They say it's very healthy to laugh a good, hearty laugh every single day. I try to do that, and thankfully we all have Stiennon to give us fodder at least once a week. His latest missive had me howling [1]. Though I'm sure he didn't mean it to be so funny, his piece on the McAfee/Secure Computing deal was exactly that.
You see, Stiennon fancies himself as a contrarian. Yet, most of the time he's seems to be a contrarian to be a contrarian. Clearly the "IDS is dead" call has been totally merged into his DNA and he's not capable of viewing anything within any other prism. In fact, it seems Stiennon's MO now is to not say anything unless he has something contrarian to say.
Listen, if I made a ballsy call like IDS is dead, then I'd probably be wanting to relive it every working day for the rest of my career. 5 years later we are still talking about it. Or at least Richard is. Indulge me for a second and let's visualize a phone call to Richard's office.
(ring, ring)
Stiennon: Hello, this is Stiennon. Did you know that IDS is still dead? What can I do for you? How about a keynote speech?
Caller: Hi Richard. This is 2008 calling.
Stiennon: Huh? What do you mean you are 2008?
Caller: I'm 2008. The year. And I was calling to tell you that maybe you should think about living in the now. I'm not feeling any love from you. I just got off the phone with 2003 and he's pretty pissed that you won't let him rest. He wants to fade off into the sunset, and you won't let it go. Maybe read some Eckhard Tolle or something.
Stiennon: Yeah, I'll get right on that. How about I speak at your New Year's Eve party? Or is do I need to talk to 2009 about that? I can talk about the cyber-threat of upper Bolivia...
Of course, I'm kidding here. It's easy to poke fun at Richard. Probably as easy as it is to poke fun at me. Richard also seems to want to take credit for telling McAfee to go buy some stuff way back when. I wonder if he told them to run the Entercept technology into the ground? It sounds like some of the stuff we hear from Presidential candidates. Remember that Gore invented the Internet and McCain was behind the Blackberry?
Though he does make some decent points about the fact that McAfee has been a bit schizo about the network security business. But as I mentioned in my post on the deal [1]: times are different now and these times call for a different set of offerings to bring to the market. And the price was right.
If you used Richard's yardsticks of a good deal: Growth companies with little overlap, or a large channel engine buying technology to feed the beast - you'd miss a key strategy that works when the markets are either plateauing or maybe even contracting. That's the market consolidation strategy. Of course, Richard is very vocal about how stupid consolidation is, but it's a fact of life.
There is no doubt that Secure bungled the CyberGuard deal. In fact, it ended up killing the company. They didn't really execute crisply on the CipherTrust deal either and you end up having to sell to McAfee for a song and a dance when you screw up. But that doesn't mean that someone else can't make sense of it and make the deal work.
Fact is, we are going to see a lot of deals over the next 18 months. There are no IPOs and there won't be anytime soon. There will be a few good, high multiple deals, but not many. And there will be a LOT of deals that don't hit either of Richard's deal qualifiers. But they'll be cheap and not paying a lot can make even a bad deal on paper into a good deal for shareholders.
And the reality is things are likely going to get a lot tighter on the VC front, so many of those companies still trying to find their markets are going to die on the vine. With limited exits possibilities, the VCs are going to be very selective about who they allow to continue living.
Actually, Richard's strong grasp of history (at least the history he wrote) will come in handy. I suspect 2009 will look a lot more like 2001 than anything else. Very little funding, tight budgets, and a big hangover resulting from some investment bankers partying like it's 1999.
Bottom photo credit: "No Exit"originally uploaded by braheem [2]