The Information Economy is Not the Second Industrial Age


One thing to get out of the way:  Andrew McAfee and Erik Brynjolfsson’s The Second Industrial Ageis a compelling book.  I devoured it over a weekend.

We are not, though, in a second industrial age.  Increasingly, we participate in an information economy.  In economist’s terms, information is the product.  Units of production are effectively data.  The factors of production are code (programmers) and computing (servers, storage, networks, electricity, etc.).

A new era also requires a new vocabulary, lest it limits our understanding of the future.  The information technology industry long has adopted the language of the industrial age, of the factory assembly line.  We talk about boxes (servers, storage), plumbing (networking), and power (CPU, memory) with a proto-mechanical mindset.  One of the biggest buzzwords in IT is automation, which comes from the industrial age.  Automating processes that do not meet the requirements of the information economy, that overwhelm the ability of human beings to keep up with the increasingly dynamic nature of computing, is the equivalent of Lucy and Ethel wrapping candy on the assembly line.

That we are saddled with an industrial age vocabulary is not a surprise as many of the parents of today’s computing industry were born in second half of the twentieth century, during heavy industry’s heyday.  Technology today is undergoing both a platform shift from client server to distributed systems as well as generational change, with a new leadership cadre that is coming of age in the Internet era.  The old boss ain’t the same as the new boss

The Shot Heard Around the Information Economy

GE’s recent announcement that it was standardizing on Box as its information economy collaboration platform stands out as one of the crossover events of this new era.  GE was (and still is) a huge winner in the industrial age (aircraft engines, MRI machines, power turbines, etc.) and it is ramping up to be a big winner in the information economy.  If you listen to GE, in the past few years they have made it perfectly clear that their information assets are among the company’s most valuable resources and a huge focus going forward.

From an IT perspective, what was most remarkable about the GE/Box deal was that the industrial giant abandoned the traditional enterprise software model for software-as-a-service (SaaS).   For those us who came from big iron side of this industry, the data center is the crown jewel of information assets.  But GE’s choice of Box meant it has started to prioritize the data and not the center of its computing environment.

SaaS makes information technology’s traditional physical assembly line invisible. Companies purchasing SaaS applications spend very little time investigating the underlying plumbing of the systems running the software and more on what the software can do and how intuitive, how usable it is.

To be successful, though, SaaS must enable speed, accuracy, and security for data while hiding the complexity of traditional applications and infrastructure.  It is not about replicating the old approach in software, but rather, reinventing for a dynamic and data rich era.

The ease and security of using and moving information is critical. Once business leaders can get past this issue – and given the recent focus on hacking and privacy, this is not trivial – they will look at information like inventory, a balance sheet item.  How many turns will your data have?

In the information economy, the tools to store, process and move data increasingly look like the trucks, cars, railroads, and planes: important but fungible capabilities.  Over time, applications will land on computing resources like commuters using
Uber and Lyft to get around.

The huge acceleration and complexity of the data environment requires the computing industry to evolve to meet this transformation.  As enterprises race to accelerate their information asset utilization, the combatants in the IT industry are going to compete not only for the capabilities required to make it secure, reliable and fast, but invisible and easy to users and IT staff alike – i.e., move data and measure information value rapidly.


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Row the Boat Ashore


I have spent the past week thinking about Pete Seeger, the peripatetic folk singer who passed away last week.  Although I came of age too late for the 60s mission singer, I first saw this gentle, banjo-playing beanpole at Folk City in Greenwich Village when I was in high school.

Pete was a human network of the American experience, a 23-and-me for the folk set who reached back to the roots of our nation with big way stops with the post Civil War blues of Lead Belly and the American political parallax of Woody Guthrie.  For many teenagers and young adults of my generation, he was an early window into the American experience.

A gentle prod for the left side of American politics, Pete was a man with love in his heart: love of people, love of justice and love of America.

