SXY has achieved its revised production guidance  of 1.2 million barrels of oil for the current financial year ,more than

doubling its annual net oil production for the second year running.

1. Full year net oil p roduction will be more than double that of 2011/12, delivering a three year cumulative annual growth rate of 103%. Senex provided initial oil production guidance for 2012/ 13 of one million barrels which was subsequently upgraded to 1.2 million barrels in April 2013.

Production guidance for 2013/14 will be advised in July 2013.

 The strong production result has been underpinned by the outperformance of Senex’s western flank and southern Cooper Basin oil fields. Additionally, new oil discoveries at Mustang and Spitfire demonstrate the potential for continued growth in reserves and production.

Senex Managing Director Ian Davies said “ Net oil production of 1.2 million barrels of oil is a great credit to the Senex team

 and again demonstrates our commitment to delivering on our promises.

 We are focused on achieving continued growth in production through a substantial drilling campaign in the Cooper Basin,

commencing in the next week.”“ Senex is in a very strong financial positi on with $140 millionin cash and no debt. In these

volatile times Senex is committed to protecting our balance sheet.”

‘There are three rules that I live by: never get less than twelve hours sleep, never get involved with a woman with a tattoo of a dagger on her body, and never play cards with a guy who has the same first name as a city.‘

Solid advice there from ‘Coach Finstock’ in that highbrow movie classicTeenwolf.

But, sorry Coach, we must persist with ‘playing cards with a guy who has the same first name as a city’.

You see, for five years now, I’ve been playing cards against ‘Washington Ben’ – though you may know him as Ben Bernanke, the Chairman of the Federal Reserve. ‘Washington Ben’ has been king of the casino, running the whole show – and sometimes in our favour. Anyone in the markets has had no choice but to play him.

He’s made damn sure many years of ‘poker nights’ with the boys turned out as useful as my formal financial qualifications. Because bluffs, double bluffs, and forced tells regarding the Fed’s next move have the power to bulldoze fundamentals and turn all global markets on a dime.

And the bulldozer is at a crossroads. Never have I seen the markets more anxious than they are today, waiting, and furtively twitching, in readiness for 4.30am AEST on Thursday morning.

This is when ‘Washington Ben’ delivers a press conference where he’s set to play his most important hand in years…

After starting quantitative easing almost half a decade ago in October 2008, Washington Ben has recently tested the water with talk about ‘tapering’ the current $85 billion in monthly asset purchases.

That’s all. He hasn’t said it’s definite.

And he hasn’t said ‘stop’ either, just ‘taper’.

The online dictionary defines ‘taper’ as ‘making gradually smaller at one end’. So this could imply dropping QE from $85 billion to $80 billion per month for all we know.

But even just a suggestion of a possible and gradual reduction in QE has sent markets worldwide into a hissy fit. If Washington Ben wanted to know how dependent the casino was on his QE, well now it’s clear as day that it’s totally addicted.

As soon as he mumbled the word taper, money flew out of emerging markets, pulling down their stock markets as it left. The Emerging Markets ETF, which covers stocks in the BRIC countries (Brazil, Russia, India and China) along with South Korea, Taiwan and South Africa, crashed 12% in a few weeks.

But the big market moves also hit the US Federal Reserve where it hurts too. Bond yields have spiked. The 10-year bond yield for example has jumped from 1.6% to 2.2% in the blink of an eye. That doesn’t sound like much I know, but it’s a serious move and takes the yield to a twelve month high.

What Will the US Federal Reserve Do?The last thing the Federal Reserve wants is for yields to suddenly spike. Their whole recovery thesis is about low rates encouraging borrowing. Rising rates would knock the insipid US recovery on the head pretty fast; there would be no natural economic growth to seamlessly transition to as QE finished.

Frankly I don’t envy Washington Ben. There’s no way to gently wind down QE without the market throwing its teddy out of the pram, in the same way that there’s no way of nicely asking our dear Prime Minister to quietly move on and seek alternative employment.

