Posts Tagged ‘IBM’

IBM To Use Stellar For Its First Crypto-Token On A Public Blockchain

, I cover enterprise adoption of blockchain and cryptocurrency.

(Photo by Joan Cros Garcia/Corbis via Getty Images)

The International Business Machines Corporation is issuing its first token using a public blockchain

Developed in partnership with carbon credits startup Veridium Labs Ltd., the “verde” tokens will be issued on the Stellar blockchain, and are designed to give enterprises that pollute the environment a way to offset that damage by supporting a patch of Indonesian rainforest.

While carbon credits in their own right are not new, the process of tracking the full extent of one’s pollution, then providing assurance that the money was actually used to replenish the environment is both time-consuming and opaque.

By moving this process to an easily auditable blockchain, and tokenizing the credits in a similar way that a bitcoin tokenizes monetary value, IBM’s newly appointed blockchain offering manager, Jared Klee, believes a vibrant market could eventually be opened up to a much larger audience.

“We’re creating a fungible digital asset, a token which part of the goal is to create a market where people can buy, sell, trade and then redeem it for the underlying credits,” said Klee, who was put in charge of IBM’s token initiatives earlier this year. “By having a liquid market you open up a world of possibilities.”

The verde carbon credit tokens, are built on top of the public Stellar blockchain and via a series of smart contracts follow the entire process of accounting for a company’s carbon emission and offsetting that pollution.

“Our engagement with Veridium will mark the first public IBM involvement in a token issuance on a public network,” said Klee. But in a twist that is finding increasing favor among blockchain developers, there is also a permissioned component via IBM’s own blockchain technology.

Klee says this “public, permissoined” model is what allows IBM and Veridium to create a market for the buying and selling of the tokenized carbon credits that will also be restricted to participants in accordance with regulatory requirements. To facilitate that permissioning while still capitalizing on Stellar’s public blockchain, IBM manages nine nodes on the Stellar blockchain.

“Not only does that help create stability for the Stellar network,” said Klee. “But that allows us to work with Veridium as the issuer and create a point of review in the transaction flow before it gets committed to the ledger.” But going forward that could be further opened up, with Klee adding that he too would like to someday be able to personally offset his own carbon footprint using the exchange.

More than just a proof-of-concept, the Veridium tokens will be backed by Triple Gold REDD+ credits from Veridium’s sister company InfiniteEarth,  founded in 2008 to help companies offset their environmental impact in a number of ways. While Veridium hasn’t revealed the names of its own potential customers, InfiniteEarth counts Big Four accounting firm PwC, and software giants, SAP and Microsoft among its customers, all of which has their own ongoing blockchain projects, making them possibly suitable adopters.

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SALE OF Cambridge NanoTech, Inc.

Gerbsman Partners – http://gerbsmanpartners.com  has been retained by Silicon Valley Bank (“SVB”), the senior secured lender to Cambridge NanoTech, Inc. (“Cambridge NanoTech”), (http://cambridgenanotech.com) to solicit interest for the acquisition of all or substantially all of Cambridge NanoTech’s assets, including its Intellectual Property (“IP”), in whole or in part (collectively, the “Cambridge NanoTech Assets”).

Please be advised that the Cambridge NanoTech Assets are being offered for sale pursuant to Section 9-610 of the Uniform Commercial Code.  Purchasers of the Cambridge NanoTech Assets will receive all of Cambridge NanoTech’s right, title, and interest in the purchased portion of  SVB’ collateral, which consists of substantially all of Cambridge NanoTech’s assets, as provided in the Uniform Commercial Code.

The sale is being conducted with the cooperation of SVB and Cambridge NanoTech.  Cambridge NanoTech has advised SVB that it will use its best efforts to make its employees available to assist purchasers with due diligence and assist with a prompt and efficient transition at mutually convenient time.


The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to the Cambridge NanoTech Assets has been supplied by third parties and obtained from a variety of sources. It has not been independently investigated or verified by SVB or Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact. Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

SVB and Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of SVB’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the Cambridge NanoTech Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of SVB and GerbsmanPartners. Without limiting the generality of the foregoing, SVB and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the Cambridge NanoTech Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum contains confidential information and is not to be supplied to any person without SVB’s Gerbsman Partners’ prior consent. This memorandum and the information contained herein are subject to the non-disclosure agreement attached hereto as Exhibit A.


