Dynamic Publishing and Content Delivery at jetBlue with MarkLogic

A few weeks back, John Kreisa, director of industry solutions at Mark Logic, gave a presentation at the SharePoint Summit in Montreal that I thought would be of interest. The presentation, Enabling Dynamic Assembly and Reuse of Operational Documents with SharePoint and Microsoft Word, got great reviews and does a thorough job of discussing the use of MarkLogic at jetBlue in the production of operational and regulatory documentation.

His abstract:

Operational documents that define policies and procedures create a common understanding and form the glue that holds complex organizations together. By employing commonly available desktop productivity tools instead of specialized content authoring tools, organizations are able to push authoring out to business users with the most relevant experience and knowledge about key procedures. This results in better policy documents and a more efficient organization.

Increasingly, organizations are turning to a combination of products such as Microsoft SharePoint, Microsoft Word and MarkLogic Server to enable the dynamic assembly of documents. In this educational session, attendees will review a comprehensive case study involving JetBlue, a leading airline who is using these technologies to drive a dynamic enterprise publishing environment in order to contain costs, improve efficiency, and meet regulatory compliance.

This discussion will also explore how business users, working in the authoring environment of preference, Microsoft Word, are now able to: search across approved content and repurpose a table, section, paragraph or any level of content; enhance and enrich the content adding significant value for future reuse; and protect content across all channels by leveraging the ability to lock official information.

The presentation itself:

MarkLogic at JetBlue for Operational Documentation

View more presentations from Dave Kellogg.

MarkMail Webinar: Email as a Knowledge Asset

With all the focus on email as a liability (think: e-discovery) of late, it seems that many people have forgotten that email can also be an asset, a rich source of knowledge and expertise in your organization.

At Mark Logic, we believe that email is both an asset and a liability. Since there are already enough people focusing on email-as-liability, we thought we'd show what you can do with email-as-asset. Towards that end, we built the MarkMail software, implemented it as a demonstration, free web service at MarkMail.org (where it's implemented on a contentbase of ~30M open source developer list emails), and use it internally to search an archive of all emails sent to our general interest lists (e.g., technical discussions, marketing discussions).

As mentioned in previous posts, we are looking at commercializing MarkMail because we believe that other companies could benefit from internal systems similar to the one we use. Towards that end, we are holding a webinar on 4/30/09 at 11:00 AM Pacific time entitled Reducing Information Overload: Treating Email as an Asset, featuring Jonathan Spira from Basex and Mark Logic's own Bill Veiga and Kelly Stirman.

For those who've looked at and/or are considering ccBetty, I'd argue that both ccBetty and a commercialized MarkMail are trying to solve the same problem, but that we are taking an enterprise approach while ccBetty is taking a consumer one. We believe the real value lies in enterprises' email lists (and their archives) and not in helping people manage their inboxes and/or personal mail. Ergo, instead of signing up individual users and have them (remember to) "ccMark", we are trying to get organizations to (1) put "Mark" on the distribution list and then (2) load the archive of the list so anyone in the organization, subject to appropriate security constraints, can search the archive.

CMS Wire covers the upcoming webinar with a piece entitled How to Put Email in its Place, Make it Useful.

Mind of the CEO: Steve Jobs Deposition

I found this post today on the Infectious Greed blog which features the transcript of a Steve Jobs deposition in what, judging by the questions, appears to be an option-backdating matter.

I encourage everyone to read a deposition now and then, so they can get a concrete feel of what they're like, and to see how emails, press releases, and other communications can pop up, sometimes years after they are written or sent.

Back in the "good old days" when companies got sued when their stock dropped (as opposed simply falling with the imploding market), I encouraged marketers to periodically read class-action complaints for the same reasons. It's one thing having a conceptual notion of something; it's quite another reading a transcript.

The fun part about this transcript is you get some free insight as a by-product: into Steve Jobs, into the mind of the CEO, and into stock options in general.

As Kedrosky points out, you have to love the parts where he says he doesn't really understand what the board secretary does (pg 77) or what GAAP is (pg 84). And the capper, which you have to work to find (pg 115):

Q. As a member of Apple's Board of Directors does it concern you that there are signed minutes for an Apple Board of Directors meeting that never took place?

A. Of course.

Q. And why does that concern you?

A. Well, because it's not true, you know. Yes, it's deeply concerning.

Here's the full document.
Steve Jobs Deposition

Publish at Scribd or explore others: Taxes & Accounting Business & Law backdating stock options

Google Book Settlement Delayed; DOJ Opens Anti-Trust Inquiry

In seemingly separate developments, the proposed Google Book Search settlement had two setbacks yesterday.

• Judge Denny Chin of Federal District Court in New York delayed the opt-out and opposition-brief filing deadline four months from May 5 until September 5, 2009 on the logic that authors and opposition groups needed more time to understand the proposed (~350 page, complex) settlement. This, in turn, delays the Final Fairness Hearing from June 11 to October 7, 2009. Simply put: now the proposed settlement cannot be approved before October.

