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Building the Industrial Enterprise Part I: The Elements of an IOT Platform

As enterprises start embracing smart devices to automate business processes, the need for a platform will evolve all the way from a fancy requirement to a key element of enterprise IOT deployments. In the past, I have been vocal about as the adoption of new forms of data consumption or data production technologies in the enterprise typically creates new requirements in areas such as security, analytics, integration etc. The internet of things (IOT) promises to take this principle to a whole new level producing new platforms that will power the industrial enterprise.

While the initial flavors of enterprise IOT platforms are starting to emerge, they are still very basic from the capability standpoint. That statement can only seem logical if we consider the fact that enterprises are just starting to adopt IOT technologies and the requirements of real world IOT solutions are rapidly changing. Having said that, there are a group of capabilities that we believe will be foundational to enterprise IOT platform. Let’s start with the following diagram that I believe provides a good foundation for an enterprise IOT platform.

iot1

From the previous diagram, we can identity the following capabilities that should be considered when considering enterprise IOT solutions.

IOT Protocol Layers

An enterprise IOT platform should be able to receive and send data using IOT protocols such as XMPP, MQTT as well as binary payload formats such as protocol buffers. This layer should adapt the data produced from smart devices so that it can be processed by other elements of an enterprise IOT platform.

Complex Event Processing  Layer

Enterprise IOT solutions are notorious for continuously producing large volumes of data. The vast majority of that data comes in the form of events that provide telemetry data and don’t have a lot of meaning individually but that can be aggregated to describe specific conditions. This characteristic makes it completely unpractical to integrate IOT devices directly with business APIs. Instead, a complex event processing layer will aggregate the data produce

Event Integration Layer

As events are collected from different devices in an IOT topology and processed by the CEP layer, the results should be integrated with different backend systems. To enable this capability, enterprise IOT platforms should enable connectivity with enterprise backend systems or APIs. This model will facilitate the integration between the data produced by smart devices and traditional enterprise systems.

Real Time Analytics

Providing real time telemetry and visualization about the data generated by smart devices is an essential element of an enterprise IOT solution. To enable this capability, enterprise IOT platforms should provide real time analytics features that can visualize the aggregated data in real time providing intelligence about the runtime behavior of enterprise IOT deployments.

Mobile Device Management

Enterprise IOT topologies are typically composed of hundreds or thousands of smart devices. The security and management of those devices should be one of the key capabilities of enterprise IOT solutions. In that sense, enterprise IOT platforms should include a flavor of device management that can scale to thousands or tens of thousands of devices.

Data Security

As any other new trend in the history of enterprise software, enterprise IOT will require new levels of data protection, privacy and access control. Those capabilities should be present at the platform level so that they can be holistically applied across different solutions.

The capabilities listed in the previous sections are just some of the essential elements of an enterprise IOT platform. As the enterprise IOT industry evolves, new requirements and capabilities will emerge that will shape the next generation of enterprise IOT platforms. In future posts we will analyze the individual elements of an enterprise IOT platform

 
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Posted by on April 9, 2015 in enterprise software

 

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Why Startup CEOs Should Understand Public Markets

Uptrend stacks coins,on the financial stock charts as backgrou

A few days ago, during a dinner with a few experienced tech executives, we had a super interesting discussion about the current state of the public markets and its relationship with the venture industry. One of the topics we were debating was the value of understanding and following the state of public markets as an entrepreneur and CEO of  a private company.

The discussion was particularly interesting to me as I have been advocating the value of knowing to speak the language of public markets for private company CEOs. In my opinion, understanding the dynamics of public markets can be incredibly useful for a variety of reasons:

Understanding of Public Market is a Very Useful Skill

Socks, bonds, options, etc are statistical principles that describe the state of a company, industry, a country or the entire world. Understanding those principles can result incredibly beneficial during negotiations with potential large customers or investors. Whether you are a technologist, business person or an investor, I’ve found that understanding the language of public markets tends to be a very complementary skill that can become helpful is various situations.

VCs Often Use Public Market Information to Calibrate Private Market Valuations

If you are raising money for your startup, it doesn’t hurt to validate the current state of public markets. Whether you like it or not, venture capitalists (VC) typically look at public market valuations as a way to calibrate the valuations of their investments. This is particularly true if your company is on a trajectory to go public at some point.

