DarkCyber noted “Algolia Finds $110M from Accel and Salesforce for Its Search-As-a-Service, Used by Slack, Twitch and 8K Others.” The write up reports that the company has “closed a Series C of $110 million, money that it plans to invest in R&D around its search technology, including doubling down on voice, and further global expansion in Europe, North America and Asia Pacific.”
Apple News: A Lesson to Be Repeated?
November 15, 2019
Many years ago, there was an online service called Predicasts. The company had offices in Cleveland, Ohio, a city notable for its burning river and an interesting American football team.
But in the world of online, Predicasts was famous. File 16 on Dialog would provide a summary of numerical data located in magazine and trade journal articles.
The company discussed creating its own service in order to disintermediate itself from the commercial online vendors. I assume that most of the gentle readers of this blog do not recall Dialog Information Services, SDC, ESA Quest, and other online intermediaries. Don’t worry. I can’t remember these gatekeeper companies. Think of these outfits as the equivalent of today’s cable companies. Instead of providing access to the vast wasteland of television, users paid to look at commercial databases like Predicasts.
The anecdotal evidence which filtered to me was that Predicasts wanted to set up its own online service. But the hurdles were technology, marketing, and the lack of information about the power of the brand. Predicasts online service went no place or, at least, no place that moved the needle in the online world.
Lesson: Online was hard in the 1980s. Online is hard today. Especially when one wants to make oodles of money.
There’s a lesson here, and it is one that Apple is now trying to understand. “Apple News+ Has Struggled to Add Subscribers Since First Week of Launch in March, Sources Say” makes clear that after the “must have” subscribers signed up, others (the “we don’t care” crowd) have stayed away.
The write up states:
Apple signed on 200,000 subscribers to Apple News+ in its first 48 hours in March, but has been stuck in neutral since that time, according to people familiar with the matter.
What does this tell us?
A bunch of customers are not interested in certain types of information when it costs more and requires extra steps. These steps can be tiny, but the anti step barrier is formidable. The costs more problem is different. Price cuts will not significantly increase sign ups.
The Predicasts’ thought process may be a precursor to what Apple assumed; that is, “We are so big, lots of people will sign up.”
Nope. They won’t.
That’s the problem online presents. A monopoly has to extract revenue in a number of ways, preferably selling something like a mobile phone and a big, juicy bundle of extras as part of the deal. Another approach to wait until there are no other choices, and then introduce a text centric online service that forces those who don’t want to pay to cross over into the “okay, we will pay” zone. There are other angles as well.
But the point is: Text requires mental effort to consume. Who wants to pay for extra work. Must have information is different. No one has a choice. A lawyer has to pay to see some data. A doctor has to pay to keep up with some medical information.
News? Maybe a broker, but there is Bloomberg, Factset, and other specialists.
General news?
Apple’s lesson is that more work is needed. The MBA assumptions, the nifty Keynote decks, and the confidence of a big sleek company—obviously wrong. Back to school and repeating a grade to catch up on what was missed the first time through the course.
Stephen E Arnold, November 15, 2019
Tech Giants: Victims!
November 13, 2019
Were you caught off guard by Google’s announcement that it was jumping into personal finance? You can get the details in “Google to Offer Checking Accounts in Partnership with Banks Starting Next Year.”
What about those wizards at Facebook? That outstanding commercial enterprise Facebook at its post-Libra Facebook Play service. You can get the public report in “Facebook Pay Is a New Payment System for WhatsApp, Instagram, and Facebook.”
Apple’s credit card has inspired some laggards to get serious about getting into the cash transaction business and getting quite fine grained details about their “customers.”
But these firms are just doing what is part of their DNA. Mere surfers of the Internet’s big waves of opportunity. The Sydney Morning Herald reports one executive’s defense in, “Tech Giants Alone Can’t Be Blamed for Online Misinformation: Google.” That company’s VP of news Richard Gingras says policy makers and traditional media companies share the blame for the spread of fake news and other toxic content. Writer Laura Chung reports on an interview with the executive:
“Mr Gingras said digital platforms have a responsibility to ensure they are not ‘enabling amplification of bad information’. But the challenge is not specific to one tech player and is a ‘societal problem’.