• The Department of Justice has launched an anti-trust investigation into the proposed settlement, reported here in the New York Times, seemingly centered on the rights to orphan works issue, challenged in a recent University of Chicago Law School working paper, The Google Book Search Settlement: A New Orphan-Works Monopoly.

Two more great topics to chat about with Dan Clancy, engineering director for Google Book Search, when he appears at the Mark Logic User Conference coming up on May 12-14, 2009.

A Silicon Valley GeoAnalysis by John Blossom

Information industry pundit John Blossom, president of Shore Communications and author of the new book Content Nation, recently stopped by Mark Logic on a visit to Silicon Valley and wrote an interesting piece on his ContentBlogger blog.

The post, entitled Silicon Valley Journal: Driving Up the Content Stack of Value, describes his journey as he works his way up Silicon Valley from (roughly) San Jose to San Francisco, observing that there is a general tendency for a vendor's location in the high-tech stack to be correlated to its latitude, with low-level technologies to the South and applications and services to the North.

Excerpt:

Rand [Schulman, his dinner host] observed that the bottom end of the bay was historically home to many of the companies that specialized in the lower-level aspects of the information industry such as hardware and operating systems, and that as one drove up the bay on 101 towards San Francisco you passed by the headquarters of companies that moved further up the technology "stack" towards the media-centric companies in and close to San Francisco itself.

While it's not something I'd ever noticed before, I would agree that it's broadly true. More:

Rand's model is particularly telling in relation to the content industry when you look at what happens in the middle stretch of Silicon Valley along 101. You have companies such as Google in or near Mountain View, rather on the southern-middle end of 101, that perhaps seemed to some like low-level technology plays when they were first launched that today have an enormous influence over the content industry as a whole.

And onto the part about us:

In the dead center of this stretch in San [Carlos] you find the headquarters of Mark Logic, a company specializing in XML server technologies that enable publishers and enterprises to create content services from multiple content sources. At our meeting with the team of Mark Logic CEO Dave Kellogg we heard how Mark Logic is enjoying prosperous times, in part because they've honed much of their infrastructure for delivering their services to a highly operable and scalable level and in part because they're looking up the highway, you might say, towards opportunities that service the content end of Silicon Valley more effectively.

In a sense much of the center of gravity in the content industry is heading towards such technology companies that used to be thought of as "middleware," rather industrious but supposedly dull bits of this and that that helped to glue diverse information systems together. With source-agnostic content aggregation the focus of much of the value in the content industry these days, you can hardly call companies like Mark Logic dull, much less similarly focused companies such as Google, MuseGlobal and Really Strategies.

Continuing the North/South analysis, I'd say that Facebook (Palo Alto) aside, most of the cool content applications and services companies are indeed up towards San Francisco.

Overall, I'd say that in this framework, we did a good job in locating our headquarters in San Carlos since we are very much as next-generation, mid-level infrastructure company -- i.e., above the hardware and operating system layer, but below the application layer.

And, as a side motivational benefit, we can look out the window to see Larry Ellison's smallest jet periodically take-off from San Carlos airport (suspiciously coded KSQL), lest we ever forget the importance and ubiquity of infrastructure technology in an applications stack.

What Do People *Really* Do with Mark Logic?

Since MarkLogic is a highly innovative and relatively low-level technology, people sometimes have trouble understanding what MarkLogic Server is and how our customers use it.

While I continue to stand behind the "robocop" positioning (half man, half machine, all cop) that we sometimes use (i.e., half DBMS, half search engine, all content), alas sometimes a picture is indeed worth a 1000 words and sometimes an application does help explain the need for the underlying platform.

Towards that end, our marketing team has added a page to the Mark Logic website that lists applications built on MarkLogic that either let you play with a live site or let you watch a Flash movie (or equivalent). On this page, you can see MarkLogic-based applications like:

• Wiley Custom Select
• Springer AuthorMapper
• McGraw-Hill BusinessExchange, a web 2.0 style site for topical business information
  
• Oxford University Press's Islamic Studies Center
• American Institute of Physics Scitation C3
  

I hope the team will enhance this list over time -- they can start by adding the BusinessWeek Business School comparator -- so it will be faster and easier for people to see, and sometimes try, applications based on MarkLogic Server.

Twazzup: A Nice Twitter Search Engine

As part of writing my previous post on swine flu, Twitter, and The Wisdom of Crowds, I ran into a nice, real-time, alternative Twitter search engine, called Twazzup, presumably as in, "what's up?"

Most folks are probably aware of Summize, which was acquired by Twitter in July, 2008, and is now at http://search.twitter.com. I think Twazzup one-ups Twitter search in a few areas:

• It shows you the TPH, presumably meaning tweets per hour, on a topic. Right now, "swine flu" is running at 6,667 TPH.

• While they both show hot topics, Twazzup does a much better job of finding and suggesting related queries. For example, Twazzup is suggesting: Mexico, #swineflu, news, avoid. Twitter search is showing cool / nifty queries that aren't related: #haiku, listening to, "is down."

• Twazzup shows a featured tweet (presumably using some authority mechanism), related pictures, and related news stories.