Cambridge NanoTech, Inc. (“CNT”) is a materials science company that designs, develops and manufactures high-performance turnkey equipment for Atomic Layer Deposition (“ALD”) from R&D to high volume production. ALD is a cutting edge thin-film deposition nanotechnology and CNT has dominant market share in the number of ALD R&D systems worldwide – a market that CNT created back in 2003.  CNT’s solutions range from lab-based analytical instruments for research to large-format, commercial production systems for high volume production of films used in various sophisticated electronic components such as micro-electromechanical systems (“MEMS”), semiconductors, optoelectronics, photovoltaics, solar, flat panel displays and advanced biomedical devices, among others. The Company also has a services component to its business, offering materials coatings services, contract R&D, as well as materials science solution consulting services.

ALD is a process by which thin-films, a few nanometers in size, are used to coat an object (“substrate”) one atomic layer at a time. CNT’s proprietary ALD technology is used to apply a wide array of coating materials, creating virtually perfect, uniform films both on surfaces and inside microscopic pores, trenches and cavities. ALD-based coatings improve the performance of a broad variety of materials, offering improved anti-wear properties, increased water vapor resistance, as well as enhanced optical, mechanical, and electrical properties. ALD has broad applications across a number of industries, including electronics, energy, healthcare, and textiles. ALD adoption has been driven by the decrease in technology form factors as an enabler for smaller and faster electronic devices and the subsequent need for nanoscale coatings given that traditional thin-film deposition techniques are reaching their technological limits.
Cambridge NanoTech  is headquartered in Cambridge, MA, and was boot-strapped in 2003 by Dr. Jill S Becker, directly out of the Gordon Lab at Harvard University (www.chem.harvard.edu/groups/gordon/), Since then, CNT has experienced tremendous revenue growth and profitability in almost every year since inception, serving a variety of world-leading enterprises as customers across a variety of end markets

Target Market:
Cambridge NanoTech (CNT) pioneered the development of compact ALD systems for the research and development sector, and in doing so created the market for affordable R&D systems. Based on the success of its R&D systems, CNT expanded its product lines to meet the needs of both R&D and Production customers. Within the span of the application space, CNT’s products target a diverse set of technologies, including Energy (Solar, Li-ion Batteries, Fuel Cells), Lighting and Display (OLEDs, LED), MEMS/ MOEMS, Electronics, and Nanotechnology.

CNT has strong customer relationships with blue-chip customers across a variety of end markets. Key manufacturing customers CNT has served include leading producers of displays, solar technology, MEMS, and R2R flexible displays. CNT is the R&D systems leader with more than 300 R&D systems sold worldwide. A key factor in CNT’s success has been the Company’s end-to-end customer support throughout the sales process, providing consultative services on systems design, contract R&D services and installation / post-installation support. CNT’s knowledgeable team of scientists, who come from an assortment of research disciplines, can provide knowledgeable insight and offer material science solutions to address customer needs. CNT’s customers span a wide range of business and academic sectors and include, Texas Instruments, 3M, IBM, GE, DuPont, Toyota, Northrop Grumman, Harvard University, Stanford University, and Sandia Laboratories.
The accounts receivable base of CNT is diverse, as no client had represented over 10% of its accounts receivable balance.

1INTERESTED PARTIES SHOULD SATISFY THEMSELVES THROUGH INDEPENDENT INVESTIGATIONS AS THEY OR THEIR LEGAL AND FINANCIAL ADVISORS SEE FIT. Any sale of the Cambridge NanoTech Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of SVB and GerbsmanPartners. Without limiting the generality of the foregoing, SVB and Gerbsman Partners and their respective staff, agents, and attorneys,  hereby expressly disclaim any and all implied warranties concerning the condition of the Cambridge NanoTech Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

Intellectual Property
CNT has generated a substantial body of intellectual property in the form of patents, trademarks, know-how and trade secrets.  The Company currently has 1 issued US patent and 6 issued international patents, 8 pending patent applications in the US and 9 pending international applications and is continuously inventing and expanding its IP portfolio in a manner that protects markets and enhances shareholder value. The patent portfolio includes a separate patent family for each of its product lines. Moreover each patent family  specifically sets forth ALD process and reaction chamber innovations that resulted from a ground up ALD design as opposed to converting a non-ALD deposition system to an ALD deposition system.
The patent families include:
•  Savannah Patent Family (R&D lab equipment)
•  Fiji Patent Family (R&D lab equipment with plasma and additional in-situ diagnostics)
•  Phoenix & Tahiti Patent Family (Production equipment for high volume manufacturing)
•  Preboost Patent Family (To proliferate the use of more precursors in any ALD system)
•  Roll2Roll Patent Family (Fast ALD; high throughput; atmospheric ALD)
Details of the issued patents and trademarks are shown in Appendix A


