Renters, it may be time to buy a home!

Screen Shot 2014-09-17 at 11.29.14 AMI was reminded again this week by how red hot the residential rental market is in the San Francisco Bay Area. Over lunch with a few friends, discussions quickly turned from the quick “what are you doing now” update to rants like “I am spending so much on rent…and my landlord is going to increase it again this year!” This statement is quite common for renters in non-rent controlled areas like Palo Alto or San Jose.

Finding a decent place to live in the Bay Area has always been a challenge, but it seems over the past 2-3 years the search has become even more formidable. However, with rents so high, the BIG $1M QUESTION is now does it make sense to continue paying high rent or is it better buy a house (or condo) and put the money towards a mortgage. Interest rates are so low now that monthly mortgage payments could actually be lower than paying rent! Yikes. The barrier to explore this option, however, lies in finding at least $200K in cash for a down payment. No matter your income level, obtaining that amount of cash is not easy and requires discipline. As I mentioned in a previous post, don’t buy that BMW M series with your options. Buy the house first!

Screen Shot 2015-11-22 at 6.45.36 PMI have been asked this “should I rent or should I buy” question several times recently. I am fan of buying a home as a longer term, 5-7 year play. I reached out to a mortgage broker friend to help build the business case for home ownership taking into consideration economic factors including home appreciation, tax benefits, etc. Of course, the analysis is positioned within the context that anyone considering buying a home should consult a CPA or financial planner to understand the implications for their specific circumstances. Come on guys, you know I had to say that!!!

Following is a rough analysis that focuses on the tax advantages of home ownership. The numbers used are for illustrative purposes only to explain the concepts. Feel free to manipulate the equations as needed. Or run a few calculations yourself using a “rent vs buy” calculator.

OK, let’s get to it! For example, let’s assume someone makes $120,000/year and is in a combined state and federal 30% tax bracket and will pay $36,000 in taxes.

Now, let’s assume a $800,000 home is purchased with a 20% down payment of $160,000 and with a $640,000 loan at 4%. The monthly payment breaks down as:

Monthly payment: $3,055.46

Property taxes: $833

Insurance: $80

Total Monthly Payment: $3,968

The same home could be rented for $3,000 per month, BUT don’t forget that the mortgage interest and property taxes are tax deductible. The high tech salaries being so high in the Bay Area this benefit is potentially HUGE. The annual interest paid on the loan in this example is about $25,000 and annual taxes are $10,000. As a result, taxable income has been reduced by $35,000. The buyer will pay $10,500 less in taxes, or $875 less per month, or the equivalent of $3,093/mo ($3,968 – $875).

But wait, there’s more to this. Now hear me out. Let’s assume the property value increases by a modest 5% per year. Over a 5-year term, the $800,000 property will be worth $1.021 million. Not bad, right?

Let’s assume rent increases by a modest 5% per year when in reality it has increased by much more!! Given the $3,000/mo rent in this example, rent will increase to $3,828 per month by year 5. Keep in mind that any renter (tenant) is at the mercy of a landlord and the laws that govern the local rental market as well. A renter could be asked to leave if, for example, the landlord wanted to sell the property.

Again, this scenario is designed to introduce the basic concepts to understand the benefits of buying a home vs renting. There are a ton of other factors to consider beyond the quantifiable including emotional benefits. We all have our hot buttons for what makes us happy.

Personally, I find happiness in home ownership from the remodeling and interior design perspective. I love that stuff. My mom spent many years as an interior designer and it rubbed off. Many family meals include conversation around what projects we are working on or what great home interiors we’ve seen. However, I have friends who are SCARED TO DEATH of any home project and prefer to just rent and let a landlord take care of it. To each his own.

However, my goal is to share with others the great opportunities, benefits and risks of home ownership to empower them to make their own decisions for what works best.

Kirk out.

Please send me an email (eric@dunstanproperties.com) or call me (408-674-2825) if you have any questions.