What is amazing — really amazing to me — is that when I was young, Pete was already old.  But his old was less about numbers of years than the window into the earlier side of the American century, the first half of the 20th century where the industrial might of American came to the fore and the agricultural roots of our nation receded.  That is much of what he chronicled – vilified and penalized by many – but it did not change the man he was.  While I understood there were direct political undertones to Pete’s message, I mostly listened to Pete’s song of America, a sweet tenor that shared a long view of our innocence and promise and the vast rolling land and people.   I still remember listening to a Pete Seeger record as a kid singing, “I’ve been working on the railroad.”

The distinct tones of a banjo present an American troubadour’s backbeat.  To this métier Pete sang songs of love, the beauty of land, and the rights of people – workers, people of the land.  His song could take you back 50, even 100 years like a time machine.

My fondest memory of Pete Seeger came on a warm, sunny summer day on a mountainside in Stowe, Vermont, many years ago where Pete was part of the line up of the Vermont folk festival.  It was my first solo driving trip out of New York with a pup tent, a sleeping bag, and a few dollars in my pocket.  After Pete’s set, he walked down off the stage and we waved him over to sit on the soft grass with us to watch the next musician.  Bending his legs like a large crane, he settled down beside us and accepted our offer of food and wine with a smile and a firm handshake.  Nervously I croaked to him, “this is great!”  He leaned back on his elbows to concentrate on Dave Van Ronk and said, “yes, Alan, it is.”

Jordan’s river is chilly cold, hallelujah.

Chill’s the body, but not the soul.

Michael row the boat ashore, hallelujah

Michael row the boat ashore, hallelujah

Downton Valley: Computing Enters the Third Era

This is the way the world ends
Not with a bang but a whimper.
– T.S. Eliot, “The Hollow Men”

Much of the teeth-gnashing in the IT industry today appears to be about competition, but it’s more about structural change as computing enters its third age. Like the passing of the Edwardian era in “Downton Abbey,” the client-server/Web era is giving way — kicking and screaming — to the rise of distributed systems. We see this everywhere, from the infrastructure models of Google, Facebook and Amazon to the applications and programming languages powering mobile, social and cloud.

Computing eras seem to peak every 30 years. Like old rock stars, they never go away completely and are frequently brought back for gigs.

Begun in the 1950s, the first empire was the mainframe era, and its first king, the IBM 360, came to the throne in the late ’60s/early ’70s. It could run a host of applications, and provided a range of tools for programmers and operators.

This gave way to the feudal era of client-server, which creates dozens and dozens of powerful tech companies across the stack. From its beginnings in Xerox PARC, a long list of new entrants emerged in the ’70s and ’80s. The birth of the World Wide Web in the ’90s — democratized by Marc Andreessen’s Mosaic browser and its commercial child, Netscape — took the client-server architecture further than anyone expected.

When new stars are formed, they originate in the collapse of enormous clouds of gases in space, called star nurseries. We are now swirling in the computing nursery of the distributed-systems era. This is a computing architecture that challenges the hierarchies or control points of the prior era. It’s more open, distributed, and virtual than client-server. This is a flatter software-centric world: APIs, programming languages and open source are magnitudes more efficient.

Moreover, this is the era of the sharing economy, where hardware and software (e.g., Salesforce, Workday) can be rented and consumed as needed versus owned. Enormous computing resources can be rented for a tiny faction of the cost of buying a range of hardware. Platforms are everywhere.

The IT industry needed a change. It has been growing at a low-single-decimal rate for the past decade (according to Gartner).Take out social, mobile and cloud, and the rest of IT feels like the old growth economy.

The apps and the infrastructure are going to change, albeit not overnight. The flexibility and speed of creating new apps — i.e., supporting new businesses or business processes — is going to drive the inevitable shift. For some new players this is the new gold rush. Lots of new entrants (including my own company) are hustling to become the Levi Strauss, Wells Fargo Studebakers (wagon makers) and Pinkertons of this era. Companies like Amazon Web Services and Rackspace are offering to give you an entire frontier town in which to set up shop.

