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Talking It Up: Launch Capital and Betaworks Voicecamp 2017

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"Alexa, turn on kitchen."

"Alexa, timer set 16 minutes."

It may seem like I'm talking to air, but I'm not; these are words I utter literally every day to my Amazon Echo in my kitchen. I've had my Echo since it first came out and I hopped onto its waitlist for purchase. When it first arrived, it was fun although I really didn't use its music function all that much. However, things really started to shine when new functionality appeared and when I hooked up my Insteon connected light switches to it.

Now it's my constant companion in the kitchen and helps me optimize my cooking time. As I race through food prep, I tell it to turn on the kitchen lights. As I dump vegetables into my steamer, I tell it to set a timer for when they will be done. I also set other timers fluidly as I prep other parts of my meal and in the course of moving throughout the kitchen, Alexa is helping me keep track of when food has finished cooking. The handsfree nature of voice allows me to not waste time taking a few steps to the light switch or fiddle with a digital timer on setting the time and setting it running.

It's this real life experience of what a voice interface can bring that gets me really pumped about voice.

We've all seen other voice applications come and go or just not really gain traction. However, with the advent of true voice devices that listen for your command like the Amazon Echo or Google Home (versus Apple's Siri which requires a button push to activate), the possibilities begin to multiply. I remember my first exposure to voice on Star Trek with its talking computer. But that was in the 1970s and it took until now to bring some of that vision to reality. Better systems and computers to recognize and process voice make real time voice interpretation possible now. However, now comes the really interesting part - how do you deal with the user interface challenges and then build a business on top of that?

As a UX guy, I find that there is inherent elegance in having less physical controls. Like me moving around in the kitchen, Amazon Alexa is a great helper without the need for my hands to *do* anything. And therein lies the challenge of voice interfaces - how can you interpret what I want it to do without me speaking endless complex sentences or memorizing specialized vocabulary? I've been impressed so far with Amazon Echo's capabilities so far, but also wishing for more. In contrast, text-based interfaces via typing have been out there for a while now; however, the interpretation of written language there is less interesting to me than the interpretation of spoken language simply because you need hands to write words. A handsfree interface is much harder to implement properly - the service that does will have a clear advantage over others.

Once you solve the UX challenge, then comes the challenge of building a real business on top of it. Amazon and Google can sell hardware and charge for being on their platforms, but everyone else needs to charge somebody who wants their service bad enough that they will pay for it. Hence, while voice interfaces are inherently context sensitive (ie. you can't be dictating every email in an open office setting), I believe building a real business is even more context sensitive. Startups will need to find those compelling use cases where voice beats other types of interfaces AND a real business exists, and some of those are known and some are still waiting to be imagined. It's why we are excited to be part of Volara.ai, one of the few voice startups we have seen with some great early traction in the hotel space.

And we are looking for more, which is why we are delighted to be part of Betaworks Voicecamp, joining as co-investors into each startup of the batch. Betaworks has a great reputation for ferreting out the unique and untapped in startups; we very much look forward to seeing what develops with Voicecamp 2017. If you're a startup working on voice based conversational interfaces, be sure to apply - the deadline for applications is coming up fast on February 28, 2017!

Hiatus from Facebook and Twitter

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Last week I closed my browser windows with Facebook and Twitter in them, and shut down the same apps on my iPhone.

I was fed up. I found myself staring aimlessly at the feeds, scrolling and scanning updates from friends and links to stuff somebody thought I should read. I would waste tens of minutes out of my day, just doing nothing but scanning.

Nice to see what my friends were doing, but I also realized that FB and Twitter also minimized the need to actually see them in real life. I felt like I knew what they were doing, so why bother to try to meet up and catch up when I already knew what they were up to?

The links being sent around were getting more and more purposeless - many were just linkbait, trying to get me to take a look at some fantastic thing, which once you dug deeper was pretty inane and really meant nothing for my knowledge, but only sucked up more of my valuable time to go take a look.

So I left. It's been a week and an interesting one. There is a bit of withdrawal symptoms there but nothing I can't handle. But now I find myself doing more real world stuff to fill my time. Stuff like just getting up from sitting in front of my Mac and moving around. Practicing my movement skills: posture, sitting, standing, squatting, sometimes doing some pull ups or push ups, maybe a few one legged squats. Being not confined to the chair is truly refreshing.

I get on the floor and mess around with my kids. They don't see me in front of the Mac or staring mindlessly at my phone any more. I interact with them, let them climb all over me. There is nothing more satisfying than hearing the triumphant giggles of a child who has climbed from the floor all the way to sit on top of your head!

I read the stack of virtual books in my Kindle - stuff I wasn't reading because I was mindlessly staring at status updates. How nice to read real writing and not the quick stuff that people just pump out there to get you to click and then make money off your ads…and your valuable attention.

Still I find that while I have not been to either site, I think there is still some value that may make me return. These would be:

1. Friends still message me on FB and DM me on Twitter. If that happens, I should go back to answer.

2. On FB pages, there are the equivalent of groups where I am a member. I may still need to go back to ask a question or reply.

3. Asking for advice is helpful on either platform. I may need to do that from time to time.

4. If I blog, like this post, I can get readership by posting there - assuming that after this post people still want to hear from me even though I've largely forsaken these two sites. I have a Socialflow account and can use that to find the optimal time to post a link. So as a distribution mechanism for blog posts, FB and Twitter still work well.

5. The one thing I have not found a great solution for is real news recommender. I went back to Netvibes to see if that would work but so many of the feeds were dead. And there is no filtering there. I am hoping my friends at Digg will revive News.me and get better at news delivery...and not linkbait delivery.

