Tag Archives: ceo

Is AWS enabling AngelList to boil the VC business?

aws logo

Just finished listening to Ben Thompson & James Allworth discuss how Amazon Web Services is impacting the venture capital business.

My mind is blown!

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I heard all about AngelList getting 400m from China’s csc. I didn’t really understand the significance until I saw Fred Wilson’s post Outsider vs Disruptor.

Are VCs nervous, I wondered?

The argument goes, as it takes less capital to get started, way more people can step in to help you get going. Startups don’t need a VC from their first day.

1. Is Amazon boiling the VC frog alive?

As the story goes, if you turn up the temperature slowly, the frog won’t notice that he’s being boiled.

Ben Thompson at 9:30 in the podcast:

“I think the real enabler of this is Amazon. Back in the 90’s you had to go buy Sun servers, Oracle databases, and you had to spend hundreds of thousands if not millions of dollars. And they were all up-front costs. And that’s what Venture Capital is good for.”

Indeed, with the advent of AWS, startups can build their application in the cloud with *ZERO* upfront costs, and only dollars per hour. This is truly a seachange.

Also: A history lesson for cloud detractors – January 2012

2. Dell’s 67 billion dollar buy of EMC

o largest acquisition in tech history
o enterprise tech & enterprise storage

At 50:36 in the podcast, James Allworth says:

“I have this mental image of what used to be this massive land mass, and all these companies fighting it out and eventually the ocean is rising, aws is rising and it’s leaving an increasingly small amount of land mass and there are fewer & fewer of them and it’s going to be very interesting to see whether any land mass is remains when aws is finished with it, and i guess this DELL EMC thing, the argument is well there’s gonna be a little bit left & we’re going to take whatever it is because we’re the biggest but it remains to be seen whether there’s gonna be anything left for anyone at all”

Dell buying EMC is apparently the largest acquisition in tech history at 67 billion according to Bloomberg. That sure does say a lot about Amazon’s downward pressure & commoditization.

Though I didn’t know EMC would be bought by Dell for such a ridiculous sum, I was arguing this back in 2011 – the New commodity hardware craze .

Related: Is Amazon too big to fail?

3. Wework & the disappearing server room

Ben Thompson makes a really fascinating point at 46:30 of the podcast:

“There’s been a big shift from the valley to san Francisco all the big companies of yesteryear are in the valley and almost all of the unicorns are in san francisco, and this is also because of AWS…

You can’t afford to pay square footage for servers in San Francisco, but if your startup is only some people, a desk & some computers… suddently it’s much more viable you have companies running businesses out of wework offices… the only reason wework can exist is because you don’t need to have servers because all the servers are housed by amazon the fundamental fabric of the silicon valley is changed because of aws”

Yet again, Amazon has impacted the valley in a huge way.

Also: Are we fast approaching cloud-mageddon?

4. Google & iphone scale

“You could make the argument that AWS is right up there with Google & right up there with the iPhone in it’s fundamental transformation of industry after industry.”

And while Amazon is fully enabled by Linux, and didn’t invent utility computing, they have surely

Read: When hosting data on Amazon turns bloodsport

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Is Hunter Walk right about operations & startups?

The.Rohit - Flickr
The.Rohit – Flickr

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Hunter Walk blogged recently about the importance of building great operations teams. And while he was speaking primarily about business operations, the startup technical operations teams are equally difficult to get right.

1. performance & scalability

As your grows like Birchbox, your customer growth curve may begin to look like a hockey stick. That’s a good problem to have. Will your web application be able to keep up with the onslaught of traffic those customers bring?

Getting performance and scalability just right, will mean fewer site crashes during those key moments when all eyes are on your site.

Also: Is top operations talent hard to find?

2. Operations is key to architecture

Developers will always have strong opinions on architecture. However they may be heavily influenced by their own mandate, features, deliverability & deadlines. So it’s no surprise that they may sometimes choose to build on ORM’s, the middleware brought to you by Hibernate, Cake PHP, Active Record & the like.

And while these technologies seem a necessity in todays modern architectures, they play havoc with your long term scalability. Strong technical operations teams mean a better vision in this area. Heading off your reliance on these technologies will mean managing technical debt before it takes down your country.

Read: Are generalists better at scaling the web?

3. Operations informs strategy

Did you build in those operational switches to turn off the heaviest code, when your site gets overloaded? Operations strategy can help you see these problems on the horizon before they overwhelm you.

Have you considered building a browse only mode for your site? If you’ve ever visited Facebook or Yelp after hours you may have been greeted with the message “We can’t save your comments. Please try again later”. A small innocuous message to end users doesn’t disrupt their enjoyment of the site terribly. But from an technical operations perspective it’s huge. It means teams can perform backups, upgrades and maintenance without interrupting day-to-day activity on the site.

Related: Is scalability a big business?

4. Operations means resilience

We only learn real disaster recovery lessons from storms like Sandy. That’s because resilience highlighted best when it is a real & urgent need.

