A Software Insider's Point of View

Tuesday's Tip: Why Unethical Marketing Costs Tech Vendors 100’s of Millions Every Year

rwang0 — Tue, 26 Mar 2024 21:06:19 +0000

Tuesday's Tip: Why Unethical Marketing Costs Tech Vendors 100’s of Millions Every Year rwang0 Tue, 03/26/2024 - 14:06

What Every Tech Vendor CEO and CFO Should Know About Their CMO’s Wasted Investments In Vanity Metrics

Marketing professionals face massive pressure to show that their marketing investments have paid off. In a zero-interest rate environment, budgets were flush and marketers had a lot of leeway in building brand, hosting amazing events, and buying ads to improve market presence. However, a shift to a five percent interest rate environment has many CMO’s focused on performance marketing, showing return on investment, and moving MQLs from SQLs as fast as they can.

Why? CFO’s like making money from interest in the bank and marketing is often seen as overhead that needs to be justified.

Thus, marketing professionals must defend their budgets via metrics. But, not all metrics are created equally. Since the dawn of time, the urge to show performance has often led to shady strategies to boost numbers to game the system with metrics such as views, likes, subscribers, and impressions. To be fair, sometimes these efforts were valiant to prove a trend or take a stand. Other times, these were short sighted to justify an untenable position.

Unfortunately, many marketers have resorted to vanity metrics, metrics not tied to financial numbers or outcomes, that often have no correlation to the ultimate outcome – revenue.

The consequences of such actions have led to hundreds of millions in wasted in marketing investments that CEO’s and CFO’s should investigate. Vanity metrics provide a temporary saccharin high, and then the sugar crash results in a lot of wasted investments.

ACTION ITEM: Develop metrics with marketers that are tied to short-term, medium-term, and long-term revenue outcomes. Create a balanced portfolio of initiatives.

Fake Media Takes Paid Media To New Lows

The good news, in a digital world, the ability to show performance is easier. The bad news, faking performance has become easier due to a class of bad actors espousing unethical practices. The rise of paid media continues this trend by marketers to reach and influence decision makers. To be clear, paid media has a place in building, nurturing, and developing a community when there is a real audience of human prospects on the other end.

Regrettably, many large tech vendors with flush budgets often spent money for permanent paid blogs on prominent business publications like Forbes, in lieu of earned coverage. Why work so hard when a million dollars bought a page or subsite on a well-read business blog? The assumption that readers could not tell the difference between authentic content and paid media was fatally flawed. Most educated buyers ignored these properties due to the lack of original or novel content. In fact, the views were low unless they also paid for a media strategy firm to “juice’ the numbers.

ACTION ITEMS: CFO’s and CEO’s should spend time rewarding performance metrics for the long term and not the quarter to quarter vanity metrics that often are reported. Don’t let marketing professionals fall into the vanity metric trap.

Marketing Strategy Firms Posing As Unethical Fake Analysts Waste Millions Of Dollars

On the video front, other marketers thought it was okay to pay for views for videos no one would watch. Hardware and chip manufacturers technology vendors were the worst offenders often paying for videos about products no technology prospect cared about. This failed tactic required marketers to spend money with “fake” analysts or marketing strategy firms posing as analyst influencers to reach views on videos with no audience.

Using bot farms and mechanical turks from Asia, they provided “views” for the CMOs to show off to executives. The called it "paid" media. These unethical firms even disclosed these practices on their websites to justify their existence. In fact, a few of these “fake analyst firms" tried to pawn off their fake bot media efforts as paid media, pulling the wool over the eyes of CFO’s and CEO’s who thought they had 30,000 views on mundane topics such as “ The future of dot matrix printing” or “Networking and AI in the 21st century”. The reality – these topics would be lucky to garner 100 views on a great day. So, instead of paid media to grow an audience, they had an audience of none.

The marketers who made these decisions wasted millions of dollars with bots who would never spend one single dollar. To be clear, paid media campaigns with a real audience can augment a marketer’s strategy to grow community. However, fake paid media, with zero real audience of buyers, is a disservice and a complete waste of marketing dollars.

What’s the point of having 29,000 views from bots who will never buy? Who would believe a social media influencer, who used to be a plumber living in the Southeast, now calls herself an analyst, could garner 536 likes on 4 views for a podcast no one has ever heard of? And even funnier, these type of fake analyst firms generate 29,000 views 24 hours later. Really? These folks don't even pass the sniff test.

Sadly, the industry has a small class of social media influencers pretending to be analysts who often pay bot farms to fake views and then show their clients that they are “influential”.

These analysts are so unethical that they even threaten technology vendors who don’t pay them, that they will say “bad” things about them when they show up on TV. This type of "extortion" is not good for the credibility of the industry and should be called out and stamped out. The good news, this isn’t the norm and hopefully marketers will wake up and shut them down.

ACTION ITEM: CFO’s and CEO’s should demand the cancellation of these fake paid media dollars and replace them with long-term programs that grow audience.

