Oct 152014
 
workers in a building site

One of the challenges facing people who’ve started their own businesses is re-entering the broader workforce. Many managers are reluctant to hire previously self employed workers; the PayPal experience shows that attitude could be hurting working

At the Dreamforce Conference in San Francisco yesterday three PayPal alumni, part of Silicon Valley’s infamous ‘PayPal Mafia’, discussed why the company was such a successful incubator of talent.

“The company was composed of a bunch of young folks who were very driven,” said founder of LinkedIn and early PayPal employee, Reed Hoffman. “Once they sold the business to eBay they weren’t the type to retire.”

Along with PayPal’s founders being driven, the company also tended to hire people who had run their own businesses but were finding the  going tough in the economy at the time; “Silicon Valley was collapsing under its own weight,” observed PayPal founder and fellow panellist Max Levchin.

“There was a lot of running for safety in the Valley,” Levchin remembers. “We were looking for people who were into risk taking and were excited to take a risk and this would be the last company they worked for because the next one would be their own. As a result we biased the selection towards entrepreneurs.”

Copying that hiring practice today is Stripe where co-founder John Collison told Decoding the New Economy last month that one of the keys to managing a fast growth business is to hire entrepreneurs and former self employed workers.

“They are self starters; they don’t need much supervision,” said Collison in describing how hiring people who’ve run their own businesses makes running a business that has gone from ten to 150 employees in three years.

it’s no coincidence that one of the investors in stripe is Peter Theil who along with Levchin founded PayPal and is probably the best known of the ‘PayPal mafia’.

PayPal and Stripe’s experience show the folly of overlooking workers who’ve run their own businesses; in a world where business is becoming more competitive, having entrepreneurial employees is an asset too good to miss out on.

Oct 092014
 
Walmart is the one of the world's leading retail businesses

After the announcement earlier this week that HP will split into two, now Bloomberg reports Symantec is considering splitting, this comes after the news that PayPal is being carved off eBay and that Yum foods is looking at divesting some  of its Chinese assets.

It looks like we’re moving into a period where conglomorates are out of fashion; that’s good news for lawyers and consultants advising the companies however it will be worth watching to see what this means for customers, employees and shareholders.

That HP is reportedly shedding 55,000 jobs says some of these conglomerates were chronically overstaffed so it might be good news for the stockholders of the split companies.

Either way, it’s always worth remembering that conglomerates come in and out of fashion in the business world.

 

Oct 082014
 
How can business survive rough seas

Last week Yahoo! closed down their directory pages ending one of the defining services of the 1990s internet and showing how the internet has changed since the first dot com boom.

The Yahoo! Directory was victim of a fundamental change in how we manage data as Google showed it wasn’t necessary to tag and label every piece of information before it could be used.

Yahoo!’s Directory was a classic case of applying old methods to new technologies – in this case carrying out a librarian’s function of cataloguing and categorising every web page.

One problem with that way of saving information is you need to know part of the answer before you can start searching; you need to have some idea of what category your query comes under or the name of the business or person you’re looking for.

That pan was exploited by the Yellow Pages where licensees around the world harvested a healthy cash flow from businesses forced to list under a dozen different categories to make sure prospective customers found them.

With the arrival of Google that way of structuring information came to an end as Sergey Brin and Larry Page’s smart algorithm showed it wasn’t necessary to pigeonhole information into highly structured databases.

Unstructured data

Rather than being structured, data is now becoming ‘unstructured’ and instead of employing an army of clerks to categorise information it’s now the job of computers to analyse that raw information and pick out what we need for our businesses and lives.

As information pours into companies from increasingly diverse sources, a flood that’s becoming so great it’s being referred to as the ‘data lake’, it’s become clear the battle to structure data is lost.

At the Splunk Conference in Las Vegas this week, the term ‘data lake’ is being used a lot as the company explains its technology for analysing business information.

Splunk, along with services like IBM’s Watson and Tableau Software, is one the companies capitalising on businesses’ need to manage unstructured data by giving customers the tools to analyse their information without having first to shoehorn it into a database.

“Thanks to Google we got to look at data a different way,” says Splunk’s CEO and Chairman Godfrey Sullivan. “You don’t have to know the question before you start the search.”

Diving into the data lake

It’s always dangerous applying simple labels to computing technologies but some terms, like ‘Cloud Computing’, don’t do a bad job of describing the principles involved and so it is with the ‘data lake’.

Rather than a nice, orderly world where everything can be pigeonholed, we know have a fluid environment where it wouldn’t be possible to label everything even if we wanted to. A lake is a good description of the mass of data pouring into our lives.

The web was an early example of having to manage that data lake and Google showed how it could be done. Now it’s the turn of other companies to apply the principles to business.

Google fatally damaged both Yahoo! and the Yellow Pages, other companies that are stuck in the age of structured data are going to find the future equally dismal. Don’t drown in that data lake.

Paul travelled to Las Vegas as a guest of Splunk

Oct 072014
 
HP management has major issues as it struggles with a changed economy

HP’s CEO Meg Whitman announced today that the company will be splitting in two with its Printer and PC division being carved away from its consulting services.