·       Attractive Industry – Material science industry, and ALD in particular  is growing at a rapid rate, as material science solutions pervade the electronics and nanotechnology sectors

·       Best in Class Technology – CNT’s ALD systems are the dominant tool of choice for researchers and offer leading edge capabilities

·       Diversified Base of Customers – CNT’s ALD systems are used in academic, and manufacturing environments, and cover a range of technologies including – Electronics, MEMS/MOEMS, Display/Lighting, and Energy. Systems have been purchased by universities, research institutes, government and military labs, and industry

·       Excellent Relationships – CNT’s strength has always been predicated on strong relationships within and outside the ALD industry

·       Opportunity for Future Growth  – Opportunities for growth can be realized by fully exploiting the need for thin film material science solutions, and in taking advantage of the Intellectual property contained within its patent portfolio.

The reasons why Cambridge NanoTech’s assets are attractive are:

CNT has historically experienced strong growth and has been the leader in the field of R&D ALD systems. However, recent working capital constraints and an overly leveraged balance sheet have created the opportunity for all or a portion of CNT’s assets to be sold.  The acquisition of these assets can enable the purchaser to realize significant short and long term value from the CNT assets as CNT maintains the ability to quickly scale within the context of sufficient working capital and a stronger balance sheet.

Robust Growth: CNT achieved profitability in 2004, within its first 12 months of being established. Since that time, revenues have grown at an 85% CAGR through 2011, and while net income performance has been lumpy, the Company has sustained profitability during periods of high growth and during periods of significant investment in product development.

Market Position: CNT is the dominant ALD company in a group of 3 other major companies participating in the ALD sector for R&D applications,  in terms of market size and presence. While CNT is not the biggest of the group, it has the advantage of superior scientific an engineering expertise, and a exceptionally strong reputation for providing material science solutions, which is not true of its competitors.

Dominant ALD R&D Platform: The Company’s R&D ALD platform is renowned for its affordability and performance – a blend which makes the Company’s products the most sought after in this competitive market. The platforms are robust, easily serviceable,  and maintainable, and meet the extraordinary needs for research level flexibility.

Diversified Customer Base: The Company has over 300 ALD systems deployed in the field in a wide variety of  industries. This allows the Company to avoid fluctuation in its revenues caused by adverse changes affecting any particular industry.

Potential Backlog and Pipeline: Prior to ceasing company operations, the Company had a backlog of purchase orders, and a sales pipeline. This information is available in the Due Diligence War Room, and is subject to an NDA.

Management Team at Cambridge NanoTech Inc (for information purposes only)[2]:

Jill Becker Ph.D, Founder and CEO: Jill founded Cambridge NanoTech in 2003 and continues to successfully lead the Company’s technical, sales and operational functions. Dr. Becker holds a Hon. B.S. from the University of Toronto and completed her Ph.D in Chemistry at Harvard University under the supervision of Professor Roy Gordon. Dr. Becker is a specialist in inorganic and metal-organic chemistry, ALD system design, precursor synthesis, and thin-film characterization techniques. She has published extensively and holds numerous patents

Ray Ritter, President: Ray has extensive experience managing and growing technology companies. Prior to joining Cambridge NanoTech, Ray was a founder and the vice president of Sales and Marketing at BlueShift Technologies in Andover, MA, a venture-backed startup delivering manufacturing automation products to the semiconductor market. Ray was the principal at Ritter Consulting Group, where he assisted private and publicly-traded corporations in driving product and service revenues through greater brand awareness and targeted sales strategies. Ray has an M.S. from Rensselaer Polytechnic Institute and a B.S. from Rutgers University

Don Farquharson, Acting CFO: Don is the acting Chief Financial Officer at Cambridge NanoTech.  Don has extensive financial and general management experience in both public and privately held companies. During the past five years, Don held positions as Chief Financial Officer and Director of Operations of Service Point USA, Inc. Prior to joining Cambridge NanoTech, Don served as CEO and CFO of Cambridge-Lee Industries, Inc., the US and European metals manufacturing and distribution operations of privately held Industrias Unidas, SA de CV.   Early in his career, Don was a treasury analyst at Digital Equipment and a CPA for Arthur Andersen.   Don has a B.A. in Mathematics from Indiana University and an MBA from The Wharton School, University of Pennsylvania.