For the distributed-systems computing era to take off, it will need the same kinds of capabilities found in the prior wave. Innovation can only succeed if you can reduce or eliminate the tradeoffs in:

  • Speed
  • Reliability
  • Performance
  • Privacy
  • Security

Want to figure out the next generation of winners and losers? Figure out who will solve these five issues.

Many of the client-server-era companies are not going to make the transition in their current forms. It’s like Michael Jordan playing baseball. Sure, he could get into a uniform, hit a few balls, and catch a pop-up, but it was not his natural sport. IBM made the transition from mainframe to client-server by transforming itself into a services-and-software company.

If you are in IT at the dawn of this third era, you don’t want to seem like the Dowager Countess of “Downton Abbey,” who, upon seeing the telephone for the first time, asked: “Is this an instrument of communication or torture?”

This post originally appeared in re/code

It’s the destination, not the journey

Platitudes are a dangerous way to build a company.

What passes today as start-up wisdom can be attractive, even seductive to new entrepreneurs. We have witnessed the creation of a sub-industry of how-to advice on creating the next tech blockbuster. Don’t get me wrong: a lot of what’s written or spoken about is incredibly valuable, but, out of context, of it can be dead wrong, even dangerous.

The Winning Viable Product (WVP)

I am a fan of the Lean Startup approach. If you are creating a consumer app in a new category, the idea of minimum viable product (MVP) is an ideal way to get something out, test it, and then either move forward with conviction or fail fast. If you are going to take on a large technology or Internet company on their home turf, then you should be thinking about the winning viable product (WVP), the one that will give you a multi-year lead over incumbents.

Make no mistake, if you are just a bit better than the incumbent, you will likely flame out early. Try messing with a giant’s profit sanctuary: A market leader will fight, discount and outright stretch the truth about pending capabilities while they hustle to catch up. Moreover, their installed base will usually wait for them if the gap and obvious benefits are not wide enough. Switching costs are one the most powerful forces in the tech universe.

If you want to take a market away from a multi-billion dollar player, to paraphrase former Chairman of the Joint Chiefs of Staff Colin Powell, enter a conflict with clear intent and overwhelming force. Since you cannot manifest this early on with market reach — sales, marketing, deep customer relationships, etc., — then your product must make the decision a no-brainer for customers. WVPs are your weapons of mass disruption.

It’s a sprint, not a marathon

When a shift in the market occurs, the “execution machine” must be in high gear if you want to translate early mover advantage into something sustainable. Prior execution machines such as Data Domain gained disproportionate benefits,particularly in the first few years of creating a new market, by pushing the pedal closer to the metal as sales took off. You could argue this underlies the early (and continued) success of, Facebook, FireEye, and even Snapchat (yes, I said Snapchat!).

This means your product both must hit its target market with force and then you have to hit the afterburners to get to as many paying customers as possible. Build your company, product, and go-to-market like you are a participant in the Hunger Games. This takes a lot of confidence not only of product fit, but market readiness. Moreover, if your company will take some time to monetize, then you need a big war chest. This is why we are seeing larger A and B rounds.

It’s OK to go home with a different date

There is nothing smarter than being cheek-to-jowl with your early customers. Do your job well, and you will have them for life. Building a company, though, is not about going to the prom.

Sometimes your initial customer group is actually a poor fit for your product strategy (e.g., you were thinking about a vertical insertion in retail and healthcare is a more attractive segment). You have to get past an emotional conflict, like a teenager leaving the dance with a different date. An entrepreneur must not fall into the trap of Shakespeare’s Othello: “one that loved not wisely, but too well”.

It’s a zero-sum game

Some companies build their strategies around being in the “herd,” one of five to 10 players in a market with a hope of getting acquired. That is a failed path for your company and your investors. Most value accrues to top one or two market share players.

As Will Farrell’s infamous racecar driver character, Ricky Bobby, kept repeating: “If you’re not first, you’re last.”

