Alfresco: A+ in Positioning as the SharePoint Alternative

Frequent readers will know I'm a pretty tough grader, but I have to give Alfresco an A+ for the positioning and strategy around (if not the naming of) today's launch of Alfresco Labs Beta 3.

They're drowning in coverage -- press this link to see a list. And the positioning and strategy is simply superb. Why?

• By positioning as the Microsoft SharePoint alternative they get to dismiss the entire existing enterprise content management (ECM) category, including their most direct and threatening competitors (e.g., EMC / Documentum, OpenText , Interwoven).
  

• The SharePoint threat to the existing category is real enough, and the existing vendors wounded, confused, or over-engineered enough, to make that dismissal credible.

• Alfresco then gets to have an elevator pitch that boils down to: everyone knows SharePoint is going to eat the ECM category, and most people like neither SharePoint nor Microsoft, so wouldn't you like to have an alternative?

It's beautiful in it simplicity, logic, and credible dismissal of what I'd guess is their top short-term enemy. Most vendors try to dismiss the current competition in their pitches, but it's not credible. They either say "we have no competition" (yawn) or "we welcome competition from the 87-foot giant because it's going to validate our space" (in which you may likely end up roadkill).

I'm not sure I've ever seen a startup so elegantly, effectively, and credibly dismiss a $1B+ competitor. What's better is that the strategy backs the messaging. By effectively offering an alternative SharePoint backend, they are able to swap out the plumbing and eliminate the need for underlying Microsoft infrastructure, such as SQL Server and Windows itself.

Great strategy. Great messaging. Great execution.

Well done John, John, and Ian!

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Cuil vs. SearchMe, Plus A Rant On Powerset

Earlier this week a new Internet search engine with an oh-so-hip name, Cuil (pronounced "cool"), launched to great hype about ex-Googlers taking on their former employer with a 121,617,892,992 page index (that's 121B if you're not good at counting digits), supposedly making Cuil "the world's biggest search engine." Excerpt from their info page:

Rather than rely on superficial popularity metrics, Cuil searches for and ranks pages based on their content and relevance. When we find a page with your keywords, we stay on that page and analyze the rest of its content, its concepts, their inter-relationships and the page’s coherency.

PageRank a "superficial popularity metric"? There's a clear roundhouse thrown at Google if I've ever seen one. I'm sorry, but didn't PageRank crush keyword frequency in Internet search because the latter was too easily gamed by spammers? At first blush they sound like they going back to the past (which I doubt), but they're not clearly backing their arguments, either. I'm fine with throwing punches at Google, but the punches better connect. This explanation in their FAQ doesn't connect either:

So we started from scratch—with a fresh approach, an entirely new architecture and breakthrough algorithms [...] our approach is to focus on the content of a page and then present a set of results that has both depth and breadth [...]

So Cuil searches the Web for pages with your keywords and then we analyze the rest of the text on those pages. This tells us that the same word has several different meanings in different contexts. Are you looking for jaguar the cat, the car or the operating system?

We sort out all those different contexts so that you don’t have to waste time rephrasing your query when you get the wrong result.

The early PR seems to suggest that Cuil has been busted for over-reaching in their claims. See this Wall Street Journal blog as just one example. For more fun, read the comments which take no prisoners. Edited excerpts:

I think the press got bamboozled in reporting Cuil’s numbers and should have checked them first.

While I really wanted Cuil to be Cool, it isn’t. I did [a vanity search] and didn't get a single hit on Cuil.com. When I did it on Google, the first result was a photo club I belong to.

I have tried this search disaster and determined that they have one thing in mind. Building it to sell. It has no accurate results that compared to Google, Live, or Yahoo.

I searched for “Cuil” on Cuil. [There is] no mention of Cuil.com on the first page of the results -- they have a long way to go.

Cuil was a waste of $33 Million. This thing is slow and the results are so outdated they are worthless.

The real story here is how a site so useless and amateurish managed to generate so much press.

The people who founded the company are obviously very intelligent, but most searches result in crap that does not really pertain to the search phrase.

The last one reminded me of a comment I heard from a disgruntled Autonomy user the other day that went something like: "I guess I'm not smart enough to understand why the Bayesian relevancy algorithms failed to get the right result; all I know is they didn't."