Ganesh Sundaram Ph.D, Vice-President of Technology: Ganesh is Vice President of Technology for Cambridge NanoTech.  Prior to joining Cambridge NanoTech, Dr. Sundaram held positions at Veeco Instruments, Schlumberger Technologies, Micrion Corporation and Texas Instruments, ranging from scientific to product management roles. Dr. Sundaram received his Ph.D in Physics from Oxford University, where he specialized in low temperature, high magnetic field physics of low dimensional semiconductors. His industrial experience encompasses processing of Si and compound semiconductors, lithography, particle beam technology, metrology and thin-film applications.

Roger Coutu, Vice-President of Technology: Roger is Vice President of Engineering for Cambridge NanoTech. Roger spent the previous six years consulting with companies in the semiconductor, automotive, materials and vacuum-handling industries. He has extensive experience designing substrate handling and advanced vacuum systems. Prior to starting his own company, Roger held numerous engineering management positions at MKS, Eaton, Millipore, Bruce Technology International and other companies. Roger has a B.S. from the University of Massachusetts, Lowell in Mechanical Engineering.


The Bidding Process for Interested Buyers

Due Diligence:
Interested and qualified parties will be required to sign a nondisclosure agreement in the form attached hereto as Exhibit A to have access to the due diligence “war room” documentation (the “Due Diligence Access”). Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the Cambridge NanoTech Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of SVB or Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) all such documents and reports have been provided solely for the convenience of the interested party, and SVB or Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Qualifying to Bid at Auction:
The Cambridge NanoTech Assets will be sold pursuant to a secured party’s public auction sale.  In order to qualify to bid at the public auction sale, interested parties must submit initial bids for the Cambridge NanoTech Assets so that they areactually received by Gerbsman Partners via email to steve@gerbsmanpartners.com no later than Wednesday, December 12, 2012 at 3:00 p.m. Eastern Standard Time (the “Initial Bid Deadline”) with a copy to Riemer and Braunstein LLP, 3 Center Plaza, Boston, MA, 02108. Attention: Donald E. Rothman, Esq. and via email to drothman@riemerlaw.com.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  In order to qualify to bid at the public auction sale, all initial bids must be accompanied by a refundable deposit check in the amount of $200,000 (payable to Silicon Valley Bank). All deposits shall be held in a non-interest bearing account.  Non-successful bidders will have their deposit returned to them within three (3) business days following the completion of the public auction sale. The deposit of the Successful Bidder (as defined below) shall be held by SVB pending the consummation of the sale.

Initial bids should identify those assets being tendered for and in a specific and identifiable way. The attached Cambridge NanoTech fixed asset list (Exhibit “B”) may not be complete.

SVB shall be deemed to be a qualified bidder.

Public Auction Sale:
On Friday December 14, 2012, a public auction sale (the “Auction”) of the Cambridge NanoTech Assets will be conducted among all qualified bidders commencing at 11:00am Eastern Standard Time at the offices of Riemer & Braunstein LLP, 3 Center Plaza, Boston, MA, 02108.  Prior to the start of the Auction, the auctioneer will advise all qualified bidders of what SVB believes to be the highest or otherwise best qualified bid with respect to the sale (the “Stalking Horse Bid”).  Only qualified bidders are eligible to participate in the Auction.  Bidding at the Auction shall begin initially with the Stalking Horse Bid and shall subsequently continue in such minimum increments as the auctioneer determines.

Bidding will continue with respect to the Auction until SVB determines that it has received the highest or otherwise best bid(s) for the Cambridge NanoTech Assets.  After SVB so determines, the auctioneer will close the Auction, subject, however, to SVB’s right to re-open the Auction if necessary.  SVB will then determine and announce which bid has been determined to be the highest or otherwise best bid (the “Successful Bid”) and the holder of the Successful Bid shall be deemed to be the “Successful Bidder”.

