first exit (!)

Admittedly a very small holding (acquired via our investment in CohesiveFT) and with some mixed feelings (more on that below) but nonetheless an excellent result for an exciting and important technology and the team behind it led by the one and only Alexis Richardson…yes today SpringSource (VMWare) announced its acquisition of Rabbit Technologies – the company behind the world’s leading implementation of AMQP, RabbitMQ.

RabbitMQ was born of a JV between CohesiveFT (my partner Amy sits on their Board) and L-Shift and was spun out as an independent entity under Alexis’ leadership about a year ago. The mixed feelings I alluded to above are only because we were quite excited by the prospect of helping Rabbit grow as a standalone business, given their already excellent market share, the existing and extremely fast growing market for their product (messaging), the already strong brand and market adoption of RabbitMQ and a number of successful open-source business model pioneers and exits to emulate. As we did not have the capital required to make this happen we could not put a credible alternative on the table. To be fair, there were always a lot of moving parts and there is no guarantee that we could have put a better, workable deal forward and clearly joining the VMWare family is an awesome opportunity for the company and the team.

In any event, I’m really excited and happy for them and proud to be associated with them, even if only in a small way. Here’s to hoping this is a homerun deal for VMWare! (And yes having “Rabbit” in your name is one of our investment criterea…) 😉

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Weather forecasting.

I’ve been avoiding putting together a list of predictions for 2010 (more on that later) but just couldn’t resist suggesting that 2010 could well be a breakout year for weather risk management. All of the conditions necessary have finally started to come together and with the worst of the 2008/2009 hysteria behind us (without passing judgement on the future direction of markets), companies (and hopefully individuals) will start to wake up and respond to the risks and opportunities inherent in weather variability. I wouldn’t be surprised if weather risk was one of the top three risks faced by the vast majority of (non-financial) corporations, perhaps even the most important risk in some cases, and of the same order of magnitude as liquidity, foreign exchange, commodity and interest rate risk – all risk categories for which massive global markets in risk pricing and transfer exist. Weather in this regard remains significantly underdeveloped:

(via Ben Smith, First Enercast Financial) For example the Department of Commerce estimates that more than $1 trillion of U.S. economic activity is exposed to weather. Even if a small fraction of new risk is hedged through derivative contracts, 2010 will be a very good year for these markets.

The massive costs incurred in much of the northern hemisphere over the last few weeks due to heavy snowfalls and cold temperatures are just one more example of how important a factor in economic outcomes weather risk can be. For example, just take the exceptional – and uninsured – costs incurred by local authorities and airport operators across the UK for snow removal, sanding, salting, loss of revenues, etc. Previously, a manager of a company (or government entity) who suffered an exceptional weather-related loss could shrug their shoulders and plausibly say “it was out of my hands.” In a way that would be impossible if for example their organization suffered a massive loss because their buildings or equipment perished in a fire and they were not insured. In that scenario, shareholders or taxpayers would be incandescent with rage at the incompetent risk management of the managers. Not managing weather risks is no different in substance (now that appropriate weather insurance and derivatives are increasingly widely available), only remaining so in perception as awareness lags.

Of course I am biased, having invested in Weatherbill, which is at the vanguard of transforming weather risk markets:

(via J. Scott Mathews, WeatherEX LLC) The weather market was built upside down, which is quite a feat, even for financial engineers. What we mean is that it started on the wholesale level without any retail underpinnings. It started out like a castle in the air…The changes coming in 2010 for the weather derivative market will be keyed “from the bottom up.” Solutions companies such as Guaranteed Weather and Weatherbill who bring management choices to “ground level” risk holders are helping to complete a strong base to keep that castle from crashing on us.


The difference between weather derivatives (Weatherbill.com) (or any other new risk management tool) and say books (Amazon.com) is that risk management tools need to be ‘sold’ – there is a learning curve, however shallow; and while most people instinctively understand and can conceptualize their weather risks, their survival instincts – honed by decades of doing business with rapacious financial services firms – and fear of ‘getting their eyes ripped out’ means that they are understandably cautious when considering using weather risk management instruments for the first time.

