The rise and fall of Aspen Technology

AspenTech grew through acquisitions in the glory-days of the stock market, but has been going through some twists and turns in recent times. I have written an AspenTech overview and update, available on the JimPinto.com website (weblink below), and summarized here.

AspenTech was founded in 1981 by Dr. Larry Evans, a professor of chemical engineering at MIT. After first landing a government-funded contract, Larry Evans got private VC funding to form AspenTech. In 1994, the company went public. This was the time when companies were forgetting profits and pumping up sales to get a high market-cap. AspenTech got caught up in this bubble, buying lots of companies using their own inflated stock as tender.

In May 2002 AspenTech acquired Hyprotech - 2001 revenues about $50m, acquired for about $100M in cash. Funding came from issue of new shares and related warrants. AspenTech raised earnings expectations for the year.

At this time, AspenTech itself fell on hard times and was itself for sale. With about 1,900 employees and 2001 sales of about $310m, the company was generating significant operating losses and had cash flow problems. Market-cap dropped from over $1b to about $140m.

In Aug. 2002, JimPinto.com eNews featured an AspenTech story, stating that the company was in trouble with its recent acquisitions and was for sale (weblink below). That sale did not take place; perhaps the price was too high, or the "baggage" of recent acquisitions too heavy.

AspenTech remained "independent" by raising $100M (almost exactly the amount paid for Hyprotech) from Advent International, a Boston-based venture-capital firm. Advent was already an AspenTech investor, and was now upping the ante. They clearly drove a very hard bargain, creating major dilution for existing shareholders. Larry Evans was bumped up to Chairman and a new CEO installed.

Almost concurrently, disaster hit. In August 2003 the FTC judged that AspenTech's purchase of Hyprotech was in violation of the Clayton Act, and must be divested. And too, other related lawsuits surfaced.

In Oct. 2004, AspenTech sold Hyprotech assets to Honeywell for a nominal $2M - the price of getting the FTC off their backs. Then, in Nov. 2004 it was announced that the company needed to re-state financial results.

In Dec. 2004 board member Mark Fusco - no relation to the cartoon Fusco brothers (just kidding) - became President & CEO. Advent had already nominated Fusco to the board, which gave them a board majority. This will probably see the removal of barriers that block selling of assets and eventual acquisition. It remains to be seen how Advent will find their exit - with, or without, a "haircut".

Only time will tell us if years under the AspenTech umbrella has lost all of the value of its multiple acquisitions - Setpoint, DMC, Trieber, Chesapeake, and others, that have been smothered over the years.

More on robot ethics

While both our expectations and fears about robots may be somewhat exaggerated, the progress of robotics raises lots of worries. Many important ethical questions need to be confronted:

1. Should robots be made humanoid?
   Lifelike robots may be used as spam agents. Soon, you may have to slam the door on a robot salesman.
2. Should humans become robots?
   Humans and computers can be connected via direct neural interfaces, which is like telepathy. While this is potentially beneficial for paraplegics, ethical problems arise when animals are used as cheap, disposable robot bodies. Even more frightening is the possibility of computer-controlled human slaves.
3. Should robots excrete byproducts?
   With automobiles, few recognized the pollution problems; yet they continue to proliferate. Imagine the pollution levels from hundreds of millions of robots using internal-combustion engines.
4. Should robots eat?
   There are proposals to allow robots to generate energy by using biological matter for food. Humans may be soon be competing against robots for food resources.
5. Should telerobotic labor be regulated?
   A telerobot is an electronic puppet controlled remotely by a human using a PC and devices like joysticks. Instead of outsourcing jobs, factory machines may soon be remotely controlled. Should local labor laws apply to remotely operated robotic workers?
6. Should robots be used in war, to kill?
   There are already unmanned telerobots supervised by humans. Soon, independent robots will be capable of killing humans. What are the ethical differences? Who is responsible for the killing?

Managed correctly, robot intelligence can lead to greater human prosperity and well being. Mis-managed robots will be a disaster which may be impossible to unravel.

Life on the fast track

We buy technology to do things cheaper, faster, better. It helps us connect, prevents phone tag, sorts and recalls huge amounts of information, simplifies writing, and even allows us to work remotely. But the speed and availability cause problems. We get lost, never quite focusing on any specific thing.

There are always more and more demands on our attention. And the need for speed is shrinking our attention spans. We look for quick answers. We make and accept deadlines that may be impossible. We start tasks that are never quite finished.