In technical operations, getting backups right & testing your recovery plan all form key steps in your path to excellence. Get them right before you need them, and ensure repeatability.

Read: Is high availability a real possibility?

5. Operations means technical strength

At the end of the day, getting technical operations right, means you can move from strength to strength. It means building on a solid foundation the likes of Google, Facebook, Foursquare & Etsy. It means you can evolve & grow with your customers, and meet their needs confidently.

Check out: Do startup CEO’s underestimate operational costs?

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Why I ask clients for a deposit

Editor & writer in friendly dialog

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1. It indicates both parties are serious

A common refrain when discussing terms of a project, and reviewing statement of work – “when shall we get started?”. The answer should be, “I’m ready to get started anytime you like. Would you like to use paypal or ACH for deposit?”.

The deposit signals to the vendor that it’s time to get working. This client has the budget and is serious about moving forward today.

Read: Why Fred Wilson is wrong about Apple

2. It protects against scope changes

Startups & seasoned businesses alike have changing needs. That’s why they may choose a situational resource to begin with.

If the winds change, and we don’t need you tomorrow, a deposit defrays the final invoice, and or discounts you may have applied.

Related: Is Dave Eggers right about risks of social media?

3. Insurance if business fizzles

Fizzling business, is a nice way to say the market has changed. Perhaps the startup has decided to pursue other opportunities. In close to twenty years of business I’ve only had this happen twice.

Once I was working with a rewards card business. They were already having trouble meeting payroll. Turns out businesses have a legal obligation to meet payroll. That’s another way of saying they’re at the top of the who-gets-paid list. And vendors may be closer to the bottom. They owner went back to being a lawyer, his profession before the startup.

All in all, a deposit provides some insurance in these cases.

Read this: 5 cloud ideas that aren’t actually true

4. Signals your maturity to client

This is a hard one for some freelancers and consultants to stomach. “I really want to get going with consulting, and don’t want to turn away this client.” The thinking goes. But consulting is a peer relationship, where vendor and client need to be on an equal footing.

Your need for a deposit, and willingness to walk away without one, says to the client you are professional and have been in business for some time.

Also: If you’re using MySQL in the Amazon cloud, you need to ask yourself this question

5. Protection from early termination

That sounds ominous but it doesn’t have to be. In the world of freelance and consulting, a client can decide they no longer need your services tomorrow.

Why? Perhaps they hired a fulltime resource? Perhaps their needs changed? Perhaps the storm of site outages have passed and the urgency has changed.

Whatever the reason, projects change. If you’ve offered a discount for three months of work, but only end up with one month of work, your full fees may apply. In that case, the deposit should be the discount amount.

Check this: Do managers underestimate operational costs?

Get more. Grab our exclusive monthly Scalable Startups. We share tips and special content. Our latest Why I don’t work with recruiters

Business lessons from brokering a half million dollar deal

I’ve had my Manhattan loft in the market for some six months now. After dropping the asking price a couple of times, buyers are finally circling, and I’m close to finalizing a deal.  In that time however, I’ve learned some big lessons.  Real Estate, is the epitome of cutthroat capitalism and as such has some very potent lessons to teach about business.

Understand Interests – Two Sides to Every Argument

Brokers have an interest – to make their fee;  buyers have an interest – to lower the selling price, sellers have an interest to get the highest selling price.  On the surface this may seem self evident.  But dig a little deeper and you’ll learn more. Brokers are somewhat aligned with buyer and seller, but like a cab driver preferring lots of short trips, their incentive is to do more deals. Fewer deals with higher margins would actually cost them. A 1%-2% higher selling price may be significant to your bottom line but meaningless to theirs.

[quote]Business Lesson 1 – Pay close attention to each party’s interests and you’ll understand the negotiating dynamic more clearly.[/quote]

In brokering, like war, no one plays fair

Each industry has it’s own ugly side. No one calls back. No one emails back. There are no pleasantries. In some businesses where credibility and reputation are built over time, people do care–little bit. But in brokering a large deal they don’t.  Silence means “Hey, thanks for going out of your way to give us an hour of your time even though we were late.  We don’t care.  We no longer need you & we’re not gonna respond.”  Got it, heard you loud and clear!

[quote]Business Lesson 2 – Be prepared for selfishness and deception. In some cases watch out for cheaters and even fraud.  Don’t let this color all your interactions, but be aware that some parties may not have the same scruples as you do and some may even break the law. [/quote]

Markets are bigger than you are

You may think your house or apartment has some intrinsic value, based on renovations or the time you’ve held it, or some other more personal metric. However the market is ultimately what sets the price of the asset. Market trends can swing wildly and irrationally so be prepared to “get real”, as they say in the business.

