Liar's Poker, Potatoes and Selling the Cloud

By Mark Del Bianco

“Liars Poker” by Michael Lewis is a classic book on several levels, and you can learn a lot from reading it. My favorite part was his description of two traders to whom he gave the pseudonyms Dash Riprock and Alexander. Lewis describes Alexander as a born trader who had a powerful moneymaking skill he applied when a major disruptive event occurred the ability to quickly look away from the initial focus of investor interest and seek secondary and tertiary effects.

One incident in the book revolved around the nuclear meltdown at Chernobyl in 1986. Within minutes of the confirmation of the meltdown, Alexander had bought the equivalent of two supertankers full of oil, correctly perceiving that the harm to the image of nuclear power would drive oil prices up. More impressive was the advice that he gave to the neophyte trader Lewis a few minutes later: Buy potatoes.” The reasoning? Of course. A cloud of fallout would threaten European food and water supplies, including the potato crop, placing a premium on uncontaminated American substitutes. Perhaps a few folks other than potato farmers think of the price of potatoes in America minutes after the explosion of a nuclear reactor in Russia, but I have never met them.”  Those educational pages from “Liars Poker” are here.

What does this have to do with selling cloud services? Well, if youre like many other Americans, youve been following the recent debate over Prism and other secret government programs designed to capture and store communications content and metadata. Theres lots of speculation over the primary effects of the disclosures. Will they harm American anti-terrorism efforts?  Will they create friction with our allies? Will they harm the domestic or overseas businesses of Google, Microsoft and other companies implicated? Dan Gilmor has a good analysis of the problem and what it means for Internet companies (many of whom are cloud services providers). 

Are channel partners more like the Russian potato farmers or their American counterparts? I ask this because one of the possible secondary effects may be a loss of trust in the confidentiality of any services involving the cloud. Would this be warranted? We dont know yet whether NSA or other agencies were accessing content stored in the cloud, or just the communications streams. But thats certainly a possibility. And for many potential cloud users, stream vs. storage may be a distinction without a difference.

Widespread adoption of cloud services by small and medium businesses requires a leap of faith. Adopters must trust that their data and services will be safe and available, and that they will be secure from disclosure. How important is the second requirement? Were about to find out. Potential customers may react to the disclosures with a shrug, reasoning that theyre not doing anything wrong so why should they care if the government looks at their communications or data. The movement to the cloud may continue unabated; it may even approach the famous hockey stick” growth mode. Or customers may pull back, and selling the cloud may become much more difficult in the short and medium term. 

I dont have Alexanders acumen so, like everyone else Ill have to wait and see what the effects of Edward Snowdens disclosures are. I doubt well have an answer by the Cloud Partners conference in September, or but we might by the Las Vegas conference in March. Odds, anyone?

Mark Del Bianco, principal, Law Office of Mark C. Del Bianco, is based in the metropolitan Washington, D.C., area. His practice focuses on domestic and international telecom clients, particularly those implementing new technologies such as WiMax, Gigabit Ethernet and FTTH. Other clients include applications providers, channel sales agents and enterprise customers. Del Bianco is a member of the 2012-13 Channel Partners Advisory Board.