Multitasking (computer term for doing many things at once) has become an epidemic. It is consistently counterproductive, is often unhealthy and could even be dangerous (talking on the cell phone while driving). And yet it is expected and, for many, has become essential for success.

Today we do more. Faster. From anywhere. All the time. You can work at home or the coffee shop or the beach. It's touted as a good thing, but is having bad effects. Life is allowed to be the sum of endless tasks. The short term always the priority. We are so connected that we actually disconnect from life. No one has enough time to focus long enough on anything. You can't mull over a question that requires a complicated answer. The one who brings up a quick answer is treated as the hero.

The average person at work switches tasks every three minutes, is interrupted every two minutes, and has a maximum focus stretch of 12 minutes. We multitask because it's expected; but also because we believe it's more effective. The truth is that no one multitasks well. It works if the tasks are simple and virtually automatic (like walking and chewing gum). But effective, efficient multitasking is difficult and each task degrades from a focused effort.

Productivity made possible by technology has been applied to work and consumption at the expense of leisure. We are working faster and longer, filling our limited leisure with busy activities, with an increasing sense of time poverty. The new technologies have become a technological leash, leaving us always on call, constantly subject to interruptions and new work requirements. As a result, we are compromising our health, marriages, parenthood, community and social activities.

You probably know people who are multi-tasking junkies. When you're talking with them, they continue to scan for email, and interrupt conversations by taking cell-phone messages. It's rude. But they keep doing it. When there is a lull in a meeting, they run off to check email - there may be something that needs their urgent attention (often it is only spam). They check e-mails while on vacation, or late at night. They fire off text-messages, or use their cell phone, not because they have something to say, but because they're junkies.

Hey! Are we talking about YOU?

Read this article about David Levy, a University of Washington professor who is searching for the balance between technology and life.

Accelerating technology advances

Most people have a linear view of the future. People look at the 21st century, and it seems reasonable to expect 100 years of progress at today's rate of progress. But because we're doubling the rate of progress every 10 years, we're actually looking at 20,000 years of progress during the 21st century. That's quite a difference in outlook. You get to a point where the rate of progress is so fast that it's virtually a rupture in the fabric of human history.

Raymond Kurzweil, the technology guru and pioneer of artificial intelligence, is among the vanguard of those expecting radical change. His latest work (still awaiting release) "The Singularity is Near" forecasts a century that will see the merging of "biological" and "artificial" intelligence to the point that, by 2099, the two will have conjoined and perhaps even fused. At the core of Kurzweil's thesis is what he argues is the double-exponential advance of technology.

Of course, Kurzweil bases his claims on mathematical models of technology progress, which is just a human construct. And as economists know well, humans have a way of putting a kink in predictions.

Wireless Industrial Networking Alliance (WINA)

802.11a/b/g, UWB…1451.5, Zigbee…802.15.4, cellular telephones, cyber- security, spread spectrum. Customers of wireless sensors and networks are bombarded with conflicting and confusing claims from several sources, primarily vendors. The resulting confusion is reminiscent of the Fieldbus wars - everyone claiming to use THE standard. Industrial end users need better access to clear, unbiased technical information on comprehensive wireless solutions.

The Wireless Industrial Networking Alliance (WINA) is a coalition of industrial end-user companies, technology suppliers, industry organizations, software developers, system integrators, and others interested in the advancement of wireless solutions for industry.

eFeedback

"I enjoyed your prognostications but the following sentence bothered me: '... small groups of terrorists, and malcontents have discovered the effectiveness of their ultimate weapon - the suicide bombing.'

"I understand the horror, but in deploring or marginalizing this tactic, you make the Bush Mideast mistake. You underestimate the cause and obscure the nobility of the struggle.

"First of all, the term "terrorist" has been misused so often that it has lost all legitimacy. It is being applied by our government to those who resist the forced occupation of their countries. The term 'patriot' would sometimes be more suitable. Words are just words; but civilian deaths are not just words and perhaps comparative civilian body counts would best define terrorism.

"Also questionable is your use of the term "malcontents". The act of strapping gunpowder around your waist, or driving a car loaded with it, is a serious act of faith or allegiance. It is also surprisingly efficient. The Buddhist monks who set themselves on fire when we occupied Vietnam had little effect on our foreign policy. With gunpowder, these people are leveraging their protests. Whether you agree with the method or not, the courage and effectiveness deserve a more respectful label.

"Ironically, it was the development of gunpowder that started all this. It began the era of vastly unequal weapons. It cheapened conquest and gave birth to the colonial period, the most enslaving and genocidal epoch in human history. With gunpowder, a few boatloads of men were able to subdue entire continents. For uncounted millions, life became as cheap as a lead ball. Although explosives are now widely available, the inequality of modern weapon systems allows the exploitation to continue.

