Appian and tech IPO’s for horses

Appian raised just $48m as a private company, compared with $163m for Alteryx, $220m for Okta, $259m for MuleSoft and more than $1bn for Cloudera. In fact, all four of the unicorn IPOs raised more in a single round of private-market funding than Appian did in total VC funding.Not having done an IPO-sized funding in the private market meant that Appian could come public with a more modest raise. (It took in just $75m, compared with this year’s previous IPOs that raised, on average, $190m for the four unicorns.) And, probably most importantly, the Appian offering showed that these types of IPOs can work, both for issuers and investors. (Appian created about $900m of market value, and saw its shares finish the first day of trading up about 25%.) So when it comes to IPOs for the second half of this year, the ‘Appian way’ could help a lot more startups make it to Wall Street. “Will the ‘Appian way’ lead more startups to Wall Street?”
Brenon Daly

Put another way: maybe you don’t have to be unicorn class to IPO now? Who knows really, it’s always a bit of a mystery.

Pretty RAD, customer count and profile

That said, what exactly does Appian do? Seems like one of those SaaS workflow/RAD companies. Nuthin’ wrong with that:

Appian provides app development software for its business and government customers. “With our platform, organizations can rapidly and easily design, build and implement powerful, enterprise-grade custom applications through our intuitive, visual interface with little or no coding required,” the company explained in their S-1 filing…. Appian acknowledges that its biggest competitors are Salesforce and ServiceNow. IBM and Oracle are also in related spaces.

More from Duncan Riley:

Founded in 1999, Appian offers a software as a service platform that helps business people create enterprise applications, especially for managing business processes, without needing programming expertise. The company is known for its “low-code” approach that allows non-programmers to create applications using building blocks and data, but managed and deployed by developers in a company’s information technology department, all on the same technology platform.

And:

  • “…booked $135 million in sales for the 12 months ended March 31, albeit at a loss of $12.5 million.”
  • “The company’s client base includes the U.S. Department of Agriculture, Sprint, Ryder, Dallas-Fort Worth Airport, BUPA North America, CenturyLink and the Department of Homeland Security.”

Meanwhile, Gartner’s magic quadrant on this space (“Enterprise High- Productivity Application Platform as a Service”), says of Appian:

Appian is an hpaPaaS vendor with strong business process management (BPM) and case management capabilities. Appian has been delivering its Appian Cloud platform since 2007. It has taken a uni ed-platform approach that enables a single application de nition to be accessed on a range of devices without additional development. Appian applications can be developed and executed both on-premises and on its aPaaS offering. Appian has positioned its Appian Cloud platform for general-purpose application development, which includes robust process orchestration, application life cycle management and integration capabilities that compete with both hpaPaaS and high-performance RAD vendors, with a common per-user or per-application-and-user pricing model.

And a few more interesting items from Gartner:

  • “There are more than 400 customers using Appian Cloud”
  • “90% of the reference customers delivered applications in less than three months, which is a much higher proportion than average.”
  • “With a predominantly direct selling effort and higher price point, Appian’s focus has been at the higher end of hpaPaaS market and not on small or midsize businesses (SMBs).”
  • It uses OSGi!

Telcos becoming cloud providers doesn’t seem to work

Since the late 2000’s, one of the cloud strategy theories was that existing telcos and network providers could become public cloud providers. Many, if not all have tried and/or trying. Thus far, it’s been a rocky road: few synergies seem to be sleeping on the ground, ready to roused up to go fight the giants, or, at least, carve out niche spaces. As summarized in a 451 report on CenturyLink:

That’s the idea that a connectivity provider should be better positioned to take advantage of cloud computing infrastructure because it controls the means of access to those resources, leading to a natural synergy. So far, none of the major carriers has managed to make that work, hampered by scale, traditional mindsets in network operations, and sales. Companies like AT&T, Verizon, Orange, BT and other global carriers got started on similar telco transformation efforts many years ago with varying degrees of success, and with major detours toward trying to out-Amazon Amazon in the IaaS space with network-focused cloud services. Instead vendors like Amazon Web Services and others have all but run away with the managed infrastructure and cloud markets, which are slated to reach a combined $100bn by 2020, according to 451 Research’s Market Monitor.