The Bottom Line: There Are No Shortcuts For Good Marketing

Smart and savvy marketers know that communities and relationships are built on trust and authenticity. Real programs take time but payoff. CFO’s and CEO’s can eliminate millions of dollars of marketing waste on fake paid media and the unethical analyst firms who propagate these tactics. It’s time to root out the bad actors and end these dark arts. CEO’s and CFO’s can help their marketing brethren stay on the straight and narrow path of truly creating impactful and performance marketing that last the test of time.

Three Easy Steps To Root Out Unethical Marketing

The defensibility of vanity metrics no longer has a place in modern marketing. In fact, fake media practices are very unethical.

To identify fake paid media, one can take the additional security step of asking for proof on where the paid media comes from. A simple Google analytics log could help one's team identify if all the views come from the same IP or were all generated at the same time period. Any marketing strategy firm that can not come up with these stats or show this report is more than likely lying about their paid media efforts.

Here are three steps to root out this cancer in your marketing organization.

Focus on performance metrics, not vanity metrics.
Identify the bad actors in the space and put procurement bans on these players for five years. These actors could be media outlets, marketing strategy firms, media influencers, and unethical analyst firms.
Build long term relationships with ethical organizations to grow prospects, partner for thought leadership, and create original content.

Your POV

Will your CMO stop using fake analysts, and paying for fake views? Need help in identifying the unethical actors in the industry?

Add your comments to the blog or reach me via email: [email protected]">R (at) ConstellationR (dot) com or[email protected]"> R (at) SoftwareInsider (dot) org. Please let us know if you need help with your strategy efforts. Here’s how we can assist:

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Disclosures

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy,stay tuned for the full client list on the Constellation Research website. * Not responsible for any factual errors or omissions. However, happy to correct any errors upon email receipt.

Constellation Research recommends that readers consult a stock professional for their investment guidance. Investors should understand the potential conflicts of interest analysts might face. Constellation does not underwrite or own the securities of the companies the analysts cover. Analysts themselves sometimes own stocks in the companies they cover—either directly or indirectly, such as through employee stock-purchase pools in which they and their colleagues participate. As a general matter, investors should not rely solely on an analyst’s recommendation when deciding whether to buy, hold, or sell a stock. Instead, they should also do their own research—such as reading the prospectus for new companies or for public companies, the quarterly and annual reports filed with the SEC—to confirm whether a particular investment is appropriate for them in light of their individual financial circumstances.

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New Analysis: Nvidia GTC 2024 Is The Davos of AI

rwang0 — Mon, 18 Mar 2024 13:01:56 +0000

New Analysis: Nvidia GTC 2024 Is The Davos of AI rwang0 Mon, 03/18/2024 - 06:01

New Chips, New Business Models Ahead In Accelerated Computing

Nvidia stock is up 267% YoY. With over 10,000 people in physical attendance and up to 100,000 people virtually attending, this could be the largest AI conference. All eyes on the next wave for AI with CEO Jensen Huang ready to keynote at 1:00 pm PT at the SAP Center in San Jose. The key things to look for in the keynote:

New B100 Chip replacement. Built by TSMC, the new chips are expected to be advanced 3nm design. NVIDIA will take advantage of the two dieTSMC's CoWoS-L (Chip-on-Wafer-On-Substrate-L) advanced 2.5D packaging technology to get larger processors. Should Nvidia move from the monolithic design to a multi-chip module (MCM) approach, the chip maker could create faster derivatives and shorten its product cycle.
CUDA advancements. This is the software layer that allows software companies to harness the power of the GPUs
Key vertical expansion. Healthcare, pharma, defense, and public sector consume massive workloads.
Partnerships across the AI ecosystem. Expect announcements from partners such as OpenAI, Microsoft, Amazon, and Google, Meta, Micron, Oracle, Super Micro, Dell, Intel, and more.
Sovereign AI growth. Nvidia is focusing beyond data centers and serving governments for sovereign AI.

Chips Are The Foundational First Inning Of A Nine Inning Age Of AI

The winners of the internet weren’t the early infrastructure companies They were the companies that built their business model on the internet as a key distribution channel. In AI, it will be the companies that take advantage of the full-stack of AI. Software companies will drive the second inning. But the third and fourth innings will be the innovative companies who use AI as their core business model. For example, in the war for refrigeration, it wasn't the appliance manufacturers that won, it was actually Coca Cola that innovated a new market for cold beverages.

Your POV

Will you be ready for Nvidia's new AI chip? Can competitors catch up?

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Disclosures

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Monday's Musings: Will AI Force Centralized Scarcity Or Create Freedom With Decentralized Abundance?

rwang0 — Sun, 10 Mar 2024 17:19:19 +0000

Monday's Musings: Will AI Force Centralized Scarcity Or Create Freedom With Decentralized Abundance? rwang0 Sun, 03/10/2024 - 10:19

Age of AI Ushers Exponential And Transformational Power In The Hands Of A Few

Society has often swung from centralization to decentralization and back in the distribution of power and rights. Living in a culture of abundance versus a culture of scarcity can alter the prioritization of decisions, the quality of interactions, and the overall optimism or pessimism of a society. AI has the power to transform societies for both good and evil.