When using Twazzup, John Battelle's database of intentions springs immediately to mind and frankly, because it's real-time and it's not just search phrases but little proclamations, I think Twitter/Twazzup does a much better job of sticking a thermometer in the public consciousness than a log of Google search phrases.

Using that thermometer what, besides swine flu, is on the public's mind at present? Apophis, which is evidently an asteroid that might hit the Earth in 2036.

Gosh, folks are in an apocalyptic mood.

Stephen Arnold covers Twazzup here.

The Madness of Mobs: Twitter and Swine Flu

In talking about web 2.0, we often think about ideas like mass collaboration, a participatory web, the web as a communication platform, and generally speaking The Wisdom of Crowds in building and establishing knowledge.

I'm a big believer in the power of functional (or wise) groups to make better decisions than even the most talented individuals. I learned this first-hand years ago when I took LDP at the Center for Creative Leadership and we did a survival exercise similar to the one detailed in table 4 of this document. In our exercise, every individual -- including a Brigadier General -- was outperformed by the group in prioritizing a list of items necessary for wildnerness survival.

So I believe that groups guess jellybean jar counts better than individuals, that PageRank generally works for finding web pages, that feedback (used to) work on eBay (until they said sellers can only say positive things), that Diggs are useful way to identify interesting content, that Wikipedia is a great way to build an encyclopedia (particularly a technology one), and generally most of the other stuff I'm supposed to believe as good, web 2.0, Silicon Valley guy.

I believe this so much that we invited James Surowiecki, author of The Wisdom of Crowds, to keynote our user conference coming soon on May 12-14, 2009. So I'm on board with the program.

But I also wonder about the opposite, what I'll call The Madness of Mobs. From financial bubbles to looters to Spring Breakers to a dozen other examples, we can all find examples of where everything cuts exactly the opposite way: where a wise crowd transforms to a mad mob.

So I was quite interested to find this article, Swine Flu: Twitter's Power to Misinform, which talks precisely about how the "mass brain" of Twitter appears to be shorting out when it comes to the topic of swine flu. Excerpt (edited for brevity, and bolding mine):

Thus, Unlike basic internet search -- which has been already been used by Google to track flu trends -- Twitter has introduced too much noise into the process: as opposed to search requests which are generally motivated only by a desire to learn, too many Twitter conversations about swine flu seem to be motivated by desires to fit in, do what one's friends do, or simply gain more popularity.

In such situations this, there is some pathological about people wanting to post yet another status update containing the coveted most-searched words – only for the sake of gaining more people to follow them. And yet the bottom line is that tracking the frequency of Twitter mentions of swine flu as a means of predicting anything thus becomes useless. (However, there are plenty of non-Twitter options summed up nicely on Mashable)

Hum. I should probably cop a maybe-guilty plea on blogging on swine flu. Like moths to a flame, we bloggers are drawn to hot topics.

The article continues:

If you think that my concerns about context are overblown, here are just a few status updates from random Twitter users:

I'm concerned about the swine flu outbreak in us and mexico could it be germ warfare?

In the pandemic Spanish Flu of 1918-19, my Grandfather said bodies were piled like wood in our local town....SWINE FLU = DANGER

Good grief this swine flu thing is getting serious. 8/9 specimens tested were prelim positive in NYC. so that's Tx, Mexico and now Nyc.

Be careful of the swine flu!!!! (may lead to global epidemic) Outbreak in Mexico. 62 deaths so far!! Don't eat pork from Mexico!!

Swine flu? Wow. All that pork infecting people....beef and chicken have always been meats of choice

Be careful...Swine Flu is not only in Mexico now. 8 cases in the States. Pig = Don't eat

If my reading list on Twitter was only restricted to the individuals who had produced the posts above, by now I would be extremely scared ... In moments like this, one is tempted to lament the death of broadcasting, for it seems that the information from expert sources should probably be prioritized over everything else.

Now, I'm pretty sure the counter-arguments to The Madness of Mobs goes like this:

• Not all groups are wise. The Wisdom of Crowds relies of wise groups.
  

• You can't cherry-pick the scariest contributions to argue that The Wisdom of Crowds doesn't work. Much as the abortion page on Wikipedia is the result of a rugby scrum of passionate, oppositional forces, so will be the mass brain of Twitter on swine flu. You need to look at the whole picture.

In fact, Surowiecki outlines failures of crowd intelligence and finds root causes which include groups that are too homogeneous, too emotional, too centralized, too divided, and too imitative.

Hopefully, we'll hear more from Jim on this topic at the user conference and, in the meantime, before enslaving yourself to The Wisdom of Crowds, ponder if your crowd is a wise one, and whether you're actually dealing with The Madness of Mobs.

Related Information / Stories

• Follow the CDC on Twitter. (A nice government 2.0 example, though they might have picked a better username.)
  