Furthermore, from another report on Verizon:

Verizon is not the first company of its kind to move away from infrastructure services in this way. Rackspace, at the time the world’s largest independently managed infrastructure and cloud provider, pivoted away from selling basic cloud infrastructure (and spinning off its low-cost web-hosting operations, Cloud Sites, to LiquidWeb), taking a more services-led approach. UK-based Colt Technology Services canceled its Managed Cloud offering (the go-to-market brand for its IT Services’ €80m revenue business) in 2016, selling it to German IT services company Getronics. Other IT vendors such as Hewlett Packard Enterprise (HPE) have chosen to keep out of the commodified public cloud service market, choosing instead to focus on hybrid and third-party services.

That said, there’s plenty of work – and spending – to be done to keep the tubes flowing and (eventually) costs optimized, e.g.:

[CenturyLink] has spent $700m on upgrades and improvements in its network, partly to serve NFV needs but also to address rates of failure in service delivery, repair times and other customer satisfaction areas.

And, for Verizon, there’s always money in the banana stand:

Focusing its efforts on managed networking services, managed security and professional services is a smart move for Verizon, given the lower costs, higher margins and double-digit growth rates of these sectors…. Managed security services and managed network services (in the ‘other’ category) – are expected to grow at 16.3% and 21.5% respectively during the same time.

We’ll see if one of the telco’s whacks it out, but the market window seems, if not painted shut, pretty firmly slid closed.

Big pay-offs in innovation take time and have confounding finances

A nice way of explaining Amazon’s success in charts, e.g., as compare to Wal-Mart:


Just thinking aloud without any analysis, it seems liken Amazon is an example of how difficult, long, and confounding  doing continual innovation as your business is. Many companies claim to be innovation-driven, but most can just eek out those “incremental innovations” and basic Porterian strategy: they improve costs, enter adjacent marketers, and grow their share of existing TAMs, all the while fending off competitors.

Amazon, on the other hand, has had decades of trying new business models mostly in existing businesses (retail), but also plenty of new business models (most notably public cloud, smart phones and tablets, streaming video and music, and whatever voice + machine learning is).

All that said, to avoid the Halo Effect, it’s important to admit that many companies tried and died here…not to mention many of the retailers who Amazon is troubcibg – Wal-Mart has had several goes at “digital” and is in the midst of another transformation-by-acquisitions. Amazon, no doubt, has had many lucky-breaks.

This isn’t to dismisss any lessons learned from Amazon. There’s one main conclusion, thought: any large organization that hopes to live a long time needs to first continually figure out if they’re in a innovation/disrupting market and, if they are, buckle up and get ready for a few decades of running in an innovation mode instead of a steady-state/profit reaping mode. 

Another lesson is that the finances of innovation make little sense and will always be weird: you have to just hustle away those nattering whatnots who want to apply steady-state financial analysis to your efforts. 

You can throw out the cashflow-model chaff, but really, you just have to get the financial analysis to put down their pivot tables and have faith that you’ll figure it out. You’re going to be loosing lots of money and likely fail. You’ll be doing those anti-Buffet moves that confound normals.
In this second mode you’re guided by an innovation mindset: you have to be parnoid, you have to learn everyday what your customers and competitors are doing, and do new things that bring in new cash. You have to try.

HPE/Micro Focus numbers: HP(E) software revenue down $870m since 2012

In a brief write-up of HPE/Micro Focus from Paul Kunert:

Shareholders will also be asked to approve a $500m return of value, approximately $2.09 per share,” the statement to the City added.

Well, who doesn’t like money?

That said, performance is declining:

The [HPE Software?] business has shrunk in recent years, with turnover dropping from $4.06bn in fiscal 2012 ended 31 October to $3.19bn in fiscal 2016. Profit before tax during that period slipped too. In HPE’s Q1 ended January, sales in the software arm fell 8 per cent year-on-year to $721m.

All that M&A didn’t work out too well:

The software division at HPE is made up of a collection of separate units including Autonomy, Mercury Interactive, ArcSight, three businesses that alone cost HPE more than $16bn to acquire. Other elements include Vertica (buy price undisclosed) and relatively smaller IT management ops outfits.

