State of the Media

Cadence's take on social media

I spent sometime chatting with Jim Price and Dan Holden who are managing the social media program at Cadence Design.  Cadence has  been involved in social media and networking longer than any other EDA company, starting with the online version of CDNLive, and one of the more experimental, including their relationship with Xuropa.  I have to give them kudos for their willingness to explore as well as make a place for traditional journalists in their efforts.  I'll let you listen to this edited version of the conversation (it was 30 minutes long) and will be making some comments in a few days.

Cadence social media

What newspapers were once about

A long time ago...and I wrote about this a few months ago...media wasn't about profit.  It had a higher purpose in mind.  With my son watching Citizen Kane this week for his film class I ran across a clip I had forgotten about.  Sums it up nicely.

Why things don't work...anymore

I just got off my fourth phone call in the past week from someone asking my to help them get some media attention on another partner release.  I've told them the same thing I've been telling everyone for three years: Unless it is a painfully slow news month the chances are virtually zero.  Here's why:

 First, there are 5,000 private technology companies in early to mid stage funding in the US at any given time, according to Dow Jones,

Second, All 5,000 of those companies are negotiating with at least on Fortune 500 company on some sort of partnership/joint agreement.  All of those companies will issue at least one news release about the agreement and will be seeking media coverage.  That means the technology press are dealing with, on average 13 partnership announcements every week.

Third, none of these agreements will mention what specific customers are being served by these agreements, nor what products will be made available to customers as a result of this collaboration, nor will they contain anything more than a very general, high-level and superficial endorsement of the private tech company's involvement.

Finally, the target audience for these announcements is always a very limited part of the entire market, possibly 10-50 people total who are directly affected by the relationship between the two companies.

The press are part of what is called mass media.  Their goal is to produce information that is valuable to the largest possible number of people in a given industry.  10-50 people does not meet that requirement.  On top of that, the press is given the responsibility of finding out information that is out of the ordinary and 13 announcements a week that virtually say the very same thing, with changes only in the players and the names of the products, do not constitute what is callled "news."

Partnership announcements are good for three things: filling out space on websites, keeping the name of your company active on the web, and for salesmen to hand out to the 10-50 people that really care.

Why you don't (or do) like social media, part 1

I've always been surprised at the negative reaction most marketers have had toward social media until I finished up leading my third seminar session on the subject and it suddenly became clear to me.  For most marketers, and even several journalists, the underlying mechanism of social media is foreign.  

The oldest form of human communication is simple conversation.  Human language was developed to exchanges ideas and desires between individuals and within small groups.  That is how we have connected with each other for millennia.  It looks something like this:

The flow of information is multidirectional and no one is in control of the outcome. The upside of this kind of communication is issues can be resolved in realtime.  You get true concensus. The downside of oral communication is that when you express an idea, you can get a negative response ranging from a simple disagreement with your premise to a punch in the nose. Those looking to avoid confrontation would amass a "tribe" followers that, if strong enough, could enforce an opinion without risking armed conflict.

With he advent of mass communications in the invention of the written language, something started to change.  It now became possible to avoid getting a negative reaction to a concept by just ignoring any written response.  Over the centuries, mass media has downplayed the conversational aspect of human nature and created a one-way flow of information that looks like this:

The flow of communication is one way.  You can give the impression that there is a dialog in a Q&A session in a live speaking engagement, or in a talk show by allowing call-ins, but that is highly controlled at the front end.  The upside of this paradigm is one person or entity can create an impression that this is the way of things without receiving any input, positive of negative, and possibly create a "tribe" that will follow your position, sometimes to the death.  The downside is that you have to guess at what your audience will accept as truth, overcome competing messages and never really learn if what you are saying is truly resonating with the audience.

The first form of communication is the most natural.  It is still going on today, although the influence of the second makes it more difficult to reach concensus.  The second form of communication is unnatural, but it is also the accepted paradigm of today.  It is the way companies do marketing, they way broadcast companies create programming, the way clergymen speak to their congregations and probably the reason that, after all the centuries, humanity is no where closer to developing a consensus on anything.  

Social media attacks that paradigm with a natural flow of communication, but on a much broader scale.  That's why marketers and journalists often chafe at embracing the practice.  What I have learned from this revelation... is something I will take up in the next post.  Comments, as always, are welcome.

