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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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4 Key Characteristics Of A Great CTO

These days I am helping a couple of startups with their technical recruiting processes and organizing their engineering groups. One of the things that I find interesting is how much non-technical founders emphasize on hiring experienced people. While I consider experience a very important factor in a great tech executive, I don’t believe experience alone can help you build a great technical team.

A few years ago, when I was still a computer science student, I had a very interesting conversation with a very wise professor about this topic. At the time, I was evaluating offers for engineering leader at several large organizations but was second-guessing myself due to my lack of experience in the industry. During our conversation, my friend enumerated some of the factors that are required in great technical leaders:

  • Knowledge: Being extremely, and I mean extremely, knowledgeable about the technology market, ecosystem, new trends etc is key to lead a great engineering team. Experience alone certain doesn’t give you knowledge.
  • Experience: Having “been there, done that” definitely helps to recognize the patterns, techniques and processes that can be effective in specific situations.
  • Perspective: From my viewpoint, this is the most important quality of look in a tech leader and the hardest one to explain. Perspective uses knowledge to overcome the lack of experience and make effective decisions. The thing about perspective is that is almost impossible to teach, you either have it and nurture it or you don’t
  • Analytical and Organized Thinking: Finally, engineering leaders need to be able to look at problems from a very analytical perspective and organize engineering processes in models that can be effective. These challenges require very strong, organized and analytical thought process which is very hard to fund in most people.

I know these are not the only characteristics of a great engineering leader but I consider them the most important. Other aspects such as the ability to listen, team player etc are also necessary but can be coached and learned over time.

I hope that helps. What do you think? What makes a great engineering leader?

 

 
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Posted by on September 6, 2013 in Uncategorized

 

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