Public Market Downturns Affect the VC Industry

Public markets are the ultimate representation of an economic downturn. The indicators of difficult economic times ultimately affect the VC circles. If you were around during the 2000s or 2008 crisis, you might remember that it was impossible to raise a round of VC funding regardless of the quality of the investment.

Public Market Investors are Becoming More Active in Private Markets

In the last few years, a number of hedge funds and private equity firms have started to make inroads in the vC market. Those public market investors are typically lured by the opportunity to invest in fast growing private companies before a potential public offering. As a result, many startups are now raising institutional rounds from traditional public equity investors. In those circumstances, the understanding of public market dynamics can result incredibly helpful.

These are just some of the reasons why I believe developing an understanding of pubic markets can be incredibly valuable in your career. At the end, public markets are a language that you should know how to speak and that will expand your perspectives of your work, industry and even your life.

 
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Posted by on April 3, 2015 in Uncategorized

 

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Some Thoughts About the Box IPO

Cloud storage company Box debuted in the public markets last Friday with a strong performance that pushed the price per share to $23.23 which represents an astonishing $2.7B market capitalization. The Box IPO represents the successful conclusion of a process that started last year when the company filed its first S-1 but later delayed the process to correct some of the concerns expressed by investors and analysts while also wait for a friendlier IPO climate.

All things considered, the Box IPO has been both incredibly successful and very atypical. Talking to a few friends about the IPO on Friday evening, we dicussed a few points that I thought would be interesting to summarize in this blog post.

The Risk of Raising at a Sky High Valuation

After retracting from its initial intentions of going public in 2014, Box raised $150M at a sky high $2.4B valuation. While the Box traded slightly over that valuation in the initial day, some of its investors are not yet seeing great returns based on the last round. In that sense, this is a great example of how, sometimes, raising at incredibly high valuations can fire back on investors looking for 2-3x returns.

Box-Info-Graph

It’s All About Going Fast

The Box IPO clearly puts the company as one of the market leaders in the cloud storage category which is getting increasingly competitive and commoditized. Since the early days, Box has done a masterful job accelerating customer acquisition, sometimes at the expense or revenues, to create distance between them and the incumbents in the space. Box’s relentless pursue of growth should be an example to follow by all startups in high growth enterprise software categories.

Profitability Matters

The market reaction to Box’s initial S-1 was far from warm. The company showed revenues at $124M  with losses at $168M which represented an increase from the year before ($112M). After the initial filing, Box updated the S-1 showing strng progress closing the gap between revenues and expenses and a clear path to profitability. As much as we reward growth in the enterprise software world, it is important to remember that profitability is a super important criteria for a strong performance in public markets.

Price Low

The initial price of $14 share proven to be correct for the Box IPO in this climate and Box ended up raising $150M with this initial public offering. This price highly contrast with Box’s initial S-1 with which the company was hoping to raise $250M. Similar to other IPOs like ZenDEsk, the strategy of pricing reasonably low mitigates any investor anxiety for the first weeks of trading.

Enterprise Software Continue to Perform Strong

Prior to the Box IPO, there was a lot of skepticism within the VC community in terms of the future of enterprise software IPOs. Similar to the Facebook phenomenon in 2013, a weak IPO for Box could close the window for enterprise software companies eyeing a public offering in the next few months. Thankfully, Box performed incredibly strong and the IPO window remains open for enterprise software companies.

 
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Posted by on January 26, 2015 in Uncategorized

 

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Scaling Enterprise Software Companies is Harder than Ever

Girls can do anything!

There is a common misconception within the startup community that building companies is easier than ever. Part of the argument is the amazingly cheap costs of infrastructure available with cloud infrastructures such as AWS or Google Cloud, the relatively easy access to early stage capital as well as the free distribution and commercialization channels available to any company. More importantly, this argument has been fueled by some large exits recently experienced by small companies such as Instagram or Whatsapp in the consumer space.