SVB reserves the right to (i) determine in its reasonable discretion which bid is the highest or best bid and (ii) reject at any time prior to the execution of a purchase agreement, any offer that SVB in its reasonable discretion deems to be (x) inadequate or insufficient, or (y) contrary to the best interests of SVB.  In determining which bid is a Successful Bid, economic considerations shall not be the sole criterion upon which SVB may base its decision and SVB shall take into account all factors it reasonably believes to be relevant in an exercise of its business judgment.

The Successful Bidder will then be required to immediately execute and deliver a purchase agreement to SVB in the form attached hereto as Exhibit “C” (this will be forwarded at a later date). SVB will require the successful bidder at the public auction sale to close within 7 days after the public auction sale. Any or all of the assets of Cambridge NanoTech will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

SVB reserves the right to (i) extend the deadlines set forth herein and/or adjourn the Auction without further notice, (ii) withdraw portion of the Cambridge NanoTech Assets at any time prior to or during the Auction, to make subsequent attempts to market the same, (iii) reject any or all bids if, in SVB’s reasonable business judgment, no bid is for a fair and adequate price, and (iv) otherwise modify the sale procedures in its reasonable discretion.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the Cambridge NanoTech Assets shall be the sole responsibility of the Successful Bidder.

For additional information, please see below and/or contact:

Steven R. Gerbsman
Gerbsman Partners
(415) 456-0628

James McHugh
Gerbsman Partners
(978) 239-7296

Kenneth Hardesty
Gerbsman Partners
(408) 591-7528

Donald Rothman, Esq.
Riemer Braunstein LLP
(617) 880-3556

Steven R. Gerbsman
Gerbsman Partners
Phone: 415.456.0628
Fax: 415.459.2278
Cell: 415.505.4991

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Article from Techcrunch.

Cisco has announced it plans to acquire Cloupia for $125 million. The software company helps customers automate their data centers.

Cisco sees Cloupia’s infrastructure management software enhancing its Unified Computing System (UCS) and Nexus switching portfolio. Cisco expects Cloupia will help better manage the automation of compute, network and storage as well as virtual machine and operating system resources.

Cisco UCS is a converged infrastructure play. Cisco has made a big bet on providing converged infrastructures that consolidates compute, storage and networking into one box. IT wants to decrease its data center dependency. Vendors like Cisco, EMC and IBM see converged infrastructures as a way to sell their hardware into the enterprise.

Investing in these systems has its costs for IT. The systems are pricey and create a lock-in with one vendor.

Cisco wrote a blog post about the acquisition today. Here’s a snippet:

Cisco’s acquisition of Cloupia benefits Cisco’s Data Center strategy by providing single “pane-of-glass” management across Cisco and partner solutions including FlexPod, VSPEX, and Vblock. Cloupia’s products will integrate into the Cisco data center portfolio through UCS Manager, UCS Central, and Nexus 1000V, strengthening Cisco’s overall ecosystem strategy by providing open APIs for integration with a broad community of developers and partners.

The post is a window into Cisco’s data center strategy. Like other big enterprise software companies, Cisco partners with companies such as NetApp and VMware to sell its solutions through its extensive sales channels.

Read more here.

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Bunchball, gamificationArticle from GigaOm.

Gamification is thought of as a hyped buzzword by skeptics, but it’s increasingly being used by corporations to incentivize consumers and motivate employees. As enterprise adoption of gamification grows, that could make gamification startups the next hot acquisition target in the coming years.

Social enterprise acquisitions have been the all the rage in the last year. But if you want to find the next big acquisition target, consider gamification startups.

Bunchball founder and Chief Product Officer Rajat Paharia told me he expects it won’t be long before gamification companies will be buyout targets soon by the SAPs, Oracles, Microsofts and Salesforces of the world. Obviously, he has a vested interest in this, but there are some compelling reasons for why this theory may come true in the near future.

Badgeville, gamificationGamification, with its reliance on points, badges, leaderboards and rewards, appeals to some basic human desires for fun, competition, interaction and achievement. The concept has been around for year and has been traditionally used to incentivize consumer behavior; think of frequent flyer programs and other loyalty systems. But corporations are increasingly seeing this as an effective way to get more productivity out of workers. As more work moves online and goes virtual, firms are looking for new tools to encourage their employees and push them toward their goals.

“Gamification is a core offering for the enterprise,” said Gabe Zichermann, the chairman of the Gamification Summit. “Today it’s a tactic but over the the next couple of years it’s going to be a core feature set for enterprises driven by the consumerization of IT.”