This is where Weatherbill’s business model I think is particularly well adapted to the opportunity: on the one hand, they have a very modern (open) approach to pricing: anyone can go to their website and play around in their pricing ‘sandbox’. Try doing that ten years ago when you wanted to price up a complex FX or interest rate option. Basically it was build your own model or keep sending pricing request to your favorite sales person (who would then have to go beg the trader for a price, and in addition to the regular parameters, the client’s identity, the salesperson and the trader’s mood would also be imputed into the price. That is of course if he felt like making one.) On the other hand, (and this is something that has evolved over the past couple years) Weatherbill has aggressively sought out distribution partners – insurance brokers, industry platforms (eg travel sites), etc. – as trusted providers to their respective customer bases, they are ideally positioned to help their customers manage their weather risks by leveraging Weatherbill’s platform. I first wrote about this a few months ago, and since then they have signed up a number of new and significant partners.


I love skiing and my family take a season pass at Les Trois Vallees. Obviously weather risk is central to running or enjoying a ski resort. While there are many different types of risk you could look at in the context of a ski resort, in the interests of simplicity (ease of understanding/customer acceptance) and maximum pain relief, there are two risks that I would have loved to have had an embedded hedge for in our season ticket (and I suspect the same would go for someone buying a week-long pass for their holiday, in fact they would probably be even more sensitive/appreciative.)

  1. Not enough snow to ski risk: ie not that the snow is great or this or that…the basic risk that the pistes are closed. For most modern ski resorts this is actually a function of temperature and not precipitation, as they use snow-making machine to lay down a base. Temperature risk is much easier to measure and price (than snowfall) and has much lower geographic variability ie you don’t need a weather station on every piste on the mountain.
  2. Rain risk: ie the only time it is absolutely unpleasant to ski is when it is raining. Also, rain typically doesn’t help the existing snowpack, making skiing after rain often unpleasant as well.

Using Weatherbill to hedge their risk, Les Trois Vallees could offer a ski-pass that reimbursed me for every rainy day and for every day say less than 80% of their runs were open due to lack of snow. In an age of increasing climate uncertainty (or perception thereof) I am 100% certain this would help them market (and sell more) season tickets. And for week-long tickets, it would be a great marketing tool for advance sales (with significantly positive cashflow benefits), and great for improving the user experience. Imagine a vacationer whose week in the Alps is ruined by 5 days of torrential rain…getting their money back on the lift tickets (irrespective of whether or not they braved the elements) would go a very long way to having them consider giving it another try next year.

Of course this is but one example, I’m sure all of you can think of hundreds more. In fact it might be harder to think of services or businesses that are completely immune to the weather. So really, what are you waiting for? Start hedging!

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RabbitFX: simple, transparent and secure.

One of the downsides of having a reasonably ‘international’ life is having to manage foreign exchange risks and effect international currency transfers and payments reasonable regularly. If you only do this once every few years for a few thousand pounds/dollars/euros/etc., you may not notice or care that your bank generally makes this quite hard to do and charges you an arm and a leg for the pleasure (no commission is just dishonest marketing-speak.) If however, you need to make a few foreign currency payments or transfers each year; and/or you have more significant sums at stake, your bank is probably not the best place to do your FX business.

                         
 

You could (and perhaps do, as I did) use one of the literally hundreds of FX brokers, and if you have the time, knowledge of spot rates and inclination to haggle and shop around, you will get a good price. For a transfer of £10,000 for example you could easily save on the order of £100 or more compared to your bank. However (aside from needing the time, skill and energy to haggle and shop around), in my experience that is the easy part. It is only once you have traded that the fun really starts. Faxes, printing pdfs, clunky websites… getting your money to the broker and then back out in the new currency to the destination account is all too often a long and painful experience. Not completely surprising given the traditional business culture found in financial services: the trade is done (and revenue is booked), the rest is just ‘back office’, paperwork…boring. But from a customer point of view, this is upside-down: the trade is the easy part, undifferentiated, relatively painless (notwithstanding the see-what-you-can-get-away-with pricing algorithms of most of the industry.) Your time (and mental health!) is valuable, being able to trade painlessly in just seconds is often times as valuable or more than a tight price. In any event, you shouldn’t have to choose between them, and now you no longer need to.

