The second part of Yogi’s quote, “You can observe a lot just by watching,” is “We made too many wrong mistakes.” My guess is that the context for this quote was Yogi’s commentary on a game the Yankees lost because they weren’t paying attention to the game’s progress, causing them to take risks – or make the “wrong mistakes” – that cost them the game. Placed into the context of today’s business world, the idea of making the “wrong mistakes” holds a good lesson, namely, that we can make “right mistakes.” In fact, a good friend and mentor, Colleen Abdoulah, President and CEO of Wide Open West, rewards members of her team for making mistakes. The reason is simple: if we aren’t making mistakes, we can’t possibly be learning. The key is to make the “right mistakes” and to learn from them.

So what’s a “right mistake”? I think the key lies in the motivation behind the mistake. If the motivation is risk-taking for the purpose of improving the business and driving results, but the execution is flawed or the environmental factors limit the success of the risk, then the mistake is one we can learn from. On the flip side, Yogi may have described “wrong mistakes” as those that stem from lack of observation or, worse, from motivation that is self-serving or unethical.

Right or wrong, never make the same mistake twice. Otherwise, “It’s like déjà vu all over again.”

The headline quote has been attributed to baseball great Yogi Berra.  Although Yogi has said that “I never said half the things I really said”, this one sounds like pure 100% Yogi.

The plain truth is that Berra is probably better known for his colorful quotes than he is for his baseball prowess.  This is truly remarkable given his membership in the Baseball Hall of Fame!

The thing that made Yogi’s quotes remarkable was not that they were nonsensical.  If he merely spoke gibberish, his utterances would have been long ago forgotten.  So would he.  Instead it was his knack for misapplying common phrases that made him an original.

The headline quote is no exception.  Yogi was merely trying to use a cliche he’d heard before.  But he misapplied it as only he could.  Even so, you know what he intended to say, and he was right.

Business managers should listen to Yogi.  There is much to observe by just watching.  Make sure to take the time to do so.  And if you have dispersed locations, make sure you have the tools to do so, each day, every day.

Thank you for the reminder, Yogi!

As I covered in yesterday’s post, the valuations for SaaS companies have routinely exceeded that of the traditional software vendors.  I suggested that there are reasons for this, and they may be different from what you expect.

Phil Wainewright , a SaaS industry pioneer, recently wrote an intriguing post on this topic in ZDNet, “Want Cash? Buy SaaS”.  Mr. Wainewright covers a speech given by the Corum Group’s  Jerome Fougerat at the SIIA OnDemand Europe conference in Amersterdam.  Mr. Fougerat’s contention is that on-demand software companies generate cash flows that are more predictable than their more conventional software brethren.  And due to this, SaaS vendors make especially attractive takeover targets.

But this seems counter-intuitive, doesn’t it?  How can a SaaS company that collects cash over the life of the subscription period better generate cash than a company that collects large upfront software license fees?

The answer, according to Mr. Fougerat, is not the amount or timing of cash flows.  Rather it is in the predictability of these cash flows.  This predictability, he argues, is the reason that on-demand companies command valuations nearly twice as high as traditional software vendors.  This is a fact certainly not lost on savvy VC investors.

I agree with Mr. Fougerat that predictability of cash flows contributes to the equation.  However, I would take his thesis further.  It is not just the predictability of cash flows, but also the overall predictability of results, that make on-demand businesses so attractive to investors.

In the investing world, uncertainty is poison.  Investors demand results that are in-line with their expectations – expectations that are governed by the guidance of executives and predictions of analysts.  Companies that miss their numbers are brutalized.

Take for example GE, the darling of the blue chips.  On the day that Jeffrey Immelt announced that GE had missed its earnings guidance, by 7 pennies per share, the stock plummeted 13%.

SaaS companies are less prone to volatile swings in performance.  This is due to the construct of the recurring revenue model.  When properly managed, the revenue stream becomes very predictable.

In other words, boom and bust cycles are more easily avoided.  And investors are willing to pay a premium for this certainty.

No, I’m not talking about the environment.  I’m also not referring to the Celtics (See Matt Steinfort’s recent posts on the Boston Celtics Part I and Part II).  Rather I’m drawing attention to the healthy revenue multiples of SaaS companies.

A presentation (see page 17) recently at the SIIA On-Demand conference in Amsterdam by the Corum Group draws attention to this fact.  The multiples for on-demand businesses have been routinely higher than their more conventional software brethren.  How much higher?  Nearly 2X for recent and relevant M&A transactions.

Do investors, including the companies that have acquired SaaS companies, have it all wrong?  Are they overvaluing SaaS companies in comparison to conventional software companies?

I don’t believe so.  And my reasons may be different from what you expect.

That’s what Detektor – SecurityWorldHotel.com called the Martin Gren, one of the co-founders of Axis communications in their recent interview.  Mr. Gren does sound like a man who has strong priorities around family, but also technology and business and is really not so concerned about just making lots of money.  He has grown to be one of the most influential people in the security industry, even if somewhat indirectly and anonymously.

In the above article, Mr. Gren offered a small peek at some of his beliefs on how new technology grows and how companies best deliver what customers want.  Making too much in house and creating closed, proprietary  systems slows companies down.  Put another way, the “Not invented here” syndrome still seems to be prevalant in our industry.