Analyst looks beyond the numbers

Lots of companies are deep into quarterly reports, trying to justify their stock prices.  And in a very timely fashion, Stephen Ohr of Gartner comes out with a post on his personal blog with a reality check.  It's a little chilling but worth checking out.

There is gold in them thar hills

The biggest question I hear now is "Can you make money off of media?"  That question isn't just about social media, but all kinds of media.  For traditional media, most people are leaning toward a "no" answer, even though many people are still trying.  For new media (blogs, social networks, podcasting) most lean toward "no" but with a question mark because they are hoping they are wrong.  they think they might be able to, but they can't figure it out.

Speaking from personal experience now (experience over the past 6 years since I got into this, I've decided upon a definite "yes" for both.  There is a "however" attached to it.

Media can be a profit center, but only when you change your definition of what a profit center is.  There was a time when revenues were directly attributed to media investment (primarily advertising) But there was never a direct correlation.  The more you invested in media, the greater your revenues grew.  That seemed to be a direct enough correlation for any company.  Then the internet came along and people believed that it would be able to give that direct correlation that everyone really wanted.  Well, not everyone.  Just bean counters and engineers.  And what's more, investing in internet media was going to be a lot cheaper than print or broadcast.

Well, the last part was definitely true.  It was cheaper.  And because it was cheaper, companies started investing in internet media while dropping their overall investment in media in general.  The result was that revenues started to drop and when the companies started using the wonderful measurement tools the internet promised them, they could not find the direct correlation between revenue and media investment.  So they cut their budgets even more.  And revenue dried up even faster.

The media industry went into recession long before the rest of the world and it started when they began telling customers that they could give them the detailed information and connection they needed with the most important customers that would raise revenues.  They were wrong and they shot themselves in the foot, ankle, kneecap and hip in the process.  They may never recover.

Unless they, and all the rest of us decide to relearn what media does for the bottom line:

It engineers opinion in the marketplace of ideas.

The keys in that phrase, that has been around for more than 100 years, are "opinion" and "ideas."  Neither of those two phrases are concrete.  They are abstract, wibbly wobbly balls of concept.  For some people they can be very clear, for many others they cannot.  But both are incredibly powerful tools for driving success, and they are influenced more by emotion than intellect.  You can't really measure it.  You can't really control it.  It's not science.  It's art.  And that makes bean counters and engineers very nervous and wary.

As I said, I've been kicking around the world of social media for about 6 years.  I sat back and stared at it for two years before that.  About three years ago I started sharing what I had figured out about social media with friends and colleagues.  Something really strange started happening for some of them who decided to take what I was saying bout it to heart.

They started to make money.  They got better jobs.  Their companies started turning around.  They started hiring employees.  Then one of them finally came to me and said, "Lou, you really should be charging for this kind of information."

Physician, heal thyself.

For the next few weeks I'm going to start sharing some things that I've discovered in the past few years.  It will be enough to get you interested, but not enough to get you to the other side.  I've decided to stop giving away what I know.  I now have a couple of clients who are actually paying me to share this information, and you may be hearing about them in the coming months.  

It can be done.  You can make money off of media investment.

BusinessWeek on the block and on the skids

News today is that Bloomberg is buying BusinessWeek from McGraw-Hill.  According the Eric Savitz at Barron's the selling price is a bargain basement $2M to $5M.  Of course, it also includes acquisition of $40M in debt.  BW has more than 400 employees but has been cutting staff steadily for a decade, so you know how big it once was.  It's name is mentioned with the same gravitas as the Wall Street journal, Barrons, even the New York Times.

I remember sitting in on an interview by Kathy Rebello, then a senior editor, after a product review at CES.  For the company (not a client) it was a major coup to get a live sit down with a BW editor, especially Kathy.  And I watched as she took the story apart and reduced the CEO to tears begging for her not to write the story.  Every client I had wanted to be in BW and every time they said it I told them about that time.  BW was never a friend of any business, but they were always a real watchdog for investors and the public.  To get a positive story was a big deal (and I did it twice), but you really had to do your homework.

Bloomberg will keep the name and claims it will keep the print publication alive.... you can believe that if you want.  We'll still have the website for a while and our memories of what was once a vibrant publication that really covered business.