                         
 

So when an ex-colleague of mine Nigel Verdon came to me with a new concept in FX payments and broking, one that was predicated on transparency, simplicity and automation, I listened. I liked what I heard and I became one of the first guinea pigs customers. I liked it so much, I bought (a stake in) the company. The company of course is FX Capital Group which I’ve written about previously, here and here. Nigel and his team have built an extremely robust and technologically modern FX payments platform that essentially acts as middleware between any end user and their bank accounts and the enormous and highly efficient wholesale, interbank currency markets. On top of this platform, they have built two applications: FX Capital – adapted for corporate customers, and RabbitFX for private clients. In the coming weeks, they will also release their API, with the clear objective of allowing anyone to embed FX and international payments into their website, workflow or application. Indeed, one of the first target markets for their platform technology is the hundreds of FX brokers who currently struggle with poor or non-existent technology. By allowing them to focus on what they do best (generally distribution – client acquisition and relationship management) and improve the level of service to their customers by outsourcing the technology to FXCG, everyone – client, broker, FXCG – is a winner. Think of it as FXaaS (FX as a Service.)

…[FX Capital Group provides] FX-as-a-Service.

The reason for today’s post however is to announce the new RabbitFX website, which I hope you will agree looks fantastic and even more importantly is easy to use and understand. It’s not perfect (still lots of improvements and features in the pipeline) but we think it is ‘good enough’: we are confident that the user experience is better than any other specialist FX broker in the market. And this starts right from the beginning: sign up for an account today and you’ll see what I mean. For UK customers, you should be able to get everything done online; customers based outside the UK (and some UK customers) can do 90% online and will need to send some identity documentation (in order for RabbitFX to fulfill its ‘know-your-customer’ regulatory requirements.) And once your account is open, I’m sure you’ll find like I did that making a FX payment has never been easier.
RabbitFX

It really is “Currency Exchange made simple, transparent and secure.”

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AWS Chronicles

So my question is when does Amazon.com split its retail operations from its AWS platform business. I’d love to see these priced separately. Actually, truth be told, I suggest Amazon.com is actually three businesses:

  • the AWS computing platform
  • the Amazon retail and logistics platform
  • the Amazon.xxx online store(s)

At the risk of being accused of adding only ‘thin’ value, I would suggest that these three businesses run and capitalized individually would be worth more than Amazon’s current $60bn market cap. Indeed, Amazon.com is a perfect example of a firm that is natively adapted to the new optimal ‘industrial stack’:
The new industrial stack.

Earlier this year I suggested that AWS in particular could well be the totemic representative technology that inaugurates the sixth techno-economic paradigm:

Just as Intel’s 4004 microprocessor was the catalyst for a wave of creative destruction in the 70s and 80s, will AWS prove the same for the 00s and 10s? Probably. We’re seeing it already. And it’s going to disrupt the hell out of the mastodons of industry across most sectors of the economy. Why? Because their cultures and leaders are entirely ill-equipped to face such a fundamental paradigm shift. They know how to play by the old rules. The strategic competitive advantages they built up over decades risk suddenly – poof! – to become obsolete.

And then a couple of weeks ago, Amazon announces spot instances on EC2. Amazon’s CTO Werner Vogel explains:

The central concept in this new option is that of the Spot Price, which we determine based on current supply and demand and will fluctuate periodically. If the maximum price a customer has bid exceeds the current Spot Price then their instances will be run, priced at the current Spot Price. If the Spot Price rises above the customer’s bid, their instances will be terminated and restarted (if the customer wants it restarted at all) when the Spot Price falls below the customer’s bid. This gives customers exact control over the maximum cost they are incurring for their workloads, and often will provide them with substantial savings. It is important to note that customers will pay only the existing Spot Price; the maximum price just specifies how much a customer is willing to pay for capacity as the Spot Price changes.

Spot Instances are ideal for Amazon EC2 customers who have workloads that are flexible as to when its tasks are run. These can be incidental tasks, such as the analysis of a particular dataset, or tasks where the amount of work to be done is almost never finished, such as media conversion from a Hollywood’s studio’s movie vault, or web crawling for a search indexing company. For most of these tasks their completion is not time critical and as such they are ideal targets for additional cost savings.

Before I go any further, let’s just say it’s pretty exciting to see vision become reality even if in this case I’m only a distant spectator. Markets in anything. Digital markets. Themes that go back to the founding mission statement of the Park Paradigm:

(December 2005) The technology of the digital age is driving an unprecedented explosion in the ability to create markets in anything. Trade anything. Not just physical goods. Not just financial instruments. But ideas. Events. Outcomes.
The emergence of these kinds of markets will – over time – impact how we view and interact with the world in all aspects of our personal and professional lives. They will fundamentally alter the current world economic and social paradigm.

