Yeah, well, who would miss a mill here and a mill there anyway

What’s the point with embedding a PDF into that small, horrible flash widget?! It’s impossible to read the document inside of that thing… it’s like reading it through a peep hole. Could you please link to a PDF so we can actually read it?

Thanks!

It’s fun to try to use Fast’s financial issues to imply that their tech has problems as a way of slinging mud at Microsoft, the problem is that it’s actually pretty good and has been proven in both enterprise and Internet-scale deployments.

nice article with journalistic features

Hahahahaa. Lervik is still in MS. He wasn’t even smart enough to ditch after his scam. Greedy bastard.

I am not at all surprised by the turn of events. What surprises me is how long it took for things to come to a head. It has been known for quite some time that the leadership culture in Fast was questionable at best. Two british finance sharks, a impotent board and a puppet-CEO whose previous job was to be a PhD student and a salesforce that was as disconnected from the developers as they were from reality.

I do feel very sorry for the engineers who work there. I know several of them. Good people. Good software engineers. Smart. Working for an organization built on nepotism, agressive sales and questionable accounting practices. Under-paid, over-worked. I certainly hope that the gross incompetence of the top management won’t stain their resumes in the years to come.

And this is only what has surfaced so far. Who knows what other boggy deals there were? Guess Microsoft has enough cash to try out a few failures, but what does the shareholder say…

#2 Try zooming to 110%.

umm.. I work for the Australian company ‘Telstra’ (actually a subsidiary) mentioned above, and we do in fact have an enterprise licence for Fast - I’m using it now. Maybe the negotiations were a bit rocky (I have no idea) but in the end we’re definitely a customer.

What is that horrible reading thing for? It’s unusable. Just link to the article.

That remembers me Lernhout & Hauspie (L&H) in Belgium (BTW, Microsoft also invested ± $100 millions in the company). Same kind of scam. Same kind of cluster of companies generating inflated revenues (WSJ makes headlines but company executives denied any wrongdoings during months). As far as I know, same story with Baan in Holland.

Nice journalistic work for Fast. Congratulations.

Such stories could raise doubts about Microsoft due diligence practices for their investments ! Strange that such company with worldwide class lawyers are so weak in due diligence. Hope they could renegotiate terms of acquisition for any Fast “missteps” !

I work for FAST in the UK; our culture is built on trust and integrity.
Until the final verdict after the investigation has concluded, all this press is negative and futile, which is misleading people to make assumptions based on asymetric information. Reporting on only one angle of infomation available is not only bad journalism but is a shameful attempt to dilute Microsoft’s credibility because of some people’s dislike for the most ground breaking and world changing technology company that is Microsoft. If you want the full picture you could speak to the people who know us best such as FAST’s customers (i.e. TelStra above) and make an judgement based on fact.

“Reporting on only one angle of infomation available is not only bad journalism but is a shameful attempt to dilute Microsoft’s credibility”

well, seems like no one in Fast or Microsoft wanted to contribute to the story… They seem to have got the oppurtunity.

AnAustralian: There were two Telstra deals, the small on that went through, which was supposed to pave the way for the big one that never materialized.

Nova: I don’t think anyone is suggesting that FAST is an awful terrible company through and through. But there was always more than one culture within FAST, and obviously you are not part of the one that is under scrutiny. And that’s great, because there was always a lot of good to believe in at FAST.

The basic problem here is that FAST repeatedly recognized revenue for deals that were not closed. As in the case of Telstra and Accoona, and numerous others.

The important point here is that a MOU (Memorandum of Understanding) does not represent recognizable revenue according to any accepted accounting practices. FAST very deliberately tried to push the limits on what could be recognized when in order to show the levels of revenue growth that were promised.

Under GAAP, you don’t recognize revenue until the product has been delivered. One of the technicalities that FAST tried to claim was that the proof of concept (the “trials” referenced in the article plus professional services work) constituted delivery and hence recognizable revenue. In the US, they call that fraud.

It was also official policy to engineer deals so that professional services were undersold in order to charge a higher licensing fee, since that revenue would be recognized earlier and services fees cannot be recognized until the project is completed.

So here is where we get to the technology. Their search core is probably the best on the market. The problem is, as a product it’s not fully baked. It takes a lot of work and expertise to get it running well. That really came from the culture of FAST R&D, which favored innovation over polish. They had great ‘R’ but their ‘D’ definitely was lacking.

I tried to use the past tense in all cases because I left some time ago.

I can’t speak to the shell companies because I didn’t know anything about those, and I’m guessing very few people did.

I think this is all part of a wider malaise in the Enterprise Search market: people are beginning to realise that the magic black box they were sold to search their data may not do exactly what they were told they would.