When will search vendors stop peddling PhDs and algorithms, seemingly all the while ignoring results? Particularly in the world of Internet search where any clown (e.g., me) can go to a site, enter a few queries (almost always including a vanity search) and get an opinion of whether "it works" in seconds?

This whole episode reminds me of the Powerset launch (where I was also critical) arguing that calling yourself the next Google was almost a guarantee that you wouldn't be. I nailed that prediction, but never had time to rant about it, so I'll do so here.

After all the next-Google hype, when Powerset finally launched they could not search the entire Internet (as one might have reasonably expected) or even the entire English language Internet (as one could have very reasonably conceded given all the natural language processing) but instead a rather small content set called Wikipedia.

You raise $20M in total capital, you call yourself the next Google, you generate more press than Miley Cyrus, and when you launch you can only search Wikipedia? Are you kidding me? By the way, have you *ever* met anyone who's complained that they can't find information on Wikipedia!?

Fortunately (for them) Microsoft bought the company a few months later for an estimated $100M, certainly yielding a nice return on the $12.5M in VC invested and a nice windfall for the founders. Not a bad outcome, mind you. But, the next Google? Pluh-ease. See here for WebGuild's take.

Anyway, I tried Cuil today and, like many others, was disappointed. I liked the Spartan search screen. I was mildly disappointed with the results of my vanity search; I prefer Google's result because, among other reasons, I beat the realtor in Colorado. I liked Cuil's multi-column presentation. I also liked the categories to refine searches, though I found them hard to find. At first blush, I liked the eye-candy, too, which reminded me of a toned-down version of SearchMe.

In fact, the whole thing reminded me of a weak version of SearchMe. Now I can't remember if SearchMe has its own index or whether it's adding value above an underlying Google search, but frankly, I don't care. As a user of the site, all I care about is the user experience and the results. Results-wise, I like SearchMe better. User experience-wise, I like SearchMe much, much better.

In fact, my single biggest complaint on Cuil is the eye-candy. While SearchMe renders a very cool iTunes-like rolodex of each returned webpage, Cuil renders a bit of seemingly random eye candy, presumably using a whizzy algorithm to find the "best" image that, not to put too fine a point on it -- doesn't work.

For example, when you run the query "Mark Logic" on Cuil, the eye-candy includes:

• Two reversed company logos
• Four regular company logos
• An image from a documentation newsletter
• A Wipro logo (one of our partners)
• An image from one of our smaller marketing programs (asking if you're missing the DITA bus?)
• A photo of Stephen Buxton, our director of product management
• A photo of Jason Hunter, principal technologist and creator of MarkMail
  

So the collection of eye-candy is both rather boring (i.e., repetitive) and random. Simply put, if you ran the query and did a quick skim of the results, you'd think that Stephen or Jason ran Mark Logic.

More interestingly, it's not at all obvious how they're assembling the eye-candy. When you visit the pages associated with the displayed images, the images aren't there. Hence, my speculation that they have a whizzy algorithm that finds eye-candy on or near the referenced page, but that nevertheless, uh, doesn't work.

Hence the four reasons I like SearchMe better:

• The SearchMe UI is unquestionably cooler than Cuil
• I find the SearchMe results better than Cuil's
  
• Both SearchMe and Cuil have categories for search refinement
  
• And SearchMe doesn't use "magic" in assembling the eye candy so it just works better
  

Note that I'm generally distrustful of magic (see Uh Oh, It's Magic) and greatly prefer SearchMe's straightforward approach of just rendering the referenced page as opposed to trying to whiz-up some potentially relevant JPEG.

(Disclaimer: SearchMe is a sister Sequoia-backed company. While I think that doesn't change my opinion of them, you might think otherwise.)

The Yahoo DIY Resignation Letter Generator

This is fun, but pointed. A do-it-yourself resignation letter generator for Yahoo employees. Ouch. Check it out, here (profanity warning).

Valleywag blogs on it here.

Highlights from the 2Q08 Software Equity Report

Here are some highlights from the 2Q08 Software Industry Equity Report published (for free) by the folks at the Software Equity Group, LLC who also host the Software Business 2008 conference on October 30-31, 2008 at the Marriott San Francisco.