The two new companies will be Hewlett Packard Enterprises and HP, the latter being the old printer and PC division.

For HPs shareholders this split is a decade too late as the printer and PC division is in an industry where declining margins are the norm.

It’s not hard to think though that both businesses are ultimately doomed, it wouldn’t be surprising to see the smouldering ruins of both companies being picked up by companies like India’s Wipro or China’s Lenovo in the not too distant future.

That HP is divesting isn’t surprising as the trend is moving away from the big conglomerates model of the past decade; two weeks ago eBay announced it will be splitting its PayPal division and the float of Alibaba will almost certainly see Yahoo! begin to hive off businesses that have underperformed under their corporate umbrella.

An era where the key to growth in the technology industries doesn’t involve buying competitors and startups to build online empire will leave the Silicon Valley greater fool business model somewhat lost. It might be time for a few venture capital and seed funds to think about their pivot.

Sep 242014
 
therese-tucker-blackline-ceo-founder

In 2005, Therese Tucker’s company was down to its last three staff when a customer suggested a new line of business. Today BlackLine is valued at over 200 million dollars and about to list on the stock market.

A few week ago Therese described her journey from a struggling software startup to a hundred million dollar business on the Decoding the New Economy YouTube channel.

BlacklLine’s business automates financial processes  as Tucker explains, “we have the interesting job of providing software that helps companies automate all the things around accounting and the financial close that they currently do on spreadsheets.”

At the time of Tucker’s pivot, the business was supplying a wealth management system when that prescient customer asked her to develop an application to manage the ten thousand spreadsheets they were struggling with for accounts reconciliation.

BlackLine wasn’t Tucker’s first business having been involved in a series of ventures after working as an electrical engineer designing automation systems before moving into the IT industry.

“There’s a reason for the term ‘serial entrepreneur.” Tucker says, ” it’s a bug that once you catch it you really don’t want to rest until you’ve been successful at it.”

For aspiring entrepreneurs Tucker’s advice is blunt — “The best advice is ‘don’t do it’. Because if you listen to that advice you’ll never make it.”

“It’s the people that are crazy and are determined to work themselves to death and to fail and fail and fail until they don’t fail. It takes that kind of grit and determination.”

“If I tell you not to do it, then that’s great advice for you.”

Sep 202014
 
Alibaba-corporate_offices_china_hangzhou

Chinese e-commerce company Alibaba floated on the New York Stock Exchange and immediately rang up a 38% gain that values the company at $238 billion, behind only Microsoft, Apple and Google in tech stock valuations.

One of the major shareholders in Alibaba is Yahoo! who posted a 2.7% drop in value despite picking up a $5 billion windfall from the Chinese companies float.

For Alibaba’s founder Jack Ma, this float and the stock market’s reaction is a vindication of his business and of China’s place in the modern global economy, something we discussed with early Alibaba employee Porter Erisman last year.

Alibaba also shows that Chinese companies are now credible international businesses and companies like Haier, Lenovo and Hauwei need to be taken seriously as competitors and suppliers.

While Jack Ma and Alibaba celebrate, Marissa Mayer and Yahoo!’s management team are going to have to give some careful thought about how to use that extra five billion dollars. Time and investor patience is dwindling away for the once powerful internet giant.

It may be too soon to draw Alibaba’s success and the fall of Yahoo! as being the parallel of the rise of the Chinese economy and the decline of the US, but yesterday does give a strong signal about how the global economy is changing.

Image source: alibabagroup.com

Sep 172014
 
businesses paying bills and invoices

It didn’t take long for the competition in the payments market to heat  up after the announcement of Apple Pay last week as PayPal launched a campaign asking if you’d trust your financials to a business who can’t protect your selfies.

While PayPal  pokes fun at Apple, there are more serious competitive pressures developing as the companies start negotiating with credit card providers and banks to reduce their rates. This is something that will be an immediate benefit for businesses of all sizes who are prepared to renegotiate their contracts.

Most businesses, big and small, are poor at monitoring what they pay for a service; while they’ll shop around and negotiate when they’re looking for provider, they’ll let often these contracts go for years without reviewing them – something that utilities like banks, telcos and power companies take advantage of.

I was reminded of this earlier this week at a lunch with some senior Qantas accountants who were quite open about how every supplier’s contract was constantly reviewed and discounts were aggressively pursued. It’s a tough life for the airline’s subcontractors.

Times are tough for Qantas though, having sustained a 2.8 billion Aussie dollar loss last year along with constant declines in market share and stock prices. So it’s not surprising they have an aggressive cost cutting strategy in place.

Many other industries are now looking at the same problem as the global economy is now in a phase of at best anemic growth for the foreseeable future, which makes it essential for all businesses to start reviewing their costs.

With the banking sector now being disrupted by companies like PayPal and Apple, it might be time for all businesses to ask some hard questions of their banks and payment providers. The time is right to strike a deal.