Phrases like “concept search” are used to market systems that generally all use the same basic principles, most of which haven’t changed since the 1970’s - inverted indexes, word stemming, probabilistic ranking etc. Plenty of open-source systems exist that do all this for a fraction of the budget.

I was part of Accoona when the Fast deal was in place. We paid $1mill in cash and a bunch of stock for an ad server system that they never produced. I heard Accoona got the money back. But the leadership at Accoona was also very shady so who really knows what happened with the money. Probably ended up in the bank of account of Accoona’s founder, Armand Roussu. See the shady deals of Accoona and the Fast problems fits right in. http://bits.blogs.nytimes.com/tag/accoona/

There are two reasons this story matters to folks in the Enterprise Search space.

The first is that integrity matters when selecting an IT vendor. Nova’s protests notwithstanding, the consensus about FAST’s integrity (which predates the Microsoft acquisition) isn’t looking good. Even if FAST’s competitors are helping dig up dirt, there seems to be a lot of dirt for the digging.

The second is that market share often serves as a proxy for product quality, especially in an arena as lacking in standards as enterprise search. This reality may have encouraged FAST to inflate its reported revenue through aggressive accounting tactics. Regardless, it is material to buyers to know a vendor’s true market share.

>It’s fun to try to use Fast’s financial issues to imply that their tech has problems
>as a way of slinging mud at Microsoft, the problem is that it’s actually pretty >good and has been proven in both enterprise and Internet-scale deployments.

I am a former FAST employee. I was an architect, and left the company because I couldn’t cope any longer with sales practices which involved what can best be described as lying to the customer, and then failing to deliver because what was promised was technically impossible.

This was common practice at FAST, and I wouldn’t be surprised if it still is - people are under enormous pressure, very often trying to achieve systems which have been sold with little or no regard when it comes to engineering best practice.

All of these pressures lead to a bloated, extremely complex, near-impossible to manage, highly unstable product. It is basically all glued together with spit and sticky tape. Running a FAST system of any complexity requires constant supervision.

Just call some of FAST’s customers and ask them about it.

This may explain why it took so long for FAST to be bought or make any real headlines, unfortunately the headlines it did make were not the ones that were expected. To bad for Microsoft.

As a recent FAST hire, it’s interesting to see what’s going on. Everyone I’ve talked to is waiting for the issue to work itself out (there’s not much the average employee can do about, after all). Obviously management did things they shouldn’t have, and have had to restate earnings for a couple of years, but supposedly Microsoft new about the issues and decided to go ahead with the purchase anyway because they felt the core software has functionality they haven’t been able to match in their products.

@17 AFormerFASTEmployee: Alas, that’s common practice in sales. –Salesmen will give half answers to make it sounds like software can do something, sell features that are months or years away from being ready for the market, and screw up because they don’t always understand the product they’re selling. When I was providing services to customers, it wasn’t that uncommon for the technical people to give me a list of features they were told (or led to believe) were available, and ask me which ones I could actually implement. This sucks and it really shouldn’t happen, but that seems to be the sales culture all over the world, especially when people get reliant on commissions, as well as constant pressure to meet quotas. –Again, that doesn’t make it right or excuse things.

Following this story is an exercise in amazement. And more is likely to come….here are a few thoughts:

a) Since Microsoft has not denied the existence of fraud my personal conclusion is that fraud must exist.

b) If (a) is true….why hasn’t Microsoft fired every individual that was aware of the fraud/participated in the fraud? That includes the former CEO of FAST – Lervik. This is only going to get worse for Microsoft the longer they wait. And it reflects poorly on the company. Anyone have any theories on why this hasn’t happened yet?

c) When will FAST’s financial auditor, Deloitte, get their time in the limelight? This is quite negligent on their part. Deloitte needs to proactively address this versus let the events take on a life of their own.

d) When will the customers that want to get out of their relationship with FAST assert that fraud was conducted and thus they should get their license $$ refunded? The customers have them over a barrel….

e) When will Microsoft’s banker, Goldman Sachs, get their time in the limelight? Ostensibly they “negotiated” on Microsoft’s behalf. In fact their own analyst made the first major public proclamation that FAST’s financials were not up to stuff six months prior to the acquisition.

f) I know Microsoft publicly justifies the transaction because of the strategic nature of the technology….one has to wonder that if Microsoft paid as much as they did, knowing as much as they did, they had to believe the technology was darn impressive. Unfortunately the same alleged crooks would be the ones extolling the virtues of the technology to Microsoft….thus I have to believe Microsoft was duped. Of course, there is no way it would be in Microsoft’s interest to ever share this if it did indeed happen.

g) Who is making the movie? This is much more interesting than the various films about the .com crash.