So for what it’s worth, odds are Washington Ben will back-peddle on the tapering talk for now. The US economy is just too weak, and the Fed knows it.

At the end of last year their stated target for unemployment was 6.5%. At last count, the actual figure jumped from 7.5% to 7.6% as more job hunters came back into the market. So on the unemployment front alone (which has been Washington Ben’s main focus) the Fed has a reason to stop using the word ‘taper’.

The other focus is inflation. The low official inflation rate gives the Fed scope to keep QE going. The headline rate is 1.4%, when their informal target is 2%.

The inflation measure the Fed bang on about more is the ‘Personal Consumption Expenditures Index’. This is now down to just 1.1%. If they believe their own data, then domestic inflation gives them no reason to take their foot off the gas today.

I’d say there is good reason for Washington Ben and his cronies to keep juicing the casino for time being, but who knows what they’ll do. It’s not all up to Ben of course. It’s voted on by twelve people. Eight of them are pro-QE, and the rest are anti-QE or neutral. The vote should be a foregone conclusion.

But what happens behind closed doors isn’t half as important to the market as what Washington Ben says at the press conference afterwards. That matters more because sound-bites travel faster than the official minutes which the Fed won’t release for three weeks.

We can only hope that he articulates the Fed’s plans better than at last month’s press conference when he mixed his messages and left the market as confused as a goat on Astroturf.

So leading up to Thursday morning, expect a bumpy ride. Traders have been jumping at imaginary bogeymen in recent days. An article in the Financial Times on Monday suggesting tapering was enough to send the markets plunging.

Last week it was a story in the Wall Street Journal from a journo (with rumoured close ties to the Fed) who said tapering was off, sending the markets soaring. It’s a total farce.

Rumblings from the China Bears Grows LouderThat’s not the only reason to expect a bumpy ride on Thursday. The Bank of England has a press conference soon after, and just before lunch the monthly Purchasing Managers Index for China (HSBC flash) comes out. China in particular has the scope to hit our market if the news is bad.

My mate and colleague Greg Canavan, of Sound Money Sound Investments, has been banging the China-bear drum again recently. His view of the market was pretty chilling when we had a chat the other day.

It’s not all about China, but his overall view of global markets is that they’re about to crash. Look out for Greg’s new video on the subject tomorrow.

Maybe a negative, or plain unrevealing, press conference from Washington Ben tomorrow could be the trigger for what Greg sees coming?

After all, you got to know when to hold ‘em, and know when to fold ‘em…

Dr Alex Cowie
Editor, Diggers & Drillers

What’s the difference between a root canal and owning silver?

Answer: A root canal is more fun.

As a silver owner myself, I can vouch for this!

Silver has been falling for the last two years.

But the thing about silver is that when it moves, it can really move. As we saw in 2008, a 50% loss can very quickly turn into a 150% gain.

And if I’m reading the market right, it looks as though a major ‘whipsaw rally’ in silver could be just weeks away…

Three different signals warning of a whipsaw rally have gone off in the last few weeks.

Before I get to them though, ask yourself how much you’ve heard about silver recently. Silver’s really fallen off the radar, and ‘market buzz’ is as low as I can recall.

Alexa.com is a free website that lets you measure website traffic. And you can see here that silver website silverprice.org has fallen 90% over the last two years. I’m not singling out this website, which is in fact pretty good; it’s a similar story for all silver websites.

No One is Looking at Silver Websites Any More – a Signal to Buy?

Source: AlexaThe point is this: silver is simply not on punters’ radars any more. However, this is perfect, as that is usually the best time to buy something: before the speculative frenzy begins.

That’s assuming a speculative frenzy happens of course, so let me explain why I think one is on its way.

A Bullish OutlookFirst of all, the positioning in the futures market has shifted.

You see, futures traders have to declare what they are up to, and this is then reported in the Commitment of Traders (COT) report. And this COT report has been a great way of picking major turning points in the past.

The thing that stands out right now is that commercial traders are net short just 5,000 contracts, the smallest net short position I can recall. Just six months ago it was a massive 60,000, but it has shrunk rapidly.

