The Internet Home of Jonathan Cavell

$100M Without Sales

Burgher Jon — Sat, 04 Feb 2012 15:14:10 +0000

I have mentioned Atlassian on this blog before. But this caught my eye. Atlassian has surpassed $100M in revenue without the use of sales people. Not just that, but they accomplished this in Enterprise IT. Part of me wants to say that they’re my heroes because they rely strictly on their great products and not steak dinners. The other part thinks that a lot more people would know about Atlassian’s products and their investors could make a lot more money if they’d just hire some salesmen.

Have You Caught The Irony in Criticizing Romney for Bain Capital?

Burgher Jon — Tue, 31 Jan 2012 12:22:10 +0000

I have a feeling it’s going to be a theme for the next 10 months or so to criticize Mitt Romney’s role at Bain Capital. This is just raw ignorance, it shows a lack of understanding about private equity, struggling companies or capitalism in general. Unfortunately, there’s a very sad, very ironic twist to this ignorance.

Most private equity firms (and especially Bain) are setup to buy companies that are struggling to live up to their potential, help them achieve that potential, and then resell them at a profit. Before Bain was a private equity firm, they were (actually still are) a leading strategy consulting company. They only entered private equity when they realized that some companies could benefit so much from their consulting help, that they’d be better off owning the company then just collecting a consulting fee.

Weak companies, even the ones that employ hundreds or thousands are a DRAIN on the economy and ultimately lead to less jobs. I’m most familiar with software companies, so let’s think of an example from my industry. Let’s say there’s a $200M (revenue) company that’s struggling. Their management is leading them in the wrong direction and existing customers may keep them alive for another few years, but they won’t be growing with their current strategy. Say they employ 250 people, you’d think if we pull the plug on that company it would cost us 250 jobs, right?

It’s not that simple though, that company is actually costing the economy jobs. There are probably 20 or 30 extremely talented developers hiding inside that company (developers are the hottest commodity for software companies right now). These developers are currently not being put to productive use, they are chasing the misguided projects of poor management. If they were instead working for a Google, a Facebook or (even better) a startup, think how their community would be different. They would be producing valuable software for a company that would soon need more and more managers, accountants, sales people, etc… to sell and distribute that software. It probably wouldn’t be long before 250 jobs seemed like a small number. Let’s say a good developing core of 20 or 30 (with proper management) can support a company of 500, models like GroupOn suggest that number might be conservative. If we look at it that way, the dying software company isn’t saving the economy 250 jobs, it’s costing it 250.

A private equity firm like Bain Capital would buy the $200M company with 20 or 30 great developers and try to turn it in to a 500 person company. It’s true, they might fail and the company may go down anyway. But even then, they are helping the economy by forcing those 20 or 30 great developers to find companies that can more effectively use their talents.

Here’s the ironic twist. The reason private equity firms exist is that bad management is allowed to happen. Why is it allowed to happen? Because companies are democracies and sometimes democracies end up with shitty leaders. That’s right, the bad managers at the companies that Bain and other private equity firms purchase are installed in their positions by the boards of those companies which are elected by the shareholders. If the shareholders knew how to vote effective leaders for their companies then Bain wouldn’t have a business. Of course, it’s some of those same voters who are now confused about whether Mitt Romney’s work at Bain Capital was good for the economy or not.

Better or Worse, Your Call

Burgher Jon — Mon, 30 Jan 2012 02:59:45 +0000

“Today, you’re either going to get better or you’re going to get worse but you’re not going to stay the same, so which is it going to be?”

- Joe Paterno

In the 10 minutes of JoePa’s ceremony that I watched, the quote above was one of the ones that Jimmy Cefalo attributed to Joe. I love it. If you’re not practicing, not reading the news, not staying in shape, not networking, not calling a customer then you’re getting worse each and every day. So, what’s it going to be?

Sauerkraut Sunday: The Whole Wall Edition

Burgher Jon — Sun, 29 Jan 2012 17:51:30 +0000

How much do you love Sauerkraut? If, in order to answer that question, you spread your arms wide and yelled, “THIS MUCH!” than this Sauerkraut Sunday is for you. I have located on Amazon.com a 6 foot by 4 foot poster of Sauerkraut that you can peel and stick to your wall! Go ahead and order one, my tweets can wait until after you’re done.

On to the purpose of Sauerkraut Sundays… As I go through the week, I use Twitter to send out little updates and links. I realize that I do this quite a bit and that not all of you use Twitter, so with that in mind I’d like to take Sunday to do sort of a week in review. I’ve selected the most useful of my tweets from the last week and placed them in to the categories that I use in this blog.

Pittsburgh AND Startups/Social Media!!

Pittsburgh born and @alphalab raised @NoWait is a finalist for one of the SXSW Interactive Awards! http://t.co/vAvPF0vg

January 25, 2012 8:09 pm via TweetDeck ReplyRetweetFavorite

The Internet Home of Jonathan Cavell

$100M Without Sales

Have You Caught The Irony in Criticizing Romney for Bain Capital?

Better or Worse, Your Call

Sauerkraut Sunday: The Whole Wall Edition

Pittsburgh AND Startups/Social Media!!

Business

Enterprise IT

Me

Personal Technology

Sports

Other

Blog Posts from this blog

Integrating Services and Why Google Doesn’t Bother Me

My Evolving Thoughts on Fun

Joe Paterno and Making Something Great

Book Review: Steve Jobs by Walter Isaacson

Top 10 Posts in 2011

Sauerkraut Sunday: The Good Luck Edition

Pittsburgh AND Startups/Social Media!!

Business

Sports

Unsolicited Advice

Blog Posts from this blog