This post originally appeared in Gigaom

Unplugging My Airespace Controller (sniff)


A little over 10 years ago, a fellowship of engineers and business folks at Airespace turned the WLAN market upside down.  As the head of marketing and product management at Airespace, I stood shoulder-to-shoulder with an amazing team who proudly launched the first viable centralized enterprise WLAN system into a market dominated by two giants, Cisco Systems and Symbol Technologies (now Motorola).   The lead dog in a pack of 15 wannabes – who knows, maybe more — we outstripped the industry for several years through a range of innovations, including:

  • Split MAC architecture
  • First WLAN controller (Symbol launched a direct connect switch)
  • Airewave Director, real-time monitoring and analysis capabilities, coupled with intelligent radio resource algorithms.
  • Multiple SSIDs (10 years ago this was a big deal!)
  • Location Tracking, including RF Fingerprinting for granular indoor GPS
  • LWAPP control plane protocol (now CAPWAP)
  • Remote Edge Access Points, and the most important capability,
  • The Wireless Control System: the [then] industry-leading platform for WLAN systems management, including graphical tools and centralized policy engines for WLAN planning, intelligent RF management, wireless intrusion protection, and wireless client location tracking.

This relentless pace of innovation resulted in moving from zero to third place market share in 18 months in the hotly contested enterprise segment.  A relentless TME and Product Management team took 19 consecutive industry awards and bakeoff wins.  Ultimately we were acquired by Cisco in 2005 and helped double a giant business in about 3 years.

So with a tear in my eye and nostalgia on my mind, here, on a late Friday afternoon, I came home and unplugged my Airespace controller (an updated Cisco version) and connected my Ubiquiti UniFi 802.11ac kit and the controller on my home Mac.

It was eye opening.

What immediately struck me

  • Feature richness.  Everything one would expect in an enterprise system.
  • The ease of installation aided by the clean, intuitive controller.  No CLI.  Everything worked perfectly of the box.
  • The reach and performance of the APs connecting to my Apple TV to stream video.
  • The amazing community of users and enthusiasts on the forums.
  • The overall value for an enterprise-class product.  When we launched Airespace, we were close to $1000/connected AP.  For the most part, the industry has tacked close to that number (or exceeded it).  Ubiquiti is a fraction.
  • And did I mention it took minutes.

When you build great technology and achieve success, you believe it will last forever.  Well nostalgia is not a good attribute when software is eating the world, where Moore’s is the law of the land.    I stand aside.  Ubiquiti excelsior.

“Don’t cry when I die

When it’s my time I probably won’t die

I’ll just lie down and close my eyes

And think about stuff

These eyes got too wise

Seeing too much of life’s goodbyes”

– Train, You Can Finally Meet My Mom

Game of Clones

“When you play a game of thrones you win or you die.”

George R.R. Martin

If you are in the IT infrastructure game, it feels like the old alliances and the forces of virtualization and cloud have breached all the great walls.  It’s the tech industry version of a global war, one rooted both in reality and fantasy.  The “Iron Throne” of the computing industry is the compute cycle, the amount of time and resource used across servers, networking and storage for an application to complete a task. For the vendor world, there is a pitched battle for all the software, services, and miscellaneous technologies that go with it.

What is different this time is that all the large entrants’ armies are marching up and down the computing stack (e.g., servers, storage and networking) – as startups have initiated guerilla actions as they seeking a larger territory.  The downfall of client-server computing is the technology industry’s version of Robert Baratheon and Ned Stark’s murders and the chaotic war period in which many viewers are now immersed.   Just change the great brands HP, IBM, Dell, Cisco, Oracle, EMC/VMware, Intel, and Microsoft for the great houses of Lannister, Stark, Tagaryen, Tyrell, Baratheon, etc., and all you need is a weekly mini-series.