These commercial traders include the big banks and the big producers. No one has a better view of the market than them, and it’s hard to say why they’d be positioned like this - that is unless they are expecting higher prices.

Secondly, the technical charts are peppered with bullish signals as well.

First off, the silver price has now carved out a 55% fall since peaking in April 2011. This is comparable to silver’s fall during the 2008 crash. And as painful as that move was, it set silver up for a 2.5 year rally that saw the silver price increase five-fold. The chance of something similar happening again is increasing.

Silver – Technicals Looking Good for a Turnaround
Source: StockChartsThe recent fall in silver also brings it to the same moving average line (350 week, in blue) as during the 2008 crash. The other supporting technicals look good too.

The RSI (above the main chart) is extremely low, and you can see that in the past this has been a good signal for the next rally. The same thing goes for the MACD (below the main chart). Let’s just say the silver charts have got my full attention.

The third big reason to expect a new bull-market in silver is the ratio of the gold price to the silver price.

Another way to think of this ‘gold-silver ratio’ is that it is the number of ounces of silver it would take to buy an ounce of gold. So, when the ratio is high, it means silver is relatively cheap.

Right now, silver is so cheap that the ratio is at a three-year high.

It doesn’t tend to stay this cheap for long. For example, the last time the ratio was this high was in August 2010. And this was RIGHT before silver broke out and rallied 170%, from $18/ounce to peak at $49/ounce in just nine months.

With the mega-bullish futures positioning, the soaring gold silver ratio, and the red-hot technicals, as well as the sheer lack of interest in silver, in all, it’s a pretty compelling set up.

The last time I saw the stars line up like this I went out and bought my first silver. Funny thing is, over a beer I was telling a hedge fund buddy about my bet.

A year later I found out he had thought there was something in it, and after further research had taken a position. But whereas I bought a few grands worth of the metal, he took a multi-million dollar position for his fund. He made out like a bandit on that trade, and got a pretty tidy bonus!

Silver is a cruel mistress though, and likes to make a mockery of investment theories. Many people far smarter than me have been calling silver up for the last few years, only to see it continue to tumble.

Watch This Key AnnouncementMy message here is that if you buy silver today and expect it to be up next month, you’re more likely to be disappointed that not. But if you are still holding in 2-3 years time, then I think you will be sitting on a 100-200% gain from this level. This is why I’m still sitting on our ‘family silver’.

As for when exactly it could turn, it’s impossible to say. Market timing is a dark art, but in a market gruesomely distorted by major central bank policy, it is nigh on impossible.

It’s a big week for the central bankers too. The Fed meets tomorrow (Thursday morning for Australians). The prospect of the Fed tapering the QE program has got the markets super- twitchy.

So much so, that last night the markets swung wildly simply on the back of a Financial Times story about the Fed tapering. And last week, it was a story in the Wall Street Journal that did it.

If the Fed backs off from tapering talk, expect to see a jump in gold and silver. I think they have to back off. US data is still too weak to take the stabilisers off, and the Fed has witnessed the abject chaos they have caused globally by testing the water with Bernanke’s trial suggestion of tapering QE.

US bond yields have risen, emerging markets have crashed, and major currencies have moved more in a night than a typical month. Not happy Ben.

So keep an eye on markets on Thursday morning. It should be a decisive turning point one way or the other. And it should mark a decisive turning point for silver too.

Dr Alex Cowie
Editor, Diggers & Drillers

Today is D-Day. After six months of preparation I’m finally ready to officially launch Australia’s most exciting investment advisory service.

This afternoon you’ll receive a personal invite to join a technological revolution.

And I don’t say that lightly. You’ll find out about the simple invention that could overthrow China as the cheap manufacturer of the world…how TVs, smart phones and laptops will become so powerful and so flexible, you’ll be able to roll them up and store them in your wallet…and also how energy – rather than getting more expensive – will actually become cheaper, cleaner and more abundant than ever.

I’m certain what you read will impress you.