Buying the first home means not buying the sports car

Screen Shot 2015-09-03 at 9.29.22 PMThe explosive growth of the Internet brought a lot of money to the San Francisco Bay Area and the Silicon Valley in the late 1990s. Many of my work colleagues and friends cashed in their stock options and bought high-end cars or lived BIG in San Francisco during those go-go years. Many of us younger employees did not know the difference between paper wealth and actual wealth. Unfortunately, the paper wealth quickly disappeared as pro-forma balance sheets fell out of fashion and stocks plummeted. Easy come, easy go.

Fortunately for me I did not get sucked into the craze of buying a BMW M5 and renting an apartment in the Marina. My Mid-West style upbringing made me far too frugal (or cheap!) for such “extravagance.” Fortunately I was able to same-day sell a chunk of my ISO options and chose to just sit on the cash. I continued to drive the 1988 Toyota Carolla I owned in college and rented with a roommate a two-bedroom apartment in less than trendy Sunnyvale. I was also able to have my company pay for a good portion of the MBA program I attended to avoid taking on massive student loan debt.

Yes, I experienced a ton of peer pressure for not living in the city. “Come on, Dunstan! Move up to the Marina with us. You won’t have to make the long drive home to Sunnyvale late at night…and “Social Safeway” is just crawling with honeys.” Many a tale has been told about love found in the produce aisle.

Screen Shot 2015-09-03 at 9.43.19 PMWhy didn’t I cave to the peer pressure or buy-in to the spendy trends at that time? I wanted to buy a house. That was my goal. Even back then, living in San Francisco was expensive and many of my friends there lived paycheck to paycheck. Several work colleagues graduated with an MBA and $100K+ in student debt. I graduated with no debt. Shortly after I started my first job after business school I was able to purchase my first house. Goal accomplished.

The San Francisco Bay Area housing market is even more competitive (read “expensive”) now than it was in the early 2000s. Buying a home or condo takes a significant cash down payment to meet the more stringent lending requirements. A hefty monthly cash flow is also required to take care of the trappings of ownership…namely property taxes, insurance and then basic living expenses. Home ownership gets expensive. Fast. But I think it’s SO worth it!

First time home ownership is still possible in the Bay Area despite the gloom and doom affordability market data. Sacrifices have to be made and savings goals have to be achieved. Life style choices have to be made too. The process of saving for the first home may take some time and may require renting with a roommate in a less fashionable area to amass cash. Building a monthly and annual budget is a great tool to help analyze where the monthly paycheck goes and decide what changes are to be made to funnel more cash to savings. I highly recommend Alexa von Tobel’s book, “Financially Fearless” to help with building a budget and savings plan.

Buying what type of house and in what neighborhood will also be defined by company stock performance and salary compensation. People make a lot of money in the Bay Area. However, how well one manages money will play a key role in the home purchasing power of the individual. Keep in mind that most first time home buyers will NOT be able to buy a home in a top neighborhood. Be OK with that. Buy what you can afford in the best neighborhood possible. How this is done will be discussed in future posts. Start small and gain equity to then move up to the next house/neighborhood. This is all very possible. It takes time, commitment and money management. I did it. So can you.

Please send me a note on Twitter (@ericdunstan) if you have any questions.


Uncle Fester says, “Focus on the customer!” Snap snap.

Screen Shot 2015-08-18 at 8.28.39 PMLast week I had lunch with a member of the leadership team of an e-commerce company I am advising. I love these lunches for I get to hear about the challenges, provide a point of view, suggest an action plan, but I’m not responsible to drive the implementation. Sigh, it’s a nice change for I’ve spent many years driving and it’s nice not to have to provide a well thought out plan and sell it to all the stakeholders.

The company is struggling with many of the problems common to an early stage start up. Nothing really all that unique. One challenge, however, points to how important it is to address early or it festers like Uncle Fester and can pave the way to a visit with Morticia Addams. The challenge focuses on building a product that customers want.