• Aggregate US software spending increased 2.6% from 1Q08 over 4Q07 and 9.5% over 1Q07, according to the Bureau for Economic Analysis.

• Server virtualization, server consolidation, and cost-cutting topped IT's spending priorities list according to a Goldman Sachs survey. Open source (which seems oxymoronic in this context), content/knowledge management (which should be two separate items) and on-demand computing were at the bottom. This demonstrates the need for Mark Logic to remain focused on verticals where content matters as it's not yet a general IT priority.

• The SEG software index of 210 public software companies closed 1H08 down 13.5% The SEG SaaS index closed down over 25%

• Median EV/revenue was 1.8x. A major arbitrage opportunity continues to exist for large companies buying smaller ones, as the median was 2.8x for $1B+ companies and 1.2x for <$100M companies. For example, this means that a previously independent Business Objects could have bought a $50M company for $60M and then, in effect, sold that revenue to SAP for $140M.

• Growth still drives a large premium in valuation. Companies growing at 10%- (i.e., less than 10%) had a median revenue multiple of 1.2x, while those growing at 50%+ had a multiple of 2.6x

• But EBITDA margin drives an even bigger valuation premium. Companies with 10%- EBITDA margin also had a median revenue multiple of 1.2x, but those with rich 30 to 50% margins had a multiple of 5.9x
  

• Median EV/EBITDA was 13.2x
  

• Median EBITDA margin was 12.5%. Profit was unsurprisingly concentrated with the rich; the median was 23.9% for $1B+ companies and 5.4% for $100M- companies.

• Median TTM revenue was $154.1M with median TTM revenue growth of 15.5%

• Database companies continue to be worth about 2x content/document companies. Database and file management firms had a median revenue multiple of 2.8x while content/document management companies had a multiple of 1.5x.

• The IPO window remains, in effect, closed. Only 2 (ArcSight and RiskMetrics) of the 12 companies in SEG's 12/07 IPO pipeline went public, and both IPOs were in 1Q08.
  

• SEG counts 17 companies in the 2008 software IPO pipeline, with average revenues of $59M, net income of $0.4M, and average TTM revenue growth of 46%.

• SEG predicts only 8-10 software IPOs in 2008, thus predicting a 66% decline from 2007's total of 26.

• Software M&A deal volume was roughly flat at 380 deals in both 1Q and 2Q08. However, the value of those deals dropped from $25.5B in 1Q to $21.9B in 2Q08.

• Database and file management companies topped the M&A exit valuation category with a median valuation of 11.4x TTM revenues.

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Should My CEO Have a Ghost-Written Blog?

I received this question the other day from an old friend:

Clearly, having [our CEO] write his own real blog would be ideal, but do you think it's possible that a ghost-written blog is better than nothing at all, or is the downside not worth it? If you're against it, [do you have] any ideas on how to explain it to him (and the marketing team pushing for it) ... ? And if you think it's doable, [do you have] any advice to him/the writers?

My short answer is a vehement no. If your CEO is going to have a blog then it should be his or her own. Why? Because, in a word, to do otherwise would be misleading.

• The promise of a blog is connection and interaction with the author on topics of shared interest.

• Readers expect blogs to actually be written by their stated authors.

• If the marketing / PR team writes the blog, it will -- with all due respect -- probably end up easily identified as marketing-produced pabulum, rephrasing and reinforcing company press releases. Odds are you can't bluff this, so you shouldn't try.
  

• Even if you have a highly talented and knowledgeable person write the blog it will fail to capture the CEO's voice. When people meet me, they feel like they know me (and in a sense they actually do) because of the blog.
  

• If the CEO simply wishes to air a few corporate thoughts every once in a while, you could accomplish that goal with a "CEO corner" in a corporate newsletter or on the company's website.

• If, on the other hand, the company wants to use a blog to comment on industry topics of interest that aren't necessarily appropriate for its own corporate website, then why not create a corporate blog -- i.e., the company X corporate blog. With this solution, you're not misleading the audience: they know they're reading a corporate blog, and you can make it a multi-contributor blog where, perhaps every once in a while, the CEO weighs in.
  

If, despite these arguments, you are hell-bent on a ghost-written CEO blog, then I do have this advice.

• Only write posts that are the direct result of live interviews with the CEO on topics that he or she chooses.