Yes I may go back for some things, but largely, I will not be mindlessly staring at feeds any more, but instead going out there and doing things I really need to be doing, spending time with real people, and enjoying the real world.

The Physical Store Analogy for Internet Competition

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Today I just sent this email to a buddy of mine working on a startup:

If [competitor.com] was a physical store on a street and you wanted to build a store right next to them, what would you build? Would you build exactly the same store or would you do something different?

I always talk about so many me-too products and startups out there today, and the ease of building competitors to just about anything. But entrepreneurs don't seem to want to stop thinking they can exist and thrive with essentially a clone of something else out there.

My statement/question above is a problem about the internet. In the real world, if you were to build a store on a busy street, would you build exactly the same store? Probably not. You would see that if you wanted all those pedestrians to walk into your store, you'd want to build something with some kind of uniqueness to attract them, and rarely would you want to build the same business that already existed on the street. But on the internet, you can't see what's on your street so easily. The browser detaches ourselves from the brutal reality that your competition can be literally a virtual store or two down from you but yet you can't perceive it as a problem because it's virtual and not something physically experienced.

And this problem is exponential on the internet as the virtual street you're building on is limitless in available storefront. Imagine a street with a limited number of pedestrians but tens, if not hundreds of storefronts are squeezing all onto that street, creating ever smaller slices of storefronts for internet pedestrians to walk by, all screaming at them to come in and buy my stuff please!

So ask yourself again - do you want to be yet another storefront on an infinite street or do you want to build something that is truly unique to attract internet pedestrians away from all the same stuff?

I bugged a friend of mine at Google and instantly got up and running on the new kid on the block, Google+. Of course, now I'm much cooler than you since I got in and you're not haha - alas, I'm sure that coolness is short-lived.

I launched into Google+ with little expectations. As soon as I got in, I was presented with a rather overwhelming page - circles? streams? friends? a bunch of tweet-like shares sitting there in my stream already - pictures also. Talk about information overload.

So I poked around. Trying to invite some other friends was really tough. Why bury that in the circles function? And why do I need to add their name? Can't I just send them an invite? After all, I want all my friends on the system.

But oh wait, these circles allow me to categorize my connections. The drag-drop UI is pretty slick, but geez I just ended up dragging them all into my Friends circle. It's too hard to categorize these people. And I'm pretty particular with who I add to my Facebook friends in any case - but even that has reached unmanageable numbers (or so I think: I just went to Facebook to look up how many friends I have and I can't seem to figure it out! I've got SO many that Facebook can't even count them up for me LOL).

Man, it seems that Google threw the kitchen sink in here. No MVP for them! Or actually, the M stands for Maximal instead of Minimum. So maybe MVP still applies! It will take me a few days to navigate around and figure this out. Somebody tagged me in a picture so many of the usual Facebookian functions are found here.

The stream is fun - seeing pictures auto displayed there is pretty cool, although it wrecks the stream UI a bit so scanning is tougher than just lines of text on twitter. Still, Twitter is the default real time stream of choice due to momentum.

Which brings me back to this point. Big, established internet companies have a huge advantage when launching new products in the area of distribution. In the old days at Yahoo!, we used to call this the "firehose" of users which we can direct to any property we launched. We merely had to create and launch a new site, and then if we could get permission to get it listed on the Yahoo! homepage, it would instantly get traffic. In fact, it didn't matter if the site sucked or not; merely putting it on the Yahoo! homepage guaranteed a steady stream of users who clicked on the link and visited the site. In fact, many business units in the past dangerously created revenue projections on traffic patterns generated by the presence of that link on the Yahoo! homepage, which suddenly were destroyed when somebody decided that the link to that site shouldn't be on there any more, or moved to a less advantageous position on the page like below the fold.

Today, getting users is tough - tougher than you can imagine. Which is really why only someone like Google could even think about launching something that competes not only with Facebook but also with Twitter at the same time, especially given the dominance that these two sites have among the userbase. A company which does not have an existing userbase with which to firehose a new service will stand little chance of gaining any sort of traction, like startups for example.

But is it enough? Firehoses are super important, but you have to firehose the right thing or else once the firehose stops, then traffic dies off too, like in my Yahoo! example. Or in some cases, even firehosing isn't enough to generate traction.

After a few minutes of playing around, it seems that the real time aspect dominates the initial views. Then, I can group my connections into circles and I can share posts to certain or all circles. And on top of that, there are some nice UI/UX enhancements and arguably there are some differences in UX between the two even as a lot of the UX is similar. I'm not sure Google+ has a better UX than Facebook or Twitter though; at the moment, they seem very similar and there are things I like more about Facebook and Twitter as I like some of the new elements in Google+. So I can say for now that I think that there really isn't some dominant aspect of Google+ that would attract me to switch and use Google+ more than my old services of Facebook and Twitter.

Therefore, if Google+ competes head to head with Twitter and Facebook, is the firehose enough to win, along with some incremental enhancements in the UX?

First, as I've often talked about, incremental improvement is simply not enough to cause switching (see condition 3 in What I Really Mean By "Souring on Internet-Only Startups"). The state of Google+ doesn't seem to be all that much better.

Granted, there may be better integration with Google services - many of us have often noted that email is simply a representation of a social network already but nobody has really exploited this fact to great effect. Certainly, a ton of people have Google mail services so there is an enormous base to draw from. Perhaps the inertia of early adopters may draw enough people in to start using Google+ to make it survive. Still, I think it is going to be hard given that Facebook and Twitter dominate social networking. To make it more likely, I think Google+ needs some exponential improvement over Facebook and Twitter but I don't see that yet; perhaps there will be something in the future.

