An Apple a day

I’m a big fan of Apple products. I’m writing this on a 6-year-old MacAir that still works like a charm. I have or have had all the other gadgets over the years. They are innovative, reliably and they interact (in most cases) with each other to provide a seamless experience.

But the oft-asked question is: has Apple peaked? There are supposedly 1 billion iPhones out there. That’s a lot. Maybe the market is saturated. On the other hand: that’s 1 billion phones. That’s one heck of an installed base. Facebook can claim more “users” but ultimately, switching off Facebook is a lot easier to do than trading in your hardware device.

Chart source: Statistica

So Apple has this incredible installed base with, as we like to say in the industry, stickiness.

Apparently, the tepid response by analysts right now is: they have a good chance.

Can iCloud, Music and the App Store grow quickly enough? Services are where it’s at: Lower margins, annuity-style revenue and lots of chances for upsell and cross-sell.

My personal experience with iCloud as a proxy is this: They can do better. Dropbox and Box are moving much more quickly and nimbly. Apple should have the home court advantage, built-in features that make the laptop and iCloud seamless. But they are not there.

Still I wouldn’t count them out just yet.


The author is long on Apple, with total ownership of 0.871 shares. At Tuesday’s capitalization of $858 billion for Apple, the author’s ownership amounts to 0.0000000001693881818 percent of the company.

The death of a Software Salesman

I don’t know if this take on Splunk is fair or not but it does help to underscore an important point that I have been trying to get across about the proverbial pail of cold water that has been dumped on the traditional software company’s sales force.

This Alphasights article spells out in excruciating detail what challenges lie ahead for Splunk, a company that started as a “Google” for log file searches, and claims to “turn machine data into answers.”

I worked with Splunk’s CEO Doug Merritt years ago at SAP, where we were both members of the senior management team.

I was impressed by Doug’s intelligence, his drive and his zeal.

But here’s the one sure thing, sure for Splunk or any other software company making the transition to SaaS (software as a service). The change is more difficult than adhering to new GAAP revenue recognition requirements. The change is a vast cultural shift.

First and foremost the glory days of selling to IT are over.

This was an easy sell, all things considered, where renewal rates were almost a given and service and support was automatic.

The sales cycle was long, to be sure — usually 6-9 months. And often the customers started with modest pilots.

They also had to contend with selling vaporware and bloatware and dealing with the consequences of holding the customers’ hands as they awaited new features and bug fixes, which could take months and sometimes years.

But they loved this model, because it was a perpetual license where the commissions were up front. And once they had them locked in, renewal was a cakewalk.

It’s not so easy on the SaaS side. That’s because first of all, the relationships that software vendors have built with IT are only part of the story. Today, lots of people can influence what software or service they want to use, because of the rampant viral adoption.

In this world, they are competing to continually maintain the relationship with the customer, and they do so knowing the barrier to change, or the switching cost, is considerably lower for a customer than it was for that customer acquiring installed software that locked them.

The upgrades and new features are iterative and this requires constant connection with the R&D group who are spitting out bug fixes, new features etc. as they complete them, rather than bundled once a year.

The vendors acutely know their customers are not going to overpay as they did in the past, because they use Elastic Computing to subscribe to only the compute resources they need for any application.

And they know, again, that the customer can switch at any time, making it important for them to be realistic in setting expectations in the sale.

All the big guns — SAP, Oracle, Microsoft, Adobe — in the software world are well on their way to making the transition. But they have been at it a long time. Interesting that Microsoft Office 365’s revenue surpassed it’s traditional installed Office version last quarter. This is a seminal moment.

The opinions in this article are mine (George Paolini). I have no investments in Splunk and no affiliation (other than as a reader) with AlphaSights.

Keep the customer satisfied

“Is your last name Italian?” says the amiable tech support guy, whose youthful intonation leads me to believe he might be still be in high school.

Look, kid, I’m thinking to myself, I have been on the phone with umpteen of your colleagues today trying to solve this Internet problem. I don’t at the moment care to engage in idle chit chat.

“Yes,” I say.

“That’s really cool,” he says, with infectious enthusiasm. “I thought it looked Italian, but I can’t tell why.”

“A lot of vowels,” I volunteer, half sardonically.

“Oh, wow!” he says, as though he has just discovered a solution to global warming.

“How much longer?” I inquire, in my best baritone radio voice to indicate, not so subtly, that I am still irritated.

He explains that he needs to text me a file for me to approve and we’ll be up and running in no time.

I wait, with as much patience as I can muster at this point. But he will not allow the wait go in silence.

“So, have you been to Italy?” he asked.


can’t believe I’m having this conversation. But before I can even muster an answer, he is rambling.

