deal architect

Food Fight!

Meanwhile at the Delta Tau Chi house  .. two Irregulars, Josh Greenbaum and Jason "Woodrow" Wood are arguing about the shrinking violet called Marc Benioff.

Jason calls Josh a curmudgeon - which would typically mean I should line up with Josh. But I am squarely with Jason on this. Because Jason looks at an economic angle, whereas Josh sticks to integration and technology issues.

To compare salesforce.com to Siebel is to compare a Southwest seat to a BA flat bed.  Every day  Southwest  flies over 250,000 passengers. BA flat bed capacity on a daily basis on its 747s and 777s is less than 7,000. Southwest average passenger trip is 800 miles. BA's long haul around 5,000 miles. BA's average long haul ticket costs, by my estimate 25X that of average Southwest ticket.

salesforce.com is going after a much larger, more cost sensitive SME market than did Siebel. Offering a "flat bed" to this market is overkill. If anything the bigger vendors have to react to salesforce.com price points of under $ 100 per user a month.

The other thing Josh does not factor is Southwest started off life as primarily a Texascarrier. Today it flies to 63 cities in 32 states. When you have a decent business model, customers help you  expand. Customers will take salesforce.com beyond CRM - but at its own pace. Not to get to be an SAP overnight. Especially when SAP has to rip out its "flat beds." Get its TCO down from over $ 1,000 per user a month to under $ 100.

I think I know who will have more turbulence the next few years. Food will be flying around, but  it will not be much fun.

You are now free to move around the world *

AnnieJennie graduated last night.  My kids have always called the twin sisters as one name. Their grandmother, Lucy, was our first babysitter. The good Puerto Rican aubela spoiled them rotten. Their step father, Jorge, from Cuba has helped us with many a home project. I was proud to take the video of the commencement. Almost as proud as their mom, Nancy.

As the Immigration bill meanders through Congress and Americans fret about being run over, I felt good about a system which produces such kids. Kids with "off the Mayflower" names. And those with unpronounceable names. If I heard right, the graduates last night collectively qualified for $ 11 million in university scholarships - average of 30K per student.

Then I see Jonathan Cousins' interactive map which shows the human Serengeti in other parts of the world. Russia as a magnet? Yup, lots of folks from the old Soviet Republics and allies, Turks and others migrating there. Europe - seeing huge migrations within itself.

I read about the no-immigration policies in Japan. Still has not helped to protect its jobs for a whole generation of its young. The Lost Generation.

I worry, that in our surly mood, we forget what a competitive advantage immigration has been to the US for over 200 years. And that other parts of the world are learning from our experiences. And some day soon will be able to attract folks like Jorge more than the US will.

Our Annies and Jennies deserve the best job opportunities in the world. They also deserve the richness in Lucy's platanos and cafe leche.  And they deserve friends with grandmas to spoil us with baklava, dim sum, samosas - and yes, country biscuits and pumpkin pie.

* with apologies to Southwest Airlines, which only flies in the US.

Vote early - and often

with your dollars, please. Good to see fellow Irregulars Susan in Naples, Sadagopan in Marco Island, Jason in Boca and James in Orlando. In FL,  we still do a few things right like hospitality. 

Hopefully they got a taste of the Everglades, Keys, St. Augustine, Art Deco district, Magic Kingdom, Kennedy Space Center, Vizcaya, Dali Museum, Biscayne National Park, Daytona,  Tampa cigars and Cuban sandwiches, our beaches, our golf, our voting machines ....knowing these Type As they probably did not leave their hotels....

Hey, so come back - and often. The state needs revenue -)

The New Medici

Small consolation for losing to the Luna Rossa, but over weekend I was admiring the technology in his boat, and wrote this post on my New Florence blog about Larry Ellison's support of a number of good things in life.

I may not agree with Oracle (and him) on a number of things , but he has done a lot for tech - and other industries.

"Don’t Finance Anyone Over 27"

NY Times follows Newsweek in suggesting VCs are not funding  companies with older entrepreneurs. It is the MTV model - have young managers who are much more in sync with your audience.  Of course, MSM primarily focuses on consumer technology.