By focusing on what you’re best at and not reinventing the wheel by using what’s available (often through partners, off-the-shelf or open source) one can innovate and create value much faster.  Axis is proof of this through their focus on IP cameras which they are very good at.  They work with partners through their open interfaces allowing their products to be used with many excellent video management systems and NVR’s.  This allows one build solutions which are tailored for the end user using the best parts to do the job.

But it takes at least some open standards to make this work.  At a minimum cameras have to talk to storage devices and management systems have to talk to both.  The all important data feed also needs to be intertwined with video to help users find what they are looking for.  I am sure the ecosystem for how these components come together over time will change, but they will be made better with open standards.

Yesterday I recalled an interesting period of protocol history when the ISO OSI protocols standards battled the IETF standards.

What happened? Well OSI lost and IP won. The reason? I think largely because the IETF was an open standards body whereas ISO was closed.

(oh, and the artwork on Milo’s teeshirt? A large elephant with the ISO logo on its belly, standing on a tight wire that has sagged considerably under the weight of the elephant!)

So how does this relate to video? Well it appears to me that that physical security / traditional security vendors are trying to plan their game based on the ISO playbook. The very traditional model for these vendors is security (and market power) by closed operation. In other words, “I won’t tell you how my stuff works so you can’t inter-work with it. That will make sure you have to use my gizmos in the future”.

Now-a-days, they are opening up a bit, but most are still missing the boat.

Axis, Bosch and Sony are working on a “Standards Forum” for IP based video. This sounds interesting, until you read on to discover it’s a closed forum until the three named above decide on the rules of who can join.

Then there is a broader group called PSIA or “Physical Security Interoperability Alliance” composed of Adesta, ADT, Anixter, Axis, Cisco, CSC, DVTel, GE Security, Genetec, HID Global, IBM, IQinVision, Johnson Controls, March Networks, Milestone, Orsus, Panasonic, Sony, Texas Instruments, Pelco and Verint. They are also holding closed meetings until they decide on the rules of who can play.

I have to say, sorry folks, but I’ve seen this movie before. Rough consensus and working code are going to blow the doors off standards, alliances, or forums that are created in a closed fashion. To be fair, some of the companies listed above get this: Cisco for obvious reasons and Axis because they have a very open architecture for their camera technology.

For the rest of you, I predict a huge migration of market share away from the old and over to the newcomers. May you all have wonderful historic references in Wikipedia!

Managed Video as a Service goes beyond loss prevention and security, with applications that help business operators identify and leverage best practices that they “catch” on video.  Not only can the operator see these activities, but, using the power of search and the Internet, they can share these incidents with their entire organization.  Employees learn in various ways, and for those who are visual learners, seeing clips of what “good” looks like is a powerful teaching tool.

I have a confession. For a while now, we’ve told our kids that there are video cameras in the house, so when they have an irreconcilable argument, we tell them we’ll review the video to find the real truth. Kind of a modern-day twist on “wait ‘til your father gets home.” At first, our threats evoked the desired response: either the kids dropped the argument or one child fessed up. I even caught them surreptitiously glancing upward to see if they could find the hidden cameras – usually right before they jabbed their sibling in the ribs. So how do you keep an eye on the kids without really being there? I believe the true demonstration of good parenting is the way your kids behave when you’re not watching. But wouldn’t it be great to catch that good behavior on video? Pop some popcorn, and make it a family event to replay the videos of all that good behavior to reinforce and encourage more.

Happy Father’s Day!

Abraham Maslow, an American Psychologist, developed a landmark theory on human motivation.  Dubbed Maslow’s hierarchy of needs, the theory describes the paradigm that controls human motivations.

In summary, people are motivated according to a hierarchy, which stretches from the most basic (psysiological needs/eating, breathing, etc.) to the most complex (self-actualization/morality, creativity, etc.).  Prior to focusing attention on future levels, one must first satisfy the needs at the lower levels.

Simply put, if you don’t have food, nothing else matters.

It’s interesting to apply the framework of the hierarchy of needs to business organizations.  Answering the basic question “what is most important to them?” is imperative to understand the needs and motivations of customers, as well as competitors and vendors.  This understanding will allow you to anticipate requests, and resist objections.

Depending on your age, you may remember the period of time after the introduction of the cellular phone.  While there were early adoptors, business operators did not immediately provide all of their salepeople with a mobile phone.  It was viewed as a luxury, not something vital to survival.

Obviously this has changed over time.

Where is managed video on the hierarchy of needs for business owners in the restaurant space?  Or the retail owner?  Hotel operator?  If it is seen by some as a luxury, this view is changing, based on impressive returns being generated by leading edge operators. 

Full industry adoption will occur when the absence of managed video is viewed as a distinct competitive disadvantage.  And this is starting to occur.

VARs are a key component of a well-prepared go-to-market-strategy. The attached link speaks to the growing sophistication of our VAR partners as they evolve into a service and support model.

MVaaS continues to gain traction with this “new breed” as they see the enterprise value beyond the typical video hardware and software resell.

http://www.sandhill.com/rss/redirect.php?name=daily_blog&id=40&post=421