For example during the Christchurch massacre, in which 51 people died, Google scrambled to remove millions of copies of the video from YouTube. But traditional media coverage of the incident drove people’s interest in it, causing them to search and repost it, he said. Following the massacre the Australian, New Zealand and British governments called on digital platforms including Facebook and Google to do more to stop terrorist content from being shared online. ‘It’s one of those tricky things that all of us in our own way – in the political sphere, media sphere and tech sphere – need to recognize our degrees of responsibility in setting the right role models for behavior,’ he said. ‘What role models are we presenting to them [society] to guide people’s behaviors? And that extends to all of us.’”
That is one way to look at it—deflection is always an option, I suppose. The write-up also touches on the financial relationship between Google and Australian news publishers. Media companies would like Google to share more revenue with them, and regulators seem poised to agree. Gingras, however, expresses concern for the preservation of open markets and open channels of information. His apprehension is entirely based on the good of society,
And what about government regulators? Oh, right.
Cynthia Murrell, November 13, 2019
The Key to Millions: Enterprise Search?
November 11, 2019
I thought the world was crazier than ever when enterprise search became the focal point of a multi-billion dollar deal and a multi-year lawsuit. The open source search movement picked up steam as companies shifted their attention from proprietary search and retrieval solutions to those maintained by a “community.” Search became a utility which many information technology professionals found a Bermuda Triangle for careers.
Why?
Our research prior to the publication of the three volumes of the Enterprise Search Report I wrote and our subsequent work on next generation search solutions revealed these problems:
- Enterprise search implies one size fits all. Information retrieval needs vary by business unit, department, and individuals. When one pokes around a large organization, one finds numerous search and information access systems. One size? Nope.
- Users look for information in the enterprise search system and cannot locate it. The reasons vary, but the universal gripe is, “I can’t locate the document I just saved.” The notion of real time is not one that fits into more organization’s information infrastructure. Cost is one big reason. What looks good in a demo does not work in the “real world” of a company.
- Silos. The implications of “enterprise” suggest that a significant amount of information will be available to a user of the search system. Nothing could be further from the reality. Legal keeps some documents under lock and key. Personnel? The same approach. Research? No data goes out of the lab or the researcher’s workstation. On and on.
- Changes that are not captured. The top sales professional changes his presentation right before giving a talk to seal a big deal. The changes are not indexed because the sales professional has to do the contract. Missing info? Yes.
- Untracked digital information. Enterprise search has not been either quick nor adept at handling social media posts (authorized or unauthorized), interviews, videos produced in lieu of a written report, and similar information objects. Try to find key facts from these content collections. Give up yet.
I could extend this list, but I don’t have the energy. Few are interested in what caused Entopia to go out of business. No one I have spoken with in the last five years cares about why Fast Search & Transfer self destructed. No one cares.
I read “Want to Earn Millions? Launch an AI Based Enterprise Search Startup.” That’s a path to fame and riches. The write up states:
Enterprise search engines based on artificial intelligence systems are taking off fast. Cognitive search systems using NLP can include structured data contained in databases and even nontraditional enterprise information like pictures, video, sound, and machine information, for example, from the internet of things (IoT) gadgets, to bring contextual results in the actual business context.
Sounds good. How about this?
For startups and venture investing, the trend is clear. One prime example of this trend is the world’s leading space agency- NASA has enormous data ever since it was created in 1958. Now, the agency is working to make its data increasingly accessible for rocket designers and researchers. It is redesigning search and analytics abilities utilizing AI and natural language processing (NLP) systems created by a company known as Sinequa which is collaborating with the agency to deploy a worldwide knowledge management ability.
Amazing. Technologies like RECON’s which NASA helped move forward because engineers could not locate key documents is looking at technology which has wobbled from search to intelligence and back again.