[quote]Business Lesson 3 – Market forces set the price of a good or service. The door swings both ways so when there is a greater supply be prepared for the price to go down, and when location, asset or skills are in great demand, be prepared for the price to go up.[/quote]

Buyers move on emotion; facts get you only so far

Salesmen tell stories. It’s their job to engage, stir passions, get people to move. Sometimes these yarns are taller than you or I might like, but if people knew exactly what they wanted, brokers wouldn’t exist. This occurs across the spectrum in sales.

[quote]Business Lesson 4 – Pay less attention to the facts and arguments a salesmen presents to you. Only the underlying interest of each party will tell a clear story of motivations. Weigh that along with the market appetite and you should have a good idea of the right price.[/quote]

Protect your interests and time

Over the months I’ve been on the market, I’ve had countless brokers try to sell me their services. An exclusive seller agreement is valuable to a broker as it allows them to control the process and control the fee distribution. One broker made an appointment to come by with their buyer over a holiday weekend. Following up at the appointed time, they explained that they were running late though frankly the broker sounded hung over. Upon arrival they brought no buyer. Seeing my irritation, they quickly fabricated a story about a phantom buyer and their specific requirements. After wasting a few hours of my time and breaking up my holiday weekend, I never heard from them again. Not fun.

[quote]Business Lesson 5 – Qualify your prospect before you grant them your time. There are many parties who can and will waste your time if you’re not careful. Be diligent about weeding them out before clearing your schedule for them.[/quote]

iHeavy Insights 77 – What Consultants Do


What Do Consultants Do?

Consultants bring a whole host of tools to experiences to bear on solving your business problems.  They can fill a need quickly, look in the right places, reframe the problem, communicate and get teams working together, and bring to light problems on the horizon. And they tell stories of challenges they faced at other businesses, and how they solved them.

Frame or Reframe The Problem

Oftentimes businesses see the symptoms of a larger problem, but not the cause.  Perhaps their website is sluggish at key times, causing them to lose customers.  Or perhaps it is locking up inexplicably.  Framing the problem may involve identifying the bottleneck and pointing to a particular misconfigured option in the database or webserver.  Or it may mean looking at the technical problem you’ve chosen to solve and asking if it meets or exceeds what the business needs.

Tell Business Stories

Clients often have a collection of technologies and components in place to meet their business needs.  But day-to-day running of a business is ultimately about bringing a product or service to your customer.  Telling stories of challenges and solutions of past customers, helps illustrate, educate, and communicate problems you’re facing today.

Fill A Need Quickly

If you have an urgent problem, and your current staff is over extended, bringing in a consultant to solve a specific problem can be a net gain for everyone.  They get up to speed quickly, bring fresh perspectives, and review your current processes and operations.  What’s more they can be used in a surgical way, to augment your team for a short stint.

Get Teams Communicating

I’ve worked at quite a number of firms over the years and tasked with solving a specific technical problem only to find the problem was a people problem to begin with.  In some cases the firm already has the knowledge and expertise to solve a problem, but some members are blocking.  This can be because some folks feel threatened by a new solution which will take away responsibilities they formerly held.  Or it can be because they feel some solution will create new problems which they will then be responsible to cleanup.  In either case bridging the gap between business needs and operations teams to solve those needs can mean communicating to each team in ways that make sense to them.  A technical detail oriented focus makes most sense when working with the engineering teams, business and bottom-line focused when communicating with the management team.

Highlight Or Bring To Light Problems On Horizon

Is our infrastructure a ticking timebomb?  Perhaps our backups haven’t been tested and are missing some crucial component?  Or we’ve missed some security consideration, left some password unset, left the proverbial gate open to the castle.  When you deal with your operations on a day-to-day basis, little details can be easy to miss.  A fresh perspective can bring needed insight.

BOOK REVIEW – Jaron Lanier – You Are Not a Gadget

Lanier is a programmer, musician, the father of VR way back in the 90’s, and wide-ranging thinker on topics in computing and the internet.

His new book is a great, if at times meandering read on technology, programming, schizophrenia, inflexible design decisions, marxism, finance transformed by cloud, obscurity & security, logical positivism, strange loops and more.

He opposes the thinking-du-jour among computer scientists, leaning in a more humanist direction summed up here:  “I believe humans are the result of billions of years of implicit, evolutionary study in the school of hard knocks.”    The book is worth a look.

Metrics Bridge Gap Between IT & Business Units

On the business side we’ve all seen requests for hardware purchases that seem astronomical, or somehow out of proportion to the project at hand.  And on the IT side we’ve been faced with the challenge of selling capital expenditures on technology, as demands grow.

Collecting statistics on real usage of server systems, and then connecting the dots to business metrics is an excellent way to bridge the gap.  This allows IT to draw concrete connection between technology investment, and reaching business goals.

Metrics and drawing the dotted line in this way also educates folks on both sides of the tracks.  It educates technologists on exactly how technology purchases can be justified, by their direct return to the business.  And it educates finance and business executives on how those hardware purchases directly contribute to business growth.