“I’ve been watching all these documentaries,” he says. “It looks so cool. I’m saving up. It’s on my bucket list. I live in Portland. It looks like the weather is really different there. I was thinking of Venice but maybe Rome?”

A lot of thoughts are going through my head. Is this a new training technique for tech support people? Is this really a kid who wants to go to Italy or a trained actor of some sort? Is he really in Portland or is he in Bangalore?

The text file comes through and I click the approvals.

“I see it on my end and you’re good to go!” he says.

“OK,” I respond. “And good luck with your trip to Italy. I highly recommend going. It’s a beautiful place.”

“Oh, hey, thanks a lot!” he says, as though as he has made a new best friend for life.

And we disconnect.

I shake my head, wondering if that conversation really just happened.

Maybe the kid is high-fiving his colleagues, having pulled it off again: turning a disgruntled customer into a satisfied one with an Oscar-worthy performance.

On the other hand, if I get a postcard of the Basilica di San Marco one of these days, I will not be surprised.

My favorite show

I’ve produced events in Silicon Valley for many years. My last show, however, was a little different and, without a doubt, my favorite.

The crowd on this occasion was a bit smaller: a mere 90 souls compared to the usual thousands in the conferences I’ve managed in the past. And the venue was a tad tinier: a modestly-sized restaurant in a Bay Area suburb vs. a typical Madison Square Garden arena. Production value? Just an unassuming stage with a few spotlights. No laser light shows or hi-def video montages illuminating a screen. Opening acts? Nope, couldn’t afford Cirque du Soleil acrobats or those Taiko drummers that are loud enough to stop your heart. And forget about headliners. No tech luminaries or Hollywood celebrities to drive ticket sales.

That’s because this event was not my typical corporate schtick. It was, in fact, my event in every sense of the phrase. I was not only the producer but “the talent.” It was an evening of music provided by my partner, Sherry-Lynn Lee, and me. We were on stage to launch our new album, “Perfect Strangers.”

It was our job, for two hours, to entertain the audience. But we weren’t just the headliner. We were the opening act, producer, stage hand, logistics coordinator, project manager, music arranger, marketing maven, and of course “roadie,” all bundled together.

Despite the difference in scale and scope, I can say, unequivocally, that I learned as much from producing this event as I have from the dozens of other multi-million-dollar extravaganzas that I have managed over the years. And perhaps the biggest reason is that this was truly a hands-on endeavor. I’ve certainly rolled up my sleeves before. But as a senior executive at Sun Microsystems, SAP, Avaya, Informatica and other Silicon Valley titans over the past 20 years, I had plenty of “helping hands” to whom to delegate most of the minutiae.

In fact, I’m not sure that until now that I fully appreciated the phrase “hands-on.” If my hands, or Sherry’s hands, weren’t directly on a task, it didn’t get done.

Rule #1: Fill the Hall

The very first rule of any event is attendance, or, in the vernacular of the corporate world, get “butts in seats.” We knew we could rely on friends and families to create a respectable crowd. But how to reach beyond out inner circle to generate some excitement in the broader community? Certainly, social media is one avenue, and Sherry is a wizard at working the channels: Facebook, Youtube, Instagram, and Twitter. Me? I’m sufficiently adept at LinkedIn.

That helped us to create some buzz. But the secret to moving beyond just a monolog and creating a conversation is still good, old-fashioned email. It’s what we all check in the morning over our caffeinated beverage of choice and in the evening before turning out the lights.

And so we built a good old-fashioned email database and began our campaigns. The list needed to be compiled, sorted by geographical location, “de-duped” (eliminate duplicated names) and other tasks that have you staring at spreadsheets until your eyes water. This was tedious work. But with no admins, coordinators or college interns in sight to help us out, it was up to us. Email address by email address.

These days, email marketing must be done through a bona fide email marketing service that allows recipients to “opt out.” These systems, all cloud-based services, have a lot of capabilities. Their interfaces, unfortunately, are invariably clunky, outdated and confusing.

It’s all about the content

We begrudgingly mastered the mechanics of the database and email marketing apps and the social media platforms. But what did we want to say?

We needed content. Compelling content, as they say. Pithy writing. Catchy headlines. Captivating imagery. What was the story? Why would anyone care?

So we sat down and started writing. We could have paid an agency to do this. But, costs aside, would they capture the essence and emotion, straight from the heart?

With content created, it was time to test the email system. These systems are designed to test messages, see what’s working, and provide you the ability to pivot or change course as needed. And so we nervously pressed the “send” button and anxiously kept our eyes glued to the responses (more spreadsheets and bar charts to blur our vision). Revise headlines and subject headers accordingly. Rinse and repeat.