A quick reality check, gentle reader, please.
One can download open source search and retrieval software and get decent results. But there are firms which have goosed the “money” in enterprise search to astronomical levels:
- Algolia, $100 million
- Coveo, $200 million
- LucidWorks, $150 million
- ThoughtSpot, $248 million.
Now let’s think about Autonomy. At its height, the company reported revenues of about $800 million. HP paid $10.3 billion. After a short period of time, HP realized its massive sales and marketing system could not generate enough new sales and sustainable revenue to keep the Autonomy business an alleged winner.
How will these companies pitching enterprise search generate sufficient revenue to pay back their investors, fund research and development, add filters and other components needed to deal with today’s content flows, and support their existing systems as licensees try to make search work like investigative software?
The answer is, “The odds are quite unappealing.”
- Enterprise search has been available for half a century with some of the old school systems still available from OpenText in the guise of BRS Search
- Dissatisfaction with enterprise search systems generally runs about 50 to 70 percent in most organizations with such a system
- Costs of keeping an enterprise search and retrieval system continue to creep up despite the advent of managed services like those available from Amazon and others
Where are the customers?
That’s the question the article ignores.
Customers are likely to be just as tough to convince to use an enterprise solution as they have been for decades.
Net net: Enterprise search may not be the spring chicken the write up describes. Enterprise search has a history. And history is about to repeat itself. When the Autonomy matter is resolved, there may be be a new search drama to follow.
Keep in mind that Google couldn’t make enterprise search work. But these cash stuffed outfits can? Maybe? Well, probably not.
Stephen E Arnold, November 11, 2019
Coveo: A 15 Year old $1 Billion Start Up Unicorn in Canada!
November 6, 2019
I read “Coveo Raises US$172M at $1B+ Valuation for AI-Based Enterprise Search and Personalization.” The write up states:
Search and personalization services continue to be a major area of investment among enterprises, both to make their products and services more discoverable (and used) by customers, and to help their own workers get their jobs done, with the market estimated to be worth some $100 billion annually. Today, one of the big startups building services in this area raised a large round of growth funding to continue tapping that opportunity.
Like Elastic, Algolia, and LucidWorks, Coveo is going to have to generate sufficient revenues to pay back its investors. Perhaps the early supporters have cashed out, but the new money is betting on the future.
Coveo was founded in Quebec City more than a decade ago. The desktop search company Copernic spun off Coveo in 2004. The original president was Laurent Simoneau. Mr. Tetu is an investor with great confidence in enterprise software, and he has become the “founder”, according to the write up. In April 2018, Coveo obtain about $100 million from Evergreen Coast Capital.
DarkCyber recalls that Coveo has moved from Microsoft-centric search to search as a service to customer experience and now personalization.
In 2005, I wrote this about the upsides of the Coveo approach in the Enterprise Search Report I compiled for an outfit lost to memory:
Coveo is a reasonably-priced, stable product. Any organization with Microsoft search will improve access to information with a system like Coveo’s. Microsoft SharePoint customers will want to do head-to-head comparisons with other “solutions” to Microsoft’s native search solution. Coveo has a number of features that make it a worth contender. Other benefits of the Coveo approach include:
- Web-based administration tool allows straightforward configuration and monitoring of the system.
- Automatic indexing of new and updated documents in near real-time.
- Includes linguistic and statistical technologies that can identify the key concepts and the key sentences of indexed documents. Provides automated document summaries for faster reading and filtering.
- Groups information sources into collections for field-specific searches.
- The product is attractively priced.
- Tightly integrated with other Microsoft products and Windows-based security regimes.
- Customer base has grown comparatively quite rapidly and customers tend to speak well of the product.
I noted these considerations:
The software is Windows-centric – both in terms of its own software as well as document security settings it tracks – which may be an issue with certain types of organizations. You will have to assign permissions to index to allow the ASP.NET worker process user to access the index. The task is simplified, but it can be overlooked. Administrative controls are presented without calling attention to actions that require particular attention. Coveo is still however able to search content on any operating system, application, or server. Other drawbacks of the Coveo search system include:
- There is limited software development support to allow customization or extensions of the core technology to other applications, although the company is expanding the product’s reach through Dot Net-based APIs.