Chris Swan calls them virtual resource markets and correctly points out that, at least for now, the market is “closed” – ie users cannot trade their capacity amongst themselves, however I suspect that it is just a matter of time before such a market is organized. But what would be even more useful (and exciting) than a closed market on Amazon EC2 resources, would be an open marketplace for on-demand spot computing resources. ie A marketplace which is agnostic as to where the compute resource comes from, so long as it is a robust and more or less uniform resource.* However for this to be useful for the end consumers of this computing commodity, the ability to switch automatically and seamlessly from one cloud computing source to another based on price and/or availability would be crucial. Indeed this would be the key value driver for anyone hoping to operate a compute resource exchange. Sure the price discovery and transaction mechanisms would be necessary but these are relatively trivial to build and hard (in isolation) to monetize. The real value creator for any exchange (just ask the CME) lies in clearing and settlements. (For the non-financial amongst my readers this is the back-end of the trade, fulfillment essentially.)**

James Urquhart makes this point strongly in his review of spot instances:

Note, however, that this feature is not market-based pricing. Amazon determines the spot price and can raise that price enough to gain back capacity at will, at no real cost to itself. There is no competition. There is no commoditization. There is just consumption of what is not being used.

The truth is, real commoditization of infrastructure services–or any other cloud service, for that matter–isn’t in the best interest of Amazon or any other service provider.

Regardless, commoditization can’t happen without open standards that allow easy portability and interoperability of data and code, as well as security, control, service-level assurance and compliance systems. Those standards are coming, but it is impossible to predict when they will arrive. I only hope Amazon embraces them when they do.

I’m not sure I agree with his view however that commoditization isn’t in the best interest of Amazon. The underlying asset is ultimately relatively undifferentiated (a compute cycle is a compute cycle is a compute cycle) which is in fact the definition of a commodity. If you are a provider of a commodity – unless you can maintain a monopoly or a cartel – it is in your interest to create as big and vibrant a marketplace as possible. Supply creating demand. And particularly if you fancy yourself the most efficient, large scale producer of said commodity (as I’m sure Amazon does), all the more reason to want a big, liquid market of consumers. It is the exchange and clearer that want to create lock-in, not the producers. To be fair, for the moment AWS is both and indeed this is the point James is making I think, but I would be surprised if they had the intention (hubris?) to think this is anything but a transitionary arrangement.

Of course, as a traded market in this critical 21st century resource develops over the next decade and beyond, the business opportunities abound. Better yet, many of them are well known and can quickly be adapted (from other asset markets) to apply to the compute resource market. It’s not a business yet, but it only took a few hours before the first ticker tapes (here also) began to appear for EC2 pricing:

An entire ecosystem will surely emerge – exchanges, prime brokers, risk management derivatives, algorithmic trading… I’m sure there will also be some interesting second-order opportunities. Linking spot computing prices with spot electricity prices. Selling green compute cycles (ie powered by renewable energy sources only.) Allowing anyone to sell compute cycles into the grid (think SETI@home meets micro-generation). The mind races.

Welcome to the sixth paradigm.


* like a bond futures contract, one could imagine allowing any compute resource fitting a certain minimum specification into the “basket” of deliverable resources; typically in this scenario there would be a “cheapest-to-deliver” resource in the basket which presumably would get allocated first.

** I can’t help but wondering if the amazing technology developed by our portfolio company CohesiveFT couldn’t be adapted or re-purposed to form the core fulfillment engine of a compute resource exchange. The fact that they are Chicago based and their CEO/Founder is ex-O’Connor makes me wonder even more!

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Platforms, Markets and Bytes

This morning I gave my presentation – “platforms, markets and bytes” at eComm 09 in Amsterdam. I’m not sure if it makes sense as a standalone but if Lee posts the video, I’ll link to it here later.

Using the tried and tested TED 20min format, it was a great opportunity for me to collect my thoughts into (what I hope was) a coherent overview of how I think technological and economic forces will shape the optimally adapted ‘industrial stack’ for the sixth paradigm. It’s a great summary of the prism through which we look at potential investment opportunities and I hope will help us articulate this more powerfully to entrepreneurs and prospective investors.

