This week’s links take a look at tech companies that are traditionally consider to be ‘not HR’. The reality is that HR involves old fashioned views of the world.

photo of old fashioned house number 5 in 5-Links HRExaminer.com post May 15, 2014

“In that 20th century lens, customers and employees exist in mutually exclusive worlds. What’s happening is that those universes are colliding.”

Expect customer input in your performance evaluations.

  • Ex-Digg CEO raises $3.5M from Jeff Bezos, Andreessen Horowitz and others for Pro.com, giving you price estimates for home projects
    This is the beginnings of a real front end for managing contractors and subcontractors. Angie’s list is developing similar interfaces. By stepping in and standardizing pricing, these freelance management operations are paving the way for real time performance management solutions.
  • Yelp Bites Back At OpenTable, TripAdvisor And Google With Free Yelp Reservations Service
    You might well ask, “what does this have to do with HR or Recruiting?”
    It’s inevitable that the social media fueled review world will collide with the performance management world. The obvious next steps at Yelp include performance evaluations of the service staff. That customer driven performance evaluation model is headed for a company near you. HR and HRTech are defenseless in the face of this incursion because they have no meaty relationships with customers. Keep your eye on the review space. Be sure to notice that Square is moving to make the cash register receipt a forum for communication.
  • Google’s Legal Blow: What ‘the Right to Be Forgotten’ Means
    In Europe, Google is taking it on the chin.
    The European Court of Justice on Tuesday ruled that individuals can ask Google Inc. to remove links to news articles, court judgments and other documents in search results for their name. While this isn’t exactly privacy, it’s a turning point in individual user relations with the search engine giant.
  • Stealth startup alert: Skype co-founder ventures into health and wearables with Project Florida
    This project is a supergroup of tech startup veterans. They’re attempting to crack the nut of wearable user experience that crosses multiple lines of data collection. The article is also a clever bit of web based detective work and will be interesting to sourcers.
  • Understanding SaaS: Why the Pundits Have It Wrong
    From VCs Andreesson Horowitz comes this analysis of SaaS company valuation. Before you run from the impending math discussion, understanding how these companies are valued in the stock market will help you understand the hows and whys of their service delivery.The basic difference is that SaaS is a 21st Century arrangement and that accounting is rooted in the industrial view of the world.

    In old school accounting, the moment you booked the deal you could start realizing income. In SaaS contracts, you can only realize this months portion of the revenue this month. So, SaaS companies appear to run in the red even though they have predictability in cash flow and generally have some accumulated cash reserves.

    In the older model, “the timing of revenue and expenses are perfectly aligned. All of the license fee costs go directly to the revenue line and all of the associated costs get reflected as well, so a $1M license fee sold in the quarter shows up as $1M in revenue in the quarter.

    That’s how traditional software companies can get to profitability on the income statement early on in their lifecycles.Now compare that to what happens with SaaS. Instead of purchasing a perpetual license to the software, the customer is signing up to use the software on an ongoing basis, via a service-based model — hence the term “software as a service”. Even though a customer typically signs a contract for 12-24 months, the company does not get to recognize those 12-24 months of fees as revenue up front.

    Rather, the accounting rules require that the company recognize revenue as the software service is delivered (so for a 12-month contract, revenue is recognized each month at 1/12 of the total contract value).Yet the company incurred almost all its costs to be able to acquire that customer in the first place — sales and marketing, developing and maintaining the software, hosting infrastructure — up front.

    Many of these up-front expenses don’t get recognized over time in the income statement and therein lies the rub: The timing of revenue and expenses are misaligned.

Bonus Link

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