• Google Helps to Track Swine Flu, Twitter Catches Criticism
• Twitter Catches Swine Flu, But Don't Shoot the Messenger
• Trying to Track Swine Flue Across Cities in Realtime (O'Reilly Radar)
  

Swine Flu Tracker Map


View H1N1 Swine Flu in a larger map

EContent on Why Corporate Bloggers Often Miss

Here's a good, brief article on EContent, entitled Blogging: Why the Basics Elude Many Marketers, which provides a nice summary of why corporate marketing types typically fail when working in social media environments.

Except (bolding mine):

Because of the casual nature of the conversation, many companies seriously underestimate the strategy that goes into successful blogs. Publishing posts is just the beginning. Making sure that the content offered is substantive and engaging requires preparation. You’ll need to create an “editorial calendar” which maps out in advance what topics you will explore. From there, you can make decisions about which internal resources must be tapped to provide or augment planned content.

Remember to plan your content strategy with your target audience in mind, and don’t be afraid to add to the calendar as your audience uncovers interesting topics with the potential for further exploration. Once a solid base of posts has been published, corporate blogs should follow the same rules as any other blogs in terms of linking to and commenting on others in the blogosphere. Rather than assuming the company name will engage people, blog writers should be looking for ways to connect with readers. The whole point is to converse, not lecture.

The article goes continues, discussing how many marketers make the exact mistakes with Facebook groups or corporate Twitter accounts, a point that I found quite logical but of which I was less aware:

More recently, the social media stampede has turned toward Twitter, and companies are getting trampled there, too. The same “anti-marketing” strategy that applies to blogging should be applied here. There’s no point spamming people with your company message – you might as well be a telemarketer.

Wiley Custom Select: iTunes for Textbook Chapters

Mark Logic customer John Wiley & Sons last week announced the launch of a new product, Wiley Custom Select, a new custom textbook publishing system based on MarkLogic Server.

Wiley's press release, Announcing Wiley Custom Select: Next-Generation Custom Publishing Application, Powered By Mark Logic, says:

Using Wiley Custom Select, instructors can "build" customized higher education course materials that fit their exact pedagogical needs, in a simple three-step process that takes just minutes to complete. The custom publishing application enables users to easily find the content, personalize the material and format, and submit the order.

John Wiley & Sons is a $1.7B publisher, growing at around 25%, with a strong presence in STM, professional/trade, and educational publishing.

The press release continues:

Wiley Custom Select simplifies the process and increases the possibilities of building course readers. Instructors can search and select content from an extensive collection of Wiley titles, arrange chapters in any order, and upload their own material. They can then customize and personalize the format, choosing print or eBook, black and white or color printing, soft or hard cover binding, and individualized title page and cover copy. Finally, they have the ability to preview and submit the fully assembled text, review the instant price quote, and submit the order. If the instructor chooses print books, copies will arrive at the campus bookstore within a few weeks, ready for purchase by students. If the instructor chooses the eBook format, the custom project will be available online as a Wiley Digital Edition even sooner.

"Wiley Custom Select, powered by Mark Logic's XML Server, is a dynamic tool that ensures that textbooks and learning materials are relevant to coursework—a key factor for students to achieve success and get good value for their investment. It also offers instructors a seamless and user-friendly service," said Iam Williams, Director, Custom Learning Solutions, Wiley Higher Education.

This is not the first custom textbook system that we've worked on and I doubt it will be the last. I think these systems are incredibly useful in the academic context because they:

• Allow professors to mix and match chapters from different books when teaching a course.
• Enable mixing and matching that eliminates the need for students to buy 3 different $175 books and only use 1/3rd of each, ergo increasing utilization of content and reducing student costs.
• Reduce and/or eliminate the need for professors to create photocopied "readers" that typically violate copyright law and fail to reward authors for their work.
• Help book publishers by reducing cannibalization from the used-books market
• Create real books, not Frankenbooks, that integrate chapters from multiple sources
  
• Typically enable online syllabus sharing so professors can see each others "playlists" of chapters for various courses

In fact, in many ways, the easiest way to think of custom textbook publishing systems are as "iTunes for chapters." They're wonderful. And I'm happy Wiley has just launched a great one based on MarkLogic Server.

The Downturn: Accelerating the Digital Publishing Transition

As part of my company's focus on the media industry, I sit on a few industry groups where I have the opportunity to spend quality time with senior media and publishing industry executives.

Like any CEO, I have a natural tendency to believe that my company is, if not totally counter-cyclical, at least somewhat immune to the effects of the economic downturn. I've heard enough CEOs make the claim (cf: this query), often where it’s ostensibly absurd, that I should ask myself if I don't have a case of CEO denial. Am I arguing something akin to the rise in bedbugs is good for the hotel industry or not?

So when a recent publishing executive group I sit on started to discuss the economic downturn, I turned up my defenses to make sure I didn't have my happy ears on.

But executive after executive said that they believed the downturn is accelerating the digital publishing transformation. Not because I said it. Not because, as a technology supplier that helps companies transition, I want it to be true. But because about a dozen senior folks from many different publishing sectors said it.

Why?

• Foot-dragging in some publishing sectors has already gone on almost a decade, slowly whittling away at the traditional models and those who support them.