New school, old school

We still weren’t done. We wanted to make sure we could fill the room to capacity. Redwood City isn’t our “hometown.” We are not regulars on the local entertainment scene. So we decided to combine our passion for music and music education with a strategy for packing the place. We contacted the community foundation that raises funds for school music programs. We made a proposal to them: If they helped us get the word out about our event, we would donate our proceeds from the gig to their charity.

We worked with the foundation to create bilingual (English and Spanish) posters to send to 8,000 area homes. And, thanks to a few Redwood City high school volunteers, we plastered every store front, every utility pole and other open space with signage announcing the gig.

Customer Experience

We decided up front that our ultimate goal was to drive album sales (both physical and online). We knew we would generate revenue from the event (tickets weren’t cheap, starting at $17). But we wanted to create a memorable evening, or, as they say in the corporate world, “a rich customer experience.” So we decided to invest in that experience.

To improve the ambiance of the event, we hired a backup band. Since we were already planning to give our proceeds to the charity mentioned above, we were now, in the parlance of venture capitalists, “cash-flow negative.” (Translation: “losing money.”) But our philosophy was this: If people liked the show, they’d tell their friends (word of mouth), and this could be a key marketing tactic. To us, this was an investment.

I’m with the band

With a band, the first order of business is scheduling rehearsals. Professional musicians have erratic schedules, which made this difficult at best. Once we worked through the calendar logistics, we needed to ensure our time together was productive. We printed detailed set lists with the song order, the key, each musician’s role, etc., all spelled out in advance.

Content in the corporate world usually consists of speeches. The tools of choice are either Powerpoint or Keynote. For a musical group, especially one that has not played together before, it requires a slightly different approach. Here, our tool of choice was something called iRealPro, which is “slideware” for musicians. It is a shorthand for creating music charts so that the band can play the same chords and notes at the same time. It comes in handy if you want to sound like a band, as opposed to, say, the Kindergarten Kazoo Ensemble (all due respect to kindergarten teachers everywhere).

We did rehearsals at our home. We happen to have a nice large and open living room with high ceilings and great acoustics. So space was not a problem.

But, as the saying goes, an army marches on its stomach. Musicians aren’t much different. You have to feed the troops. Since both Sherry and I come from large extended families, we are accustomed to cooking in volume. I won’t brag about the quality, but I know for sure quantity was not lacking.

The nail biting begins

As with any show, for me at least, the tension is highest about two weeks out. That’s when I’m looking at the registration numbers (which invariably spike only at the last minute) and when I’m still rehearsing and critiquing my material and wondering whether it’s all in place and perhaps most importantly, any good.

But there was still plenty to keep us busy and focused, including the technical aspects of the event. Production planning included countless phone calls and emails with the club owner and his sound engineer. There were specs to be drawn for the stage, technical details to review (number of microphones and other inputs) all down to the very last detail. Again, in the past, I would have had “my people” talk to “his people.” No people. Just me.

The gig is up

Throughout the two months leading up to the event, our days were quite consistent. We began each day with laptops on the kitchen table and coffee, lots of coffee. We ended each evening with laptops at the kitchen table and a glass of wine. It was nonstop planning, rehearsal, discussions, emails, phone calls and social media postings.

In the end, the show was a success. We filled the room. The crowd seemed to love the show. The owner invited us back.

How did our “marketing investment” work out? Well. Very well. The next morning we were delightfully surprised to see we made the charts for new jazz albums on iTunes. (More on that here.)

Was it worth it? Yes. But as with any event, it’s not over when you strike the set. Now the real work begins, building on the success of the event and the iTunes listing.

And, of course, planning the next gig.

No politics on LinkedIn? Think again

I’m amazed at the number of times I have seen comments on LinkedIn admonishing an author of a post for mentioning anything having to do with the current political climate.

The common refrain from the peanut gallery: “Save it for Facebook. It doesn’t belong here.”

Let me relay a few stories on just one topic — the so-called “Muslim ban” — to explain why that reaction is misguided. This is very much a business issue. And things are anything but business as usual. To wit:

— A friend called last night to cancel our dinner plans. The reason? He received a call from the company’s immigration lawyer that they needed to urgently process all H1-B paperwork that night. The friend, who works at one of the largest and most prominent tech companies in the world, had to pull an all-nighter to get the relevant documents and information needed. (Law firms, like government bureaucracy, are still ladened with actual paper documents and PDF files.)

— On our little neighborhood email forum, the chatter this week has been about a nearby town’s businesses being disrupted with ICE raids.