I’d love to hear any feedback (good, bad and ugly) from any of the eComm delegates who saw my presentation and hope to continue the conversation with you and others here. You can also follow me on twitter @nauiokaspark.

Thanks to Paul and Lee for inviting me and especially to those of you who took the time to respond to my call for input – it was tremendously valuable in helping me to shape and refine my thinking and in building the presentation; just a few years ago, assembling this kind of distributed brainpower would have been impossible, and I hope I never lose my ‘childlike sense of wonder’ at the boundless possibilities that technology enables.)

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Cloud computing = on-demand business innovation

While in the technology and venture capital world, a mention of cloud computing these days is more likely to elicit yawns than excitement, in 99% of the rest of the business world it is all too often looked upon as ‘just another new technology’, something for IT to think and or worry about. Whenever I’m in this other world I try to make the case that ‘the Cloud’ is as transformational a technology as electrification or the invention of the microchip. In fact, I’m becoming increasingly convinced that it will be the technology that lies at the core of the sixth techno-economic paradigm of the modern era:

Just as Intel’s 4004 microprocessor was the catalyst for a wave of creative destruction in the 70s and 80s, will AWS prove the same for the 00s and 10s? Probably. We’re seeing it already. And it’s going to disrupt the hell out of the mastodons of industry across most sectors of the economy. Why? Because their cultures and leaders are entirely ill-equipped to face such a fundamental paradigm shift. They know how to play by the old rules. The strategic competitive advantages they built up over decades risk suddenly – poof! – to become obsolete.

And yet all too often, I’m met not with disbelief but with apathy, indifference. You can see the thoughts forming in their heads: “I’m a CEO, a business man, a producer! Why is Sean boring me with this technology stuff? Why doesn’t he just talk to the CIO?” Worse, too often when I talk to senior technology managers in big corporations, they also are disdainful, thinking: “Yeah, yeah, that’s all fine for your start-ups and Web2.whatever companies, but this is a real business. Serious. Not some website for teenagers to swap gossip.” Ok I’m exaggerating but a lot less than you think. Sometimes I figure I must not be saying it right. So I’m always on the lookout for good articulations of the potential and importance of cloud computing and its incredible relevance to anyone who is pretending to run a business. Especially a big one.

Peter Fingar has written a great one, a summary of the new book Dot Cloud: The 21st Century Business Platform. He sums it up nicely:

In short, Enterprise IT must extend out to Consumer IT, otherwise those companies simply won’t be able to compete. As we’ll explore, Web 2.0 has changed the landscape with social networks, and companies can ill afford to ignore the shift…

…Cloud computing isn’t just about on-demand IT; it’s about on-demand business innovation…

…Cloud computing isn’t just for small- and medium-sized companies and garage startups. Cloud computing makes it possible to create new business platforms that will allow companies to change their business models and collaborate in powerful new ways that weren’t practical before. What’s important for companies to consider is that cloud computing isn’t about technology, it’s about technology-enabled business models.

So if you know a CEO, or any senior managers (in any business) pass them this article. It will only take 10 minutes to read. And maybe it just might make them reconsider. And maybe they’ll invite me to lunch! 😉

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Welcome to SkyGrid.

(soft synthetic female voiceover:)

Welcome to SkyGrid. Please stand by for the safety demonstration. We hope you have a pleasant experience and come again soon.

I’m sorry – couldn’t resist. Whenever I think of SkyGrid it automatically triggers visions of Chiba City (from Gibson’s Neuromancer) or other techno-futuristic visions (think Totall Recall or Blade Runner or Minority Report etc.) But the SkyGrid in question is not some fictional future Matrix but a real 21st century startup based in Southern California focused on advanced search and filtering of company and sector specific news for a professional audience.

SkyGrid Screenshot

I was first introduced to Kevin Pomplun – SkyGrid’s founder and CEO – back in late 2006 when he was raising the initial angel funding for this venture and it has been interesting to see how the initial vision and business model have evolved over time. Especially since during this time you have seen the rise and fall of potential competitors like Monitor110, the strong growth of crowd-sourced and/or curated news aggregators (like Digg or more recently VBrief), and perhaps most importantly the explosive recent rise and rise of the “real-time” web and search with Twitter. So can SkyGrid compete in this fast-changing landscape? My view: maybe. It all depends on execution and knowing your customer. Well, duh – but let me explain.