Take the climate agenda. For the most part, the messages have focused on authoritarian control. People are told they can't eat meat, they need ot use less water, they have to stop traveling long distances, they need to get rid of their gas stove, they shouldn't do this and that. Centralized scarcity allows for massive authoritarian control. However, the objectives of a more efficient and green society could just as easily be achieved with decentralized abundance. In Tesla's Q1 2023 Investor Day, Elon Musk showed how less than .2% of the world's land area, 240 TW/h, and less than 10% of the world's GDP could be used to create sustainable and abundant energy. Over 10 years, this would require 1% of the world's global GDP to achieve this sustainable energy goal. Humanity ultimately innovates better with decentralized abundance. The goal is to create win-win-wins across the board.

Bottom Line: Free Societies Must Define Their Digital Rights Before Its Too Late

The rapid digitization of the physical world brings more centralized control in the hands of the few. Many of the global elite see AI as an opportunity to impress their values at scale without checks and balances and rigorous public discourse. Those who seek decentralized abundance, will have to work hard to battle the elites who seek centralized scarcity.

Free societies will have to modernize their rights and privileges for a digital age and for an age of AI. Freedom is at stake and humanity could face a dark ages without having these basic digital rights codified ahead of mass AI adoption. For countries such as the US, there is time to create a new constitutional convention codifying a digital rights built for the Age of AI. By defining your genomics, your personal data, and your digital footprint as a property right, this first step could provide a key protection in privacy. Other rights will preserve right that allow humans to operate at human scale in an ever growing machine scale world.

Your POV

Do you see a world of centralized scarcity or will humans achieve decentralized abundance? What digital rights should we fight for and preserve?

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Disclosures

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Monday's Musings: In An Age of AI, Death To The Pyramid Model, Long Live The Diamond

rwang0 — Sat, 02 Mar 2024 06:39:26 +0000

Monday's Musings: In An Age of AI, Death To The Pyramid Model, Long Live The Diamond rwang0 Fri, 03/01/2024 - 22:39

The Traditional Pyramid Is Under Attack. AI Arbitrage Is Here

Most professional services firms have operated in a pyramid model where the most senior owner of a P&L would have a staffing ratio of 1:3 to 1:5 and their next reports would have a staffing ratio of 1:5 to 1:10. This pyramid structure would continue until the last level. There could be as many as 8 to 10 levels in a structure that looks like this with billable rates per hour that would correspond to seniority and level of expertise.

Managing Partner/ Senior Vice-President ($1500/hr)
Partner ($1200/hr)
Senior Director ($750/hr)
Director ($600/hr)
Senior Manager ($400/hr)
Manager($300/hr)
Senior Consultant ($200/hr)
Consultant ($150/hr)

The Diamond Is The New Staffing Model

As more and more work becomes automated and a range of lower-level and higher-level tasks are replaced by AI, the need for a classic command and control pyramid structure goes away. In fact, automation and AI break off chunks of the pyramid. As more humans manage more bots, the pyramid look more like a diamond. Workers on the bottom levels of the pyramid are replaced or even age out. And in many cases, new product or service offerings hasten the reduction of humans as the level of automation increases.

The Bottom Line: Services Firms Look More Like Software Firms In An Age Of AI

If one was to create a new services firm startup, the biggest target market would be the BPO business of legacy services firms. Why? Well defined processes, established exception handling, and large contracts could all be turned into AI-driven smart services and software. The future services firm must compete on bot efficiency and human ingenuity. Software driven approaches will trump traditional labor intensive services. Expect AI to augment work while automation software will play a big role in operations Services firms that fail to make this transition will cease to exist.

Your POV

Do you expect your services firms to deploy more bots or more humans? What's your expectation on contracts in 2024?

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Disclosures

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News Analysis: Finance In The Age Of AI - Microsoft Copilot for Finance

rwang0 — Thu, 29 Feb 2024 13:34:05 +0000

News Analysis: Finance In The Age Of AI - Microsoft Copilot for Finance rwang0 Thu, 02/29/2024 - 05:34

The Leap Year Brings Announcement Of A New Copilot - Finance

Microsoft announced the public preview of Copilot for Finance. With tools such as Copilot, the user experience begins and ends with generative AI. In conversations with Corporate Vice President of Business Applications Engineering - Charles Lamanna, Corporate Vice President of Business Applications Marketing - Emily He, Vice President of AI-led ERP Engineering - Georg Glantshnig, users can now apply generative AI across departments such as sales, service, finance, and IT with Copilot for M365, Copilot for Sales, Copilot for Service, Copilot for Finance, and Copilot Studio.