• Instruct the writer to suppress his/her own voice and instead work very hard to capture the voice of the CEO -- in tone, in diction, and in style.

Here's a slightly old article on the topic written by corporate and CEO blogging expert, Debbie Weil. Debbie's author of The Corporate Blogging Book and runs a blog of her own on corporate blogging.

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Pelz-Sharpe on Analyst Relations

A few months back, Alan Pelz-Sharpe of CMS Watch posted an interesting write-up entitled Advice for Vendors Dealing with Independent Analysts. I thought I'd highlight it here for two reasons:

• It provides a rare, reverse-look at vendors through the lens of analysts, a bit like a doctor writing up how to be a good patient.

• After two decades of dealing with industry analysts from the vendor side, I -- perhaps surprisingly -- generally agree with the advice and I have some commentary I'd like to share on it.

Here are Pelz-Sharpe's 12 rules, along with some Kellogg color.

1. Don't assume the analyst is out to get you. Color: too many people assume analysts take sides and, in general, I believe they actually try not to. So while you may notice analysts not taking your side, you probably won't notice that (good ones, at least) aren't taking your competitors' side either.

2. Your reputation precedes you. Color: the software world is small, the software marketing world smaller, and the analyst world smaller still. Your company's reputation and your own precede you in walking into the room. Ignore this at your peril. Instead, try to build credibility over time through honest, credible communications and responsive turnaround.


3. The technology customer is king. Color: analysts love to talk to customers. So you should not only respond quickly to reference requests, but ideally work at a company that actually has happy customers, so it's both easier to find references and you can do things that analysts will find unusual -- like giving them un-chaperoned access to customers at your user conference. Almost any vendor can find/manufacture 5 happy customers out of 1000 and chaperone an analyst safely through the minefield of the other 995. Very few say: "go into that room full of customers and talk to anyone you want; yes, you'll hear a few grumbles, but overall I think you're find them very happy." I'm pleased to say at Mark Logic that we do the latter.

4. Don't threaten analysts. Color: this is probably the one way to get an analyst to take sides. Remember years ago when CA declared war on Gartner? Take notice of Alan's comment that nasty emails are "the coward's way" of dealing with conflict. Those who know me may laugh, but I'll say it anyway: never send a nasty email. (OK, outside the company at least; I'm still working on the inside-the-company part.)

5. Don't quote your own press releases or other analyst reports as evidence. Color: this is just plain moronic and I'm amazed by how often I see it either attempted or done. Also, remember that while it's a bit non-intuitive, most analysts deliberately do NOT read each other's work as a way of both insuring independence and avoiding plagiarism claims. So it's bad idea for even more reasons than you might think.

6. Never say "we provided an X% ROI to our client in less than six months, etc. Color: this is the one point I'd quibble with, but in general I'd agree -- not for the reason Alan states -- but because most vendor ROI claims lack credibility because the analyses are simply not well done. They lack rigor, ignore opportunity costs, tend to count only incremental costs, and make a dozen other basic errors such that I -- as a buyer -- wouldn't give them the time of day. To agree with Pelz-Sharpe, I do think that the lower level the technology, the more the ROI argument is in fact **for the category** and not for the vendor. In short, while I believe it's possible and often desirable for marketers to invest in high-quality ROI analyses, I think it's equally important not to overmarket them (i.e., your mileage may vary) and not to attempt to differentiate unless the analysis is specifically focused on competitive differentiation. (In which case, I'd argue that should be more of a total cost of ownership analysis that assumes roughly equal benefits as the competition, so the differential ROI is actually coming from a lower TCO.)

7. Don't kiss my ass. Color: while I agree with his point overall, I've known many an analyst who appreciated a fun dinner and a nice Bordeaux. Much as in dating, I'd argue, the issue is what you expect. I expect to have a good time, to enjoy at least some of the Claret, and hopefully to make a new business friend -- but nothing else. So I say offer the fine meal -- or the simple one as your guest prefers -- and spend some time getting to know one other. But don't expect 5 mm of magic quadrant improvement per Robert Parker point above 95. That's not the way it works; expecting such is offensive.