Another potential competitive advantage that could be exploited is branding. Facebook used to be a cool brand but I'm not so sure right now - I think it's more utility now. Twitter is more recently cool and still there is more cool brand value than Facebook; it's also moving to utility now that people are exploring its news and communication delivery capabilities. But would you consider being part of a Google social network a must-have, enhancing your own coolness by being on it?

The firehose of a highly trafficked web service like Google is an incredible asset and brought to bear on a truly transformative, useful, and/or cool web service, it can accelerate discovery and adoption and vault it into the mainstream. But point that firehose at something less than that and the service will die once you take that firehose away. The jury is still out on whether Google+ can be more than just on parity with its competitors, Facebook and Twitter. If it doesn't, what waste of a perfectly good firehose...

The Dangers and Opportunities of Platforms [UPDATED]

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UPDATED: Added another possible suggestion to What Can You Do?

Recently, we saw a flurry of discussion surrounding Apple and their new subscription bounty. So many cries of "foul!" and "unfair!" - it was evident that many people had never taken a deep look at platforms, the people behind them, and why they come into being in the first place.


The First Platform

The first platform I can remember was when Google launched their maps API in June 2005. How cool was that! Before Google, maps data was nearly impossible to get hold of, and certainly not in a form that made it easy to access. Maps data was huge; it took a lot of resources to host and to maintain. It was expensive to get hold of - who could cut a deal with a maps provider at early stage? Even big organizations couldn't justify the cost of getting that data versus the uncertain return it would bring. Maps data took a lot of computation power to fully access; you had to know how to write programs to access maps data efficiently and quickly.

In an ingenious move, Google took their maps data, which powered their own maps product, worked it out with the maps providers contractually, and then released it to the world through an API. This spawned an amazing flurry of innovation, more than they could have achieved internally. They created a maps platform on which others could build and innovate without the added difficulties of getting the maps data at all, and maintaining it.

Not only did this spawn innovation on their own platform, it created a flurry of platforms launched by every company who had data to share, on the hopes that they could get developers to do something interesting with the data they had.


Why Platform?

Now that Google (assuming there wasn't another company that did it before Google) paved the way, people had proof that this was a great thing to do and could justify positive effects worthy of their time and cost.

Google showed that companies can open up their data to the outside for the following reasons:

1. They have some valuable proprietary data that nobody else has.

2. They want to extend the value of their data by leveraging outside resources.

3. They want to innovate on that data and want to utilize the creativity of the external developers to do that.

4. They want innovation but can't do it internally for any one or more of reasons we all could come up with, with respect to big organizations and even small.

5. They want to create another monetization stream, now that Google and others have shown that this is possible.

6. If someone innovates in a way that is hugely profitable and brings an enormous amount of customers and value to the company, that opens up the possibility of bringing that capability into the company either through acquisition or blatant copying.

7. By the way, all this has positive effects on the customers and users of the original platform as they can enhance their experience with the activity via the new innovation that arises.

This is, of course, dependent on the company actually having resources to:

1. Do the development and make the platform available for outside consumption.

2. Create a backend to support the platform and be able to support enough access to it to support a large ecosystem of developers.

3. Create a monetization scheme around the platform.

4. Set up on-going support and maintenance of the platform. Continuing support is necessary to make sure that platform access is not interrupted or corrupted.

5. Setup educational resources to teach people how to develop for the platform.


Opportunity Beckons!

The announcement of a platform comes usually with lots of excitement and interest.

Wow! Data that was previously hard to get hold of, now easy!

Developers can innovate and make money! They put together pitch decks and get funded by investors!

Even the company benefits from the press, who covers this explosion of developer studliness and the emergence of a new ecosystem and rampant innovation.

Eventually, as developers get on the platform, the company makes money by charging for access to the platform. If the company is smart, it would have planned for many avenues of monetization. In many instances, many cannot be planned for. Herein, lies the dangers of developing for platforms...


Dangers of Platforms

While opportunity knocks for both developers and the company, people start forgetting about a crucial concept, which is the most often misunderstood or forgotten concept about platforms:

A company creates a platform solely for its own benefit first, before all else.

I cannot think of any company that just puts a platform out there for the good of the world, and is willing to just pay the bills for providing this service without monetizing anyone using it. Wikipedia seems to be getting an API together so I suppose they are the closest to an independent organization that claims to be non-profit. NYC opened its data to the world and held a competition to see who could create the best applications using that data.

But other than non-profits like Wikipedia and government organizations, for-profit companies create platforms to increase usage, to open up new opportunities, to draw customers, to make more money. Otherwise, how can they justify to their shareholders, budgets, and balance sheets to keep personnel dedicated to developing and supporting the platform?

While a platform may be launched with its services being used for free, at some point this must change. A platform's owner will eventually, if not at the outset, begin to charge for being on that platform. It will start exerting control through techniques like throttling of data (pay to get full speed and volume access), taking a cut of all money made by anyone on the system, and up to kicking developers who have growing influence and power off the system using a variety of techniques.

All of these facts make it extremely dangerous for any developer to depend solely on a single platform for its livelihood. It's because you never know when the platform will turn on you. So if you're going to create a business on someone else's platform:

Never bank your business on a single platform.

Why is that? It's because the world has shown that as long as you are small and not a threat to a platform, the platform will let you live on it. The moment you get big, powerful, hugely profitable, and/or influential, the platform will begin to actively work to stifle you up and to the point of shutting you down.

Let's take a look at what was once one of the most opportunistic platforms: Facebook. Here is a snapshot of a series of events through the history of its apps platform. As you flow through this peek at its history, remember also this essential fact about Facebook which is their relentless focus on the user and keeping users happy:

May 24, 2007
Facebook Launches Facebook Platform; They are the Anti-MySpace

"Facebook’s strategy is almost the polar opposite from MySpace. While MySpace frets over third party widgets, alternatively shutting them down or acquiring them, Facebook is now opening up its core functions to all outside developers."