As with all Microsoft Copilot experiences, Copilot for Finance changes where and how users interface with transactional applications which changes the user dynamics of how roles, workflows, and insight transform work. For example Copilot for Finance:

Allows users to engage in their preferred environments such as Excel or in email, instead of in a traditional finance application.
Guides users to the next best action
Accelerates automation efforts
Orchestrates information across internal and external financial systems
Uses pre-built business logic to surface the right insight at the right time
Supports human in the loop
Provides transparency that allows users to understand the data analysis process, veracity of data, lineage of decisions, and sourcing of where data is used to provide assumptions.

Public Preview Supports Three Scenarios

Copilot for Finance focuses on Collections, Variance Analysis, and Reconciliation. These three scenarios represent some of the most labor intensive and and costly operational tasks finance teams face on a daily basis. The goal - shift tedium away so that finance professionals can focus on more strategic tasks. Copilot for Finance will also expedite and simplify the connection to existing financial systems, data sources, planning tools, and others via pre-built connectors.

Finance professionals will be able to:

Conduct a variance analysis in Excel. By using natural language prompts, financial analysts can identify risks, anomalies, unmatched values, and other irregularities.
Simplify reconciliation using Excel and automated nudges, suggestions, and guided troubleshooting.
View rich customer account details in Outlook
Turn raw data in Excel into visuals and reports for sharing.

The Bottom Line: Finance Professionals Can Now Augment With Generative AI

Automating high volume, highly repetitive, and highly regulated tasks show where the power of generative AI and AI can augment human work. Copilot for Finance enables the shift from tasks to workflows when using AI. Microsoft's latest offering may be what CFO's have been looking for. faster, better, and even cheaper innovations.

Your POV

Ready to start with Finance? What Copilots do you plan to start with? Will your office of the CFO start with Gen AI?

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Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact [email protected]">Sales.

Disclosures

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Monday's Musings: Trust In The Age of AI

rwang0 — Mon, 15 Jan 2024 02:59:19 +0000

Monday's Musings: Trust In The Age of AI rwang0 Sun, 01/14/2024 - 18:59

Enter AI And The Real Fourth Industrial Revolution

Running out of ideas to inspire, a false fourth industrial revolution was coined by the World Economic Forum. The move to digitization and digital transformation was a necessary half-step to the move towards AI. While some will now profess that the Fifth Industrial revolution is AI, AI is more exponential than the internet or the fake fourth industrial revolution. The dawn of the fourth industrial revolution begins with AI. This Cognitive Era will be with us for decades to come.

Post AI World Requires Lots Of Precision Data

Digital transformation has made more data available by digitizing the physical world. Enterprises who led the way in digital transformation built a foundation to take advantage of AI. In 2023, enterprises rushed to AI for an exponential advantage. Unfortunately, many organizations realized they did not have enough data to achieve precision decisions. Even more concerning, most enterprises do not have enough data, compute power, or energy to solve their problems. In fact, 91% of companies will determine they do not have enough data to achieve a level of precision their stakeholders will trust. Some will find internal data good enough but not good enough for many use cases.

For example, would 91% accuracy be good for customer service and support? Probably yes. Would 91% accuracy cut it for procurement? No. Would 91% accuracy make a CFO feel confident In finance? Definitely no. Would 91% accuracy be okay for patient visits in healthcare? Absolutely not!

Sadly, hundreds of millions, even billions will be wasted because organizations did not develop a data strategy. Without enough precision data, AI cannot be trusted. Hallucinations in generative AI lend well for creativity but become dangerous when users expect precision and trust. As skepticism grows of AI, mistrust will increase. The timeline over the next five years will look like this (see Figure 1).

Figure 1. Business Expectations For AI

Source: Constellation Research, Inc.

Data Collectives Emerge To Fuel Data Inc. Companies

Trust and transparency requires constant training and a voracious appetite for increasing amounts of data. Yet, data half-life makes much of your data worthless in seconds. The battle for more data and increasing number of signals requires data mastery. Data mastery results in not only better AI use cases, but also a new class of organizations known as Data, Inc. companies.

Deep data resident knowledge of the flat sides of data provides rich understanding. Unique data sets and partner models will augment synthetic data approaches to feed the beast. Despite best efforts, no organization will have enough data.

For this reason, hybrid models for data persist as a shift back to on-premises will accelerate because of security concerns and efficiency reasons for mission critical data sets. Data collectives will bring richer and higher precisions inputs. Small language models become as valuable as large language models as data collective orchestrate market places of insight. Data collectives will provide insight in the “dark ages” of post AI where publicly available information is rare and useless. Winners will emerge to reap exponential advantages.

Data Inc. Companies Will Deliver Trusted AI

A new class of company known as Data Inc. will emerge. These organizations will be valued by their data in addition to their revenues. Moreover, these companies will emerge as their own asset class valued by the market for their ability to create flywheels of monetization. Five types of Data Inc companies will emerge: (see Figure 2)

Unique data sets
Data driven digital networks - network + data
Longitudinal data sets
Derived data advantage
New classes of data

Figure 2. Five Types Of Data Inc. Companies Emerge

Source: Constellation Research, Inc.