BusinessWeek on the block and on the skids

News today is that Bloomberg is buying BusinessWeek from McGraw-Hill.  According the Eric Savitz at Barron's the selling price is a bargain basement $2M to $5M.  Of course, it also includes acquisition of $40M in debt.  BW has more than 400 employees but has been cutting staff steadily for a decade, so you know how big it once was.  It's name is mentioned with the same gravitas as the Wall Street journal, Barrons, even the New York Times.

I remember sitting in on an interview by Kathy Rebello, then a senior editor, after a product review at CES.  For the company (not a client) it was a major coup to get a live sit down with a BW editor, especially Kathy.  And I watched as she took the story apart and reduced the CEO to tears begging for her not to write the story.  Every client I had wanted to be in BW and every time they said it I told them about that time.  BW was never a friend of any business, but they were always a real watchdog for investors and the public.  To get a positive story was a big deal (and I did it twice), but you really had to do your homework.

Bloomberg will keep the name and claims it will keep the print publication alive.... you can believe that if you want.  We'll still have the website for a while and our memories of what was once a vibrant publication that really covered business.

Of hubris and market share

The A tweet from Brian Fuller led me to a new blogger that had a great post on why FPGA start-ups fail.  Not only was it a good review of the basic problem from a technology it also gave a good overview of the business challenges.  Oliver Coudert, who has been banging around the EDA world for quite a while, including chief technologist at the infamous Monterey Design (arguably the most spectacular flame-out in the EDA industry) pointed out that no FPGA start-up provides a significant enough advance in FPGA technology that Xilinx and Altera can't overcome it at the next process node.  He also points out that with those two holding 87 percent of the market, it's tough for any company to get a serious toehold against the giants.

One thing is missing though.

Neither Altera nor Xilinx really compete directly against each other as much as they do against the ASIC world.  In every presentation I have seen from either company, neither ever mentions the other.  What they do talk about are the misconceptions about the limitations of FPGAs vs ASICs, and the inherent advantages of FPGA design.  On the other hand, every FPGA start-up pitch I've ever heard target both the market leaders.  The cost of developing a new ASIC is killing SoC startups, even when they provide a giant leap forward in performance, while the cost of developing an FPGA system is fractional by comparison.  Both Xilinx and Altera attack that market and are successful. 

What seems to be a constant in the FPGA start-ups is a preponderance of EDA marketing acumen.  EDA start-ups target the market share of of established EDA companies, not the unserved market segments of the semiconductor and electronic systems world.  The underlying belief of this practice is that they can be successful by stealing away just a few customers of the market leaders.  On the other side, the EDA leaders work very hard at undercutting the startups, so they don't grow their own market either.

So the basic failure I've seen in both EDA and FPGA start-ups is more of hubris than of technology or market share.  

Of hubris and market share

A tweet from Brian Fuller led me to a new blogger that had a great post on why FPGA start-ups fail.  Not only was it a good review of the basic problem from a technology it also gave a good overview of the business challenges.  Oliver Coudert, who has been banging around the EDA world for quite a while, including chief technologist at the infamous Monterey Design (arguably the most spectacular flame-out in the EDA industry) pointed out that no FPGA start-up provides a significant enough advance in FPGA technology that Xilinx and Altera can't overcome it at the next process node.  He also points out that with those two holding 87 percent of the market, it's tough for any company to get a serious toehold against the giants.

One thing is missing though.

Neither Altera nor Xilinx really compete directly against each other as much as they do against the ASIC world.  In every presentation I have seen from either company, neither ever mentions the other.  What they do talk about are the misconceptions about the limitations of FPGAs vs ASICs, and the inherent advantages of FPGA design.  On the other hand, every FPGA start-up pitch I've ever heard target both the market leaders.  The cost of developing a new ASIC is killing SoC startups, even when they provide a giant leap forward in performance, while the cost of developing an FPGA system is fractional by comparison.  Both Xilinx and Altera attack that market and are successful. 

What seems to be a constant in the FPGA start-ups is a preponderance of EDA marketing acumen.  EDA start-ups target the market share of of established EDA companies, not the unserved market segments of the semiconductor and electronic systems world.  The underlying belief of this practice is that they can be successful by stealing away just a few customers of the market leaders.  On the other side, the EDA leaders work very hard at undercutting the startups, so they don't grow their own market either.

So the basic failure I've seen in both EDA and FPGA start-ups is more of hubris than of technology or market share.