• As the decade has passed, the top brass at publishers continues to change, slowly replacing less tech savvy executives with more tech savvy ones.

• Enough time has passed that there are now examples of both new and traditional publishing companies who have successfully transitioned business models. The “it can’t be done” rationalization starts to wear thin.

• Hands are being forced. Seeking to cut costs, publishers are forced to make real trade-offs between investing in the future and preserving the past. When forced, most executives will bet on the future.

Now that I see the picture, it’s clear: after roughly a decade of fence-setting, the downturn is forcing publishers of all ilks to move. The downturn is accelerating the transition to digital publishing. And that's not happy ears.

Catching Falling Knives: Oracle Buys Sun

On Wall Street, they say never try to catch a falling knife, and with today's announced $7.4B acquisition of Sun Microsystems, it appears that Oracle might be doing precisely that.

For Sun, this is most probably a good thing. The company had been limping along without any strategy for quite some time now, seemingly an obvious target. And when the IBM deal fell apart they ran the very real risk of being perceived as "damaged goods" which might have scared off other suitors. By analogy, they could have ended up Yahoo.

For IBM, it's certainly a bad one. Oracle is paying $9.50/share instead of IBM's $9.40, so it appears that for 1% more cost, IBM -- already a systems company -- could have acquired Sun's customers and fairly easily begun product line integration. (Though it wasn't purely an acquisition price issue -- IBM is said to have balked at items such as change of control agreements, which were supposedly both bigger and more broadly extended than it thought appropriate.)

For Oracle, it's hard to analyze, but in the end I think it's probably a bad thing. While betting against Oracle's ability to do anything is usually a bad bet, I'll take the chance: Oracle's been very good at executing a Computer Associates II strategy but Sun is a systems vendor, not just a software vendor, and there is a difference between the two.

I think this deal marks a change in Oracle strategy. Looking back nearly three decades, you can divide Oracle in several different strategic eras.

1. Land grab. Win the market share battle in the emerging RDBMS and tools market
2. (Try to) move upstream. Despite no lack of effort and strategic advantage, the company failed to build a sufficiently competitive applications product line.
   
3. Buy your way out of the apps problem. Acquire the applications vendors who have built businesses atop your stack, almost coincidentally at a good time for software industry consolidation
4. Become a financial acquirer. Continue the successful acquisition strategy outside applications -- i.e., change from "fill holes" in the product line to pure financial acquirer.

This deal marks the start of phase 5 to me: become a systems vendor. That's a big strategic shift for many reasons, not the least of which is size/scale. Oracle touts itself as "the world's largest business software company" and did $5.5B in its most recent quarter. IBM did $27B in its most recent quarter. Net: a major league software vendor looks like a AA player in systems.

And if you think I'm wrong, that the deal is a pure financial play and Oracle has no intent to be a systems vendor, read the press release:

"The acquisition of Sun transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems," said Oracle CEO Larry Ellison. "Oracle will be the only company that can engineer an integrated system - applications to disk - where all the pieces fit and work together so customers do not have to do it themselves. Our customers benefit as their systems integration costs go down while system performance, reliability and security go up."

And if you the status quo might continue at Sun under Oracle, you better think again:

Under Oracle, [Catz] said, the Sun businesses will be able to achieve operating efficiencies “far in excess of what Sun has done to date."

Financially, Oracle seems quite confident it's a great deal and I tend to take them at their word in this department:

"This would make the Sun acquisition more profitable in per share contribution in the first year than we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," said Oracle President Safra Catz.

But Wall Street doesn't seem to agree. As of the time of this post, Sun stock is up 36% while Oracle is off 3%.

I need to explore the MySQL question later -- recall that Sun paid $1B for MySQL in January 20008 -- so Oracle will find itself in the presumably happy position of owning the #1 alternative business to itself. Matt Asay of CNet starts to explore this here: Oracle Gets Sun for $7.4B; MySQL for $0.

But the question to me remains strategic. Has Oracle finally bitten off more than it can chew?

Mark Logic User Conference Breakout Session Guide

Just a quick post to share the breakout session guide for the 2009 Mark Logic User Conference which will be held May 12-14, 2009 at the Intercontinental Hotel in San Francisco.

Highlights of the conference will include keynote addresses from James "Wisdom of Crowds" Surowiecki (who just published an interesting column, Hanging Tough, about business investment during recessions), Gartner vice president and distinguished analyst Whit Andrews, search industry expert Stephen Arnold, and engineering director for Google Book Search, Dan Clancy.

I hope to see you there. As promised, here's the breakout session guide.

Mark Logic User Conference 2009 Breakout Session Guide

Publish at Scribd or explore others: 2009 mark logic

Links:

• Mark Logic User Conference 2009 microsite
• All of my prior posts tagged User Conference
  

McKinsey Releases Cloud-Unfriendly Cloud Computing Report

McKinsey has released a "discussion document" on cloud computing that comes to some fairly un-trendy conclusions about cloud computing. Entitled Clearing the Air on Cloud Computing the 34-page unwieldy PDF slide presentation argues the cloud computing is at the peak of Gartner's hype cycle, has created a gold rush atmosphere, has about 22 different definitions, and that in many cases cloud computing is more expensive than what large companies could accomplish on their own.

