Yet Another (ex-)VC Blog

Social connections trump business plans by a long shot, says Goldfarb Thus it is that people who already know VCs and angels have an easier time raising money. The irony, says Goldfarb, is that people who don’t have connections need to go out and make them, which may require that they have a business plan to discuss. But the plan is sort of like a business card, he says – just something that business protocol dictates you carry around.

via peHUB » Study Finds Business Plans a Waste of Time.

I wasn’t surprised by the results from this study, although the study only looked at plans from the dot-bomb era.  I’d be interested to see how the conclusions would have been affected had they also looked at a less frothy period.

On a related note, here’s what I like to see when being pitched, in lieu of a full business plan:

• 3 year financial model
• 10 slide pitch deck (I like the guidelines they’ve got on www.garage.com for early stage company pitches)
• 20+ slide supplementary deck that reads more like a document, filling in details from the pitch deck

With these three items, you’ll have the meat of a business plan, without the less nutritional filler.

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There are way too many vendors talking and not enough practitioners. That is not a good thing. If all of our education is coming from vendors we will be in a bad place. This is SOA all over again from 3-4 years ago. When I do see a practitioner, most of them have not done anything significant yet. If I have to listen to the NY Times success story one more time I will puke. I keep hearing the same case studies over and over which tells me that we are talking about the cloud a heck of a lot more than we are doing the cloud. Most of the good case studies are from startups which is an obvious sweet spot for the cloud. I haven’t heard many case studies where an established enterprise built something significant in the cloud.

via My thoughts on Cloud Computing after the Cloud Computing Expo (Mike Kavis’s blog)

Mike made a great post reviewing the cloud computing expo, and I encourage you to read it.  The post resonated with me not only because I’ve seen a similar dynamic in the past with other enterprise IT companies, and the dynamic keeps repeating itself.  Let me draw on some of my experience at VMware as an example.

I started working at VMware in 2003 when ESX Server was v1.5, and spent the better part of the first year or so jetting around the US, helping customers learn how to use what was, at the time, a very new product without wide adoption.

Besides getting a great education on bad takeout food and figuring out which hotels would give me double miles for staying with them, I also witnessed an interesting phenomenon related to how customers perceived our product.

Here are some conversations from various customer visits (with a little bit of hyperbole sprinkled in, and the names and faces changed) to give you a sense of what I’m talking about.   Although I’m exaggerating with regards to customer routers communicating w/Mars, the general flavor of the scenarios is quite real.  Here goes…

• Customer ABC: “Hey, have you ever tried to use ESX with super-bleeding-edge-storage-array-XYZ that was released last week?
• Me: “Nope”

• Customer EFG: “Hey, we’re running funky Cisco VLAN configuration options #752, #781, and oh yeah, we’ve got the firewall configured to communicate with Mars on alternate Tuesdays through a virtual machine proxy server.  You have any other customers in our region who are running this configuration?”
• Me: “Uhh…”

• Customer 123: “John, I see you guys support our tape backup software.  We have it configured in this really specific way that cost us about $100k of consulting work from the tape backup vendor to get it to work just right.  Any chance you guys tried this configuration out in your QA labs at VMware?”
• Me: (frantically calls product management)

I was trying (perhaps unsuccessfully) to be funny with these examples, but hopefully I’m illustrating a point…

When a startup releases a new product,  everyone in the market knows the darned thing is so new, that there is no reference architecture, there are no production customer references, and that there is probably some risk that the technology will not work as advertised or designed.  Expectations are not low, but its clear to everyone in the room (or the datacenter) that the vendor and the customer are going to need to be tied at the hip to make the implementation successful, and likely everyone is going to be learning and taking lumps along the way.

It’s a different story when a company or  a market sector has received strong coverage (and hype) from the press and has the appearance of being more established.  All of this mindshare, marketing, and PR causes customers to assume that a startup will be able to support any and all configurations and uses cases, even in newly released products.

And that’s where we are with cloud computing.   Conversations like the ones I had at VMware are the same kinds of conversations the cloud vendors are having with their customers and prospects.  Cloud computing has been receiving so much press and hype- but frankly (and to Mike’s point) not many referencable examples that show enterprise adoption.

Over time, we’ll start to see greater adoption in the enterprise, but it will take some cutting edge enterprises assuming some risk and partnering with emerging cloud computing vendors  to develop this next generation of success stories.

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My buddies at Opencrowd recently published their Cloud Taxonomy.  They do a nice job of bucketing vendors by specific area of focus and help to unblur some of the cloud classification/nomenclature confusion.

If you think the taxonomy is useful, let Brad at Opencrowd know, I am sure he would be happy to hear from you.

Note, if you want to do “strategy” (which is a fine endeavor) and nothing else, you have just defined your career as one in large corporation or in a consulting firm. Stay out of startups. Tactics mean tenacious and relentless execution measured in years.

via SuperMac War Story 5: Strategy versus Relentless Tactical Execution — the Potrero Benchmarks « Steve Blank.