When we think about this argument, we can is about 75% true. If we divide the process of building a company between early stage (building) and late stage (scaling) and then we segment that universe between consumer and enterprise solutions. We can arrive to the following conclusions:

  • Starting a consumer software company is easier than ever before
  • Starting an enterprise software company is easier than ever before
  • Scaling a consumer company is easier than ever before
  • Scaling an enterprise software company is HARDER than ever before

scaling

To illustrate this thesis let’s take a look at the latest round of IPOs in the enterprise software space. Recent analysis showed some outstanding metrics about the new wave of enterprise software companies:

  • Average time from starting to IPO:5 years
  • Average amount of capital raised: $110M
  • Average number of employees: >560
  • Average number of sales and marketing employees: >180
  • Average revenue: $70M

As you can see, those metrics describe the difficult and challenging process of scaling an enterprise software company which highly contrast with the cheaper and easier way to get it off the ground. Without getting into a detailed analysis of the factors that contribute to this phenomenon, we can list a few usual suspects:

Markets are Bigger

The size of the enterprise software markets have drastically expanded over the last few years. As a consequence, companies need to capture a bigger size of the market to be relevant on any particular space which results in a harder endeavor compared to the equivalent task a few years ago.

Markets are Global

Today, enterprise software is a global business. The commoditization and globalization of distribution channels as well as the flexible global trading laws, have allowed customers in emerging economies to have access to the same enterprise software solutions than their peers in first world economies. As a consequence, every scalable enterprise software companies is faced with the challenge of acquiring customers in emerging markets which results in large sales and marketing operations.

Requirements are More Complex

With the evolution of enterprise software comes the complexity on the requirements of new solutions. As businesses have evolved they have faced more complex business dynamics that are rarely addressed by default in enterprise software packages. In order to acquire those types of customers, enterprise software companies need to spend more and more time and resources providing the right levels of customizations of their solutions.

Markets are More Competitive

Because starting an enterprise software company is relatively easy, you find a lot of early stage (post-seed, pre-Series A) companies in any segment of the market. As a result, competition is constantly intense which requires companies to deploy the right level of resources to stay competitive. Additionally, newcomers in the space always lower the price and try to simplify the customer acquisition model which poses new challenges for companies in growth mode.

I hope some of the factors below make sense. The enterprise software space is more exciting than ever but, as mentioned before, I often think there is a strong misconception about efforts that take to fully scale a modern enterprise software business. Reading this, you have to ask yourself: are you sure you don’t want to build a messaging application? ;)

 
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Posted by on September 2, 2014 in Uncategorized

 

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Startup Lessons: Selecting the Right Tools and Processes

toolsSince the early days of KidoZen, I’ve been obsessing about using really different an innovative tools to improve the productivity of the team. With our rapid growth, we continuously revisit and sometime restructure some of the tools and processes we are using to improve the communication and efficiency of the different groups at KidoZen. Considering how difficult is to model the right productivity processes and selecting the right tools in fast growing startups, I’ve been surprised about how little has been written about the subject. In that sense, I’ve decided to write a series of blog post about our experiences and current practices. In a fast growing environment, if the management team does not devote the time to innovative on the internal processes and productivity tools, it’s very easy to follow well-established practices and adopt well-established solutions like Salesforce.com, Office365, Marketo, etc. Even though those tools are best in class in their categories, they are built on traditional business processes which, sometimes, are not the best fit in a fast growing environment. Since the very beginning, we really wanted KidoZen to operate differently and innovative in our internal processes and communication structures. In that sense, we carefully looked at all the new vendors which were innovating the in the productivity space and went through the effort of evaluate their capabilities against our internal processes. Below you can find the different categories of tools we have implemented internally. I will be publishing individual posts about each specific category.

Document Repository: Internal portal to store and collaborate in corporate documents.

  •   We started with: Google Docs,
  •   We are currently using: Google Docs

Voice-Video Communication: Video conferencing platform for internal communication

  • We started with: Skype
  • We are currently using: Google Hangouts

Web Meetings: Platforms to host web meetings with partners, clients, etc

  • We started with: GoToMeeting + GoToWebinar
  • We are currently using: GoToMeeting + GoToWebinar

Internal Communication: Platform for internal communication between groups of employees, share news, etc

  • We started with: Nothing
  • We are currently using: Slack

Task Management: Platform for managing and tracking short-term tasks across the different teams

  • We started with: Asana
  • We are currently using: Trello

CRM: Systems to manage you current leads, accounts, etc

  • We started with: Salesforce.com
  • We are currently using: Insightly

Marketing Automation: Platform to manage leads, campaigns, etc

  • We started with: Nothing
  • We are currently using: ActOn

Relationship Management: Platform to manage the communication with your partners and related contacts

  • We started with: Nothing
  • We are currently using: RelateIQ

Email Marketing: Systems to author and manage email marketing campaigns

  • We started with : Constant Contact
  • We are currently using: ActOn

Internal Integration: Platform to integrate data across different systems

  • We started with: Nothing
  • We are currently using: Zapier

I hope this helps, the next few blog posts will go in details about our selection criteria and the specific capabilities we are leveraging on each one of these systems. Please provide feedback if there are other categories that we you would be interested on learning more about.