After Facebook launches its platform, developers quickly figure out that continuous posting throughout friend's walls, both legitimate and not, could grow their services enormously by exposing new potential customers to their services. Many grew to tremendous size on these marketing techniques.

Aug 16, 2007
Facebook Takes Action Against "Black Hat" Apps

"The changes that Facebook have made today, while they may inconvenience some application developers, have clearly been done to protect users from spammy tactics that some applications have employed."

Jul 7, 2008
Facebook Continues War On App Developers. This Week: Super Wall

"Facebook is continuing its war on Facebook apps that push the limits on acceptable user interaction. Last week it was Slide’s Top Friends App, which it briefly suspended. Later Facebook also suspended another popular app, Social Me.

This time they’re targeting Slide’s rival RockYou and their Super Wall application, which tends to have a lot of spammy user content. But instead of shutting down the application wholesale, they’ve simply turned off the viral components of the app - invitations, notifications, etc.

The consequences have been just as dramatic. A month ago Super Wall had 2.4 million average daily users. Today it’s 600,000 and falling fast."

Those whose services were dependent on a continuous firehose of users and not on their own merits to grow users saw their traffic shut off and many were forced to shut down. But some did figure out how to keep growing within the system, generate huge profits, and then use those profits to further market to users on Facebook via their advertising platform. Enter Zynga.

Oct 31, 2009
Scamville: The Social Gaming Ecosystem Of Hell

"Zynga may be spending $50 million a year on Facebook advertising alone, fueled partially by lead gen scams. Wonder how Facebook got to profitability way ahead of schedule? It was a surge in this kind of advertising. The money looks clean - it’s from Zynga, Playfish, Playdom and others. But a large portion of it is coming from users who’ve been tricked into one scam or another."

This time also saw the entrance of a clever promotional method pioneered by a company named Trialpay and others like Offerpal, which enticed users to sign up for an advertiser's service and traded that user signup for credits which could be used in the games. It drove a ton of revenue into the social games running on Facebook and encouraged users to keep signing up for these services in order to get essentially free credits in the games to gain levels and buy virtual goods.

Sep 17, 2010
Social Gaming Market Reaches Its Final Stage…and It’s Not Looking Pretty

"This same cycle is now taking place in social media. When Facebook changed the rules, the early leaders in the space faced two extremely unpleasant realities: 1) Unlike casual gaming, their popular franchises were ineffective at acquiring Facebook audience directly and 2) Paying market rates for audience made their books look a whole lot less pretty. Faced with this challenging circumstance, social game development studios have started taking aggressive steps to remedy their situations, including:


  • Finding buyers as fast as possible before people realize that their growth and maybe even their businesses are not sustainable
  • Leveraging the abundant capital available to try to buy their way out of dependence on Facebook by either acquiring their own standing audiences or by acquiring non-Facebook dependant game companies
  • Overspending on marketing to try to buy audiences to preserve their apparent growth even as their books leak money and their earned audiences decline"

By now, Facebook's changes and restrictions were growing to point that many companies simply could not survive and were forced to shut down or take other options. If they have enough capital, they attempt a pivot off the platform. If not, they were dead.

Jan 24, 2011
Facebook To Make ‘Facebook Credits’ Mandatory For Game Developers (Confirmed)

"Facebook has confirmed that it is indeed making Facebook Credits mandatory for Games, with the rule going into effect on July 1 2011. Facebook says that Credits will be the exclusive way for users to get their ‘real money’ into a game, but developers are still allowed to keep their own in-game currencies (FarmBucks, FishPoints, whatever). For example, Zynga can charge you 90 Facebook Credits for 75 CityCash in CityVille."

"Of course, Facebook gets something out of it: they take an industry-standard 30% cut whenever users purchase anything with Facebook Credits. That can add up to a lot of money — we’ve heard elsewhere that Zynga is paying Facebook around $30 million a month for its Credits tax."

Facebook launched their own virtual currency which they are requiring any developer on their apps platform to use. Direct charging of customers is prohibited, and Facebook receives a 30% cut of all monetary transactions on their system.

What's a Facebook dependent company to do? Zynga was a lucky one. They were grew so huge that they *could* take their users and leave.

May 7, 2010
Zynga Gunning Up (And Lawyering Up) For War Against Facebook With Zynga Live

In fact, after Facebook began to force Zynga to use their credits, they threatened to leave. They formed Farmville.com and started making motions that it was going to leave and take its audience with them. But, it was also to Facebook's advantage to keep Zynga on their platform as they were generating an enormous amount of revenue for Facebook. So after a lengthy negotiation, Zynga still remains on the platform, to the delight of users who love to play Zynga games on Facebook, but also paying a significant amount of capital to Facebook, although we do not know the details of how much.

May 18, 2010
Facebook And Zynga Enter Into Five Year Partnership, Expand Use Of Facebook Credits

So far, only Zynga has had enough market power to initiate that kind of negotiation. Every other company has been forced to change their strategy or die.


Will it Happen Again?

There are a lot of platforms and their APIs: older ones like Google, newer ones like Twitter and Foursquare.

You could say that Google search is a platform. Over the years, people have used SEO to drive traffic to their sites. It's a never ending game to figure out how to get yourself on the top of search results for important terms. Google adjusts the algorithm for best user relevance; companies game the system to get higher up, sometimes being relevant and sometimes to fool users into clicking over in order to monetize them. Even now, companies are in danger of being dependent on Google.