Until then, on with today’s Money Morning…

When does a bull market not feel like a bull market?

When it has gone on for four years and yet barely a day has gone by without fear the market will crash.

Investing in a bull market is supposed to be easy. But you usually only hear those claims after a bull market has ended, with the help of rose-tinted hindsight glasses.

But really, that’s not how it is at all.

Below is a chart of the US S&P 500 index:

The chart covers the last 10 years. It covers two huge bull market rallies. The first lasted from March 2003 until October 2007.

Then followed a bear market that lasted until March 2009…when the next bull market began. Four-and-a-bit years later and this current bull market is still going.

But look at the chart. You could hardly say that both bull markets have been a walk in the park forinvestors. The current bull market has been especially testing. Several months of gains followed by big falls that have doubtless shaken many investors out of the market…only to see it take off again.

That pattern has repeated at least five times on the US market since 2009.

Australia’s Missing Bull MarketBut despite the volatility, the US market has recovered enough to go past the 2007 high.

The latest bull market hasn’t been quite so kind to Australian investors. In fact, when we look at the chart it’s hard to claim with any conviction that the Australian market has seen a bull market since 2009 at all:

Since 2009 the Australian market has a completely different shape to the US market. Where the US market burst higher in 2010, the Aussie market sputtered. Then when the US market took off again in 2011, the Aussie market couldn’t even muster a false start…it just fell in a heap.

It stayed that way for the best part of a year.

Even though the Australian market enjoyed a similar run to the US market in 2012, it did so from a much lower base. So that while the US market hit a record high, the Aussie market is 2,000 points away from taking out the 2007 top.

But regardless of whether you invest in US stocks or Australian stocks, we need to get away from the idea that making money during a bull market is easy, because it isn’t.

Australian Market in No-Man’s LandThe buy-and-hold investors will point to the US index and say, ‘that’s what happens next, stock prices will go back up again.’ They’ll say you should put all your money in the stock market and never sell.

The naturally bearish investors will point to a chart we haven’t shown you today, the JapaneseNikkei225 stock index. They’ll say that’s what happens when a credit-fuelled market crashes and the central bank can no longer prop up the market.

That puts Aussie investors in a bind. Right now the Australian market is in no-man’s-land. It’s a long way from both the high and the low. It’s just stuck in the middle.

This is why we encourage you not to fall for the old buy-and-hold nonsense. In Money Morning we encourage you to take a more active involvement in your investments. And we’re not saying this with the benefit of hindsight either.

In late 2010 we started telling our Australian Small-Cap Investigator subscribers to take some money off the table because we believed the market had seen the end of the best gains.

Turns out we were right.

And then in late 2011 we suggested investors forget about blue-chip growth stocks and instead invest in cash, gold and most importantly, dividend stocks…a message we repeated often through 2012 and into 2013.

But the key question is what you should do next?

A View From the Other Side of the MarketBy now you should know your editor’s view on this market. While it looks dangerous and volatile, we still say this is a great time for investors to build wealth.

We say you should use the current period of falling prices to top up your portfolio with a mix of incomeand growth stocks.

In fact, we’re confident the Aussie market will reach a new high in 2015. But not everyone here at our Albert Park office agrees with that view. In fact, your editor is in the minority on that score.

So, what do our other editors think? One person we suggest you listen to if you’re after another view is our old pal, Sound Money, Sound Investments editor, Greg Canavan.

A few weeks ago Greg sat down to discuss a crucial influence on the Aussie stock market and economy – China. Greg says a slowdown in China could have a major impact on Aussie stocks in the months and years ahead.

In fact, it could be the single biggest influence that determines whether the Aussie market takes off on a new bull market run like the US or sinks into a decade long slump like Japan.

As we say, your editor is optimistic about the future. We believe this is the best time in four years to buy stocks in particular sectors. And that investing in businesses is the single best way to build wealth.

But we also know you can only be a truly enlightened investor if you take into account more than one viewpoint. So we suggest you tune into
Greg’s video to check out his view on the markets, the economy and China.