Good journalistic work - there is substance in these allegations.
However, there is more: The two British co-owners and board members Robert Keith and Thomas Fussell came under increasing pressure from the remainder of the Board and the shareholders. This came to a head at the end of 2007, when major shareholders led by Norwegian conglomerate Orkla decided they had had enough and mounted a run on the board. An extraordinary Shareholder’s meeting was scheduled for early 2008. The stock tanked, this looked as it would be an ugly fight to the bitter end. Some investors sold and lost millions. However, only a couple of weeks later, the acquisition was announced.
Fast management maintains that the timing of these events was entirely coincidental. Far more likely, however, is that all the parties involved (Keith, Fussel, Orkla and the other big sharehoders) realized that selling the company was a way for everyone to get out with a very nice profit. The CEO (Lervik) has since publicly stated that negotiations with Microsoft had been going on for months. So why is this a problem? The answer can be found by looking at the trades made in the stock in the weeks and days before Microsoft’s offer was announced. That work has barely started.

This kind of mess happens all the time. Check out the mess with Broadcoms CEO. Their communication chips still dominate. Microsoft did not have to do due diligence, FAST customers (bestbuy, careerbuilder, rakuten, ibm.com, dell.com, autotrader …) already did that for them. These are some of the highest trafficked websites with complex rules that are clearly not running on a power point. More likely than not MS will clean up the mess and restore the natural order. It would’ve been a shame if the MS did not buy them, company went under and their technology did disappear.

it’s interesting that one of the shell companies is located in the same city (a pretty weird one for high tech to begin with) as a a big customer of FAST. when i worked for them, we had used their technology to build a contextual advertising server, along with a massive web crawler setup that never got off the ground. we had a couple of their consultants (they actually outsourced most of their consultants, which meant most of them knew less than we did. awesome practice!) hanging around, and about 6 months later, we heard that they were releasing their own contextual ad platform. i can’t say that they stole it or anything like that, but it’s certainly a fishy situation, particularly in light of the shell company.

all that being said, i agree with the people saying that MS can clean this up. their technology, even when it is over-sold, is fundamentally sound.

Shawn, AFormerFASTEmployee , val, and anyone else sharing information on this blog:

I am one of the journalists behind the original story in Dagens Naeringsliv. I would be happy to speak with people who have information about subjects in our story. Please contact me on: trond.sundnes ((a)) dn.no

A friend of mine was one of the first FAST employees. He’s written three blog postings about the early years: http://blog.borud.no/2008/01/a.....years.html .

As another fast customer:
0. Dedicated engineers: check, but:

1. Aggressive sales: check
2. under delivery on features: check
3. intensive support requirements: check

The saga continues:

http://www.cmswatch.com/Trends.....is-Attivio

Though blogger Stephen Arnold does defend Attivio:

http://arnoldit.com/wordpress/.....ast-folks/

Fascinating story

I interviewed several times w FAST in Boston, and was never offered a (sales) position. I always left the interviews with an uneasy feeling that something just wasn’t quite right.

These traits seem to be point-for-point the same for FAST’s competitor(s), except for the dedicated engineers (they all left).

Something about Enterprise Search as an industry is just wrong. It could be pressure from the low end, but that’s part of any long-term software market. It’s also the squishy nature of the product features — the fact that no solution is all that great, and customers are bombarded with dubious promises. Customers seem to want to be overpromised and underdelivered — they’re convinced that this is necessary to be cutting edge.

As a former FAST employee working for Ali Riaz was a trip! He had a very hectic and complicated work schedule/style and he really had a way of twisting things to make himself look innocent and liked to keep you in the dark about a lot of things. Considering we were only doing our jobs, never ever would you question him about anything pertaining to invoices, expenses you would be scolded or ignored. There was always this unlying threat that you could be fired at any moment, depending on his mood.

Trond - I’m sure a few people from FAST would like to speak with you, but it’s best that we mind our p’s and q’s. Keep at it though, it makes for great reading!!

Has anyone done any research on the journalist - Trond Sundnes?

I believe he has also been investigated (or was it arrested?) in the past for his inability to report the “facts…”

As always, take everything in the above with a very, very large grain of salt…

Former FAST Employee II : Nice try. I wonder why you don’t write the post under your full name.

As far as I know I have never been investigated. I know I have never been arrested or convicted. And in my 14 years as a journalist I have never had any of my stories tried for the Norwegian press ethics committee.