I don't know what's causing it, but I've had a huge amount of trouble accessing the PDF, which says (SECURED) in my Window bar, mysteriously appears to be only an improbable 1MB in size, but which just eats CPU when you open it. I've lost about an hour and crashed my machine twice trying to make this post, which has become a Sisyphean quest at this point.

Ergo, I've uploaded it to Scribd in case you can't access it either, and in so doing discovered what the problem is. The geniuses at McKinsey have published a cloud computing report in some encrypted PDF format such that it's quite unusable in the cloud. Bravo. Incroyable.

Somehow, someone got it uploaded to Slideshare, where it also acts quite unwieldy, but here it is:

[Sorry, it still went too slow when embedded, and when I tried to simply link to it in SlideShare form, the uploader had subsequently marked it as private. The whole thing is an exercise in how not to do viral marketing.]

• TechCrunch covers the McKinsey cloud report here
• BusinessInsider covers the McKinsey cloud report here
  

A Crack in the IPO Window: Rosetta Stone IPO

In the third IPO in April, language education provider Rosetta Stone went public this week, raising $112.5M. The IPO priced at $18, and the stock ended its first day of trading at $25.12, a 40% rise.

As one banker said to me: "this shows that investors are getting back into the business of investing." I think that's a good thing, not only because I run a private venture-backed company but, more importantly, because a closed IPO window (1) locks out John Q. Public from buying the shares of early- and mid-stage companies, (2) forces some companies to be sold "before their time," potentially snubbing the lives of would-be, great independent companies, and (3) indirectly reduces the attractiveness of the venture capital machine that I've long argued is a highly effective engine for driving innovation in the economy.

Numbers-wise, Rosetta Stone is quite a bit above what I'd been calling the 50/50/0 IPO window that I've seen in the Software Equity Group's IPO pipeline data ($50M+ in TTM revenues, 50%+ growth, 0%+ EBITDA.)

Rosetta Stone's key numbers are:

• 2008 revenue: $209M
• 2008 growth: 52%
• Adjusted EBITDA: 17% (see the S-1 for definition)

The company's market cap was $385M and the end of the first day of trading. Their investor relations page is here. The S-1 is here.

Wow, My Blog is Worth $394,545,921

I just received a fun note from fellow blogger Daniel Tunkelang of The Noisy Channel who pointed out that Pufip has calculated the worth of my blog as $394,545,921 so I should be retiring in the next week or so.

Or perhaps, not. As I'm sure Daniel is aware, Pufip only works for top-level domain names so sadly, I think the $395M value is Blogspot's and not mine. (And even then, it strikes me as way high.)

One of the disadvantages of hosting my blog at Blogspot is that I lose such analytics. But at this point, I actually feel rather trapped because I worry that changing the domain name would be a lot of work, break a lot of links, and cause me to lose my PageRank. I like Blogger, by the way, as a blog-creating tool, and Blogger does let you host your blog at your own domain. I've just defaulted into hosting it (for free, I might add) at Blogspot.

So, I'll see you in the office tomorrow. I think Daniel will be back in his office, too -- while his blog is worth a respectable $58K, I don't think he'll be retiring to journalism anytime soon, either.

Hi Ho!

Annual User Conference Unofficial Cycling Trip

If you are a serious cyclist* and are attending this year's Mark Logic User Conference, you might wish to participate in an early-morning, fairly hardcore, pre-session, unofficial** ride organized by Matt Turner (matt-dot-turner-at-marklogic-dot-com, spelled out to avoid email address spiders).

The ride has become an informal tradition over the years. But would-be riders should be aware that the group includes triathletes, semi-pro cyclists, and amateur race champions, so unless you're a pretty regular, serious cyclist you may not enjoy it. If you have any questions about logistics or whether you'd fit in, then please contact Matt at the above email.

---
* If shipping your bike and/or bringing your own pedals makes sense to you.

** This is not an official User Conference event and the company assumes no liability for any accidents, injuries et cetera, that may result from participation in the ride.

Regulating Venture Capital? Methinks Not.

What if you went to the doctor's office with a sore wrist and she proposed bandaging your ankle?

That's how I feel about the government's proposal that venture capital be regulated along with other private capital pools including hedge and private equity funds. See this Mercury News story, Venture Capital Needs Transparency Not Regulation, for background.

I'm no financial expert, but far as I can tell, the root causes of our current financial crisis are:

• Leverage. Investment banks and hedge funds building 30:1 levered portfolios (and somehow managing to only get 8-10% returns on them). Kind of reminds you of buying on margin as a root cause for the crash of 1929.
  

• Financial system interlocking and the too-big-to-fail problem. Like it or not, as a citizen and taxpayer, it does seem to me that many of these firms/funds are indeed too big to fail and the government was correct to use my/our money to stop the collapse.