Back in the mid to late 1990s the concept of “build it and they will come” spread across product innovation. Speaking from the days of the early Internet, I remember talking with companies who received funding based on an online product with the PROMISE that millions of consumers were on their way within a few quarters. WRONG. During my time at eBay, the product team had to take a very pragmatic test and learn approach to innovation for fear of disrupting how consumers buy and sell on the e-commerce platform. New product features would be built and rolled out to a limited amount of select eBay buyers or sellers. The effect of the product rollout on category revenue, GMV, completed listings, etc. was closely measured. Only after the product innovation had proven to achieve a targeted measured increase would the feature be rolled out to the greater eBay community. This test first concept is almost “well, duh” to most of us veterans. However, not every product road map takes this test-and-learn approach.

Screen Shot 2015-08-18 at 8.25.06 PMApparently the founder of the company I’m advising was insistent that scarce product development resources focus on building a specific feature that would be the key product differentiator. The founder was certain that this feature would meet the needs of the perceived target customer and steal customers from the industry leader. Customers were certain to come and revenue would spike after this feature was implemented. No discussion or testing plan was discussed to determine if the feature really met the needs of the customer, if the needs of the RIGHT customer were being met, or if the feature provided enough lift in revenue to warrant significant finite resources.

My contact shared that the feature was rolled out and had consistently abysmal (sub 1%) adoption from the target customer. The target customer did not find value in the feature and significant product adoption did not happen. There was no spike in revenue. Sigh. It became clear that the innovation efforts were focused on the wrong customer and needs. Opportunity was lost.

Meanwhile, the competitor focused on launching new features to help the RIGHT customers, small businesses, who brought supply to the e-commerce platform. These innovations brought more small businesses to the platform, which attracted more consumers, generating more revenue for the competitor. These innovations resulted in a significant A round of investment.

“Yikes, I feel like we missed the boat here,” my contact shared. Hopefully the team is able to quickly pivot and re-align resources before the competitor gets too far ahead. The lesson is very clear, however. Before young companies launch their product, it is important to identify the customer who has the potential to generate the most revenue. Focus on meeting the needs of this customer first through product innovation. As we all know, it’s sometimes not obvious who this customer is and what needs are to be met. However, that’s where product leadership is needed to hold back the “build it and they will come approach” and fan the flames of the “test and learn” approach. The life of the company is dependent on it. The floor of the Silicon Valley is littered with the bones of companies that did not get this right.

The Addams Family. Snap snap.


Mobile payments leader must provide value to consumers and banks

Screen Shot 2015-04-01 at 8.23.55 PMI remember being swept up in the early Foursquare craze. I raced around my little town checking in at my local Starbucks and favorite lunch spots to become The Mayor. I worked hard to keep it by doing drive by check ins as I was stuck at traffic lights. I know, I’m hyper competitive on certain things. Friends and I would compete on who could win the most badges too! I quickly earned the “jet setter” badge with frequent flights from SJC to SNA. Other friends won the “crunked” badge with late night shenanigans. Ahh to be a DINK again. All for what? For pure competition and Facebook feed bragging rights!

At a deeper level, I hoped that eventually I’d receive relevant geographically based alerts and rewards on my phone as I walked by a restaurant or store. Unfortunately, many of these rewards required an AMEX card subscription (creating a HUGE hurdle) or were nothing more than a free drink at check in. Big whoop. Sigh…it was very clear that geo based local marketing had not made the jump from great concepts to effective execution. However, this is all changing quickly with the launch of mobile payment solutions like Apple Pay and well designed retail loyalty mobile apps. Real customer value can be delivered at the right time. Banks can also make HUGE strides in building more meaningful customer relationships beyond checking accounts. FINALLY!!!!!

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My family and I are loyal Safeway customers for the majority of our food. The loyalty was solidified by Safeway launching a program that contained several weekly coupons and special offers based on shopping activity. A key component of the loyalty program is the Safeway mobile app which serves as the main touch point for how offers are communicated to consumers. Just recently, Safeway has pushed daily offers that appear on the front scream of my mobile device. Last week I made a special trip into Safeway’s deli to take advantage of a sandwich offer that was delivered to my phone that morning. Cool. There are several other retail apps, Starbucks for example, that deliver this customer value in a similar way. All of these apps have a way to go on using geo fencing technology to send me offers as I’m nearby or actually in store. Clearly this will be coming!