I have though once been interrogated by the Oslo Police.
http://www.journalisten.no/story/30748
Not because of my “inability to report the facts”, but because I had too many correct ones. The police wanted to find my alleged sources within the Norwegian directorate of immigration. They found none.

Let’s keep it real here. Not surprising that current FAST employees will be defensive and try to dig up or manufacture dirt on Trond. Also not surprising that competitors or bitter former employees would fan the flames. And of course no one, myself included, is going to use real names.

#31: facts would be a more powerful argument than unsubstantiated ad hominem attacks. As it is, you’re actually strengthening Trond’s case.

In Trond’s favor, his case is supported by facts FAST publishes on their own web site: http://www.fastsearch.com/search.aspx?q=restated

Former FAST Employee II - if you really worked there you would know what went on! I’m not bitter and was very glad to have left FAST. You should be grateful that someone like Trond has the guts to find the answers!!

Why should someone like Ali Riaz get to continue swindling people out of money, continue to live in a million dollar home, and drive a car that is geared toward a bachelor type, he’s married and has two kids!!! He is bi-polar, and his head will blow up one day!!

Funny thing is that for $1.2 bil they got big fat nothing!!

Just like yahoo got nothing when they bought AllTheWeb…

Trond - While I would love to talk, I try to avoid the paparazzi…jumping out of the bushes…ha.

I was with FAST from day one and know the characters, the product, and business operations inside and out. The fact is, FAST is an amazing company, with an amazing platform (not product…if you want a search product, buy Google Appliance…you don’t need a Ferrari), and, most importantly, AMAZING Customers.

All of this will blow-over as it is not really interesting or important. Microsoft was clearly aware of the issues as it was public that FAST was being investigated. Microsoft bought FAST for all of the reasons above - their financial control/business operations are tight enough that any/all issues will be cleaned up.

So, bottom line, there is no story here. Trond - which former board member or employee is paying you to keep digging? It’s odd, as everyone seems to have benefited in the end…

Oh - FormerFAST3 - clearly you have no knowledge of the Overture/Yahoo!/ATW deal or of the post Inktomi, AV, FAST, Y-Search integration. Yahoo! has benefited greatly from the technology and team they acquired. And, if you tell me you work with Yahoo!, then you are almost as clueless as Jerry Yang…

Sadly, the only truly AMAZING thing about FAST’s legacy is that nobody has been put in jail yet. As far as amazing product and customers — then why fraudulently book revenue? Why is FAST being silent on the issue versus defending themselves? Because they can’t say anything - it is indefensible.

Of course the financial issues are immaterial as it relates to Microsoft cleaning up…but the criminal liability for anyone involved in fraud won’t be cleaned up until those accountable have their due. And it does not surprise me that Former FAST employee II does not think this is interesting - clearly a large number of FAST employees didn’t think fraud was all that interesting and chose to look the other way versus voting with their feet. I feel for the honest ones that will need to continually explain their reasons for staying to future employers.

As far as I can tell Microsoft wants to stall the inevitable of firing those involved so that they can use them to help with the integration. Microsoft is well aware of whether the execs conducted fraud. It is a sad statement about their ethics that the integration of FAST overrides doing the responsible thing. One can only hope that those looking the other way for their own selfish reasons end up being held accountable for their actions as well. It is the responsibility of this community to keep this issue visible versus letting it get buried like Microsoft and those that are guilty would like to see happen.

I do hope the honest former FAST employees find it within their conscience to contact the authorities and share what they know. In fact, it is more than about conscience, it is about being able to tell a future employer you did the right thing.

Lars - all fair points, and in my defense, I’m a “former” FAST employee because I get sick of delivering the value while not being compensated accordingly…there is only so much one can take, especially know that others are benefiting in “one-way-or-another”…

I can only imagine how infuriating that would be to work hard to deliver value for customers only to have actual financial value be siphoned off. But I can also see how it is even worse to have your own accomplishments maligned in the process - I did not intend to imply that although I am sure most people falsely draw that conclusion unfortunately. There is no doubt there were many capable individuals on the FAST team at various points in time (I have even heard your former competitors say as much).

I am not a lawyer but I suspect aiding and abetting securities fraud in Norway would still be an issue here in the US. I also suspect that there may be cases to make simply with the taxman (the way Al Capone finally went down). I doubt those that siphoned money off to their own personal consultancies properly accounted for the taxes (probably booked all sorts of improper expenses against it to make it look like a real consultancy)…..and the companies that booked fake revenue probably then booked the loss in a future time period and tried to take the deduction…..all big no-nos.

If anyone has documents they can anonymously send to wikileaks dot org I am sure this community will keep it visible so that it gets the attention of the various law enforcement authorities.