Zichermann doesn’t think there will be a lot of immediate acquisitions of gamification startups this year. But in the next 12-24 months, he believes big enterprise companies will start to make moves in this space as their top executives realize the strategic benefits of gamification.

Bunchball, gamificationFor many big software companies, adding gamification can complement social collaboration tools such as Yammer and Chatter and can work alongside existing HR performance software and customer relationship management programs. It can become part of a complete suite of services that software companies offer their clients, who want to engage both consumers and their own workers. Many of the big players are already making investments in this area.  Salesforce last year bought Rypple, a social performance management platform that employs game mechanics. IBM has been working on its own product called Innov8, which has been effective in generating leads and traffic to its website.

Gartner has predicted that by 2014, more than 70 percent of Global 2000 organizations will have at least one “gamified” application and half of organizations that manage innovation processes will gamify those processes by 2015. While some companies are already dabbling with their own in-house gamification efforts, many other enterprise companies are turning to startups like Bunchball, Badgeville, BigDoor, Gigya and others to implement game mechanics into their processes.

Paharia, who founded Bunchball in 2007 before the term “gamification” took hold, said his company now has more than 200 customers including names such as Warner Brothers, Comcast, Hasbro, Mattel and others. About 90 percent of the business through the end of last year was selling to corporate customers, who used gamification to engage consumers. But now, about 35 percent of Bunchball’s deployments are for companies using game mechanics to motivate enterprise workers.

badgevilleHe said enterprise software companies and their customers are realizing that gamification can be an effective tool in addressing the constant struggle over getting workers to use software.

“They’re all making software but whoever figures out how to get their software used regularly will win. It’s a problem of motivation,” he said.

A year ago, Bunchball introduced a product called Nitro for Salesforce’s AppExchange, giving Salesforce customers an easy way to add on gamification tools. Bunchball has also teamed with Jive to integrate its game mechanics into Jive’s social business platform. Rival Badgeville has partnered with Yammer to improve employee performance and launched its own program to integrate with enterprise software applications from Jive, Omniture and Salesforce.com.

The big question is will the big enterprise software players be content to partner with gamification startups or will they seek to buy the technology or try to build it themselves. If these companies can develop the gamification knowhow in-house, that could keep them from looking to acquire any of the dedicated gamification startups.

Gamification still faces plenty of hurdles. It will need to prove it can produce consistent, tangible results. And it will also need to overcome the skepticism of critics, who see a lot of hype and buzz in the concept. Many still see gamification as a passing fad or old methods dressed up in new terminology.

But if this crop of gamification startups continue to win over corporate customers and prove their worth in the enterprise, don’t be surprised if we see them get snatched up in the next couple years.

Read more here.

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Article from GigaOm.

“I meet a lot of owners of midmarket IT services companies who almost immediately ask me, “What is my company worth?” Even those who don’t ask want to know often ask.

It’s a fair question, with a complicated answer. I can do a back of the envelope calculation and determine the enterprise value of a company today based on 12 months trailing revenue or perhaps a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization). But the real value of a company is based less on its past performance than on its potential worth to a future owner. What the buyer can bring to the party and how well its management believes it can execute the acquisition and business strategy going forward is where a company’s true value resides and where the domain expertise or strategy comes into play.

Case in point: In 1996, IBM bought Tivoli Systems for $743 million, paying about 10 times trailing revenue. Many analysts concluded at the time of the sale that IBM grossly overpaid for the asset. Within a year, IBM was able to leverage Tivoli into almost a billion dollars in revenue. Just like beauty, value is in the eye of the beholder. Tivoli had more value to IBM than Tivoli had to itself at the time. So did IBM pay 10 times revenue or less than one times revenue for Tivoli?

Unfortunately, I don’t have a crystal ball. So I don’t know what potential buyers can do to leverage a company’s value. And a calculation on the back of an envelope almost always fails to satisfy.

Here is something else the owners I talk with really don’t want to hear: Chances are they have taken actions that over time have eroded — or even destroyed — the value of their company without even realizing it. In my last post for GigaOM, I wrote about “5 things that destroy a company’s value.” In this post and in future posts, I’m going to examine these value killers one at a time in greater detail.

Today, my topic is opportunistic acquisitions. And to be clear, my message is for owners of midmarket companies who are interested in making acquisitions designed to increase their own value. In doing so, they hope to become attractive acquisition candidates to buyers in the future.