Recommendations: Seven Rules To Create Trusted AI

In discussions and workshops with over 50 leading enterprises, seven rules have emerged to crate trusted AI entities and Data Inc companies:

Rule 1: Achieve data mastery

Rule 2: Understand how to partner for data sources and signals

Rule 3: Generate new derivatives

Rule 4: Monetize outcomes

Rule 5: Engage stakeholders

Rule 6: Nourish networks

Rule 7: Trust but verify

The Bottom Line: Trusted AI Is Not Only Just About Ethics, But Also About How We design AI for Human Scale In A World Built For Machine Scale

In the Post AI world, organizations no longer compete with humans for labor. Humans will compete with bots and AI to get work done. The quest for more data sources will result in the “dark ages” of publicly available data. Most entities will not want their data to be publicly available for ingestion by other AI models. Hence, high quality public data will be scarce in the future.

In order to source high quality data, data collectives will emerge to create trusted AI models in private networks. Data collective will reward small language models for providing the last mile in precision. Solid data strategy will drive the valuation of companies in the future and provide stakeholders with trusted AI.

As organizations build AI for machine scale, humanizing AI will require different design aesthetics. Organizations will have to determine when they will insert a human in the process and at what cost – benefit to the organization.

Trust in an age of AI will emerge as the north star to guide Data Inc companies.

Your POV

Will you build a Data Inc. company? What steps will you take to deliver for the future?

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Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact [email protected]">Sales.

Disclosures

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Event Report: Rebuilding Trust - The 2024 Davos Agenda

rwang0 — Sat, 13 Jan 2024 09:24:16 +0000

Event Report: Rebuilding Trust - The 2024 Davos Agenda rwang0 Sat, 01/13/2024 - 01:24

The World Economic Forum's Four Themes Seek To Rebuild Trust

The 54^th annual convening at Davos brings 2700 delegates from over 130 countries to officially attend the World Economic Forum’s event. Meanwhile, an additional 5000 individuals join events around Davos in a series of programing known as UnDavos. This year’s official Davos proceedings center on four main themes:

Achieving Security and Cooperation in a Fractured World. The forum hopes to find ways to deal with security crises and stem fragmentation of societies.
Creating Growth and Jobs for a New Era. Leaders seek win-win-win partnerships with government, business, and civil society to craft new economic frameworks that benefit more stakeholders.
Artificial Intelligence as a Driving Force for the Economy and Society. More disruptive and exponential in impact than the Internet, the conveners want to harness artificial intelligence as a force for good in all aspects of society, economy, and technology.
A Long-Term Strategy for Climate, Nature and Energy. Members hope to develop long-term systemic approaches to address climate through carbon reduction while improving inclusive access to food, water, and energy.

Self-Inflicted Crises Dominated 2023

By all means, 2023 was a very difficult transition for many global economies, enterprises, and individuals. Many of us wished for a return to pre 2019 conditions, but were severely disappointed. More importantly, the year continued a series of five self-inflicted crises that global leaders had to address and overcome (see Figure 1):

Figure 1. The Confluence of Crises

Source: Constellation Research, Inc.

Inflation. Over stimulus by governments drove goods inflation while supply chain issues exacerbated prices which led to union actions that compounded wage increases. Pernicious wage inflation could impact global growth rates. Instead of addressing the root cause of high energy costs by increasing choices and supply, leaders imposed more costly ESG requirements forcing citizens to choose between food or energy.
Interest rates. Monetary policy met fiscal constraints and central banks used interest rate increases as a blunt tool to combat inflation at the expense of economic expansion. Lower energy costs and less fiscal stimulus would have created a more market driven option in driving down interest rates
Inventory. Supply chains felt constraints from post-pandemic logistics along with a shift in inflation and interest rates as the world sought deglobalization as a means to mitigate geo-political risk. Inventory shortages increased inflation and kept prices high. Labor strife added to woes in logistics and supply chain networks.
Infection. Work from home policies led to a flight from urban dense cores to suburban spaces. This enabled dense urban cores to continue their deterioration in public safety as shop owners faced declining business and mass transit ridership plummeted. Reopening mania created revenge spending demand for luxury goods and experiences. Meanwhile lockdowns reduced childhood learning rates.
Invasion. Wars in Ukraine and Gaza, and kinetic war threats in the South China Sea and Persian Gulf continue to add to the sense of a heightened global insecurity. Armed conflicts and cyberattacks have impacted the general populaces psyche and a feeling that governments have failed to protect them. The lack of a strong benevolent super-power keeping peace through strength and savvy foreign policy has led to this decline.

Five Dominant Narratives Espoused By Elites Hinder The Rebuilding Of Trust

This convergence of these self-inflicted crises and globally enabled chaos could be attributed to the lack of leadership among the “Davos Set” to listen to and act upon the concerns of the general public by actually addressing the root causes of trust. In fact, the Davos Agenda versus Public Trust has been the crux of the issue In the growing lack of trust in institutions and continues to exacerbate the divide among the general populace and the “elites”.