For more context, see my notebook on the HPE/Micro Focus merger back in September, 2016.

Source: HPE dumps Grandpa Software in Micro Focus care home, hightails it

60m Americans have used voice devices, 35.6m devices estimated to be sold in 2017

According to a recent research report from eMarketer, 60.5 million Americans will talk at least once a month to their virtual personal assistants named Siri, Cortana, Alexa, and other as-yet unknowns this year. “That equates to 27.5% of smartphone users, or nearly one-fifth of the population,” eMarketer said. Link

screen-shot-2017-05-08-at-12-09-31-pm

More details on the study:

  • “The e-commerce giant’s Amazon Echo and Echo Dot devices will claim a 70.6 percent share of the U.S. market this year, the study found.”
  • That 60.5m figure is more like “penetration,” people who have tried voice stuff but aren’t active users. By device ownership (I don’t know if this includes or excludes phones with Siri and such): “The number of active U.S. users will more than double for the devices this year, to 35.6 million, eMarketer said.”

See more details over from TechCrunch’s Sarah Perez.

Personally, I still find all this obnoxious. But (a.) I’m more of a podcast and text person, and, (b.) hey, the Echo is a really nice Bluetooth/Spotify speaker.

Print media doesn’t translate well to online, still – a travel magazine case study

After all these years, print media still struggles versus the Internet. This long piece on how the travel magazine industry has been suffering covers many great topics. I suspect much of the analysis is the same for all of print media.

One of the problems is the new set of demands on writers in that field:

There is the pain point of figuring out an internal work flow that functions across platforms. Journalists, writers, and content creators often have specialized skillsets, so asking one to write a story, create a listicle, take photos, and film compelling videos about a trip is a major challenge.

“We just started working more efficiently that way and it really, it’s painful to integrate digital and print,” said Guzmán. “The plays are different, the workloads are different, the story ideation is different. In doing this, there’s this huge cultural shift that is exciting and difficult.”

And, then, even after suffering through all that “cultural shift,” the results are often disappointing:

“The iPad was just going to be this Jesus of magazines and I never really quite believed that because I knew how challenging it was was to rejigger the content to fit that format,” said Frank, who oversaw Travel + Leisure’s digital strategy in the early 2010s. “Having just gone through the process of signing up and downloading a magazine, it took forever and was buggy and it just wasn’t necessarily a great solution. I was never really bought the gospel that the tablet was going to be our savior. But we did it. I mean, we created a great app and it was beautiful. It won awards, but that was knowing what the usership was is a little disheartening.”

And, as ever, there’s the tense line between blaming “most reader are dumb” and “rivals are evil” when it comes to what’s to blame:

“I could have written the greatest travel story ever known, and it would not have gotten on the cover of the traffic oriented site because a Swedish bikini teen saved a kitten from a tree; which is going to be more popular?”

Let them watch cats.

Still, as the article opens up with, it’s the old Curse of Web 2.0 – former readers, now just travelers – writing the useful content in the form of reviews on TripAdvisor and such:

“In general, people don’t read a review and make a decision,” said Barbara Messing, chief marketing officer of TripAdvisor. “Consumers will read six to eight reviews. They might dig in a certain characteristic that they are interested in, maybe they really are interested in what the quality of the beach is, or maybe they are really interested in whether it’s kid friendly or not kid friendly. In general, people will hone in on the characteristics of something that’s most important to them, find that answer on TripAdvisor, get that most recent insights, check out the photos, check the forums, and really be able to make an informed decision of whether something is right for them. I think that the notion that people could rely on the wisdom of the crowd and the wisdom of individuals to their detriment, I just think that’s false, and I don’t think the reality is that is going to happen.”

There’s also some M&A history of trading various assets like Lonely Planet, Zagat, and Frommer’s back and forth as different management figures out what to do with them.

As ever, I’m no expert on the media industry. It seems like the core issue is that “the Internet” is so much more efficient at the Job to be Done for travel (as outlined by the TripAdvisor exec above) that the cost structure and business process from print magazines is not only inefficient, but unneeded. Those magazines are now over-serving (and thus, over-spending) with a worse product. 