Demand Is Strong For Demand Media IPO

"It’s important to note that Google is changing how it ranks certain websites, including Demand’s network of content. Demand is highly dependent on Google search traffic and no doubt a change in ranking could negatively effect the content farm’s business."

If Demand Media is to be a true contender in the public markets, it cannot be beholden to another company for its success. It needs to be independent or else it risks being shut down. The markets know this and the short sellers are loading up on Demand Media stock. As of Feb 28, there are 3.21M shorts on DMD, up from 2.68M from the previous month.


Twitter's Platform

Look at a small piece of history of Twitter's platform:

September 20, 2006
Twitter Blog: Introducing the Twitter API

Dec 9, 2009
Twitter Spawned 50,000 Apps To Date, Will Open Up Firehose For More

Apr 9, 2010
Twitter Acquires Tweetie

"Unsurprising, because Twitter investor Fred Wilson recently wrote that Twitter developers needed to stop “filling holes” in Twitter’s product and instead build entirely separate businesses."

When Twitter acquired a mobile app, it put all other mobile Twitter apps in danger. But let's look at someone who is trying build a business on real-time Twitter data and attempt to monetize it in a way that other Twitter apps have not, to this date: UberMedia.

Why Is Twitter So Afraid Of This Man?

The world suspects that Bill Gross is attempting to aggregate Twitter clients and find a way to monetize the users, which has, to date, eluded Twitter itself.

As a result:

Feb 18, 2011
Twitter Suspends UberMedia Clients For Privacy And Monetization Violations, Trademark Infringement

While I am only hypothesizing here, and the news say that Twitter shut down UberMedia due to policy violations, I am sure that somewhere in Twitter, somebody has noted the growing power of UberMedia and has drawn battle lines in the sand. To me, it was only a matter of time.

And at SXSW:

March 11, 2011
Twitter Drops The Ecosystem Hammer: Don’t Try To Compete With Us On Clients, Focus On Data And Verticals

It becomes official; Twitter clients are Twitter's responsibility.


And Apple's iOS...?

So why would Apple's strategy around iOS be any different, when it comes to exerting control over its developers over time?


The Harsh Realities

1. The launch of a platform can present large opportunities, especially if the platform owner has chosen not to innovate for whatever reason.

2. Small to medium businesses can be built on this platform and the platform allow them to thrive.

3. Over time and as the platform gains users and power, the platform will continue to press its advantage in monetization.

4. If there are any businesses that gain significant influence or power, the platform will seek to limit their influence and power through any number of techniques. This can be any kind of limits in access to the data, to driving more monetization from them, to blatant shut down.

5. As a business owner who is trying to build a business in this kind of environment, it can really suck. You will feel like the world is crashing down around you and are powerless to do anything about it. Feeling powerless and watching all your hard work go down the tubes really sucks. I can sympathize. In my portfolio, the machinations of platforms has already tanked two of my businesses. I've learned to not invest in startups who are overly dependent on a single platform.


What Can You Do?

1. Don't plan on building a business that is dependent on a single platform. Plan early for a business strategy that can be ported to other platforms (ie. a mobile app business that is built on iOS, Android, and Blackberry; ad serving that is on webpages, mobile apps, etc.).

2. You can start by developing for a single platform to gain traction. But move as fast as possible to be not dependent on that single platform.

3. If you're skilled and/or lucky, you should attempt to build your business as fast and as large possible on the platform. If you can grow your influence and power to the platform, you may be able to have negotiating leverage against the platform in case they attempt to shut you down. Do this before the platform figures out that they should do something about you.

4. If you can, you should build something that is essential to the platform's customers. This puts the customers on your side in case the platform tries to shut you down.

5. Plan for independence. Can your customers/users be taken with you if you are forced to leave the platform? If so, this makes you less dependent on the platform. Build towards this independence as fast as possible.

6. Build something that continues to add tremendous value to the platform, and hopefully that value is measured in dollars. This has proven to be a way to be exempt from getting shutdown by the platform. An example of a business built on a platform that have been left alone are SEM management companies who are helping Google generate tons of revenue, but their own revenue is independent of gets passed to Google. As long as they do not interfere with Google's monetization, they really don't care about how they monetize over and above the rates that Google sets.

7. Leverage PR to your advantage. Write blog posts, talk to journalists about how a platform has destroyed your livelihood. Bad press can be a lever used against a platform's owner who cares about their reputation in the world.

8. Analyze the terms of service before you start. Make sure you aren't violating or are close to violating their TOS. Even entering grey areas can put you at risk for shutting down.

9. Don't develop an improved version of a core service. Just because the original platform owner doesn't do something basic well, doesn't mean that they won't do it better later and supplant you, or shut you down. It may mean that you get acquired (ie. Tweetie), but if there are a lot of competitors, then this can be a single-winner-everyone-else-loses-it-all game.

10. [NEW] Be super-creative and develop a service that is a huge opportunity but also something that the platform owner would never want to do themselves. Then the platform will be most likely to leave you alone (assuming you don't do something like violate their policies). An example of this is Zynga on the Facebook platform. Facebook will never want to be a games developer, so they will probably never try to do this themselves. However, if you're great at games development, you can create a big business as Zynga has done. If the platform owner ever wants to enter the space that you're in, then you're most likely going to die.


The struggle between the platform's constituents (users/customers, businesses on the platform, and the platform itself) is a classic fight for market balance. You provide something of value, you find out what people are willing to pay for it, you constantly test how much you can charge for something and adjust to what you think the market will bear. If there is anything you don't like, then just leave, assuming there is somewhere to go. If there is nowhere to go to, then the platform has all the advantage. But usually there are competitors and a platform has to also work hard to keep customers and businesses on its ecosystem or else they will leave.