I mentioned in a previous post that I recently completed my first Apple Pay transaction at Sports Authority. It took me 6 months to actually do this after I loaded all of my cards. Honestly, I forgot to use Apple Pay and struggled with finding locations that use it. I opine in my last post that Apple Pay must do a lot more to remind users that “Apple Pay is Accepted Here” to drive adoption. Steps are being taken to do so for I saw an Apple Pay logo appear on a Walmart payment terminal as I purchased Easter cards.

So where do banks fit in creating greater customer value? Apple Pay requires that customers enter in debit cards and credit cards to make payment. Banks provide these cards. Banks frequently offer rewards programs and provide an incentive to shop a designated retail location. By not actively engaging in this payments ecosystem, banks are LOSING OUT BIG TIME on engaging with customers in a meaningful way with relevant, geo targeted offers.

Screen Shot 2015-03-27 at 3.15.25 PMFor example, let’s say a consumer is using a Wells Fargo bank card for Apple Pay. The consumer pays for items at Walmart that is a member of Well’s Earn More Mall program. The consumer is then informed that they receive double points and are reminded of other Earn More Mall retailers that may be geographically close by. How powerful is that for Wells to influence consumer purchase decision and drive usage of its cards?!

Unfortunately, this type of consumer influence will not be available to banks through Apple Pay. Apple has decided to not share consumer purchase data with card providers/banks. Clearly Apple is looking to own the consumer relationship AND control the valuable behavioral data. However, given the amount of marketing activity driven by banks, especially Wells Fargo, this seems a little one-sided of Apple…giving room for a competitive payment platform that helps consumers AND banks. Banks need to use their power to guide the creation of a payments ecosystem that builds deeper customer relationships.

As we all know, Android OS based Samsung announced the acquisition of LoopPay as their digital payments platform and competitive solution. It would not be surprising if the Android OS based Samsung phones enable banks to access purchasing data to banks and provide the channel to communicate special offers. For a fee, of course. Apple and Samsung need to be reminded of the power banks have in the transaction process. Banks provide the cards! Strangely, BANKS need to be reminded of the power THEY have in influencing the payment ecosystem. The larger banks like Bank of America and Wells Fargo, have enormous power. At the current moment, banks are willing to draft on the success of Apple Pay.  Wells Fargo even promotes their Apple Pay features in TV commercials.  Cleary banks see value in positioning themselves as “cutting edge.”  However, this affiliation is purely brand driven and not consumer value drive.   If a bank can be promised greater access to consumer data AND direct access to consumers through the device, banks will drive great consumer value while promoting new technology.  Because of the consumer value focus, banks will promote one payments solution over another…and mean it.


“Apple Pay Accepted Here” alerts needed to drive adoption

Little Screen Shot 2015-03-12 at 11.21.46 AMLeague baseball season recently started which meant a trip to Sports Authority to purchase the relevant equipment. Fortunately, most of the items for t-ball are in the under $20 each category which makes the financial commitment more bearable. Like most dads, the start of Little League season brings back many fond baseball memories including a controversial meeting of a reigning Miss California. When I say “controversial” I mean it raised a few eyebrows as to why she attended, whom she knew on the team and the outfit she was wearing. It turns out she was dating our team’s assistant coach and used her fashion sense to keep his attention off the game played on the field. Dads enjoyed the game that much more. Moms were furious. Funny the things one remembers from more youthful days.

I was excited about the recent trip to Sports Authority for an entirely selfish reason. I was super stoked for a chance to FINALLY use Apple Pay! When I purchased my iPhone 6 Plus, the first thing I did was load on my bank’s ATM and credit cards. Why? Because I’m a FinTech guy…and this sort of thing gets me just as excited as a chance to meet Miss California. However, my Apple Pay excitement quickly slid down into a “now what?” I really struggled to find a place to use Apple Pay within my network of retailers that I frequent. Based on a recent BI Intelligence survey, just 8% of large US retailers currently accept Apple Pay. Keep in mind this stat focuses on LARGE US RETAILERS. I don’t shop a lot at large US retailers. I’m a keep it local type of guy…or at least keep it regional type of guy. When I did visit an Apple Pay enabled business like Toys R Us the opportunity to pay with my phone slipped by for I was not reminded that my chance arrived.