Cheers,
Kris Sayce.

This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.

Did the recent stock price action surprise us?

No. Just the opposite in fact.

The recent stock price action confirms what we’ve said in recent weeks.

While the mainstream press and many analysts banged on about the search for yield driving stock prices, we said investors didn’t really want yield at all.

Or not just yield anyway. They wanted more than that. It just goes to show, you need to pay more attention to what investors do rather than what they say…

The recent fall is exactly why we suggested you should tread with caution before buying income stocks at the high.

It was good to be cautious. The Australian market has slumped 400 points in two weeks. That means we’re in ‘correction’ territory now.

So, what was it about the market action that stumped so many in the mainstream?

Simple. Most folks looked at investors rushing into dividend stocks and assumed investors wanted income. While that’s partly true, it doesn’t tell the whole story.

The fact that dividend stocks reached a peak and then fell in recent weeks tells you investors want more than dividends…they want growth too.

Dividends Just Won’t Cut itLook, it’s not hard to work this out. If investors as a whole really only want dividends they would keep buying while stocks are travelling high.

After all, paying a sky-high price for Commonwealth Bank [ASX: CBA] to get a dividend yield of 5% is still better than anything you’ll get in a savings account.

But the fact is it’s not just about yield. There are a bunch of other factors involved. One of them is risk. You can lose some or all of your capital in the stock market, whereas thanks to the government guarantee you can’t lose capital from a bank account (subject to government-imposed limits).

There’s another reason. Foreign investors piled into the Australian market while it looked as though the Aussie dollar would keep climbing. Remember all those forecasts about the Aussie dollar hitting USD$1.50?

Well, now that foreign investors realise the Aussie dollar can fall, they’re quickly taking measures to protect their money. Either they’re selling Australian stocks and repatriating the dollars back to their home currency, or they’re putting in place hedging strategies to protect their Australian dollar exposure.

Both have the effect of putting further downward pressure on the Australian dollar. Of course, if the Australian dollar reverses and heads back up, the unwinding of these hedging transactions would increase the upward pressure.

That’s what happens in a leveraged market. You get bigger swings.

But perhaps the biggest fib about the recent move was the story that investors had given up on growth…

Greedy Investors Want MoreIt’s just not true that investors didn’t or don’t want growth. However, it’s not that they want growth instead of dividends (or vice versa) it’s that they want growth and dividends.

And you can’t blame them. When you’re getting 40-50% capital growth plus 5-7% dividend yield, it’s easy to be greedy. But with income stocks trading at full valuation, there wasn’t room for further growth.

So it’s not surprising that stocks fell back from the peak, just as we expected (and feared) they would. The question now is whether stocks will fall further.

The benchmark S&P/ASX 200 is already about 100 points lower than we had bargained for. Our bet was that stocks would trade between 4,900 and 5,200 points for the rest of the year.

For now we’ll stick with that view. Odds are the market has experienced what Murray Dawes calls a ‘false break’. That’s where an index or stock goes through a previous support or resistance point, but rather than continuing to fall or rise it reverses back with the range.

A Buyers’ Market for Sensible InvestorsThat’s why we continue to be bullish on stocks – and not just dividend stocks either. We’re especially excited about the opportunities in the technology sector.

We suggested you start to ‘average in’ to stocks when the index got to around 5,000 points. That means buying one-third or one-half of your usual transaction size.

If you followed that advice, we’d suggest buying another third or half of the position today. While there’s still a risk stocks could fall further, investors with a sensible stock exposure should be able to invest through this volatile period without any worries.

Furthermore, the recent fall shows perfectly why we still recommend a relatively conservative approach to the stock market.

The market can turn on a sixpence quickly. If you have too much of your wealth in stocks, these big moves can cause you to panic and sell when you should be looking to buy stocks.

In short, this recent short-term fall has given you a great opportunity to top up your stock portfolio while over-exposed investors sell.

Although the growth and dividend picture may not be as great as it was 12 months ago, even some of the big blue-chips could give you 20-30% growth plus 6% dividends over the next year.