News Innovation: Still Haven't Quite Gotten There Yet

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Over the last few months, I have been actively giving feedback to my buddies at the news.me team (see NYTimes: Betaworks and The Times Plan a Social News Service and Techcrunch: Exclusive: An Early Look At News.me, The New York Times’ Answer To The Daily.

News is one of those things I worked on since the beginning of the internet when Yahoo released its first linked page of news back in 1995. I watched it grow, basically taking offline news and putting it online, into a huge powerhouse of traffic. Likewise, traditional outlets put all their news online launching both opportunity and destruction as users flocked to reading news online and heralding the slow death of physical newspaper business models.

But in the last few years, I've been thinking a lot about news, how I read it, consume it, and want to do things with news that I still can't do. If you look out there on the web, news is still basically just pages of content. Only just in the last year have people started looking beyond just RSS readers and using the social/real time web to help with recommendations. But I still want more; Twitter is a big source of news for me, but it still doesn't do everything.

I wrote this and sent this to the news.me team, but I want the world to come up with something exponentially better, not just incrementally better. Here are my current issues with news and what I would love to see:

1. News front pages haven't innovated in ages. They mostly look like their offline analogues. Seems like it's time for an improvement.

2. Trust is a problem. Too many sources and no way to verify, or verification takes way too much time. You can always find someone who supports your viewpoint on the internet so it can be very difficult to tell who is lying and who is not. At one time we trusted journalists because they had ethical standards to uphold. That's been destroyed. Everyone has biases and it's starting to show more and more.

3. Every news source reports on the same news, with few exceptions (ie. local or vertical). If everyone is just re-reporting what comes off the wires, then what is the differentiator for news outlets? Brand? Voice? Opinion? Bias?

4. How to balance what I am interested in and what I want to read serendipitiously?

5. I want to pick sources I want to follow all the time but want to be introduced to new sources on occasion. There are too many sources to deal with.

6. I often drop into a topic later in time. I want to be able to easily navigate back in time to a topic's start. I also want to see how the topic developed so i want to read all stories up to the present. I also want to navigate across sources for any given topic to see other opinions.

7. When I am interested in a topic, I want to somehow designate it to be tracked. I want to be able to undesignate it also, when I do not want to follow it any more.

8. News rolls with time. but there are often stories I don't have time to read now. This is the problem with using Twitter as a newsfeed. It does great from a social recommendation standpoint, but the news rolls past so fast that I have to favorite or else it is gone forever.

This also applies to news front pages. The saving grace is the NYTimes email which snapshots the news for me and it is saved in my email.

9. Breaking news often comes from many places, and maybe from Twitter before anywhere else. How do we insert that into our news reading? Do I have to stare at my Twitter stream all day long just to catch the rare, elusive news event before anyone else does?

10. I want something to remember everything I read because I often want to find something that i read in the past. I want to be able to search everything I read and only that.

11. Ideally I want to pull up old stories I've read, or tagged, or saved. Hopefully I can easily tag/save into categories and pull them up by those groupings.

12. News must be both curated and algorithmically recommended. Either can't do it all.

I really hope someone innovates news more than just putting a "news" layer on top of Twitter, or a prettier face on top of RSS feeds. Everyone seems to be working on a singular part of news but not the whole experience. I would love to see a startup take on the whole project of news rather than just little pieces of it. Might even be worth investing in...

Hiring and Succeeding in a Multidisciplinary World

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Decades before the coming of the Internet, we could confidently go to school, get a major, and then get a job in that discipline. I could get a BS in Marketing and find a marketing job at a great company, and know I had learned the basics of what I needed to know to start at a job and suceed from there.

Along comes the Internet which turns this all upside down. I see this everyday in the job postings that internet startups post. Some typical ones:

1. UX Designer - Someone that can do visual design, interaction design, usability testing, and also translate visual designs to HTML/CSS code or Flash.

Internally I cringe when I see this kind of post; when people ask for my help in finding this person, I tell them that they should either 1) prepare for a long wait, or 2) prepare to really be hiring four people. Why the long wait? Because it is almost impossible to find people who can do all 4, let alone even 2 of the job description. Visual designers are trained in visual aesthetics, a discipline that is decidedly non-technical and totally subjective in nature. Interaction designers are experts in structure and how users interact with products and interfaces, which has a relation to but does not need to include visual design. Usability testing requires knowledge and training in statistics and testing protocols, which are even more different than the basic skills required for visual and interaction designers. Argubly, usability testing professionals could require no design sensitivity whatsoever to perform their job well.

In years previous, universities have not adequately cross trained people on all the design disciplines. Certainly even peoples' brains aren't generally wired for creativity and technical disciplines together; you more often find a propensity towards one or the other but rarely for both.

2. Internet Marketing Expert - Someone who can do SEM, SEO, Word of Mouth blog marketing, brand management, marketing materials for sales, public relations.

Let's see, that just about covers the entire old discipline of marketing plus the new ones of SEM and SEO! Even CMOs can rarely say they've worked in each of the old marketing roles. If we split it into technical and non-technical, we find that SEM/SEO are on one side, and the remaining on the other side. Now we're requiring marketers, who aren't really technical and numbers people, to now engage with numbers and to be experts at it. If we add SEO into the mix, now they have to understand what drives search engine ranking and how to wrangle HTML to make it more search engine friendly.

Again, we mix multiple disciplines, with creative and technical angles, into one person who can do it all. Many more examples exist: SEM Engineer, Web Designer (HTML/CSS + Design), Flash Designer (which requires true programming skills to create Actionscript) - the list goes on.

So why do we have this problem now?

