Replies to post #238098 on Wave Systems Corp. (fka WAVXQ)

[aleajactaest]

of course, folks are correct to seek affirmation in revenue with solms.

if he doesn't produce it using the process he has adopted, then i think it will reflect poorly on the viability of this market.

it's possible there's no there, there.

[aleajactaest]

all comes back to genius theory. certain members of wave's board appeared to encourage the ceo to think of himself as a genius. that the supply side is where the action is. that the product is not at fault, the market needs to be educated. that paradigms can be shifted by a grand idea. that home runs are where the action and the glamour is.

sometimes the supply side idea works. but not so often in a complex, sensitive, social environment.

in this case, the supply side model failed. complex ecosystems tend to be hard to shift. incumbents are hard to displace. you have to work with them if you want to change the environments they control. adaptation is the rule. smaller steps are more likely to work than big ones. demand tends to pull a product into the market so you need to build what customers want.

wave was surely right to customise its eras product to begin with. it would have done this to learn. but it kinda seems they never learnt how to customise their way to a standard, scaleable solution. my hypothesis is that they failed because the original product had too large a scope. it ran into issues of incumbency. folks in mobile were worried that their cash flows and customer control were in the balance. system administrators saw their delicately created systems being subject to toppling and resisted wave's software.

the writing on the wall was in the income statement. at the time, the company didn't reveal why it repeatedly failed to deliver. but investors could see that it wasn't fixing its problems. the lack of traction continued. the sales velocity declined. leading to yet more attempts to get a foothold in the market with new software.

wave wasn't sprague's creature. it was gilder's. it is the baleful influence of genius theory that seemed to make wave arrogant in its approach to the market. if any approach can yield a better outcome, solms' can. but no one is such a magician that they can take the mountain to the market.

[Bluefang]

Alea: I agree with almost everything in your post with one exception. You wrote, "...if the issue was banana or goat rather than scaleability, the previous management needed to go."

I don't think the major reason for SKS's ouster had anything to do with fruit or billy goats. I think there were two main reasons: (1) The consistent failure to deliver on promises of profitability and sales (2) the consistent lies about both of the above.

One can argue if the product sold well and if Wave had been profitable, no one would then care whether SKS lied his butt off or not. I disagree. I believe credibility and integrity are important in a publicly traded company. Wave and its former CEO had neither.

Furthermore, it was baffling, that in an age of extreme data insecurity and privacy disclosures, Wave, which claimed to solve many of these same problems, could not sell into a market craving security. As you mentioned, the excuses were prolific, although excuses were not forthcoming unless someone cornered and pressed the former CEO for explanations. The resultant excuses were seen by many investors as mendacious and without any basis whatsoever in truth. Time bore out the truth of those views.

I believe Solms is trying to undo that well-earned, bad reputation. But the new CEO is facing two major problems. Shortage of cash for the long haul and the failure to sell any Wave products in a consistent manner.

It may be the former CEO dug too deep a hole to get out of before his hands were pried loose from the reins.

It is troubling to me after three quarters as CEO, there have been no announcements of new contracts or deals. Maybe we simply have not given the new CEO enough time, but surely Solms must realize his window is a short one and if execution does not begin soon, he will face massive desertions from the loyal longs who stayed too late and too long at the dance with SKS calling the tunes.

I am confident Solms has ended the squanderage of precious funds on stupid stuff 'developed' by Sprague relatives and friends. That's a huge plus, yet not nearly enough.

Blue

[RootOfTrust]

I can think of at least one shareholder reading the boards who probably thinks I overuse the term "scalability", and that in using it I don't know what I'm talking about. In reality scalability of a solution refers to capabilities or characteristics that go beyond the context I'm using it in relating to Wave products. To clarify I simply mean a Wave solution needs to "scale" into a customer's environment, essentially as on off-the-shelf out-of-the-box solution that requires little or no customization or integration or if professional services are required for integration at least the product has a complete feature set capable of "scaling" to fit any customer's needs.

In my opinion a CTO up to the task will assemble the team and knowledge base relating to the universe of customer environments and will engineer an out of the box solution that will be essentially correct in feature set and capabilities when it goes to beta. Beta results in tweaking followed by a formal product launch. After initial traction and deployment the solution is revised on an ongoing basis to improve value and performance.

Prior to VSC 2.0 I don't recall a true product launch of a fully designed and beta'ed Wave product.