8. Don't ask me for advice. Color: I just love this point. While there are times when it's important to get analyst input and buy-in up front, most people seem to get it quite wrong. Were I an analyst, nothing would scare me more than a vendor who says: we don't know what it is and we don't know how to position it -- but what do you think? To which my response would be: "Hey buddy, it's your full-time job and if you mean to tell me that you can't figure out your strategy in six months why do you expect me to do it in ten minutes?" Put differently: "Do you have a strategy or not? While I will most certainly have an opinion about your strategy (if you have one), frankly, nothing scares me more than its complete absence."

9. A demo should actually demonstrate something. Color: totally agree, and hard to add much here.

10. Make sure you understand how your product works. Color: this is another point I just love. It's scary how many product marketers want to brief people on products about which they understand relatively little. Remember the Dale Carnegie-ism: if you want to speak about something you should know 10x more than you're audience. You should not be presenting at the limit of your knowledge; your knowledge should be much deeper.

11. Understand the difference between a fact and an opinion. Color: I'd agree and offer the analyst community a friendly reminder that this cuts both ways. An opinion isn't a fact just because it's mine -- or, for that matter, yours. I'd also add that vendor commitment to a strategy is a fact (provided you can validate it's true since many vendors claim commitment to N different strategies and ergo none). But, once verified, commitment to a strategy is fact; whether a given strategy will work is opinion.

12. Understand that customers implementing your systems have a very different perspective to share. Color: while I understand his point, I think that great companies to go great lengths to understand their customers and partners experiences and opinions about the product. So, to me, this point goes without saying, but I'd add that I am more than ready to discuss what we are hearing our customers and partners telling us and we should be allowed to do so (if only to show the degree of gap or non-gap in our knowledge).

He closes with an "extra credit" rule -- don't believe your own hype -- where he adds the following sage advice on not living in a vacuum.

We know it's your job to be passionate about your company, about its product, and its services. We understand it's your job to help sell this vision and to educate us all. But make the effort to really understand your competitive landscape too. Don't live in a vacuum. Analysts don't. I applaud your enthusiasm, and I wish you and your colleagues the best of luck, but I wish all your competitors the same too.

Thanks to Alan for a great post. I hope vendors everywhere read it.

Greene Bounced from VMware: A Bad Valley Pattern

Here we go again, with one of the age-old questions of Silicon Valley: when, and under what circumstances, should the board / executive management bounce an executive who was an integral part of building a company in order to replace him/her with a "professional" who can presumably do things better than the home-grown leader whose credentials include only, simply, uh, well, building the company in the first place.

This post was prompted by this article about Diane Greene, co-founder and until recently CEO of VMware, who was recently fairly visibly bounced from her job. I met Diane a few times in 2002 and I was very impressed with both her and the company. I think she did great things for VMware -- not the least of which was taking it from a raw startup to a company with over 6,000 people.

But what "credentials" does she have to run a company of 6,000 people? It's such an easy question that I view it as a kind of a sucker punch. Few people start companies and take them to 6,000 people twice. So, almost by definition, a founder-CEO (which I'm not, by the way) is going to lack those credentials.

See this InfoWorld story where the standard reason/ story / cover-story for this kind of situation is presented articulately:

David M. Lynch, vice president of marketing at Embotics, said Diane Greene was a strong and charismatic leader who focused on the technology -- which is ideal for a technology startup. But Lynch said, "VMware is now entering a new (and highly competitive) market phase, and the skills and focus that served the company well during the initial phases are not the skills needed to deal with the market challenges that are now occurring. It is very rare that a founder of a startup will see that company through to its maturity."

What credentials does Larry Ellison have to run Oracle? Or Steve Jobs to run Apple and Pixar? The answer isn't about credentials. It's about leadership, skill, and brains -- of which Greene seems to possess plenty. Frankly, I was surprised and impressed that EMC managed to keep her as long as they did with their Boston-centric, rather blue-collar corporate culture (compared to VMware's Berkeley/Stanford-centric PhD rocket-scientist culture.)

Losing her, to me, seems a bad thing for VMware, though I don't claim to be informed on the details, because I'm a database, CMS, and search watcher, and not an EMC watcher.

But I'm also a Silicon Valley watcher, and my gut reaction is "bad idea" when I hear that a company has cut loose an entrepreneur and visionary who built a $1B+ software company. Sometimes it's true that person who took you to stage N can't get you to stage N+1 or N+2. Sometimes they don't want to.