Most – if not all – of the information that SkyGrid aggregates and filters is freely available on the web; further most if not all can be searched and/or aggregated with a number of other free and well known tools. Indeed, I would go so far as to say that the early-adopter, highly web-literate user, would find SkyGrid somewhat limiting and would probably be more comfortable using a variety of other tools that are more flexible and precisely tuned to various tasks than SkyGrid. But – and this is where I think the opportunity lies for Kevin and his team – most potential consumers for SkyGrid’s product are not early-adopting-tech-geeks. Often, they are almost the opposite – skeptical, time-constrained, 80% rule, type-A personalities – that don’t want to have to do anything to get the information they are looking for: they just want it to work. Now. With no effort. Quickly. This is the core opportunity: intelligently package free data in a way that is highly relevant but also easy to consume.

SkyGrid’s initial business model focused on selling terminals (seat licenses) to professional financial services professionals – a well-trodden, often difficult but potentially lucrative path. This initial focus I imagine was a big influence on SkyGrid’s look and feel, as I guess they felt their prospective customers would take them more seriously (and pay them more) if SkyGrid looked like a Bloomberg termninal. (Personally I don’t like this look at all, but am conscious that I am probably not a good focus group when it comes to things like this!) More recently, they have started to offer their product for free, but on an invitation-only basis. If I understand the strategy correctly, this will allow them to build a very valuable community of high-end users, and over time add more social curation and editorial tools (like a Digg or HubDub, etc.) but in a closed more professional / specialist community.

It’s only been a week or so since I got an invite to use SkyGrid and so to be frank I don’t have an opinion yet on whether or not they have build a valuable and sustainable service but it looks promising enough to take a closer look. Better yet, Kevin has very kindly offered a limited number of SkyGrid invites to Park Paradigm readers (apparently you are just the kind of smart, informed, professional users SkyGrid is looking for!) Click here to sign up.

I’d obviously be very interested to hear both your first impressions and then once you’ve had time to use it for awhile, your more considered opinions on their product. At the risk of influencing your views, to finish, here is a list of some of my first impressions:

  • Like the simple, clean presentation of results and the tabbed history of recent searches.
  • Don’t like the Bloomberg-esque look and feel
  • Frustrating that it only searches on US listed equity tickers for now; want to see global coverage and ideally not limited to public companies – ie private companies, more sectors, by geography (esp. for emerging market countries), etc.
  • Would be nice to have a Google-Finance-like mapping of stories to price chart, or at a minimum a quick and easy way to visualize current market price and change

Let me know. And Welcome to SkyGrid. 😉

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Why I’m (still) long Apple

Image representing Apple as depicted in CrunchBase
Image via CrunchBase

A few years ago I bought a few Apple shares (AAPL) in my pension plan. When I got the idea they were trading in the high 20s and when I finally capitulated and pulled the trigger (after chasing it for months with unfilled limit orders) it was in the high 50s. I bought it because the first time I saw an iPod I was blown away and the great experience we had had with our iMac at home after ditching our old Dell. It’s been a pretty good investment and my expectations in terms of their success with iPod/(then iPhone) driving gains in marketshare for their computers has been met or surpassed. I probably should have sold when it ticked over $200 (if only to reload when it traded lower) but that is back-trading and oh so easy. A more useful question would be: is it worth buying today? and if so, what is going to drive the next leg of the company’s growth. I think the answer is yes, and I think you’ll find the kernel of the answer as to why in this graph (hat tip to @azeem for the pointer):
Apple share UVa undergraduates (MacRumours)

The latest computing survey results from the University of Virginia’s freshman class show evidence of continued Apple marketshare growth in the higher education market (via Daring Fireball). The chart above shows that Apple has made steady gains since 2003 in the percentage of incoming UVA freshman who own a Mac. The latest year (2008) shows that 37% of incoming students owned a Mac while the percentage owning a Windows computer had shrunk to 62% from a peak of 96% in 2001.

Ok, so Apple’s selling lots of laptops to college undergrads, nice but not a game-changer, right? Wrong. I think it just might be. And better yet, it’s all about tipping points and power laws and stuff.