When it came time to bay for the baseball pants, socks and belt I whipped out my iPhone (that scene from “Blazing Saddles” comes to mind)

with great excitement and said, “OK, I want to use Apple Pay. How do I make this work?” My question should raise grave concerns from Apple and the retailer. However, what happened next should FREAK APPLE OUT. “Uhhhh,” began the clerk. “I don’t know…let me talk to my manager.” I stopped the clerk, saving him a trip to find the manager. I scanned my phone over the payment terminal, used my touch ID and the payment was made. “Oh, great…you figured it out,” the clerk said. So wrong.

This frustration is shared with many iPhone loving friends and FinTech colleagues. Clearly Apple Pay merchant adoption needs to increase and consumers need to be reminded to us it. Hopefully this is all changing with greater merchant adoption and the launch (FINALLY!) of the Apple Watch. The same BI Intelligence survey revealed that 56% of retailers say they will accept Apple Pay by 2018. But doing the quick math, this means that 44% still will not…and we all know these merchants will be the locally owned business.

Eric DunstanSo where does Apple Watch fit in driving Apple Pay adoption? Well for starters, the payment process gets much easier for the watch will be tethered to the iPhone loaded with the relevant cards. Users double click a button on the phone, place the watch near the payment terminal and payment is made. Skin sensor technology verifies the watch is on the verified user’s wrist to prevent unauthorized use. The watch really helps make Apply Pay easy to use. Ease of use means greater user adoption.

Informing users that Apple Pay is accepted is the remaining adoption hurdle to be solved. Frankly, I’m a little surprised this hurdle has not been addressed. It seems easy to solve. Functionally needs to be implemented to push alerts to Apple Watch users when they are near a payment terminal that accepts Apple Pay. Given how integrated watches are to routine interaction and reference, these alerts will be easily seen. Better yet, leveraging the iBeacon technology, merchants can send Apple Pay alerts to customers as soon as they walk in the door and before any purchases are made. Ease of payment may be enough of a factor to push the customer to a purchase decision. I am envisioning personal finance expert, Alexa von Tobel at Learn Vest cringing right now!!!

I’m excited that we are moving closer to not having to carry a bulky wallet anymore. The Apple Watch and alerts to use Apple Pay will train and shape the right habit to eventually push me to leave a wallet at home. Now, if I can only get my drivers license, loyalty cards AND annual passes on my phone I will be wallet-less!


Increase online sales by optimizing for the highest value keywords

A colleague building a high-end fashion e-commerce site reached out asking for help.  She is pulling her hair out about how best to address a common challenge – how best to drive customers to her website without having to spend a ton of money. “What are simple things I can do, Eric, that don’t cost me anything?” Not only does she need to drive traffic, but she needs to drive the RIGHT traffic…the kind of traffic that will buy $200+ dresses, shoes and jewelry.  The site has really nice items. However, just because the site exists online customers will not automatically find it and start browsing…let alone buying!  Gone are the late 1990’s!MKCollab

How to drive the right traffic to an online store can be a daunting task, but fortunately there are a lot of tools that can be employed and when used strategically, can be very effective.  These tools include search engine optimization (SEO), email marketing, social media, and content marketing (which influences EVERYTHING).  These tools are free to implement and tips and tricks are easily found online. However, the biggest hurdle for the business is to implement the tools strategically and to find the time to optimize.  This takes time.

The next series of posts will share insight on each tool and how best to implement from the standpoint of a budget strapped…or no budget 🙂 business.  Links to additional online content from relevant thought leaders will also be sprinkled in each post.