- When the system is installed and its defaults accepted, the “Everyone” group is enabled. Administrators will want to customize this setting. A wizard would be a useful option for organizations new to enterprise search.
- No native taxonomy support, except through partner Entrieva.
- Achieving scalability beyond hundreds of millions of documents requires appropriate resources.
My final take on the company was:
Coveo Enterprise Search meets many distinct needs of the small and medium-sized business that has standardized on the Microsoft platform, while still providing a few critical advanced search capabilities. Perhaps more importantly, CES minimizes search training, system maintenance, and other cost “magnets” that typically accompany an enterprise search deployment.
Like a handful of other products in this report, you can test Coveo out first, via a free download of a document-limited version.
The challenge for Copernic is to make enough sales and to generate robust sustainable income. This is the uphill run that Algolia, Elastic, LucidWorks, and probably a number of other enterprise search vendors face. Perhaps an outfit like Xerox will buy up, which would be one way to get the investors their money?
DarkCyber wishes Coveo the best. But a start up unicorn? No, that is not exactly correct for a 15 year old outfit. This push to make the investors smile is not for the faint hearted or those who have a solid grasp of the formidable enterprise search options available today. Plus there are outfits like Diffeo and other next generation information access systems available for free (Eleasticsearch) or bundled with other sophisticated information management tools (Amazon, search, managed blockchain, workflows, and a clever approach to vendor lock in.)
One tip: Don’t visit Quebec City in February during a snow storm.
Stephen E Arnold, November 6, 2019
Stephen E Arnold, November 5, 2019
Economists: The Borjes Approach
October 28, 2019
Now this is a source among sources: Epoch Times. DarkCyber is not equipped to identify the information in “Krugman Admits He and Mainstream Economists Got Globalization Wrong.” One point in the write up evoked memories of a college course when I was a callow youth; to wit:
the consensus economists failed to measure adequately and properly account for the impact of globalization on specific communities, some of which were disproportionately hit hard. This despite the fact that models predicted, and figures later showed, that free trade was a net gain in terms of both jobs and wages in the broader American economy. Generalized gain but localized pain.
There you go. Better for everyone. Not so good for some others.
In business, the technology magnets are doing fine. Local retail shops, not so fine. Some countries are chugging along. Others seems to be shifting into riot mode. Planning a trip to Bogota, Lima, or Paris for a three day week end soon?
What about that college economics class through which I sat asking such questions as, “What is this professor talking about?” and “Have I awakened in a short story by Jose Luis Borges?”
Maybe the Epoch Times is neither wrong nor right about Paul Krugman? Paradoxical thoughts have legs in the online world. What’s real and what’s fake? Think of those riders in the wasteland in front of what seems to be a mountain range. Borges did and look what that earned him.
Stephen E Arnold, October 28, 2019
Amazon AWS Revenue
October 25, 2019
Amazon’s third quarter 2019 results revealed that net sales went up. The number of interest in Harrod’s Creek is AWS. The company’s data report:
- AWS revenue hit $9 billion, up from $6.7 billion in the third quarter of 2018
- Amazon rolled out a fully managed service for business forecasting
- The Quantum Ledger Database is now available as a fully managed service
- AWS cut prices of storage for several classes of service.
Net net: Plenty of cash but Microsoft’s cloud service may be nibbling at some service areas in which Amazon had minimal competition for a number of years.
Stephen E Arnold, October 25, 2019
Security Industry Blind Spot: Homogeneity
October 24, 2019
Push aside the mewlings about Facebook. Ignore Google’s efforts to quash employee meetings about unionization. Sidestep the phrase “intelligent cloud revenue.”