Firstly (and most obviously) substantially growing market share with this key demographic (young, upwardly-mobile, educated, proto-professionals), in a product with significant (perceived) switching costs, is great for long term sustainable sales growth. But it gets better (and here is where tipping points come in.) Very soon, over half of university graduates entering the workforce will have grown up / come of age using Macs. And they won’t exactly start doing cartwheels if they are forced to use PCs at work. (As an aside, this will thrust into stark relief the coming colossal collision between big company culture rooted in a 1990s technology paradigm – ie a bright line separation between corporate and personal IT assets and usage – and the reality of the 2010’s when the best and brightest will expect (almost) complete convergence of the two and regard trying to distinguish between the two as ridiculous and anachronistic.) I fully expect a story in Fortune or the WSJ etc. within the next 2-3 years, reporting on graduates

…who had turned down a job with ABC Inc in favour of one with XYZ Inc. because the former allowed only corporate PC’s at work while the later was a (mainly) Apple environment and was happy for employees to buy their own laptops as long as they complied with data and security policies…

Apple as a competitive recruiting advantage. You don’t want to be short the stock the day after this tipping point triggers.

As an added bonus, catalyzed (or at least accelerated) by the current Great Recession, a large number of 30/40/50-something professionals are leaving big corporations and striking out either on their own or in smaller enterprises. Many of these professionals have never worked with anything other than a PC at work and quite frankly never gave it a second thought. But many of them also had Macs at home – they were cooler, easier to use – especially for music and home media (which drove the purchase decision) and could even run Windows easily if absolutely necessary (like for the kids EA game collection…) And when these folks leave Megacorp Inc and start working on their next venture, doing a bit of consulting, writing a business plan, day to day networking…they’re using the Mac at home. And then when it’s time to get an office, it hits them: why on earth would I want to go back to using a PC. So they don’t.

People criticize the smugness of the cool Mac vs. the loser PC commercials but the reality is that this positioning is only gaining momentum amongst some of the most desirable demographic groups in the economy. Here’s a little experiment: if you are a senior executive in a Fortune 1000 firm, send an email to all of your employees (that your currently provide with a PC) and ask them if they could choose what computer to use at work, what would they prefer: iMac/Macbook or a Windows PC? (A few smart-assed geeks might answer they would like a Linux Box but you can ignore them because they are probably using whatever they want already, being smart and geeky enough to have circumvented standard corporate policy.) Warning: only do this survey if you know how you will react if 30% or more say they’d rather use a Mac. Waking sleeping giants and all that…

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Dear Companies House,

It’s lovely that you have a website and that you even allow Companies to file (some) documents online. And wait until Google and others find out about your revolutionary business model of paid search! (Imagine if Google caught on and started charging a pound for every search! I can’t believe they didn’t think of this, but think I should buy some shares in case they see this. Just imagine – they would make billions!) Isn’t modern technology wonderful? But although you do seem to be quite ‘au fait’ with this whole internet thingy, there are a couple really neat newfangled things that could make your site even better. Things like relational databases for example. And if you really want to live on the edge, check out what the crazy kids at places like LinkedIn and Facebook have done. And then there’s this stuff called UI and UX, but I understand if you think this is perhaps a step to far. Maybe in 2015. In any event, the blue is very nice. Most people like blue. Very clever! Best regards, – A. Director

Say you are a Director of a UK limited company. Say you are a Director of many UK limited companies. You would think that in 2009, you’d be able to go to the Companies House website and ‘manage your profile’, no? (Address, contact details, present and former Directorships, qualifications, etc.) Well, you’d be wrong. You can’t even search on a person. Only on Companies. God help the poor bastard who is Director of 50 companies and has the stupidity to move: 50 change of address forms to fill in and submit. Online. Sort of. (Only for Limited companies, by post for LLP’s.) Aaaarrgh! I mean c’mon! WTF?!? Just because it is a government organization doesn’t mean it needs to be devoid of innovation, especially since:

The Minister responsible for Companies House is Ian Pearson MP, Minister of State for Science and Innovation. The agency also has Trading Fund status which allows the agency to directly manage its own finances.

Maybe next time he’s in the UK, Reid Hoffman might want to spend an hour with the Companies House Board(could be mistaken but a cursory google search would suggest that none of the Companies House directors are on LinkedIn so perhaps they do think they are on top of their game…)

In the ten minutes I’ve taken to write this one could sketch out the business model for Companies House 2.0 and given it’s key monopoly status, I’m sure you could build a killer revenue model (without fleecing your customers.) Better service. More revenues. Smarter business.

Please?

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