 
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Posted by on July 22, 2014 in Uncategorized

 

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PR Lessons: The Difference Between Good and Great

Image

These days our marketing team is going through the effort of selecting a new partner for our public relations(PR) and brand building efforts at KidoZen. This selection process comes after a failed attempt to work with a different PR agency which, despite their best efforts, turned out not to be the best fit for our current needs.

After being incredibly frustrated with the experience with our former PR partner, I shared my thoughts with a few of my advisors and they almost laugh at me explaining that my frustration was just a symptom of not knowing how difficult is to find the right PR partner for your company. It’s absolutely true, the KidoZen marketing team has decades of experience in PR and still managed to select the wrong firm for our current goals.

With this experience I learned a very fundamental lesson that could be valuable for every startup CEO: when comes to PR, you quickly learn the difference between good and great. Below I summarized some of my thoughts that, hopefully, will be helpful when working with PR partners

Different Stages, Different PR Needs

When selecting a PR firm, it is very important to clearly understand in details your current PR needs. The stage of your company is one of the fundamental elements that needs to be considered when working with a PR partner. While a mature company might have the need to increase its visibility in the public markets media outlets and specific types of investors, a smaller startup has completely different needs.

In Early Stages, Small PR Firms Might Be Better

There are many exceptions to this rule but, in my experience, I’ve found that smaller PR firms might often result in better partners for startups during their series A-B timeframe. Boutique PR agencies have the flexibility of growing with your company and can devote the right level of attention to your team to understand their PR needs.

Find Someone Who Understands Your Space

This is a tricky one. Every other PR agency, will do their due diligence in order to appear knowledgeable in the space but that doesn’t mean they are true experts. Deep knowledge, experience and connections in your current space are key in order to be a solid PR partner. When going through your selection process, push your potential partners in terms of understanding of the new trends in your space, your competitors, acquisition patterns, VCs investing in the space etc.

Good PR is not Cheap

Might sound obvious but I was a bit surprised of how expensive good PR agencies can be. While, as a startup, you need to remain very cost-conscious, it is important to realize that good PR work is going to require a significant investment on your side.

Connections Matters

When selecting a PR agency, look for someone who is really connected in the space. Connections are extremely important because, more often than not, your PR partner will have to call favors in order to increase the visibility of your company.

You Need an Internal Marketing Team

As engaging in PR efforts, don’t attempt to manage your external PR partner. It will drive you insane. It is important that your internal marketing team owns the relationship and manages the communication channel between your team and your PR partner. At the end, a good PR partner will grow with your company and it is key to have dedicated resources focused on nurturing that relationship.

 
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Posted by on June 24, 2014 in Uncategorized

 

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How to Run a Board Meeting: The Slide Deck

A few weeks ago, I blogged about my first board meeting as a CEO of a venture backed company. The response to the blog post was great and I received a few emails asking me to share more details. In that sense, I decided to put together a template of the slide deck I am using during board meetings.

The purpose of the board package slide deck is to provide a clear summary of the current state of the company including the major milestones achieved and challenges faced since the previous board meeting. CEOs should use the slide deck as the main vehicle to drive the discussions during the board meeting and it should be structured in a way that prevents unnecessary discussions that might derail from the main goals of the board meeting. In order to present the current state of the company, CEOs should give clear metrics about the main areas of the business: finances, sales, business development, product, team, marketing, etc.

While preparing for my first board meeting, I looked at different recommendations to structure the slide deck but, at the end, decided to create a specific structure that work for our investors. Even the slide deck template before might result as a good reference, I suggest you do the same and try to find the flow and structure that works for your company.

I hope this helps. Let me know your feedback.

 
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Posted by on March 20, 2014 in Uncategorized

 

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