Category Archives: Case Studies

@BPGlobalPR – PR, BP, and Twitter Converge

Follow a few basic rules of PR, throw millions of dollars at a problem, and it will go your way, right?

A crash course in PR from @BPGlobalPR:

1. Acknowledge the problem without acknowledging specifics. This was our very first tweet:

@BPGlobalPR: We regretfully admit that something has happened off of the Gulf Coast. More to come.
2. Be open about one piece of bad news and no more. You want to appear human, but you don’t want to appear like a bunch of idiots. There’s another word I’d use there, but I don’t think I can. It rhymes with mickleticks.

@BPGlobalPR: Sadly we can no longer certify our oil as Dolphin Safe.3. Threaten legal action if anyone crosses a line. You’re in PR, but you need to make sure you flex your muscle and establish some ground rules.

@BPGlobalPR: Please do NOT take or clean any oil you find on the beach. That is the property of British Petroleum and we WILL sue you.

View the rest of the tips here.

Why the Department of Defense Failed to Secure Our Computers

Every day, new viruses emerge that compromise the security of millions of computers – both personal and corporate. As government agencies increasingly rely upon commercial software for Top Secret computer systems, they found themselves facing a difficult dilemma: continue using their 80’s era software or upgrade to the latest commercial systems, while exposing themselves to the security vulnerabilities that plague everyday users.

From 1999-2001, Robert Meushaw, the director of the NSA’s Information Assurance Reserach Laboratory (NIARL), and his team worked on a solution that coul dgive hte best of both worlds. The system he developed, codenamed NetTop, uses a “sandbox” technique whereby inherently insecure software (such as Microsoft Windows and MS Office) is granted access to a limited portion of the computer. Even if one of the insecure applications was infected with a virus, it is unable to spread beyond the specific machine.

Unfortunately, the results were disappointing. Two crucial missteps ultimately led to its slow adoption within government agencies and by the general public.

The first problem was that NetTop compromised security for functionality. By being neither 100% secure, nor 100% functional, security experts were unsatisfied, and users were frustrated.

The second problem was around cost. Each “virtual” system required its own licenses. Thus, Top Secret computers that accessed six separate networks would require 6 licenses for Microsoft Windows on a single computer! Furthermore, the virtualization component was developed by a for-profit startup named VMWare (now publicly traded NYSE: VMW). As VMWare grew larger and more successful, Microsoft started to tamp down the competition by restricting its licensing terms to make virtualization even less cost-effective.

The end result has been another expensive government project with limited application and a dim future.

Three Things Every Business Should Do in a Recession

Change begets opportunity. Given the current economic situation, here are three things that every company should do:

Renegotiate vendor contracts. This is not to say that you should squeeze all profit out of your vendors. Business relations should always be mutually beneficial. However, contracts that were negotiated a few years ago when things looked rosy should be carefully reevaluated. For example, one small business was able to renegotiate their contract with Verizon Business and cut their bill in half.

Foster employee loyalty. Employees are more likely to stay at their jobs now, if they feel the jobs are secure. The good news is it’s easier to retain employees. But don’t be lulled by this. Unhappy employees being forced to work harder and longer hours will not stick around once the economy turns. Now that employee’s expectations are lower, do small things to increase job satisfaction and make people feel appreciated.

Do more for your customers. Much advice centers on how to maintain price discipline and avoid doing work at (or below) cost. There’s a different opportunity, however. Given that your customers are likely facing a new environment, they may be open to help in new, adjacent areas. For example, a company that downsized may now be shortstaffed in certain areas and happy to have a vendor provide managed services. Look for these areas, and propose solutions for your customers’ problems.

Comparison: Obtaining Top Secret Clearance vs. Disputing a Parking Ticket

I am one of the few, the fortunate, to successfully navigate two of the Government’s most formidable challenges: a few years ago I obtained Top Secret security clearance (actually, three levels above “top secret”), and more recently, I cleared my name of a parking ticket in Boston traffic court. I’d like to describe the experience so that others may learn from the grueling tribulations I endured.