From an objective point of view, this lack of trust stems from these root causes:

A Belief That The Expert Classes Know Best. The notion of elites making decisions for the rest of the world and academic experts deciding policies without public input has eroded faith and public trust over the past decade. Time after time, the public has seen how the expert class lacks the pragmatic skills to govern and positively impact their lives. The pandemic showed how inept and detrimental the expert class could be. Children were deprived of schooling in long and unnecessary lockdowns. Small businesses were shut down and destroyed while big businesses were given exemptions. Vaccinations were forced upon a populace instead of giving them free will and choice to decide. Individuals were fired for upholding their personal beliefs and freedoms.
The Great Reset Is Needed To Create A New World Order. As part of the Davos Manifesto, elites felt that by influencing business leaders, the political class, and academia with the World Economic Forum’s point of view, they can craft a better society through forced polices upon the rest of the world. These elites champion forced scarcity due to climate change, global interests over local interest, big pharma vs independent medicine, technology to control others instead of technology to enable individual freedom, forcing a global competitive level playing field instead of enabling market based innovation. This reset was designed to attack countries who have outperformed the rest of the world.
The Assault On Free Markets And Democracy As Evil Ideologies. Corruption by the elites in liberal western democracies adds to the narrative that free market capitalism and democracy have created failed models. The failed models stem from the lack of accountability for performance by the ruling class to uphold the original values each institution was founded upon. From two-tiered justice systems to two-tiered healthcare, society sees how money, power, and greed have corrupted efficient markets and systems.

Leaders in liberal western democracies have bought votes from the populace with promises of free housing, education, healthcare while seeking contributions from business with free tax breaks, trade deals, and laws that benefit the few. At the same time, these same leaders use the prospect and delivery of more regulation to take over greater control of individual freedoms and obfuscate the efficiency of free markets. The calls for stakeholder capitalism have only proven to lead to disasters at companies who forget that their purpose is to address shareholders and have led to losses and backlash by the general public.
Continued False Narratives of Inequality And Forced DEI. The push to harness support for failed policies prays on creating class warfare and tribalism. This ideology pushes a notion of cultures divided by oppressors and oppressed. The continued division by superficial diversity (e.g. skin color, race, religion, gender, sexual orientation, country of origin) enables the pitting of one group over another while root cause issues are ignored. In these models, success is not rewarded but instead attacked.

Cries for equity have resulted in more inequity and injustice as small minorities inflict tyranny on silent majorities and often helpless majorities. When shop owners cannot defend their property from looting and biased district attorneys protect the criminals at the expense of victims, society finds the world turned upside down. DEI has ruined many young adults dreams to pursue educational opportunities at “elite” institutions and has prevented the promotions of hard working individuals who believe in meritocracy. Instead of creating systems that enable conditions for all types of individual to have equal opportunities, the short-term fantasy for equal outcomes without hard work has added to overall inequity and anger.
Hypocrisy In Do As I Say Not As I Do. From leaders breaking their own quarantine rules during the pandemic to elected leaders getting away with corruption by special interests, the general public sees how laws are no longer fairly and equally applied. Laws must be applied equally to all or else systems will break and society will have chosen winners and losers. Add to the rise of misinformation campaigns and the destruction of objective journalism, these twin forces exacerbate the divided conversations among societies and continue the perception and reality of hypocrisy among elites.

The Bottom Line: Rebuilding Trust Must Move From Words To Actions

Trust is the ultimate currency. Institutions in public service, higher education, media, business, and society must uphold to higher standards of transparency and trust. Rebuilding trust requires a commitment to reward integrity and punish those who do not uphold the values required for a trusted society. Application of rules must be uniform and fair. Leaders must deliver on dynamic leadership while balancing responsible and responsive approaches.

Good leaders will anticipate and deliver on the needs of the majority while listening and advocating for the voices of the minority to create a culture of optimistic abundance not a culture of forced scarcity. Rebuilding trust is not lip service nor a mantra for a corporate campaign. Rebuilding trust requires a shared commitment and sacrifice to achieve a win-win win among all stakeholders.

Trust will be earned by actions, as actions speak louder than words. Trust will be restored and elevated when individual rights are protected, meritocracy is rewarded, justice is equally applied to all, checks and balances are in place, accountability is expected, and rule-breakers will be appropriately punished.

Trust will return when the elites abide by the same rules as everyone else.

Your POV

Do you see WEF as a force of good or evil? Can trust be restored by the elites or is this a fantasy? What do you hope to get out of Davos?

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Trends: Tech IPOs Will Come Back In 2024

rwang0 — Tue, 26 Dec 2023 22:47:19 +0000

Trends: Tech IPOs Will Come Back In 2024 rwang0 Tue, 12/26/2023 - 14:47

Two Year IPO Drought Coming To An End

In 2023, only 148 companies completed an initial public offering (IPO). This was the worst year on record and followed a 15% decline from the number of IPO's in 2022, another disappointing year. In 2023, ARM was the sole blockbuster tech IPO.