The first question my high-end fashion e-commerce colleague asked focused on the immediate need of search engine optimization (SEO).  Or, what are the easy things that one can do to help potential buyers find the online store and start buying.  There are 3 easy steps that can be taken to optimize a site to be found by search engines. However, before any of these things can be implemented, the store/site must have web analytics tools in place to track traffic and e-commerce activity.  The most ubiquitous tools are Google Analytics for E-commerce or Yahoo Web Analytics for E-commerce .  Unfortunately, I’ve come across several website managers who have the traffic analytics in place, but have not “turned on” the e-commerce analytics.  Both analytics must be enabled to build the right plans that drive sales.

Step 1:  Identify what keywords drive site customers that result in a sale.

This almost feels like, “well, duh!”  This makes total sense, right?  Unfortunately, many e-commerce site managers focus on understanding what keywords drive traffic only…and don’t follow the analytics to the sale.  For example, the term “fashion design” may be a top phrase users type into Google that leads them to a store’s front page.  However, these users typically do not buy a dress or a pair of shows.  Additionally, the term “vintage coat” may be a low traffic driver, but a high percentage of customers end up making a purchase.  The big tip here is to look for the unique keywords that customers use to find your site and make purchases.

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The biggest hurdle for not tracking traffic all the way through to a sale is implementing the analytics tools and understanding how to use/run the reports.  The implementation information is readily available and any website or store developer can implement these trackers correctly.  How-to guides that define reporting are available online too, but they take time to digest.  The site manager and business owner must invest the time needed to understand how to unlock the analytical power available.  Yes, it’s daunting, but the more a tool is used, the easier it comes to understand..and the deeper the understanding the more the data becomes available.

Step 2:  Identify what pages on the site are receiving the most keyword traffic and driving the most sales.

This step builds on Step 1 above by focusing analysis on the site pages users land on after clicking on keyword search results.  Step 1 focuses on what are the top keywords used for users to find a site.  Step 2 focuses analysis on what are the top site pages that receive this keyword traffic.  In short, this analysis will inform the site manager where within the site potential customers are landing and buying.  This is powerful information, but to obtain this data all site pages must be indexed (or crawled to use a late 90s term) by the search engine.

The question that pops to mind is, “Well, how do I determine if all my site pages are indexed?”  Fortunately, it’s easy to get a sense of this on Google by simply typing in the search box: “site: YOURSITEDOMAIN”.   All pages of the site indexed by Google will appear in the search results.  You will be surprised by how many site pages ARE NOT indexed by Google.

On a side note, inform the site manager immediately of the site pages not indexed by Google.  Google Analytics code will need to be added to each of these pages to ensure they are properly indexed.

When the analytics are correctly implemented, the tool will clearly indicate what pages receive the highest volume of traffic and generate the most sales.  Why is this information valuable and what do I do with it?  The data is valuable for it tells the site manager how customers are finding the site, where users are landing in the site and what customers are buying. This intelligence is invaluable in understanding how to drive more traffic to these pages and products!  See Step 3!

Step 3: Build site content that includes the top keywords and point users to the highest sales generating items.

Once Step 1 and 2 are completed, acting on this information guides completing Step 3.  Two areas to focus on are the ecommerce site home page and on the pages generating the most sales.  For example, ensure that the highest sales generating keywords and phrases are mentioned on the site home page.  If “vintage coat” is a high sales generating term, ensure the term is referenced in the home page copy and includes a link that points to relevant products in the store.  Another option is to consider creating a separate “vintage coat” category on the site home page to more distinctly differentiate these items.

The second area to focus on improving are the pages where these most sold items are listed.  Continuing with the “vintage coat” example, there may be an option of developing a store page that focuses only on vintage coats.  The page could include vintage coat items for sale and other content around vintage clothing and relevant accessories available in other areas of the site.

Knowing vintage coats are hot selling items, the site manager may also want to build out content around this topic off the ecommerce site as a strategy for driving more customers.  I will focus in another post around using content marketing to drive ecommerce sales.