In years past, we would go to college and get a degree and be able to find a job. If we had some area of expertise, like in consumer electronics or fashion, then it would make it easier to find a job in that industry. But crosstraining wasn't required; corporations would hire people good for a task and there were enough headcount to do so.

Along comes the Internet which screws all of this up. So many changes:

1. Marketing becomes measurable! Now marketing isn't just about getting awareness out there or subcontracting that out to advertising agencies. You could actually setup technology to get you response information on your marketing efforts. Optimization becomes possible on cost, targeting, and effort. Now you can compute the ROI of a campaign and know which campaigns gave you the most bang for the buck. Given the data of viewers of a campaign, you could target only those customers you wanted exactly (more or less) and be much more exact than saying "approximately 35% of the people who pass this billboard on a given day is a woman". Effort could then be optimized to those channels and programs to maximize ROI with the least amount of effort. Being a marketing quant is now a requirement or else people don't like you for the fact that you can't judge the effectiveness of your own campaigns.

2. There is still confusion on where the new roles lie. Even though there is an M for marketing in SEM, does it belong in marketing or is it more a technical function? Marketing departments now require engineering sub-departments to help them function! What about SEO? That has a marketing application, which is to help drive users to a site through search ranking, but it is a highly technical endeavor, and marketing people don't have access to a site's code to alter it. However, traditional engineers aren't even sure how to perform good SEO. So does it belong in engineering or marketing?

There is even confusion amongst design. In many companies, site design reports to marketing. But designers need to work closely with the product teams in order to be effective. And some design roles require even working closely with engineers to implement design. So should design be in the product organization? The engineering organization? Back to marketing? Even usability testing professionals have a heavy research bent; should that be part of the corporate marketing research group or product group?

Dependent on where the multidisciplinary folks end up, the roles they play and how well they play them are heavily influenced by the orgs in which they sit.

3. Startup fever rises, and everyone needs to be cheap and hire the least amount of folks. So they always look for that one guy to do everything design, or all marketing. Add to that the fact that many entrepreneurs are young and are encountering multidisciplinary roles for the first time, that they do not know that there are multiple areas of expertise that encompass some of these single title occupations.

Even experienced entrepreneurs have to stay cheap, and still try to find that one guy who can help do it all.

4. There is a lack of understanding of these multidisciplinary roles. I find that for design, people want someone to just take care of it all but I end up explaining to them that each part of the design requires different sensitivities and skills and that you can spend 4 years of college and 2 years of grad school becoming an expert in only of the areas, without ever touching the other areas. Even all those disciplines that are lumped under the generic term "internet marketing", they touch on so many other areas and are sometimes even done better by those who have trained first in another discipline, like engineering.

Yes I've been harping on marketing and design, but this also applies to many other disciplines:

Customer Service - traditional customer service department, or marketing communications, or feedback for product team, or customer service via social media?

Engineering - "I want a database engineer that can also do front end engineering..."

Sales - "I want a sales guy who can also do business development, so selling online advertising and also calling on B2B customers..."

...and the list goes on....

The fact of the matter is, for Internet companies, it is almost a must that you be conversant in more than one discipline in order to be successful. Consider two design folks that I know, Irene Au (@ireneau), Director of Google User Experience, and Jason Putorti (@novaurora), formerly of Mint.com and now a Designer in Residence at Bessemer Venture Partners.

Both of them are accomplished designers. Yet both of them have engineering degrees and later got into design. In watching both of them, they were successful because they were able to bridge the gap between design and engineering and create success by melding the two on a variety of fronts, from implementation, to technical understanding, to being able to integrate design and engineering, and being able to simply communicate better with their engineering peers.

Contrast that with some designers on both my old team at Yahoo and in Irene's team at Google. We both have seen designers who were very talented in their own right but simply could not either survive working on internet projects and/or interact successfully with their peers in engineering and product management. Chiefly we saw this happen to folks that were not able to acquire enough knowledge of other disciplines to be successful.

We can say the Internet has disrupted many old traditional businesses and business models, but I think that the Internet has also disrupted traditional occupations. Companies and their managers need to realize the difficulties of finding multidisciplinary folks and balance that with finding someone with fewer disciplines or doing more internal training to take talented people and adding to their skills. Universities hopefully are adjusting their curricula to reflect that you can't just teach disciplines the old way; you need to teach them all those new ways that today's working world requires and demands from its workforce. Workers today should also go out and cross train themselves in multiple related areas, whether it's on the job or through secondary or self education. Otherwise, you'll quickly find yourselves out of the job and unable to find a new one...

Transferring Hosts

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I have not had much fun, from about end of October until week before Christmas. My previous host decided to "upgrade" me and not only lost random files while transferring to a new system, their new mySQL DB decided to also not allow me to save large blog posts. Of course, they claim nothing is wrong, and of course they cannot see what is wrong because they have a super fast connect with all their servers. But for us poor slobs out here....well I can't get them to do anything to fix this.

Early December I finally decided enough was enough. I found a new hosting provider based on the recommendations of friends. I spent a week installing to MT 4, upgrading from MT 3 which I had been using for years now. I also tried Wordpress and thanks to my friends who are big fans of Wordpress who volunteered to help me with the transfer. But I was also using MT as a primitive CMS, which Wordpress just was not flexible to do. Even though they had nicer themes and some other really nice functions, I decided to go back to MT.

I'm thankful for my buddies at Sixapart who helped me with some sticky issues, like the fact that my old filenames were created in one way, but the new MT 4 created them in a different way. This was pretty critical; who knows who was linking to me from the outside? Also, I use bit.ly a lot and all those links would have also been broken. And most critical, my SEO juice could have been harmed because Google would have discovered a whole bunch of links that would be broken and who knows how my SEO ranking would have been affected.