Entrance & Approach

For personnel requiring the highest level of security clearance, the National Security Agency administers polygraph tests in an unmarked campus that looks like a public high school built in the 50’s. The notable difference is that the building has no windows and is surrounded by a barbed wire perimeter with security guards patrolling. To enter the building, you punch in your social security number into a rotating gate, relinquish all books and paper to the security guard, proceed through a metal detector and into the polygraph center…

Similarly, to dispute a ticket with Boston’s Department of Traffic, one enters the City Hall building, and go through a metal detector and carry-on screening similar to the airport. My blackberry did not set off the alarm, nor did I need to take off my shoes. Then I proceeded down to the cavernous basement where the Traffic Department resides.

Conclusion: security is somewhat higher at the NSA than at City Hall.

The Interviews

The NSA polygraph is a simple device – a blood pressure monitor that wraps around the arm, and two conductivity sensors that clip gently onto the fingers of one hand. The wires are then hooked up to a black box that records and prints out the results over the course of the two-hour interview. The interview consists of two sections: the first section to feret out criminal activity, the second section to feret out spies through counterintelligence. Although two hours long, there are only about 20 questions, which are asked in different ways and in different order. My NSA interviewer was a charming fellow, who encouraged me to any illicit activity, since the process is focused on trying to find major offenses and double agents, and withholding information no matter how minor would screw up the results and lead to a failure.

Back at City Hall, I was led into a small, drab, windowless room – not unlike the NSA’s polygraph room. The interviewer again had a desk, a computer, and a casette recorder. The interviewer was a very nice woman, but she sternly reminded me that perjury was a criminal offense, and that meter maids are trusted at their word, unless I could bring incontrovertable proof in my defense. We proceeded to discuss the parking ticket I had received. She drew a diagram of the situation and asked a few questions until she was reasonably convinced that I was not a serious threat to society, at which point she reticently voided the ticket.

Conclusion: The NSA is more informal, friendly, yet thorough. The Boston Traffic Dept vehemently defends the integrity of its meter maids, and is far more skeptical than the NSA.

Triumph!

The polygraph finished successfully, I had my fingerprints digitally scanned (no ink), a photo taken, and a voice signature recorded. I punched my social security number into the gate one final time, and stepped out into the cold, barren tundra that are beyond the suburbs of DC.

Once my parking tickets were voided, my parking lady and I chatted a little more about traffic laws and tickets, and then I was free to return to the light of day, filled with happy people unaware of the suffering taking place just below the surface of City Hall.

Conclusion: The polygraph hurt more (since the blood pressure cuff cuts off circulation), was longer, and required multiple flights and bus rides. But I still think I enjoyed the polygraph more than Traffic Court, if only because of the coolness factor.

How to start a profitable consulting business

A friend recently asked me if he should add a consulting unit to his business. He thought consulting could have high profit margins and add value for his customers.

I gave him the following advice, having seen the full spectrum of consulting practices – ranging from startup firms making millions in profits, to languishing firms losing money.

Although there are many factors involved, two simple questions come immediately to mind:

  • How big are the clients (and consulting budget available)
  • How long will it take to deliver results?

Typically, smaller companies have smaller budgets, and the largest budgets are available only at the Fortune 500 level (though exceptions include VC-backed startups).

If a consulting firm’s project requires more time than the budget allows, then consultants will cut corners, clients will be unhappy, and the consulting firm will still have poor profit margins. Although high margins are often attributed to custom, strategic consulting – profitability at the low end of the market dictates “productizing” the deliverable to reduce time spent on each project. That’s not to say that all clients should receive the same report – rather that a standard approach based on some pre-arranged templates should sufficiently add value (given price and scope of project).

Techniques that can be used to accomplish this include focusing on an industry, focusing on a functional problem/process, and developing a standardized methodology that simplifies the consulting engagement.

Although many consultants seek larger clients and longer projects, there’s plenty of room to be successful even serving small businesses.

Trust in Small Business (Loans)

Although the recent credit crisis has had limited effect on small businesses, there are some signs that this area may be affected as well. One established company suddenly found its asset-backed revolving credit line slashed in half. While the business had solid fundamentals, it appeared that the bank itself needed to pull back.