Again, we know it’s not a popular view to take in this market, but stocks look pretty good value right now. It’s definitely a time to buy rather than sell.

Cheers,
Kris Sayce.

Today’s Money Weekend will talk about the most important industry of the next decade: technology. Some of the changes are shaping up to be like King Kong let loose in the city: highly disruptive. And that’s putting it mildly.

The first thing to do is to make sure you’re not in the path of the beast and in the companies getting knocked down. The second is to consider the businesses that stand to benefit after he’s crashed through. Technological change will rebuild economies and industries just as it destroys them.

Technology Trends You Can’t Afford to MissYou might know already that Money Morning editor Kris Sayce is about to launch his new service,Revolutionary Tech Investor. He and technology analyst Sam Volkering will hunt all over the world to find the best companies who can make a motza from tech development. It’s an exciting project.

Take the latest report from the McKinsey Global Institute for example. It’s called ‘Disruptive technologies: Advances that will transform life, business, and the global economy.’

They argue that we’re on the verge of some massive changes over the next decade or more in 12 key sectors. These will impact how we live and work, not to mention reshaping whole industries and economies. The evolutionary rule will stand supreme: adapt or die.

What are the key sectors? Check them out, in order of the size of their potential impact. They are:

• Mobile Internet
• Automation of Knowledge Work
• Internet of Things
• Cloud Technology
• Advanced Robotics
• Autonomous and Near Autonomous Vehicles
• Next Generation Genomics
• Energy Storage
• 3D Printing
• Advanced Materials
• Advanced Oil and Gas Exploration and Recovery
• Renewable Energy

We’re talking stuff, in the words of the report, that has ‘the potential to affect billions of consumers, hundreds of millions of workers and trillions of dollars of economic activity across industries.’

If you consider the growth in tablets and smartphones, the possibilities and changes of just the top one are already pretty amazing. These barely existed a few years ago. Now they’re in the hands of one billion people and deliver the potential to bring billions more people online in the developing word.

Don’t forget the app economy of Apple and Android and all the new ways of servicing and reaching consumers. It has generated new payment systems in banking and new channels for advertisers. It’s generating astonishing amounts of data. Mobile technology will also soon feed into ‘wearable tech’ like Google Glass.

A quick snapshot of winners and losers from this kind of change is Nokia and Samsung. Nokia’s share price has collapsed from $58 in 2000 to around $3.50 today. Samsung, on the other hand, is now outselling Apple in the smart phone market.

If Joseph Schumpeter were alive, we’d encourage him to take a bow. One of the best insights from economics is thanks to his famous expression ‘creative destruction’.

It’s the idea that the heroes of the free market, the innovators and the entrepreneurs, will always hustle to disrupt the established order. Old institutions get swept away and replaced. That’s what we’re talking here. The winds of change seem to be blowing across so many different industries at the same time.

The projections in the McKinsey report are only to 2025. Twelve years away is not that long really. Will 2013 feel like a lifetime ago when we get there?

On the Way to 2025It’s true that the McKinsey report writers admit that a lot of the numbers they throw up and the scenarios they predict are at best educated guesses. There are simply too many variables to be precise. But you can only call it how you see it, and they see big change.

It’s a world where you better have the right skills in information technology if you’re a worker and a pretty nimble business plan if you’re a company. The report sums it up like this:

‘By the time the technologies that we describe are exerting their influence on the economy in 2025, it will be too late for businesses, policy makers, and citizens to plan their responses. Nobody, especially business leaders, can afford to be the last person using video cassettes in a DVD world.’

The idea for investors, of course, is to try and get ahead of these changes before they’re obvious and gauge the right areas to profit. That’s the task Kris Sayce and Sam Volkering have set themselves. Stay tuned for Kris’s report on where he thinks the best action is.

Of course, an investment you may be more familiar with is property. You might recall we discussed the out and out property bull Phil Anderson last week and the presentation he gave calledRemembering the Future. It’s available on DVD if you’re interested.