But oftentimes -- and especially when it's a sudden ouster -- it's a PR smokescreen, corporate politics in disguise, or simply corporate conservatism and distrust. My guess in this situation -- given that her replacement was an internal transfer -- is #2.

In the end I think the old expression about dances should serve as the default guiding rule: dance with the person who took you.

Global Service Branding: Let the Seller Beware

It's only fitting that my first post since heading off to Europe 3 weeks ago should discuss international branding. Bear in mind I'm a career marketing and business professional who has lived in Paris for 5 years so these aren't just the idle rantings of a frustrated American tourist. Well, actually they are. But at least they're the idle rantings of a moderately well informed and business-savvy American tourist.

Today's question is why do American service-industry firms use the same branding in Europe as they do in the US when the consumer experience they deliver is not at all the same? Do they think they're leveraging their global brand? Do they think they merit kudos for global consistency? I think all they're doing is under-cutting their brands, irritating most customers, and potentially badly alienating their best customers.

For product companies, I think things are bit different. A BMW's a BMW no matter where you put it. So is a QuickSilver t-shirt, or a Nike soccer ball.

But when the product is service, well, if you're going to call it McDonald's, the coffee better be lawsuit hot, the quarter pounder (or metric equivalent) better taste like a quarter pounder, and there better be a moderately clean bathroom in the vicinity.

Similarly, if you're going to call it Starbucks, then I better be able to order my half-caff, extra-hot, no foam, no whip, peppermint, skim mocha.

Now, I'd say that McDonald's and Starbucks actually deliver quite well on the global experience consistency promise. (Except that I'd rather not pay the same nominal amount in pounds-sterling as I do in dollars when I order my latte, but that's a different problem.)

My wrath today is aimed at two global brands who don't deliver consistency: Hertz and Hyatt.

Two summers ago when we visited France, Hertz kept us three hours at the airport waiting for a minivan that I'd reserved months in advance. "We don't have any cars. Sorry. It's not my fault. It's not possible to do anything. I don't care if you ever rent from Hertz again for the rest of your life. It's not my fault. You and your kids can just wait 3 hours for a minivan in 90 degree heat after getting off a twelve-hour flight."

It was legendary French indifference, non-empowerment, and incompetence. Is that endemic in France? Sadly, in most service industries, I'd say yes. But that's not the question. I knew that already. The question is why would Hertz want their brand slapped on that customer service experience? The answer is they shouldn't.

This year's nightmare was a repeat of one two years ago at the Hyatt Charles de Gaulle. We typically stay there the night before returning to the US, because the flights leave early and you can (theoretically) reduce stress by staying overnight at the airport. We typically arrive around 7pm, after a long day's drive, want a quick dinner, and then want to retire early before heading off the next day. Nothing special or surprising, I'd imagine, for an airport hotel.

This year, as was almost exactly the case two years ago, the dinner part of the equation was a disaster. (So much for giving service providers second chances.) Skipping the myriad details, it took over 2.5 hours and numerous requests in various languages with various intensity to be served green salads (whose dressing was seemingly forgotten) and some plates of penne pesto.

"It's not my fault. We only have two cooks. There are several big tables here. It's not my fault." Overall it was a total mess -- many other American customers cancelled their orders and left -- and a mess on which Hyatt absolutely should not want its brand.

Some people at the Hyatt Charles de Gaulle were nice; some people were competent. Some were both nice and competent. But that's the trick in service industries: you're not a good as your best person; you're as bad as your worst.

In branding, so much is about expectations. If the sign on the door said Sofitel or Mercure, I'd have thought "heck, we're in France, it's normal that things take forever." But the sign didn't say Mercure. It said Hyatt. And when I'm in a Hyatt, I expect a Hyatt experience. And if you can't deliver that, well, then don't call it a Hyatt.

Delivering consistent global servce can be done -- it just takes a work. A good ex-pat friend in France once quipped that he loved Disneyland Paris because it was the one place you could see French employees smile.

The moral: either do the work to ensure service consistency (e.g., Starbucks, McDonald's, Disney) or put another brand on the experience. But don't, don't, don't promise one brand experience and then deliver another.