An possibly more significant item appeared in “Information Security Industry at Risk from Lack of Diversity.” The write up states:
The Chartered Institute of Information Security (CIISec) finds that 89 percent of respondents to its survey are male, and 89 percent over 35, suggesting the profession is still very much in the hands of older men.
Furthermore, the security industry is wallowing in venture funding. That easy money has translated into a welter of security solutions. At cyber security conferences, one can license smart monitoring, intelligent and proactive systems, and automated responses.
The problem is that this security country club may be fooling itself and its customers.
The write up quotes from the CIISec report, presenting this segment:
“If the industry starts to attract a more diverse range of people whilst spreading awareness of the opportunity available, we could be well on the way to truly modernizing the industry,” adds Finch. “Key to all this will be both organizations and individuals having a framework that can show exactly what skills are necessary to fulfill what roles. This will not only help hire the right people. It will also mean that it the routes to progress through an individual’s career are clearly marked, ensuring that individuals who enthusiastically join the industry don’t over time become jaded or burn out due to a lack of opportunity.”
Partially correct opines DarkCyber. The security offered is a me-too approach. Companies find themselves struggling to implement and make use of today’s solutions. The result? Less security and vendors who talk security but deliver confusion.
Meanwhile those bad actors continue to diversify, gain state support, and exploit what are at the end of a long day, vulnerable organizational systems.
Stephen E Arnold, October 24, 2019
Algolia: Cash Funding Hits $184 Million
October 15, 2019
Exalead was sucked into Dassault Systèmes. Then former Exaleaders abandoned ship. Algolia benefited from some Exalead experience. But unlike Exalead, Algolia embraced venture funding with cash provided by Accel, Point Nine Capital, Storm Ventures, and Y Combinator, among others.
The write up adds:
Having Salesforce as a strategic backer in this round is notable: the CRM giant currently does not have a native search product in its wide range of cloud-based services for enterprises, instead opting for endorsed integrations with third parties, such as Algolia competitor Coveo. The plan will be to further integrate with Salesforce although no products to speak of as of yet.
The challenge will be to go where few search and retrieval systems have gone before.
Some people have forgotten the disappointments and questionable financial tricks promising search vendors delivered to stakeholders and customers.
With venture firms looking for winners, returns of 20 percent will not deliver what the sources of the funds expect. The good old days of a 17X return may have cooled, but generating an 8X or 12X return may be a challenge.
Why?
In the course of our researching and writing the enterprise search report in 2003 to 2006 and out and our subsequent work, several “themes” or “learnings” surfaced:
- Good enough search is now the order of the day; that is, an organization-wide search system does not meet the needs of many operating units. Examples range from the legal department to research and development to engineering and the drawings plus data embedded in product manufacturing systems to information under security umbrellas with real time data and video content objects. Therefore, the “one solution” approach dissipates like morning fog.
- Utility search from outfits like Amazon are “good enough.” This means that a developer using Amazon blockchain services and workflow tools may use the search functions available from Amazon. Maybe Amazon will buy Algolia, but for the foreseeable future, search is a tag-along function, not a driver of the big money apps which Amazon is aiming toward.
- Search, regardless of vendor, must spend significant sums to enrich the functions of the system. Natural language processing, predictive analytics, entity extraction, and other desired functions are moving targets. Adding and tuning these capabilities becomes expensive. And it the experiences of Autonomy and Fast Search & Transfer are representative, the costs become difficult to control.
DarkCyber hopes that Algolia can adapt to these research factoids. If not, search and retrieval may be rushing toward a disconnect between revenues, sustainable profits, and investor expectations.
The wheel of fortune is spinning. Where will it stop? On a winner or a loser? This is a difficult question to answer, and one which Attivio, BA-Insight, Coveo, Elastic, IBM Watson, Lucidworks, Microsoft, Sinequa, Voyager Search, and others have been trying to answer with millions of dollars, thousands of engineering hours, and massive investments in marketing. I am not including the search vendors positioned as policeware and intelware; for example, BAE NetReveal, Diffeo, LookingGlass, Palantir Technologies, and Shadowdragon, among others.