At times like these, it’s often worthwhile reviewing what former leaders had to say about the issues. A 1998 conference on small business banking issues sponsored by the US Treasury and the Comptroller of the Currency gives such a picture. (Full document available here.)

Eugene Ludwig, former Comptroller of the Currency (1993-1998) describes how he restored the flow of credit to small businesses:

First, we went over our regulatory rule book with a fine-toothed comb, weeding out or modifying those rules that seemed to complicate unduly fair access to small business credit.

Second, we developed innovative new programs to encourage financial institutions to make those loans.

Third, we conducted research into the systemic problems that interfere with the whole process
of small business lending. Finally — and the one that made all the other possible — we sought to stabilize and strengthen the national banking system, so that banks were once again in a position to lend.

Let me give you some specific examples.

  • We liberalized the rules requiring a small business owner to obtain a real estate appraisal from a licensed appraiser whenever personal real estate was used as collateral for a business loan — a change whose benefits, for those who qualify, can be measured, not only in the savings of dollars, but also in the savings of time — weeks sometimes, critical weeks when loans can be delayed awaiting the completion of an appraisal.
  • We adopted a low documentation loan program to allow highly rated and well-capitalized
    banks to make a portion of their loans to small and medium-sized businesses — loans that examiners would review solely on the basis of performance and not on the basis of the documentation in the file. These are loans made because of character that may not
    necessarily meet standard requirements for collateral or detailed performance plans.

Nowadays, it might sound excessively lax to be providing loans without documentation, and lowering barriers to collateralizing loans… but remember that historically small businesses have had lower default rates than other classes of borrowers. And lack of trust is precisely the problem that could send the economy spiraling downwards even further. The principles behind Ludwig’s approach were first to enable financing (through securitization, etc), and second to increase trust (through simplification and reduced bureaucracy)

At times like these we need to recognize that things may have swung too far in one direction, but a happy medium is much better than moving to the other extreme.

Development principles – courtesy of Xobni

At the MIT emerging technology conference, Adam Smith, founder of Xobni, describes the process he went through to develop a great product that is changing the way people interact with their email.

He described three principals that went into product development:

  1. Doesn’t require the user to change their workflow patterns (i.e., behavior)
  2. Dynamic data – constantly changing so encourages users to review it frequently
  3. Context aware – adapts to users current needs and objectives

nTAG: Solving a problem that doesn’t exist

At the MIT Technology Review’s Emerging Technologies conference, rather than regular nametags, nTAG provided electronic badges. These badges weighed about a pound, had an on-screen display (that looked like an old cellphone), and could connect wirelessly to one another.

When meeting someone at the conference, rather than exchanging business cards, two electronic badges could be held next to each other and exchange the contact information automatically.

The renting the system costs $15,000 for a conference with 100 attendees. The value it proviedes is to solve the problem of….. carrying an agenda and exchanging business cards.

Unfortunately, I found myself still collecting business cards so I could write on the back of them. So essentially this is a $15,000 system that replaces a $0.02 agenda page, and a handful of business cards.

If the value isn’t clear for attendees, maybe it’s clearer for the organizer… nTAG provides big-brother quality data to the organizer, who can monitor which attendees talk to each other. But the value of this information? Unclear.

The factors that make a conference worth attending – engaging speakers, open environment to network with others in the field, good food and entertainment – have little to do with nametags.

Rick Burns, Sevin Rosen Funds and Pilot House Venture, which provided $14MM in angel / Series A / Series  B rounds of funding, thought otherwise.

This Sign Has Sharp Edges

This sometimes happens in powerpoint, too….

Private Equity Enters the Trailer Park Industry

Note: for information on the Watchtower industry screening tool, please contact Daniel Berch.

Trailer Park Boys (television show and movie) is an amusing and sometimes heartbreaking look at struggles towards life and happiness in an RV park in Nova Scotia. But while the Boys were busy with various get-rich-quick schemes, private equity investment firm Context Capital Partners entered the space.

Industry data shows EBITDA margins of 27%, slow but steady growth around 2% per year, and extreme fragmentation for the RV Parks and Campgrounds industry (NAICS 721711). And at, $1.7 billion market size, it’s worth a second look.

Click for full-size image