Today’s Product Cycles in Tech?

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This weekend is “Distance Weekend” at the New England Short Course Yards Championships at Harvard’s Blodgett pool, if that rekindles memories for any of you.  Blodgett is a mammoth, concrete, monolithic building across the street from the Business School and adjacent to the football field.  I’ll be swimming the 1650 on Saturday afternoon, so can’t say how long, or rather short, the Rearview Mirror will be.  The following weekend, Friday through Sunday, is the bulk of the events such as the 400 IM; 50, 100, 200 and 400 free; and the relays.  All as a warm up for Nationals, which are in Santa Clara this year.

Two of my colleagues, who are Masters swimmers, Tracy Grilli and Kevin Fisher, have literally left town, Tracy to Sarasota and Kevin to Miami and Mexico.  Both claim these trips are business related.   But we know that it’s all so that they would have a “reason” as to why they weren’t swimming in the meet.  That guilt trip will get you every time.

Just when you think you’ve got ahead, something comes around the bend and jumps out in front of you.  In this case, it’s the IRS review of 2011 and 2012 business expenses.  I’d just come through (1)  the Anti Money Laundering audit, (2) the year end financial audit and (3) FINRA’s audit.  The next project on the agenda was to compile BLPA’s 2013 tax data, and then finally get back to business.

Not meant to be, with the IRS data request in hand, sort of makes me wonder if they understand that all my tax numbers with the Broker Dealer are generated from audited financial statements.  Everything has to be documented.  Formatting the data for the IRS will be time consuming.  The good news is that BlueLake has all the backup data. FINRA rules require that I keep all financial receipts and documents forever.  End of story.

Anyway, on to this week’s blog on product cycles.  It’s no secret that the tech world is product cycle driven.  It’s a lot like surfing and catching that wave:

  • Ride the product cycle to strong growth and profitability;
  • Missing a product cycle is the road to diminishing sales and profitability.

Big waves make for long rides.  Short waves make for much shorter rides, but are what fill the space between those big waves.

The thing about the list is that these are all totally predictable.  They’re a rework of current businesses, applying new platforms and technologies.  The theme is the enabling power of more cheaper compute power. coupled with “ease of use”.  Read Hardware and then Software.  And this has been the over-arching theme for decades.  It has literally been the investment theme since Intel introduced the first microprocessor in 1971, when I was in high school.

The personal computer was introduced in 1977, when I had just graduated from Stanford and was too poor to do anything but make car payments, rent payments and student loan payments.  Forget about buying a TRS-80 or Apple II, but I do remember Steve Jobs and Steve Wozniak coming to Harvard Business School to speak to the Computer Club.

In 1977, the personal computers were the Apple II, the Commodore PET, and the Tandy (now Radio Shack) TRS-80.  And it was Dan Bricklin’s VisiCalc that made the personal computers of interest to the business crowd.  That spreadsheet was truly revolutionary and made for the first of exciting times.

Incidentally, Dan is also an iOS developer, and behind Note Taker HD, one of the iTunes Store’s biggest selling apps.  Dan is now Chief Technology Officer of Alpha Software.  Their product is Alpha Anywhere:  “the fastest path to responsive mobile and web apps.”

Biotech IPO’s

Lately, there has not been a wellspring of IPO’s.  What IPO’s we’ve seen are in the biotech/pharma space.  No revenue companies at relatively small valuations taking a big hit on dilution.  Their game is to raise money to stay alive and make it through to FDA clearance, to a distribution deal.  The End Game is to be acquired by Big Pharma.

Non-United States Private Placements

Once-upon-a-time one rarely or never saw private placements from companies outside the United States.  Yes, for companies based in Israel who probably had a large U.S. presence as well as Canada and the U.K., but not in China, Brazil, Chile, Malaysia, Russia or Germany.

We’ve assembled a list of 26 investment themes.  Considering the breadth of the list, we’ll wait till another newsletter to go into more detail.  Suffice it to say

Sleeping Pugz
Sleeping Pugz

three words:  Apps, Clouds, Mobile.

And for those who care, the “Pugz” are getting along.  It’s truly amazing what upping the Fluoxetine HCl [Prozac] dosage by 50 percent will do for a dog’s behavior.  Geesh, if it works this well in dogs, do you think it will work in humans?!

Oh, and now my stepdaughter is looking at Pepperdine.  She tells me that she’s made the college’s time cut in several swimming events, and has 18 months to make more time cuts, before entering her Freshman College year.  Go team!

Margaret Johns

Founder & Managing Partner

Margaret Johns is the Founder and Chairman of BlueLake Partners, a boutique M&A investment bank based in the Greater Boston Area.  Prior to founding BlueLake she was an employee founder and Managing Director at Needham & Company where she worked in Corporate Finance in New York City and headed up its Boston office.  She now lives in Londonderry, New Hampshire with her husband, 16 year old step-daughter and three pugs.  When she’s not working with clients, FINRA or writing blogs she competes on the Granite State Penguins Masters Swim Team, skis, rides her bike or is out walking her pugs.

Content researched, edited and reviewed on a best efforts basis.

We make no claim to being comprehensive in our review, as the contents are companies and topics we, ourselves, find of interest.

This newsletter is proofed by Dave Henshaw, which is much appreciated. Dave is my USMS swimming lane mate, and Granite State Penguin team-mate.  He is retired from MIT, where he used to produce and proof their annual financial report.  Exactly what we need.