Worth monitoring the trajectory of Algolia.
Stephen E Arnold, October 15, 2019
AI: Of, By, and For the One Percenters
September 28, 2019
I read “At Tech’s Leading Edge, Worry About a Concentration of Power.” You can too if you pay the Gray Lady or have a dead tree version of the estimable newspaper.
The main point of the write up is that doing smart software with machine learning and lots of data is expensive. Therefore, if a person struggles to pay the rent, smart software is going to be out of reach.
Sure, Amazon offers deals, but the fees for big time machine learning can be beyond the reach of the average country club member. Even a pro athlete with a history of interesting tweets may not be able to handle the invoices from Google, Microsoft, and other cloud vendors.
The newspaper observes against these somewhat poorly kept smart software secrets:
Computer scientists say A.I. research is becoming increasingly expensive, requiring complex calculations done by giant data centers, leaving fewer people with easy access to the computing firepower necessary to develop the technology behind futuristic products like self-driving cars or digital assistants that can see, talk and reason.
Is there a fix?
Well, sort of. The New York Times pointed to foundation support; for example:
At the Allen Institute in Seattle, Mr. Etzioni [former professor and online expert] said, the team will pursue techniques to improve the efficiency of artificial intelligence technology. “This is a big push for us,” he said. But Mr. Etzioni emphasized that what he was calling green A.I. should be seen as “an opportunity for additional ingenuity, not a restraint” — or a replacement for deep learning, which relies on vast computing power, and which he calls red A.I.
Net net: Smart software requires big bucks, big brains, big computing, and big effort. Can innovations emerge from a lab like the one beleaguered Tesla operated?
Maybe, just not probable. When big outfits “help”, the opportunity for “borrowing” may be tempting. In an ethics free zone, who wins?
The one percent. What’s different this time?
Stephen E Arnold, September 28, 2019
Mithril Capital Tarnished by Federal Probe
September 26, 2019
This is a true or false situation.
You may be familiar with Peter Thiel, who co-founded PayPal and Palantir Technologies and has since used his billions to become a prominent venture capitalist. So prominent, in fact, that his involvement as co-founder helped Mithril Capital raise over $1billion. Now, though, Vox Recode reports. “The FBI Is Investigating a Venture Capital Fund Started by Peter Thiel for Financial Misconduct.” The investigation centers on Ajay Royan, Mithril co-founder who has a long history of working with Thiel. Though the probe is in its early stages, investigators have questioned individuals “close to Mithril” about possible financial misconduct. We’re told Mithril’s investors have complained in recent years that Royan failed to invest some of their cash in startups while collecting a fortune in fees for himself. Reporter Theodore Schliefer specifies:
“Mithril is likely collecting as much as $20 million a year in management fees, sources familiar with the figures have previously told Recode — an unusually large haul for a venture capital firm that each month has a smaller and smaller staff and therefore smaller and smaller expenses. (Mithril disputed the $20 million figure but did not provide an alternative.) At least 75 percent of the firm’s management company is owned by a Cayman Islands limited company that is, in turn, owned in excess of 75 percent by Royan, according to legal documents. So some of that money is going to Royan directly as salary. Those management fees go further in a low-tax state like Texas, where Mithril Capital said it was moving late last year. Several employees resisted the sudden move to Austin, which has a much smaller startup scene than Silicon Valley. Royan has said the move was rooted in his distaste for the Bay Area. But beyond that, two sources told Recode that Mithril leaders alluded to tax advantages when privately explaining the multiple reasons for the move. Mithril denied this.”
While denying any wrongdoing, Royan is sensibly cooperating with investigators. He also seems to be playing defense, offering uncharacteristic interviews at several financial and tech news outlets. Schliefer observes Thiel’s reputation is suffering from the association, though his direct involvement with the firm appears to be minimal.
The lengthy article shares some interesting details about the firm. Several staff members have recently bailed, for example.
Would an analysis of the available data with the Palantir Gotham system provide some insight?
Cynthia Murrell, September 26, 2019
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