After a brutal two years with a paucity of tech IPOs, the market is poised for a resurgence in 2024. Why? The Federal Reserve is set to reduce rates two to three times, an election year usually bodes well for the general economy regardless of party, and a number of tech companies have patiently waited to go public and now have the numbers to make it so. Not all is rosy as consumers have entered a doom spend loop and have spent down $2.1T in savings since August 2021 and now sit on about 100B in savings (as of October 2023) down 90% in a short 26 months. Yet, a drop in Fed Rates will pave the way.

Tech IPO's Follow Market Trends

Constellation's analysis shows a strong IPO pipeline in areas such as AI, enterprise cloud software, financial tech, space tech, and specifically some of Elon Musk's companies should they pull the trigger. Simultaneously, smart money is leaving trendy categories in clean tech, ESG, and EV's. The backlash on ESG has had its impact on funding. The results of COP 28 highlight the populist and voter backlash elected officials face and many funds have closed and liquidity is rapidly drying up.

Tech IPO Watch List Startups

On the watch list are eight names:

Shein. Fast-fashion retailer from China could fetch $80 to 90B
Open AI. Despite the leadership drama which cut its valuation own to $50B, the ChatGPT startup is still a contender for 2023.
Databricks. Data and analytics company competing with SnowFlake is worth up to $50B
Stripe. The Fintech darling plays a key role in disrupting the payments world with an estimated $50B valuation.
Discord. The cool kids are on this modern social network and their recent valuations put them at $15B.
Reddit. Everyone's favorite social media forum is rumored to be valued at $15B.
Canva. This Adobe competitor is on fire with a potential $10B valuation.
ScaleAI. Alexandr Wang's play in AI could fetch as much as $7B.

Key Musk Companies Could Create Mega IPO's As Early As 2024

SpaceX. Estimates of $200B in market cap could place this IPO as big as Saudi Aramco and Alibaba at their time of listing. The space exploration technology company has paved the way for the privatization of space travel and disrupted the cabal of defense contractors and NASA in cost and reliability. Some estimate the IPO in 2027, but others expect an earlier split out of StarLink.
StarLink. While Elon Musk recently put a kabash on rumors that a spin-out of StarLink from SpaceX at an estimated $100B valuation was happening. The space communications market leader has proven its technology in civilian and military applications and could be more ready to spin out than SpaceX
NeuraLink. The ability to connect human brain waves to machines may seem SciFi at first, but this company has seen a valuation north of $5B
The Boring Company. At a $7B valuation, this transportation critical infrastructure tech company is not only useful for the terrestrial world, but may also play a big role in space.

AI Startup Ecosystems Do Differentiate by Regional Expertise

In mega categories such as AI, differences abound by region. For example, AI in:

San Francisco. Founders and startups typically are run by the under 30 set pushing a consumer AI startup in Cerebral Valley
Silicon Valley and Seattle. Startups here tend to lean towards an enterprise play with a grizzled veteran working on their 3rd AI startup or advanced chip design.
Toronto. The GTA area boasts some of the best math and next breakthroughs in General AI.
Boston Cambridge. AI projects focus on awesome math, hardware such as robotics, pharma research, and really smart chip design.
New York. Wall Street loves arbitrage and AI plays a huge role. However, this bleeds into Ad Tech, and of course pharma research.
Washington DC. Startups here focus in on the military and public policy.
London and Paris. Research here take a focus on policy implications on humanity. Startups tend to follow suit on creating paradigms for human and AI ethics.
Tel Aviv. Cybersecurity innovations abound here and military applications play a key role in the ecosystem.
Dubai/ UAE. AI startups have a big Web 3.0 component and funding in the Middle East is hot hot hot as the regulatory environment for crypo has brought significant investment into the region.

The Bottom Line: Expect 2024 To Be Start Of A Comeback Cycle For Tech IPOs

So long, interest rates come down, and the Fed sticks the soft landing in an election year, the market conditions look bright. With a number of Series C, D, and E startups showing good metrics in lower CACS, greater ARPU, and rule of 40 growth, 2024 looks to be the start of the comeback!

Your POV

Ready for the Tech IPO boom in 2024? What startups are you piloting that we should know about? Which is your big bet for IPO in 2024?

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Disclosures

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Survey: 2023 H2 CxO Business Confidence Survey

rwang0 — Fri, 22 Dec 2023 22:00:10 +0000

Survey: 2023 H2 CxO Business Confidence Survey rwang0 Fri, 12/22/2023 - 14:00

Introduction

Constellation’s 2023 H2 “CxO Business Confidence Survey” assesses the confidence of C-suite executives in today’s business and technology climate as well as their financial outlook for 2023. The survey asked respondents to identify top business issues impacting their enterprises, weigh in on their state of investment in digital technologies, and confirm which service and software vendors are top of mind in the industry.

Every enterprise has been affected by the generative AI boom in 2023, particularly its growth surge over the last six months. Although many efforts remain in the pilot state, enterprises are shifting their focus and budgets to digital tool adoption, large language models (LLMs), efficiency and productivity automation, and artificial intelligence (AI) skills training.