"Colonial powers no longer find it practical to occupy their vassal states. Today they merely destabilize coveted countries and install puppets that are dependent on money or military aid or high-tech arms. Witness the Mideast where the US slakes its thirst for cheap oil by supporting sultans and dictators and is attempting to further its control by creating a protectorate state and military bases in Iraq. The Mideast, however, has tossed out several colonial empires and is having a go at this one. President Bush would have us believe that this is a "global war on terror". It is merely the struggle to stay.

"The "global" reference however is true. A terrorist used to be someone who had a bomb but didn't have an air force. Today, trade and travel provide the air force. Sealed borders offer a possible defense but they won't work for viable and productive nations. Even militant religious retreats like Israel find isolation impossible to achieve. In our new global village, the historically powerless have found a cheap and effective fighting tool. Gunpowder opened the colonial era and for one part of the world it is threatening to close it.

"In the ancient cradle of civilization, titanic forces are weaving and probing and grappling. Weaponry again is equalizing. Conflict again is becoming costly on both sides and life is cheapening everywhere. Nuclear arms are proving useless but as with the un-winnable nature of nuclear war, parity and the hope of détente can be faintly seen among the death and devastation.

"Witnessing the horror, it is easy to miss the nobility of the struggle. Our president has termed this a classic fight between good and evil and in a way it is. It will last for generations and span the globe but this fight had to come and if history is any guide, it can only end one way.

"Many Europeans can remember their own tragic right-wing lessons and their own embarrassing evictions. With sad retrospection, anger, and perhaps undue smugness they are now watching ours. Also watching are malcontented millions in the third-world, watching and learning and cheering."

"We must discover some way to prohibit the teaching of hate by anyone to anyone about anyone without losing the freedom to speak freely of other things. We have far too much hate in the world and no clear way to solve the problem. Where are the missionaries of long ago? Where are the prophets we need now?

"The 'every man a community of one' trend of social isolation and lack of social responsibility will continue.

"In only a few years cars will have built in RFID tags. It will be illegal to remove or disable it.

"More people may mostly rent cars or vans as needed. Perhaps we will own the (front) power unit and rent the (back) attached unit.

"A few years later people will have RFID tags from birth. Second generation will include health monitors. Third generation will include wireless connectivity to a health network.

"Medical practice will undergo the same sort of automation we see in manufacturing and sales. (Privacy vanishes.) All diagnostic input data will be computerized and diagnosed online immediately. The role of the present GP doctor will erode or vanish. Designated specialists will rule. Medical facilities will join into large central units all owned by large medical conglomerates. This will all be driven by rising costs of service and insurance, it will not help as much as promised. [The first problem is national standardization of terms and methods, you know how standards work...)

"I think I see serious inflation ahead, I don't know how to pay for all the government spending otherwise. Sooner or later we have to pay. This has been the pattern since the Roman Empire.

"We need to impose a significant tax on fossil fuel power. Perhaps this can help to reduce the need for inflation...

"Somehow the US has to re-energize our education system. The goal of institutional mediocrity must be changed.

"A sense of national goals and leadership would help us. The negative political posturing and mud slinging does not make things better."

"I strenuously disagree with your analysis of the sale of IBM's PC Division. In fact, your own newsletter is self-contradictory in this regard. You mentioned Bill Gates' and Ray Kurzweil's comments on change - both indicating that people overestimate change in the short run and underestimate in the long run. If you agree with them, as I do, then you believe change is accelerating. You then skewer IBM for selling a 25-year old business by stating examples from an era when change was at a fraction of the pace of today. Yep, it took a lot longer than 25 years for the auto and the airplane to reach maturity. But that was a century ago when, by Kurzweil's reckoning, change was 1/20,000 the rate of today. And, by the way, most of the early innovators (like the Wright brothers, for instance) were absorbed or made extinct by later developments in the industry. Why should IBM await a similar fate?

"Further, you make the argument of the shrinking radio and compare it to PCs and their movement to PDAs. This, too, is a poor analogy. Much of the innovation in PDAs -- from the Palm to the Blackberry to smart phones - has come from people who broke with the PC paradigm to create new operating systems and chips suited to the application. Innovation in the PC world is centered in two companies that bring products to market if/when they feel like it. Getting the quality and functionality you want requires a new model for innovation.

"IBM leaders may be demonstrating exactly the opposite of the "lack of imagination" you accuse them of. Consider the scenario here -