— A conversation overheard in the workplace recently revolved around a colleague from one of the “banned” Muslim countries. He was trying to decide whether to cancel his parents’ visit. This prompted other workers to relay their fears that this will escalate to even non-banned countries — India, China, for example — and beyond H1-B visa holders to Green Cards.

— The local newspaper carried a story about housing deals that have fallen through as H1-B workers fear they will be deported.

These are not isolated stories. The raids, deals falling through, loss of productivity at work are happening across the country. Imagine what the effect on overall GDP is going to look like in the coming months.

Not appropriate for LinkedIn? I believe it is front and center.

Dissing the dashboard

I’ve done a fair bit of travel, which has usually involved renting a car. I’ve had the opportunity to drive myriad vehicles from all the major auto brands. One thing I’ve noticed about the car dashboard over the past few years is that manufacturers are struggling to integrate digital technology with the user interface.

Most cars, in my opinion, have ended up with a Frankenstein-style mash-up of analog and digital instrumentation. And if that weren’t enough, we’ve got audio cues in the forms of indecipherable beeps warning us that something (never sure what) is amiss.

I had a Prius a bit ago that flashed a “Ready” light. This was while the engine was running, so I have no idea what it was ready for. And take the photo included here from a Nissan Pathfinder, warning me that I have no warnings. Always useful information.

Trust me, I’m not a Luddite. We can’t move to self-driving vehicles quickly enough. And there’s plenty to appreciate along the way as we get there. The car is getting smarter with backup cameras, sensors everywhere (tire pressure, proximity radar, etc.). This is all goodness.

But until things are fully automated, we need to make decisions, sometimes in a split second. The car dash isn’t helping us in that process.

Time is of the essence

I am a stickler for punctuality. It’s a bad habit I learned from my father, an engineer by trade and an eager advocate of time-motion study. He is the only person I know who had a stopwatch dividing a minute into one hundred increments. I inherited the stopwatch (along with his slide rule and micrometer, of course). I also inherited his habit of perpetual hurriedness.

He used to set our clocks (analog back then) ahead 10 minutes to ensure we would never be late. So somehow I absorbed that notion of time and still prefer to arrive 10 minutes before a meeting’s scheduled start time. If you’re there at the top of the hour, from my perspective, you’re already late.

Yes, I’ve been late to meetings, my own and others. The difference is that I am consumed with anxiety at doing so. That feeling is only exacerbated when I subsequently see others waltz in after me and they are oblivious to their tardiness. In my book, late is never fashionable.

At least I know I’m not alone. President Obama apparently was a 10-minute-early kind of guy and he attributes his success at least in part to this discipline. I can’t quantify what it’s meant to my career. I only know that’s how I operate.

The biggest challenge to those of us in senior management positions is that our day is usually stacked from morning to night with meetings. If one runs long, the schedule collapses like a proverbial stack of dominoes. Some companies have instituted the 10-minute rule (i.e., meetings should end at the 50 minute mark) to provide people time to scurry to the next confab. That’s a good start.

And for any company out there that is considering making such a change to keep people on schedule, my only advice is there is no time like the present.

Off the Rack

He returned home from the department store to find five items in the bag. There should have been six. It was New Year’s Eve day and the young man who was the unhappy customer was perplexed.

The young man, who is a friend of mine, was from out of town. Way out of town. In fact he is from a tiny island nation out in the Indian Ocean. This was going to require some way of proving to the store in a foreign country that they had made an error.

He called the store, which in this case was the Nordstrom Rack in Roseville. The clerk who handled his purchase told him unequivocally that she had put all the items in the bag. My friend’s English is good, but not so good that he felt comfortable arguing his case over the phone.

That’s when I took over. I called the store and asked to speak to the manager. It took a few tries to get through, but eventually I reached Cindy. She was polite and remarkably cordial in taking my call, especially given this had to be one of the store’s busiest days of the year.

I stated my case that the missing item was nowhere to be found and that I hoped Nordstrom Rack lived up to the reputation of its parent company for putting the customer first.

She asked for a little time to investigate the situation and promised to call me back in a few hours. She did as promised and gave my friend the benefit of the doubt (and reimbursement for the missing item).

Tales of Nordstrom’s customer service are legendary. My favorite is of the guy who wanted to return a set of tires to Nordstrom, because the building where he purchased the tires was now occupied by Nordstrom. They honored his request.

But it begs the question as to where Nordstrom is going with the Rack. How do you balance customer service with discounted everything? I’m not sure. And it seems they are figuring it out as they go. Nordstrom Racks now outnumber the traditional stores.

But I do hope it works. It appears my experience might be the new model, and they might just have a winning combination.