Search engine optimization is a big topic and I’ve covered just the surface level concepts here.  However, implementing these concepts will have an immediate impact on sales. Dig deeper into this topic by reviewing the Google Search Engine Optimization Guide and courses or attend online classes on Lynda.com.  Lynda.com is A GREAT SITE!!


Protect company data by securing the personal cloud – a cautionary tale

Screen Shot 2015-02-08 at 8.53.17 PMI was part of the leadership team at a small technology company based in Europe and North America. As with many multi-national companies, there was friction around the strategic direction of the company and what verticals provided the greatest revenue opportunities. Unfortunately, the friction was never resolved and festered into a deep level of distrust between the US and European based business units. At times it got down right ugly.

The CEO convinced the Board to focus our technology in the financial services vertical where we had the strongest foothold and generated enough revenue to break even. Other members of the leadership team had very different points of view on where the product should evolve and several stealth projects started popping up. Yes, it is wise to focus on innovation and to make longer-term bets on where and how the market or technology may evolve. However, this can’t happen at the expense of making customers happy.

As a result, several “skunk works” projects were started, engineers ran amok and no one was in control of the code. Our CTO mentioned to me in passing that one project was being coded on a unsecured personal laptop…and the director of the team was not aware of it. When I heard that, I busted out the Rolaids. Oh boy. Clearly these “skunk” projects were stinking up our offices and needed to be reined in for corporate data and proprietary code was at risk.

An eagerly anticipated employee was hired and brought under management by the product organization. This employee was cherry picked from a competitor and had great knowledge of our type of technology and how to apply it to the financial technology vertical. He quickly got started creating innovative products and the team was excited to reap the benefits of a growing revenue side. Sounds great, right?! The company will own innovative products and the code to meet the lucrative financial technology vertical! WRONG!

Screen Shot 2015-02-08 at 8.42.21 PMThe leadership team learned that our innovative product dynamo was developing code on a work laptop, but was backing up to a personal cloud service. Our IT team had no policy in place to prevent or address this. Yikes. The company lost control of a proprietary asset. This employee was quickly reprimanded and asked to back up to a secured back up solution. Unfortunately, the relationship quickly soured and the decision was made to fire the employee. The employee was escorted out of the building, but a copy of the code was backed up to the personal cloud only hours before the termination. Clearly the employee saw this coming. Shit…the code was gone. The investment in the employee’s talents was wasted and company assets were outside of the company’s control.

Obviously once this incident happened, there was A LOT of finger pointing for why the right data policies and technologies were not in place to secure the personal cloud. This unfortunate tale is not uncommon and points to the many challenges company leaders, especially CIOs, face in a fast paced and innovative world. These many challenges are made even more complex with the adoption of cloud solutions and mobile devices in the business environment.

This personal yarn I’ve spun points to the importance of having CIOs and other IT leaders think through how to protect company asset. The first exercise is to implement a mobile enabled network access control (NAC) solution and policy. This technology will enable IT managers to define who and what devices have access to the corporate network. Speaking from my experience, a NAC solution and policy would have prevented employee personal laptops from accessing the secured network. IT would have easily identified the laptop’s posture and directed the employee to access a public Wi-Fi network. Given the wide adoption of mobile devices, it’s important to consider a NAC solution that is also mobile aware. Imagine the competitive implications if our code dynamo was able to access proprietary code through a powerful tablet he brought in the day we terminated his employment? By not controlling this device access, a company is leaving a back door open for data to escape.

A second exercise is to consider implementing a mobile security solution to secure the personal cloud. This is of paramount (I LOVE that word!) importance given how many productivity solutions are moving to the cloud. From my experience working for a multi-national company, cloud technology is very important to enable cross time-zone collaboration. However, it is mission critical that access to this cloud is controlled and managed. Cloud collaboration should only be occurring in secured environments where employees have the approved device posture and access credentials. If the right cloud solution is not in place, the company risks experiencing the code floating out the door accidentally or through deliberate nefarious employee activity.

Heed my words, young IT Jedi, or risk having your “Death Star” plans slip right through your fingers.*

*Star Wars fans, yes, I understand I’m mashing together a lot of Star Wars quotes with this sentence.


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