Before we say another word, we must admit that we have no major stake in this debate. We don’t own property, don’t invest in it and don’t pretend to know anything about the property market other than the fact that it’s expensive in Melbourne, where we live. Perhaps that’s a mistake. Phil thinks real estate people should learn about stocks, and stock market people should learn about real estate.

This is one reason Phil was 100% in cash in 2007. He saw a banking crisis on the horizon at the time. Little titbits like that make us curious enough to read his book, The Secret Life of Real Estate. We’ll let you know what we discover.

But Phil’s bullish call on property has certainly got plenty of people interested (and angry), so we’ve got some snippets from the rough cut of his Remembering the Future talk below for you. If you haven’t heard of him, Phil’s research has led him to conclude there is an 18 year US real estate cycle that you can use to time the property market in America, the UK and Australia.

Callum Newman.
Editor, Money Morning

How many times do you come up with an idea and think to yourself, ‘Wow, I should really do that.’

People in general have the capacity to come up with great ideas. We are all inherently creative to some extent. But there are a few key factors that separate great ideas from great technologies and from great businesses.

In this current global economic environment, a lot of businesses are struggling. There’s a lot of doom and gloom about. Yet it seems every other day there’s a story about successful technology companies making billions of dollars.

Recently the ‘Billion dollar Buy-out’ is the catch phrase running around tech hubs like Silicon Valley. But what takes a company from being worth nothing with a great technology to, to a billion dollar business?

Before we look at the answer first I should point out that, like with the English language there’s an exception to every rule. There are some companies that just have technology so good it sells itself.

A good example of that is Atlassian. Atlassian is an Australian private company that has no sales force, just a great software solution. They develop proprietary software that helps companies track information, analyse data, collaborate on documents and develop their own programs.

Not quite a billion dollar company yet, Atlassian has gone from start-up to about $200 million in just 10 years. Their clientele includes eBay, Facebook, Twitter and LinkedIn.

Also there are some great technology companies worth billions of dollars like photo-sharing website Instagram, and microblogging platform Tumblr. But…that doesn’t make them great businesses either. Mainly because they don’t actually make any money. These two are examples of a great idea that people love, but don’t pay for.

But there are a lot of great ideas in the world. A lot of inventions, a lot of smart people coming up with world changing ideas. Some get lucky (like Instagram and Tumblr), some fail and some take years of hard work.

For those ideas to become great companies, the pathway to that destination is relatively simple.

1. Have an idea,
2. Turn the idea into an invention,
3. Sell the invention to some people to see if it’s good,
4. Create a business to sell invention to more people,
5. Have plan for business, make it big,
6. Sell invention to many people,
7. Make invention better,
8. Make company bigger,
9. Repeat cycle and add to business model,
10. Sell for a billion dollars.

Sounds simple enough? Well unfortunately it’s not. Most people get to step one easy enough. But then most people will fail at step 2.

For the very few that make it to step 2. Most of them will fail at step 3. And for those that make it to step 4…they are likely to fail in the first year of business.

The Best of the Worst and the Best of the BestBut some do make it through the other side, and still can’t take great technology to a great business. Here’s a couple of examples of great technology, but not great businesses.

1. Segway.The launch of Segway had hype and fanfare like nothing before. It was the answer to the problems of personal transportation. It was a game changer…well that’s what the owners believed at least.The Segway is actually an amazing piece of technology. With inbuilt gyroscopes it’s a self-balancing battery powered transportation device.

   It’s got a swathe of computers and motors that work in tandem to make the machine work. But Segway never really took off as a business. Why?

   Well the technology is great and the sales pitch is outstanding. But the Segway didn’t actually solve a big problem. It was just something new and interesting. It ultimately failed to disrupt the transportation market it was aiming at, personal transport. People couldn’t afford it and didn’t find it particularly helped them in any way.

