Tune Into The Cloud: The Billionaire Boys Club

The Billionaire Boys Club
Not too long ago, it took even the most successful entrepreneurs several centuries or at least decades to reach a valuation of a billion and thus become a member of the exclusive Billionaire Boys Club*. Families like the Rothschild’s, the Walton’s or the Brenninkmeijer’s have indeed built up impressive capital wealth, but because it took them several generations, it often became quite diluted among brothers, sons, daughters, nieces, and even third-degree-nephews.

With the advent of first: IT; then the Internet and now the cloud, that timeframe has rapidly shrunk. Today companies with as little as 50 or even 13 employees reached valuations where reputable companies and world-renowned artists can only dream of. This acceleration is even more poignant when we look at applications in the heart the nexus of Social, Mobile, Cloud and Analytics (SMAC), such as Instagram , Tumbler and recently WhatsApp. And just like in the music industry there is a lot of interest in the tip parade: the list of runner ups; ideas and products getting ready to become the next mega hit.

Companies such as Spotify, Deezer and SnapChat are on the radar of many corporate investors and internal M&A teams, but predicting a SMAC hit is proving to be as difficult as picking the next number 1 album. Even industry experts often have no science that goes beyond general wisdom such as: " Good things arrive fast" or "You'll recognize a hit when you see it (it will smac you in the face)". For large companies this type of randomness is often not acceptable, which is why they try to institutionalize their success though more formal strategies.

One of those strategies is "Lean StartUp" (after the book: The Lean Start-up). Essence of this approach is to launch a “minimal viable product” fast and then rapidly evolve from there to a more complete or even to a completely new product. All in an extremely short amount of time. Other companies choose to create so-called " Digital Skunk Works", by setting up their own start-up, preferably as far away from the headquarters as possible, in which they - often in collaboration with partners from all walks of life - try to create a hit. The mantra in both cases is "Fail Fast". After all, if 99 out of 100 ideas fail, then it is better to have them fail quickly - before they have cost tons of money. And ironically that is something the agility and scalability characteristics of the cloud can help with.

This "Need for Speed" is however not just important only to technology companies. We are on the dawn of what we call the Digital Industrial Economy (DIE). An era in which more and more companies and organizations (in media, entertainment , finance, health and government ) will add value through digital moments. Moments where instant analysis of vast amounts of (often social and mobile) information is used to rapidly launch new digital services through and from the cloud. Hopefully services with enough potential to become an instant hit and move straight to the top of the charts and generate lots of "Software Defined Business".

* An artist who knows all about how difficult it is to create a hit is Pharrell Williams, the man behind the "Billionaire Boys Club" album tape and clothing line of the same name. An album which by the way did not include a single hit. It is not that Pharrel has no hit potential. Thanks to its distinctive voice and musicality that artists like Mika, Daft Punk, Britney Spears , Snoop Dogg and many others - often for the first time since many years – moved right to the top of the charts . Pharrels contribution to Blurred Lines (a song the record company did not even want to release at first, so much for corporate insight) enabled Robin Thicke to put “the summer hit of 2013” to his name (and thus, again not to Pharrell 's name). But there is justice, with the song Happy from the movie Despicable Me 2 Pharrels has now scored what some already call the biggest hit single of all time. And Pharrel's reaction? In various interviews Pharrel has expressed his surprise about the success of this song, he had not seen it coming.


Dutch version at cloudworks.nu

http://open.spotify.com/track/5b88tNINg4Q4nrRbrCXUmg

Tune into the Cloud: Locked out of Heaven

Locked out of Heaven

In the cloud lock-in is often a greater concern than lock-out*, but both should be top of mind for organizations looking to deploy cloud seriously, or better said, for organizations that want to deploy cloud for serious business

Lock-in is the phenomenon that it is often difficult (lengthy and expensive) for user organizations to switch suppliers, often because after some time the software becomes so closely linked with the way the organization works that saying goodbye to the vendor becomes virtualy impossible. It is no coincidence that there are only two industries (IT vendors and drug dealers) that routinely refer to their customers as "users".

As long as the supplier still has his sights set on expanding its market share, lock-in is often not a problem. But by the time the revenue from the installed base becomes more important than winning new customers, customers often start to encounter regular price increases, increasingly stringent terms of use and less responsiveness from its vendor. With cloud computing that tipping point is still far away (currently the cloud market makes up only about 3 to 5 % of total IT market spend), but it is also an industry where lock-in has a lot more impact that in traditional IT. In the cloud customers are - for the whole service stack (application, middleware and underlying hardware) dependent on their supplier. Unless when the application they use is also offered as a cloud service by other providers, but that is not a very common model for SaaS offerings. Today SaaS offerings can typically only be bought directly from the authoring organization.

But also in the cloud lockout must be avoided. Just imagine a scenario of a typical cloud provider, who controls the entire stack from application to hardware, unexpectedly going out of business (like a Nirvanix, that had a relatively soft landing and was able to give two weeks notice to its customers) or if that provider decides it does not want to serve a certain company or country anymore. Like how several cloud providers locked out Wikileaks after the first press leaks, or a vendor like Mega Upload, where regular customers lost all access to their data after a judge ordered them to shut down completely based on media industry accusations. But same can happen if a reputable large provider decides some of its products are no longer strategic. The big difference between the cloud and traditional in-house hardware and software is that as soon as the provider stops it service, the customer is immediately out of business. This is very different form traditional IT where resources could often still be used for years, even if the hardware is out of warranty and the software out of support.

Having a plan B and an up to date and easy to execute exit strategy is therefore much more important in the cloud than it was in the past. Agreeing upfront what parties will be allowed and enabled to continue the services if the original provider no longer can (or no longer wants to do so). At this moment this is only pragmatically possible for open source solutions that are already offered by multiple parties, but in some countries hosting providers are putting standard rules and arrangements in place ≈to move customers from one hosting provider to another, in case the need arises, including any commercially licensed standard software. But for traditional SaaS there is still a distinct risk f being “Locked out of Heaven”. So for now the advice from one of my first bogs ever, still stands: Any good cloud strategy must start and end with an exit strategy”.

* Locked Out of Heaven is an album by Bruno Mars, an artist whose popularity grew even faster than the popularity of cloud computing. But this album is not a collection of different songs. It is a compilation of several remixes of the same number, allowing the customer to choose the delivery method that he likes best for his situation.