The end-of-year reality around generative AI is largely “hurry up and wait.” Buy-side CxOs are balancing the pressure to invest in the AI space with the need for certainty about the reliability of these new tools. In turn, enterprise tech vendors recognize and predict strong revenue potential in the generative AI space but currently are in the waiting phase of tangible selling and the client’s desire to see tangible return on investment (ROI).

Despite Prior Reservations, CxOs Shift To Optimism in 2013

To conclude the “CxO Business Confidence Survey,” executives were asked whether their enterprise was experiencing a better business climate in 2023 than in 2022. The question elicited an optimistic response of “yes” from 51% of the CxO respondents. This has shifted from Constellation’s 2022 Q4 CxO survey, where 67% predicted a worse business climate for 2023 overall (see Figure 8).

The data suggests an outlook shift from CxOs regarding the potential of emerging technologies, market growth, and revenue potential. CxOs who have been proactively using their technology budget to find solutions and grow are only increasing their investment after seeing the payoff.

Although 49% of enterprises are not experiencing a better business environment yet, the most interesting observation is regarding the mindset of CxOs. Perhaps the recent strides in technology have opened new doors of possibility to reduce costs, grow the business, and create stability.

Your POV

Whats your sentiment for 2024? Are you more optimistic or pessimistic?

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Big Idea: Return on Transformation Investments (RTI)

rwang0 — Thu, 21 Dec 2023 20:42:13 +0000

Big Idea: Return on Transformation Investments (RTI) rwang0 Thu, 12/21/2023 - 12:42

Executive Summary

Many organizations have performed classical cost-benefit analyses to determine the impact of business technology projects. Although these approaches account for the quantifiable metrics, they often fail to capture key attributes such as probability of success and level of difficulty in project type.

Today’s artificial intelligence (AI) and business transformation projects require a much more holistic approach when evaluating the value created for an entire organization. Consequently, boards and their executives seek richer attributes to augment their traditional decision-making techniques.

Welcome to Constellation’s Return on Transformation Investment (RTI) methodology to provide decision support for business and technology leaders in their investment analyses. The methodology accounts for four elements that must be considered for any digital transformation project: cost, benefit, probability, and project type.

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Quantiyfing Success In Business Transformation Requires New Techniques For Measurement

Old-school return on investment (ROI) calculations and legacy ownership cost calculations have not been modernized for the world of digital transformation. The understanding of economic impact is not enough to determine successful transformation. In conversations with more than 200 leading business transformation executives, Constellation found that most believe existing techniques fail to provide a holistic and pragmatic perspective for a few reasons:

The long view is often ignored in short-term project execution. Even though business transformation projects have longer time frames, most business leaders and technology executives work from yearly budgets but live quarter to quarter. With an average tenure of 2.8 years for transformation leaders, the incentives are not in alignment with long-term benefits. In fact, most ROI calculations fail to consider the longer-term impact analysis.
Likelihood of success not considered in investment analysis. Armed with the most complex analysis and management consulting type of projections, executives often make their case for transformation. Unfortunately, project sponsors rarely rank the likelihood of success for these transformation efforts. A proper portfolio analysis requires an understanding of a project’s propensity for success.
Impact analysis fails to consider qualitative attributes. Organizations can easily ascertain hard metrics such as cost and benefit. However, the determination of probability and impact requires industry expertise and access to the best practices from early adopters who can provide validation.
Project types do not reflect the level of difficulty that must be overcome. Cost takeout projects differ greatly from business model transformation. Revenue and growth initiatives are usually more complicated than operational efficiency. Compliance projects will always be funded despite economic status. Applying a difficulty factor can help organizations with prioritization of budget, resources, and time.

The Bottom Line: User RTI to Evaluate Investment Prioritization

The RTI methodology of cost, benefit, probability, and project type provides a proven approach to evaluating investment prioritization for a portfolio of transformation initiatives. Constellation recommends the following:

Apply a consistent formal methodology to assess transformation efforts. C-level change agents agree that a formal methodology such as RTI will allow for consistent evaluation of projects and assist with prioritization. Formalizing the methodology ensures a consistent approach to quantifying and qualifying the value of a transformation initiative.
Be diligent in developing metrics for each element. What is measured will determine what the results are. Focus on first principles and the metrics that matter.
Consider how technology will transform business models. Focus on the business model and then see what technologies will transform the business. Every project should be driven by the business and apply exponential technologies to achieve the desired outcome.
Determine the sustainable impact of a transformation investment. Some projects have a half-life; others provide durability. Prioritize those projects that have cultural buy-in and create enduring impact.
Educate all stakeholders on the RTI methodology. The methodology for RTI should be taught at the level 1 and level 2 tiers of executive management. Use the RTI methodology across business units, finance, IT, and operations.

Your POV

Are you using an old ROI model that doesn't capture return on transformation? Do you need assistance considering portfolio strategy?

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Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact [email protected]">Sales.

Disclosures

Contact the [email protected]">Sales team to purchase this report on a a la carte basis or join the Constellation Executive Network