Acquisitions fail 70 to 90 percent of the time

If you search for the phrase “acquisition failure rates,” you’ll be treated to study after study that peg failure rates at somewhere between 70 percent and 90 percent. Dig a little deeper, and you’ll find articles enumerating the many reasons most acquisitions don’t work.

Nearly all of these reasons can be boiled down to two:

  1. The acquisition was a bad match between what the seller had and what the buyer could do to create value. The bad match often occurs because the buyer was fooled, misled, or overlooked key points of the deal, or the buyer simply suffered from hubris.
  2.  The buyer did a poor job of integrating the acquisition and executing on the business strategy designed for its new asset.

In both situations, acquisitions fail because the buyer doesn’t really know what or why it’s buying — let alone what to do with the acquisition.

Think about when HP bought Compaq or when Time Warner bought AOL.

Of course there are companies that are successful with acquisitions. Cisco has acquired 150 companies since its first acquisition in 1993. In fact, acquisitions are a core competency of Cisco — few companies are better at it.

Cisco’s purchases are fueled by the desire to speed up the rate at which the company can offer new technologies in a market that is hyper-competitive and evolving rapidly.

Not all of Cisco’s acquisitions are hits. Remember the Flip video camera that Cisco shut down in 2011? But many were successful, especially in the early days. At the peak of its acquisition activity in 2001, Cisco’s purchases were widely credited with laying the foundation for about half of its business at the time.

The secret to Cisco’s fruitful acquisitions is its ability to successfully onboard companies. Cisco employs a full-time staff solely focused on integrating new companies into the fold — instead of haphazardly assembling part-time transition teams whose members are all busy with their regular jobs.

In terms of strategy and execution, Oracle is even better at acquisitions. The company has spent billions on about 90 companies since its acquisition of PeopleSoft closed in 2005. Oracle’s chief skills are identifying companies that fit well into its longterm business strategy at the front end of the process, and its ability to integrate and act on these strategies at the back end. In 2011, readers of The Deal Magazine recognized Oracle’s track record with an award for most admired corporate dealmaker in information technology for deals completed from 2008 to 2010.

Until late in 2011, Oracle’s acquisition drive was to create the broadest portfolio of traditional enterprise software applications in the industry. With the company’s $1.5 billion acquisition of SaaS CRM applications provider RightNow Technologies (announced in September 2011 and completed in January 2012), Oracle now hopes to work its magic in the SaaS market. Oracle paid more than seven times trailing revenue for RightNow. I bet that in the next year or two, Oracle will make that multiple look like a bargain — just like when IBM bought Tivoli.

Still, Cisco, Oracle and other exceptions to the rule underscore the difficulty of making acquisitions work. It’s even harder when an acquisition happens because a buyer is presented with an unexpected “opportunity” and management decides it’s just “too good to pass up.” These so-called “opportunistic” acquisitions often lead to disappointment or disaster.

The reasons for failure are obvious. Acquirers lured by such a passive approach often have no clearly defined goals, have not thought through the attributes of ideal acquisition candidates, have done little or no pre-acquisition planning, and suffer from a lack of choice.

It reminds me of people who go to Las Vegas for the weekend and end up married. Getting married in Nevada is quick, easy and relatively inexpensive. All you need is a marriage license — no blood tests and no waiting period. And there is a wedding chapel on every corner.

Of course, when you wake up the next morning, there may be hell to pay.

I know. I’ve been there. Not in Las Vegas on the morning after, but at an organization that for many years only bought companies that showed up on its doorstep. We had no strategy and no process for integrating acquisitions into the mothership. I’m convinced that if the owner of the neighborhood car wash had offered us a “good” deal, we’d have taken it.

So here’s my advice for owners of companies seeking to enhance their value through opportunistic acquisitions. Acquisitions can do a lot of good. They can add to your growth and earnings, speed your entry into new markets, allow you to acquire human capital or intellectual property more quickly, and lower your costs through economies of scale. All of these things have the potential to increase the value of your company to a prospective buyer.

But just like marriage, acquisitions should never be decided on a whim. And you should never buy a company just because it’s for sale. Frankly, companies that are not for sale offer juicier profits and are likely a better strategic fit. Better to take some of that money and go have fun with it in Las Vegas.

And if you go there, don’t get married.”

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