But for enterprise technologies? With few exceptions, I dare you to find many 27 year olds or younger who understand enough of enterprise processes and technologies to deliver a whopping success. Of course there are exceptions (Michael Dell, for example or Ben Casnocha), but if I was funding enterprise technologies I would vote for someone globally traveled and with several years in an enterprise technology vendor or someone who has run a major project or a unit in a large corporation.

In tech world, we have a smug view that only we can do start ups right. Managers at big companies are constantly launching new products, opening new global operations - building billion dollar businesses from scratch. If VCs would loosen the low cash/high equity comp packages, you would see several 30, 40, 50, 60 year olds come out of the woodwork and make pretty damn good entrepreneurs.  And they would mirror the enterprise customer audience  - which is not likely to be in its teens or 20s.

Age has little to do it. Just ask serial entrepreneurs like Dave Duffield, Dan Bricklin, Jim Barksdale.

The fat, flat world

Ok, so I am dating myself, but when I joined PwC, a partner told me - $ 1 for you, $ 1 for training, rents and other overhead, $ 1 for the partners. Billing rates at 3X base salary.

So now I read, a graduate joining TCS (the biggest Indian vendor) starts at Rupees 2.5 Lakh a year. Lakh is Indian for 100,000. The Dollar to Rupee Exchange rate is roughly 41 to 1. Over 2,000 billable hours a year that is $ 3 an hour. After 3 years, say $ 4.50 an hour.

But the average billing - 6X  - $ 17 to 28 an hour for a programmer (the typical college fresher assignment). On-site rates in the US and Europe are much higher - $60 to 100 an hour (for more senior staff). Clearly the overhead part is higher these days - more training (8 to 10 weeks at entry level, 1-2 weeks every year after),  infrastructure, more travel etc. And that overhead is worsened with the significant staff turnover. Cannot blame young Indians seeing themselves billed at 6X to 20X, for trying and get a piece of that for themselves.

But the margins are also significantly higher now. Most Indian vendors are enamored with the huge valuations Infosys, Wipro, Cognizant enjoy. But Wall Street is only generous if you can deliver 40% top line growth and 45% gross margins consistently. And net margins in the high 20s.

In fact in this survey, customers think after-tax outsourcing margins should only be 5 to 12%.  You can see why some customers feel they can do better with their own captives.  You can see why Chinese and E. European and S. American competition is growing. Why IBM is able to beat Indian vendors as at least some contracts come up for renewal.

In the flat world, customers, competition and employees are not far behind Wall Street in visibility to economics. Something's gotta give.

Equal Time

Most of what Thomas (who works for SAP, but is a fellow Irregular) describes would fail my MAGIC framework for innovation. To me, innovation is when you look at a business problem, then find the most appropriate technologies for it, do it intensely- so ridiculously low cost/high payback etc...not just sit and wait for years for a supermarket vendor to deliver and then take months to implement.

...but credit where it is due. Thomas does a great job with video clips, superb photos, links in describing what SAP calls innovation and it showcased somewhere in the two Sapphires in Atlanta and Vienna in the last month. Sets a benchmark for every other vendor on how to summarize and  showcase a major conference or announcement.

Must read.

And disagree...especially if you are a slob who blogs in shorts while Thomas describes the latest in Windsor knots -)

More in New Florence

On my innovation blog

RFID and Privacy
Planning for a Climate Changed-World
Oh No! Human Wave 2.0
Email on Vacation
Technology Innovation and the San Francisco Giants

We are going to the 'Ship!

Nothing as exciting as the baseball kids in the movie Hardball, but my daughter, Rita  had a roller coaster weekend at a chess tournament. Came down to the last game in the tournament. At stake, the right to represent Florida girls at the prestigious Polgar National Invitational

She was real close last year. Glad she pushed hard to get through this year.

Susan Polgar, a chess prodigy and Grandmaster, has done more in the last few years to encourage young ladies to play the game.  And girls like Rita are helping carry the tradition. She just got some business cards as she is starting to get calls to coach the next generation of players.

Of course, us chess dads have to carry our baseball bats around. With 10 boys to every girl in the game, you have to -)

Planning for "Extreme Scale"

This business did not plan for scale.

Scoble has advice for start ups (and grown up companies)

"The word of mouth network is now so efficient that I knew they’d probably have about a million people hit it on the first day....Companies that don’t plan for extreme scale issues are gonna really look lame from now on."

PS - that poor donkey would be happy to be just lame -)