This is a game of clones war, however.  The magical weapon category owners now use against the other is their version of the unsullied, a commodity proxy army of their enemy’s hardware or software – effectively a clone.  We saw this first in the server industry in the 1990s, where the x86 server market took off and left the RISC minicomputers in the dust.  Things did not get really interesting until the early 2000s when the magic of server virtualization — led by a new dragon called VMware — leveled the server playing field and decimated the great houses of Sun, DEC, SGI and many others.

“When my dragons are grown, we will take back what was stolen from me and destroy those who wronged me!” – Daenerys Targaryen

This is no to say the current computing powerhouses are sulking in their castles.  Most have hot actions as well as furtive plans to either shore up their existing territory or claim the market share of others through acquisitions or headlong jumps into open source movements. This falls into three broad flavors:

  1. White box hardware models driven by proprietary software
  2. Proprietary hardware and software that compete on performance
  3. Open software models (e.g., OpenCompute/Facebook, OpenStack, OpenFlow) across a range of hardware models.  This is an epic free-for-all where all the major players are involved in one way or another.

Seemingly each week, a new episode of intrigue and border crossing seems to appear as the giants vie for position.

“Surely there must be ways of having me killed that would be less detrimental to the war effort!”– Tyrion Lannister

What is different in this epic, unlike the client-server revolution before it, IT buyers have a range of options on how to obtain their compute cycles well beyond the traditional great houses:

  • Embrace the open model and be like Facebook and Google and join the bare metal ecosystem (i.e., buy your hardware directly from the original manufacturer).  The new champion is Cumulus Networks, a new entrant in the traditional networking kingdom.
  • Buy it all as a single plug-and-play package as a hyperconvergence models from vendors like Nutanix or Scale Computing
  • Rent it from the cloud (Amazon)
  • Rent pieces like storage and file sharing/collaboration from fast-rising upstarts such as Box
  • Skip the infrastructure and just rent the application (Workday)

While little is certain in the new world of computing, one thing is probable: any forced wedding between customers and vendors will be bloody.

Can Enterprise Tech Avoid The Fate Of The Automobile Industry?


Only the paranoid survive”

– Former Intel CEO Andy Grove

Things seem so good in the enterprise technology universe right now it is a little scary. The IT transition to cloud/mobile/social has entrepreneurs and investors salivating, with three significant forces at work:

  • Real, not PowerPoint, multi-billion dollar opportunities are emerging for new entrants
  • IT buyers have new productivity options for workers and better values for their operating and capital spending
  •  Incumbents are getting needed wake up calls on their technologies and business models.

So why am I nervous?

The Detroit Syndrome

Forty years ago, the Middle East oil embargo ripped a hole the size of a Buick through the American automotive industry. Over the following decades, the Big 3 automakers suffered huge market share losses, two major bankruptcies and government bailouts. Smaller, cheaper and more fuel-efficient cars from Japan broke the Detroit oligopoly and proved not everyone wanted big, powerful sedans, powered by a Detroit’s V8s.

As David Halberstam documented in The Reckoning, hubris and management blindness led to an enormous transfer of value from American to international car manufacturers. In 2012, the American auto industry had a $140 billion trade deficit. That’s like Apple losing everything.

Tech Drives Today’s Economy

Today, tech is a huge growth driver of the U.S. economy. Millions of jobs – not just in Silicon Valley but across the U.S. – directly depend on it. And that’s just the beginning: Enrico Moretti of UC Berkeley estimates that 1 job in traditional manufacturing generates 1.6 additional jobs, but one job in tech generates closer to 5 incremental jobs.

But the last heyday of enterprise IT crested around 2000, as “CIO as rock star” gave way to “CIO as cost center.” IT spending in the developed world has been basically flat ever since.

5 Challenges For Enterprise Technology

And now, enterprise technology faces an incredibly complex series of challenges and opportunities:

1. Customer Collaboration is Reducing Switching Costs. The IT industry has long relied on vendor-led standards bodies (IETF, IEEE) to ensure interoperability, but the dramatic growth of customer-led collaborative efforts in the open source and cloud movements is reworking the playing field. Rackspace-led OpenStack and Facebook-led Open Compute initiatives are cookbooks for the commoditization of IT infrastructure. If low-cost producers take over the infrastructure business, they will likely come from offshore producers (China, India, etc.) and not U.S. manufacturers. And don’t forget GitHub if you are in the software business.