2. MiniDisc.Cassette tape ended the reign of the record player. The ability to have a compact portable audio device was ground breaking, but then CD’s came along and spoiled the party for cassette tapes.CD’s were the major format at the time, and dominated the music industry for many years. But in 1992 a new technology and format came out that was going to spell the end of CD’s forever. It wasgreat technology, it was the MiniDisc.

   You could quickly search through discs, and even record and edit on the portable device itself. It was better tech than all other audio formats.

   But the problem with MiniDisc was hot on its heels was still better technology. Technology that would change the way we listen to music, and change the whole music industry forever. MP3?s and MP3 players.

Each of these examples highlights a different problem that stops great technology from being a great business.

Segway had tunnel vision and weren’t prepared to accept that as great as their technology was it didn’t really solve a problem for lots of people. And although they are still a business, they certainly aren’t a great technology business.

MiniDisc weren’t open and aware to other technologies in the market place. They failed to appreciate the market in which they were trying to build a business. Within a few years a superior technology simply overtook it.

But for point of comparison, let’s look at some great business, and see what made them stand out in a competitive world of technology.

1. Apple.You simply can’t go past Apple when it comes to turning great technology into a great business.When Steve Jobs and Steve Wozniak put together the first Apple computer they didn’t know the impact it would have on the world. But what they did have was a great vision to put a Personal Computer in the homes of millions of people.

   The benefit they had here was that they started a whole new industry. The Personal Computer didn’t exist at that stage. So the two Steve’s had the advantage of being early movers.

   That’s not to say there weren’t competitors. IBM and Dell became competition, as did Microsoft when it came to operating systems and software. But what Apple did was make their products beautiful and easy to use. And what they were able to do was design, market and sell their products like no one else.

2. Nokia.Although not at the pinnacle it once was, Nokia is an example of taking great technology and turning it into a great business.Mobile phones were all the rage from the late 80?s into he 90?s and of course the smartphone revolution today. But Nokia dominated the mobile phone market through the 2000?s. How?

   What Nokia did was make a product accessible to the masses using available technology. Mobile phones were expensive devices that only the affluent and rich could afford.

   Nokia changed all that by putting to market an affordable mobile phone for everyone. This led them to having the top 6 bestselling mobile phone models of all time.

   They sold almost one billion units worldwide between those top 6 models alone. Nokia phones are still the number one used phone in developing nations across Africa.

There a couple of key factors that made these two companies tech giants of the world.

Apple had the combination of a great technical guy in Wozniak, but a great salesman in Jobs. Without the creative and marketing genius of Jobs, Apple would simply be a company for computer hobbyists.

If Wozniak had gone it alone he wouldn’t have had a great company. If Jobs had done it himself the company wouldn’t have had great technology.

Likewise Nokia didn’t necessarily have the marketing genius and personality of a Jobs-like leader. But they identified an unmet need in a market that affected millions of people.

They created a big solution to a big problem. And that was to put affordable mobile phones in the hands of everyone. They also had the advantage of being the first company to mass market cheap mobile phones.

The Great Business ChecklistWhen we look at these basic examples of great technologies, it’s fair to say not one technology is necessarily better than another. They all meet an unmet need, and they all were new technologies of their time.

But what companies like Nokia and Apple were able to do was have the leadership and management in place to make great technologies into great businesses. They also met an unmet need that impacted millions of people around the world and were also able to make their technologies simple and accessible to everyone.

And that’s the key difference between great technology, and great technology companies. It’s really got nothing to do with the technology at all.

It’s about the people that lead the technology and the team that’s involved to take it from good to great. It’s about making it accessible and relevant to lots of people, not just one small segment.

These companies also had the foresight to see when something wasn’t working. For them failure was par for the course, just a part of the process. And both Apple and Nokia had their fair share of failures. But they saw the problems, and fixed them the next time around.

So here’s the checklist that makes a great business from a great technology.

With the steps outlined and the checklist above, there’s potential to turn great technology into a great business. It’s hard, takes years and there’s a very good chance it won’t work.

But the right tech, the right people, the right plan and the drive to make it happen, gives a fighting chance of making a truly great technology business.

Sam Volkering
Technology Analyst