• Agency problems and excess compensation. Basically, you had very smart people who could make $10M+ per year by taking excess risk. When viewed from their perspective, put undiplomatically, who cares what happens to their employers? It doesn't take many years (e.g., one) of $10M income to become permanently wealthy so senior managers had huge agency issues (where the interests of the owner and the agent diverge) which seemingly were left unchecked both by the companies' own boards and by government regulators.
  

• The housing bubble and the conflicts of interests among loan-originating banks, assessors, developers, and mortgage brokers. Arguably, the root cause here is the securitization of mortgages combined with the next point.
  

• Conflicts of interest in the ratings system. I never knew this before, but the people who pay ratings agencies are the issuers of debt, not the buyers. This would be like Sony paying Consumer Reports to rate their new television sets. Perhaps this is how a portfolio of zero-down, floating-rate mortgages on overpriced houses in Stockton gets rated AAA.*

• The lets-insure-each-other problem associated with credit default swaps. In a tightly interlinked system where each player is too big to fail, this strikes me as a mathematical hallucination designed to make it look like each player is taking less risk. But, in reality, it seems like a bunch of people living on the same street in Florida insuring each other against hurricanes. The question isn't when will the insurance system fail, but indeed will it ever work -- i.e., will there ever be a hurricane that wipes out only a few of the houses in the pool?
  

• Lack of regulation to control / keep in check the amount of risk, leverage, ratings, and agency issues.

I'm sure I missed some and if you think I got anything wrong in this laundry list, feel free to comment. Because my primary point is that nowhere on this long list will you find anything related to venture capital.

In fact, as I've previously argued, venture capital looks quaint by comparison. VCs buy and hold the shares of start-up companies on 5-year, plus or minus, timeframes. No leverage. No ratings agencies. Investment professionals (e.g., foundation managers) are typically the only investors, so there's no duping of John Q. Public.

Yes, venture returns are down over the past decade. Yes, there are probably too many VC firms and a shake-out is imminent. Yes, VCs make lots of bad investments. Yes, VC is increasingly a "hits business" where the biggest winners in the portfolio account for a disproportionate share of the returns.

Yes, VCs can make a lot of money. (And yes, I view carried interest as income and not capital gains.) And yes, there is probably an element of Fooled-by-Randomness / increasing returns inherent in the VC pecking order.

Sure, there are lots of flaws, but overall, I believe the VC system works. Much as you might say democracy is the least bad form of government, VC strikes me as the least bad way of driving innovation in the economy.

It wasn't part of the problem, so let's leave it out as part of the solution.

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* I know the ratings problem is more subtle and involves mixing loans of various quality to stay just-within the bounds of a given creditworthiness level. Nevertheless, I'd argue a "good" rating system would differentiate between a basket of all-solid loans and a basket which mixes solid, semi-solid, and wobbly ones. As an aside and largely from a position of pure ignorance, I'm amazed that someone hasn't raised some venture capital and tried to challenge the ratings industry with a new consumer-focused model.

Welcome Uptick in Venture Capitalist Confidence

Thanks to this story in today's Mercury News, I noticed that Silicon Valley Venture Capitalist Confidence Index showed a welcome and rather surprising uptick in 1Q09.

The index, produced by the University of San Francisco Entrepreneurship program, has tracked venture capitalist confidence since 1Q04 and hit its all-time low (2.77 out of 5) in 4Q08 and then re-bounded somewhat in 1Q09 to 3.03.

Excerpt:

This quarter’s reading rose from the previous quarter’s reading of 2.77 (a 5 year low) and ended a five-quarter trend of new lows in confidence. This breaking of the downward trend in VC confidence provides hope for an eventual recovery in the high-growth venture environment.

In fact, several of the VCs surveyed made the increasingly popular argument that the best companies are founded in bleak times, presumably as would-be entrepreneurs either flee or are laid off from their ailing employers:

And some responding VCs see the downturn in the economy as an opportunity to build great companies. Prashant Shaw of Hummer Winblad Venture Partners shared, “In a struggling economy, the real innovators emerge. And for firms like ours who have capital, there is no better time to invest in new startups.” And Sandy Miller of Institutional Venture Partners reasoned, “While the environment seems gloomy with no end in sight we need to remember that some of the best companies have been founded and built during bleak times. True entrepreneurs will continue to find ways of moving their ideas forward. From a venture investor standpoint 2009 and 2010 should be an attractive environment for new investments though there will be little liquidity for existing investments.”

For those wanting more detail, here is the full 1Q09 venture capitalist confidence report (PDF).

Amazon Elastic MapReduce: Power to Burn, On Demand

Amazon Web Services today announced Amazon Elastic MapReduce, a new member of the Amazon web services family designed to help users process vast amounts of data using the divide-and-conquer parallel processing approach made famous by Google's MapReduce and as implemented in the Apache Hadoop project.

Background on Hadoop (from the project site):

Here's what makes Hadoop especially useful--

• Scalable: Hadoop can reliably store and process petabytes.

• Economical: It distributes the data and processing across clusters of commonly available computers. These clusters can number into the thousands of nodes.