While the quality of TripAdvisor (and Yelp, for example) reviews is infinitely worse than glossy magazines, since there’s an infinite amount of more crappy reviews, with the occasional helpful ones…it sort of more than evens out in favor of Sweedish bikini cat rescuers. Plus, digital advertising has so much more spend (and overall, industry profit, if only by sheer volume if not margin) – it must be because it’s better at making the advertisers money and because it creates a larger market:

Link

HSBC’s Google Cloud use

A brief note, from William Fellows at 451, on HSBC’s use of Google Cloud’s big data/analytical services:

They have lot of data, that’s only growing:

6PB in 2014, 77PB in 2015 and 93PB in 2016

What they use it for:

In addition to anti-money-laundering workloads (identification and reducing false positives), it is also migrating other machine-learning workloads to GCP, including finance liquidity reporting (six hours to six minutes), risk analytics (raise compute utilization from 10% to actual units consumed), risk reporting and valuation services (rapid provisioning of compute power instead of on-premises grid).

As I highlighted over the weekend, it seems like incumbent banks are doing pretty well wtih all this digital disruption stuff.

Source: HSBC taps Google Compute Platform for Hadoop, is ‘cloud first’ for ML and big data

The fight for money between states and cities

The miniature culture wars fought between cities and states—such as North Carolina’s tussle with Charlotte over its anti-discrimination rules—are well known. The financial tensions between them are quieter but as important. “Money is usually the main problem,” says Larry Jones of the United States Conference of Mayors, and especially divisive in lean times.

Link

Twitter’s video deals mean it’s giving up on business model innovation

So says Ben Thompson in his newsletter today:

This is why Twitter’s increased focus on securing these video deals feels like such an admission of failure: the company is basically admitting that, despite the fact it contains some of the best content — given to it for free — in the world, it simply can’t figure out how to make that into a business, so instead it is (presumably) paying to create content that it can monetize more easily. The Bloomberg deal, which was first reported on Sunday, is particularly poignant on this point: Twitter is (again, presumably) paying for content about business and financial markets even as the most valuable business and financial market information is being posted for free on Twitter. That the company cannot build a business on that fact is certainly a disappointment.

You’ll have to subscribe to read the rest. For $100 a year, it’s worth it.

Meanwhile, some stats from Sara Fischer at Axios:

In total, Twitter has closed over 40 live stream partnerships around the world with sports leagues, media companies, etc. The company increased live programming by 60% last quarter and aired roughly 800 hours of live content reaching 45 million viewers. Of those hours, 51% were sports, 35% were news and politics, and 14% were entertainment. Above all, Twitter says 55% of its unique viewers are under the age of 25, a stat that directly competes with Snapchat’s coveted millennial demographic.

There’s also an extensive list of the video partnerships and shows to be broadcast in Twitter.

Why Pivotal Serves Free Breakfast to All Employees

Free food, during a limited, half-hour window, both saves people some hassle and gets them to show up at the same time to kick off the workday.

To understand why this is so important, picture Pivotal without free breakfast. Let’s start with the obvious. Most developers would sleep late if it were up to them. They’d roll into the office around 10 or 11 AM. Which means they’d grab a coffee, maybe respond to a few emails, and then sync up with the team.

Before you know it, the morning is over and it’s time for lunch. But hey, that’s okay, we live in a digital world, and you can show up whenever, so long as you get your work done, right? Wrong. Pair programming only works when you have people to pair with. And that means you need to sync their schedules.

We ring a cowbell at 9:05 AM. (The Toronto office smacks a golden gong with a mallet.) It signals that breakfast is over and the office-wide meeting is about to start. After the five-minute standup, the teams have their own standup meetings, and then pairs break off to get rolling at their workstations.

While posed as a pair programming enabler, take out pairing from the above and it also gets the point of having people show-up on-time, not dick around, and do actual work.

If you’ve seen me talk you know the joke of “how a developer spends their day” which usually includes 1-2 hours of actual coding because of all the meetings, you know, those 30 minute sitdown-standup meetings, architectrual reviews, deciding where to go to lunch, the post-lunch-buffet comma, “researching on the Internet, etc…. it’s all just unsynchronized schedules and little not attention spent on actually managing your staff’s time.

Source: Why My Company Serves Free Breakfast to All Employees