2. The Cloud and the Rental Economy. The tremendous cost, energy, speed and operational savings presented by Cloud and SaaS technologies are changing how we think about IT. Why buy from HP or Oracle when you can rent from Amazon or Workday? Why let capacity sit idle when you can pay for it as you need it? This is a good thing, as resources will be used more efficiently. But it poses challenges for enterprise tech vendors. “We are one or two amortization cycles away” from the coming drop-off of premise-based IT purchases, warns Lightspeed Ventures’ Tim Danford.

3. BYOD and BYOA. The verdict is in: IT managers are coping, sometimes kicking and screaming, with the influx of customer-purchased devices as corporate computing platforms (Bring Your Own Device). The next wave of mobile challenges will come from BYOA (Bring Your Own Applications), where applications likeEvernote and Box replace popular Microsoft programs like Sharepoint or even the Office suite. The classic enterprise software license could be a few apps away from oblivion.

4. The Lean Vendor. User-led IT communities like Spiceworks are replacing how buyers learn about products and services. Tech marketing is becoming a content and education task, not a promotional activity. This is giving the high-touch (read high cost) sales and marketing models of traditional vendors a run for the money. Companies like Ubiquiti Networks are not only taking advantage of this new buying behavior, they are passing on their own lowered selling, general and administrative (SG&A) costs to customers in the form of great technology and user-friendly innovation at lower prices. As a CIO friend of mine once told me: “When you walk into a vendor’s offices and they’re nicer than your own, remember you paid for it.”

5. Distributed Computing Model. Current computing models are built around a central premise: a client (e.g., Microsoft) will talk to a server (x86, IBM) in a single location to process an application. If you own either end of the equation, you can exact enormous value. But the cloud architecture is massively distributed, apps might have to touch dozens of places to process everything, totally disrupting that vendorscape. More significantly, the new in-demand IT skills sets look less like a traditional Fortune 500 corporation and more like Google or Facebook. Distributed computing scientists are this generation’s Einsteins.

3 Ways To Save Enterprise Tech

In Silicon Valley, it’s easy to assume the next generation of giants will grow just down the street. But the rest of the world is working to take advantage of the same trends while eyeing the large and relatively wide-open U.S. market.

I for one do not want to wake up in a decade and buy a book charting the downfall of the American technology industry by the next David Halberstam. Here’s what has to happen for the enterprise technology industry to avoid The Detroit Syndrome:

1. Incumbents need to blow up their own business models before challengers do it for them. The first wave of Detroit’s reaction to the initial oil-shock resulted in half-baked responses like the Ford Pinto, Chevy Vega and AMC Gremlin. And what did the auto industry do when oil prices moderated in the late 1980s and early 1990s? They went back to promoting horsepower instead of fuel efficiency and rolled out fleets of gas-guzzling SUVs that were great for short-term profits but made them even more vulnerable to the next oil shocks.

2. Some of today’s startups must grow into the new giants. While there are many enterprise tech vendors in $500 million to $5 billion range, few new suppliers have cracked the $10 billion run rate as independent companies. Large tech companies play a critical role in the IT economy, but customers must use their wallets to keep their own ecosystems healthy by fostering competition and innovations.

3. Systemic security and privacy solutions must be found. Buyer confidence could be torpedoed by cybercrime and careless data leakage. It will take a range of enabling technologies to give enterprise buyers more purchase confidence to embrace innovation.

Enterprise tech is not the Rust Belt, not by a long shot. There is every possibility that the technology industry willnot go the way of the automobile industry. But the seeds of our growth could also be the seeds of our decay. And the ability to thrive requires innovations in our minds as much as our technologies. In the words of Mark Twain: “Circumstances make man, not man circumstances.”