• Efficient: By distributing the data, Hadoop can process it in parallel on the nodes where the data is located. This makes it extremely rapid.

• Reliable: Hadoop automatically maintains multiple copies of data and automatically redeploys computing tasks based on failures.

Hadoop implements MapReduce, using the Hadoop Distributed File System (HDFS). MapReduce divides applications into many small blocks of work. HDFS creates multiple replicas of data blocks for reliability, placing them on compute nodes around the cluster. MapReduce can then process the data where it is located. Hadoop has been demonstrated on clusters with 2000 nodes. The current design target is 10,000 node clusters.

Here's some background on MapReduce (from Google Labs):

MapReduce is a programming model and an associated implementation for processing and generating large data sets. Users specify a map function that processes a key/value pair to generate a set of intermediate key/value pairs, and a reduce function that merges all intermediate values associated with the same intermediate key. Many real world tasks are expressible in this model, as shown in the paper.

Programs written in this functional style are automatically parallelized and executed on a large cluster of commodity machines. The run-time system takes care of the details of partitioning the input data, scheduling the program's execution across a set of machines, handling machine failures, and managing the required inter-machine communication. This allows programmers without any experience with parallel and distributed systems to easily utilize the resources of a large distributed system.

Our implementation of MapReduce runs on a large cluster of commodity machines and is highly scalable: a typical MapReduce computation processes many terabytes of data on thousands of machines. Programmers find the system easy to use: hundreds of MapReduce programs have been implemented and upwards of one thousand MapReduce jobs are executed on Google's clusters every day.

So Amazon Elastic MapReduce is a cloud-based service that enables you to perform highly parallel operations against large amounts of data, all in an on-demand model. This strikes me as a great offering, particularly for those organizations who have an intermittent need for large Hadoop clusters.

From the Amazon press release:

It utilizes a hosted Hadoop framework running on the web-scale infrastructure of Amazon Elastic Compute Cloud (Amazon EC2) and Amazon Simple Storage Service (Amazon S3). Using Amazon Elastic MapReduce, you can instantly provision as much or as little capacity as you like to perform data-intensive tasks for distributed applications such as web indexing, data mining, log file analysis, machine learning, financial analysis, scientific simulation, and bioinformatics research. As with all AWS services, Amazon Elastic MapReduce customers will still only pay for what they use, with no up-front payments or commitments.

Amazon says they made the offering in response to users who were already deploying Hadoop clusters on their lower-level EC2 framework -- i.e., that this was an organic evolution:

“Some researchers and developers already run Hadoop on Amazon EC2, and many of them have asked for even simpler tools for large-scale data analysis,” said Adam Selipsky, Vice President of Product Management and Developer Relations for Amazon Web Services. “Amazon Elastic MapReduce makes crunching in the cloud much easier as it dramatically reduces the time, effort, complexity and cost of performing data-intensive tasks.”

I suspect this was a bad day at CloudEra, an Accel-backed startup that wants to be the RedHat of Hadoop. Perhaps, like SugarCRM in competing against Salesforce, CloudEra will soon offer an on-demand Hadoop as well. But that means supporting two business models at once and buying a lot of hardware to boot. And, I suspect, a lot more hardware than SugarCRM needs to buy to support sales automation as a service.

WSJ: Google Books Settlement a "Ripoff"

See this editorial published in the Wall Street Journal, Google's Book Settlement is a Ripoff for Authors by Lynn Chu of Writers Representatives, an literary agent who, according to their site, "represents authors of trade books in the sale or licensing of rights to appropriate publishers (and other copyright licensees) on the best possible terms and in all media."

She starts with an easy lash-out against the (presumably blood-sucking) class action lawyers who stand to make $30M on the deal:

The settlement gives the class-action attorneys $30 million; a new, quasi-judicial bureaucracy called the Book Rights Registry $35 million (more on this later); and $45 million for owners infringed up to now -- about $60 a title. It remains subject to a final fairness hearing, slated for June 11.

She then argues that Google has handed the publishing industry a massive data entry task:

Consider this: Under the settlement, every rights-owner in America is supposed to hand over all their private contract data, on every edition of every work they ever wrote -- and every excerpt permission ever granted to others -- at the peril of losing the money Google will be making on their backs. This is a massive burden on everyone in the book industry, making us all, in effect, Google's data-entry slaves.

She then discusses publishing economics:

Book publishers today are entitled to a share of the publishing partnership because they shoulder -- not lay off on authors -- all the costs of editing and publication and marketing. The author's net profit share, generally half, in books, is for his creation. The author's share rises against the publisher when the publisher's costs are lower, as in digital. If the author shoulders still more of those costs and burdens, the publisher's share should be reduced again. That doesn't happen with Google.

And concludes:

The U.S. Constitution grants authors small monopolies in their own copyrights. Author market power is talent-based and individual, not collective. This class action seeks to wipe all this out -- just for Google. But U.S. law does not grant any single publisher monopoly power to herd all of us into its list.

See Slashdot for interesting discussion / reaction to the article. See this scathing rebuttal by another literary agent, Janet Reid.