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Violin Memory’s IPO Lessons: Public Markets Don’t Always Get Cool Technology

Violin Memory, one of super cool players in the flash memory storage space, had a very rough IPO last Friday. With an initial offering of $9 per share, we watched the stock dropped all day up to 22% at $7.02 per share. Since then, the stock has had ups and downs closing at $7.50 last night. This IPO was another example that, when come to highly competitive sectors, public markets care more about revenues and deal flow than about solid technology roadmap.

As a technologist, I always have a hard time reconciling innovation with public market perception. While there are no doubts about the game changing capabilities of Violin Memory technology, the fact of the matter is that solid state flash memory is a very competitive space with incumbents like Dell, HP, EMC and IBM moving in. Like any other utility technology, the expectations are that these types of technologies will be highly commoditized in the near future. The fact that other players in the space such as Fusion.io are going through a bit of a turmoil didn’t get Violin’s IPO either.

In those type of sectors, public markets tend to look for a solid path to profitability and deal pipeline to overcome some of the, sometimes unjustified fears. From that perspective, Violin Memory couldn’t present a great picture either after terminating a deal with its top reseller: HP who have helped to grow the company’s revenues by 500 in the first year. In terms of numbers, Violin posted revenue of $51.3 million in the first half of 2013, up from $30.3 million in the year-ago period. However net loss was $59.2 million in the first half of 2013, up from a net loss of $48.3 million. Not a great picture either from a public sector perspective.

Having said all that, I still feel optimistic about the future of Violin Memory. However, my perception has little to do with an empirical analysis and is more based on the fact that I have a really hard time betting against a super talented team that knows their space better than anyone else in the market. With the right support, Violin Memory will be able to innovate into new areas in the solid state flash memory space and keep differentiating itself from the competition.

 
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Posted by on October 4, 2013 in Uncategorized

 

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Discipline vs. Organization

As startup founders, we are psychologically wired to reject routines. I frequently find that inexperience founders typically associate routines with the stability and lack of excitement of corporate jobs and one of those elements that doesn’t have a good fit in a startup culture. In an almost addictive behavior, startup teams welcome change, unexpected challenges and a company style that makes the unexpected parts of the daily lifestyle. Even though embracing change is one of the key characteristics of successful entrepreneurs, we should be very aware that constant changes are one of the recipes for a guarantee failure of a company.

When you are executing to long term strategies such as shipping a product, establishing a customer pipeline or implementing strategic partnerships, establishing a work routine can become one of best allies.  Allocating periodic amounts of times over days or weeks to focus on specific problems is one of the best recipes to getting things done. Routines help us to establish the necessary discipline and focus that is so necessary when tackling long terms problems. With the traditional chaos and constant changes surrounding startups environments, it’s very important that you establish your own routines. In order to effectively do so, you should be very clear that work routines are about discipline and focus and has little to do with being organized.

Organization is about setting structural elements and processes around specific tasks. On the other hand, discipline and focus is about systematic effort and organized thinking. While being organized can certainly help people to execute on certain tasks, organization is not a direct indication of discipline and focus.

Since my school years, I discovered that I am extremely disciplined and focused but not very organized. At Tellago Studios, when I am not traveling, I tried to stick to different routines around different areas of the company. Each day, I try to allocate a discrete amount of time to work on our different products, strategic alliances, customer pipeline, talking to the team, customers, etc.. During the early evenings I devote some time to think about strategic problems, play with new technologies, write, etc. Sometimes that routine gets disrupted by unexpected circumstances but I try to stay as disciplined as I can. Now I couldn’t tell you I am very organized on my work routines and, sometimes, I end up frustrating some of my more organized colleagues J.

As a startup founder, my best advice is that you establish your open routines and stay disciplined to execute on it. Sometimes, we get way too addicted to the action and change of the startup world and forget that the most important decisions require systematic effort and a calmed and logic thinking process.

 
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Posted by on June 6, 2012 in Uncategorized

 

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Is open source in the cloud still open source?

Open source platform as a service (PaaS) platforms are one of the most exciting topics in the software industry nowadays. Following the $212M acquisition of Heroku by Salesforce.com, we’ve seen how in a matter of months, platforms like dotCloud of VMWare’s Cloud Foundry have emerged with complete PaaS suites based on popular open source technologies.

The value proposition behind this type of PaaS offer is very simple. These platforms will enable the foundation to host, manage, provision and scale solutions based on some of the most renowned open source technologies such as Ruby on Rails, Hadoop, MySQL among dozens of others.

When we start exploring these technologies in detail, we will quickly realize that they could have a profound impact in the software industry that changes the economics and cultural aspects of the open source model.

For the last 20 something years, open source technologies have been fighting an uphill battle to gain a wide adoption within traditional business that favors commercial software alternatives. Lack of support options, poor documentation or vendor commitment are some of the reasons (or prejudices J ) that are often seen as limitations of open source technology stacks. Those years of anti open source mindsets have had a deep influence in the software markets. If you think about it, other than JBoss, MySQL or SpringSource, we can’t cite many other big exits of open source technology vendors. While it is true that the number of exists or acquisitions is not a direct in direct correlation to the viability of a business model it’s a pretty good indicator of the health and stability of a specific market segment.

Can open source PaaS platforms change this? I definitely think so. Let me try to explain.

Does it matter if it is open source when somebody can provision, host, manage, and scale it for you?

I think the open source PaaS model is removing a lot of the friction that companies experience when adopting open source technology stacks. Think about it, would you still be concerned of using Ruby or MySQL if Heroku, VMWare or dotCloud provisions, hosts, manages and scales the technology for you in a very elastic, self-healing infrastructure?

We have to think about open source PaaS beyond the technology landscape and see it as a phenomenon that can change the economic dynamics of the open source model. To put it in very simple terms, open source PaaS platforms have the opportunity to erase a lot of the non-technical advantages that, sometimes, were attributed to commercial software compared to open source alternatives.


Playing by the same rules…. what does this mean for commercial software vendors?

The emergence of open source cloud platforms will force commercial software vendors such as Microsoft or IBM to focus more on innovations of the cloud stacks and less on the advantages of their delivery model. At the same time, commercial software vendors will now have to compete with very complete technology stacks that group a large variety of open source technologies. For instance, I think developers are going to find themselves evaluating complete cloud fabrics like Windows Azure vs. Cloud Foundry, instead of individual technologies SQL Server vs. MySQL.

What does this mean for enterprises?

I think open source PaaS should be a primary option for companies when considering embracing cloud computing. Unfortunately, I get the feeling that it will take some time for organizations to get rid of the same anti open source prejudices that were common when evaluating on-premise open source technologies. In any case, we have to trust the influence that software communities can have in the industry.

Do open source communities need to change?

I don’t think open source communities will change drastically in this cloud computing era but I do believe we need to start considering open source PaaS platforms on the roadmap of the different open source technologies. For instance, I believe open source communities should be very influential regarding which features should be enabled on the different open source cloud platforms and, at the same time, guide the path of the technology in a way that won’t harm the platforms that are enabling those technologies in a cloud environment.

Who will win the PaaS wars?

I believe we will have multiple winners. Microsoft has a head start and a fantastic platform with Windows Azure. I believe VMWare’s Cloud Foundry and Salesforce.com’s Heroku can leverage their strong presence in the virtualization and business software aspects to grow its adoption.

 

In any case, I believe we have interesting times ahead of us.

 
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Posted by on July 15, 2011 in Uncategorized

 

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