I spent the better part of this week getting my URLs to match up and, thanks again to the support folks at Sixapart, I was able to get the URLs mostly translated over. I then packaged up everything on my old hosts and FTP-ed them over. I also exported my blog entries from my old MT 3 and then re-imported them all into MT 4. Somehow this all went off without a hitch.

The next step was to then redesign my blog. That took a while getting to know the CSS and HTML of MT 4 which was different than MT 3. I didn't have much time to work on this, so I cranked out something that I could live with for now.

In the middle of all this, I was fiddling with domains and messing around with where they pointed to. Of course I screwed this up many times. But thankfully I figured out exactly what they should be set to and now everything should be working fine.

By the way, I HIGHLY recommend NOT hosting your domains with your site hosting provider. It makes changes that much easier when you're trying to bail on a hosting provider when you don't also have to transfer domains to somewhere else. Yes it may be cheaper, but man it just made my transition away from my old hosting provider that much more lengthy while I waited for those domains to transfer to somewhere else.

It was really disappointing dealing with my old hosting provider. I was with them for so long and they failed me in the end. It was also obvious they weren't doing much to improve things, because the control panel at my new hosting provider was so much more flexible and advanced. Then I got caught in IT support hell where I would say I have a problem, and they could never seem to figure out what the problem was on their end. Now let's see if they actually stop billing my credit card....!

It was an interesting exercise to move hosts. I don't relish the idea of ever doing this again, and can only hope that my hosting provider doesn't screw up miserably, forcing me to move yet again.

My Take on Current Top Internet Trends

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I just read this post, ReadWriteWeb: Top 5 Web Trends of 2009: The Real-Time Web where they are doing a series of posts related to what they think are the top trends affecting the Web in 2009. The top five trends are listed at the end of the post, which are:

1. Structured Data
2. The Real-Time Web
3. Personalization
4. Mobile Web & Augmented Reality
5. Internet of Things

All of them are interesting, some are broad, some specific, some directly relevant to me and some relevant but in a removed sense.

Then this last week in NYC at my visit to betaworks, we also talked about burning topics in today's Internet. As I brainstormed trends, I could not help but be drawn to those trends which are directly affecting me personally.

I list what I came up with here. Instead of trying to be like ReadWriteWeb and focus on worldly, pontificat-ible trends, I thought I would list only those that were directly relevant to myself:

1. Crowd participation is so easy, but we debate on whether or not democratic-ness to that degree is good. We worry about open markets vs. government intervention with respect to our economy. We argue about free speech versus letting everyone have a say, from destructive fringe groups to just those who are angrily spouting about an issue. In the pre-internet world, it was a lot more difficult to be heard; now everyone can hear you and what is said has wide ranging effects, especially on the naive.

2. There is so much news and content, but how can we know what is real and what is fake? Trust is a big issue now with respect to this information. How can we educate ourselves to be smarter in a world where it is extremely hard to tell what's real and what's not?

During the last elections, there was so much spin out there that you couldn't tell who was good or bad. With the internet, it's easy to just find points of view that mirror your own; once you read this content, it becomes validated and reinforced in our brains. But often this information is incomplete - we consumers simply don't have time to surf around and find all the points of view on an issue in order to make an informed decision. We just create an opinion and find support for that opinion. This can be very dangerous as we just don't have the will, patience, or even intelligence to fully understand an issue and attach ourselves to the easiest path.

3. The velocity and quantity of information has increased so much, but can we consume it? Have our brains and senses evolved enough to be able to consume, process, and act on it? Information overload has been exponentially increasing over the years and I don't think there are enough ways to help us filter and understand, as well as driving to us what is truly important and relevant.

4. In a world where everything is free, how can we make a living on fame, usage, etc? A lot has been written regarding freemium and why we give things away. They can be viable business strategies, but ultimately the people working on these projects need to be paid. It's hard to eat badges that you earn on a gaming site.

5. What is the fate of old media in a new media world and the fate of the businesses that once existed and thrived in the old world, like in the areas of journalists, music artists, and movies? I am active consumer of all media and I for one would like to continue consuming and enjoying it. However, if we do not compensate those creators, they're going to stop doing it. I think the world will suffer mightily if that happens. I wonder all the time about these so-called new business models that need to be developed in a world of piracy, declining prices, and change.

6. We struggle with the openness of our own information versus privacy. What are the implications of a world where everything you do is posted and never deleted, and is searchable and findable?

I already actively manage whatever I post or tweet. I am a big believer of the fact that the world is a stage and I am an actor on that stage with the people around me as my audience. When I do something, those actions are interpreted across a wide variety of levels related to how people feel about me. So I think about the short and long term effects of these pieces of personal information I make public, since I know that it will be there for all time. This also goes for my posting of information regarding others, and the short and long term ramifications of that undelete-able information now public.

7. Has the internet business world topped out so much that me-too products are the only things that pop up now? As an angel investor, how do I ferret out those opportunities that are truly unique and world changing? Every pitch I've heard lately has competitors and they're all fighting for the same users. Intelligence and ideas are a commodity now, so what are those other elements that startups need to get to gain an advantage: contacts? luck? distribution? the right partners?

8. Given that me-too products proliferate, I believe this heralds the rise of the small business on the net. When affiliate marketing proved it possible to generate tons of money off a well-written blog, micro and lifestyle businesses came into being. However, I think that has extended to me-too products now where you can capture a small slice of the market and if you're smart, you can make enough money to support yourself. This unfortunately makes angel investing a ton harder. Many ventures can easily become great small businesses on the Internet; but for an investor where our money gets trapped in a decent small business, it doesn't work so well.

9. Related to 8, and those of us working in this industry have known this for years, putting up a product is so easy and cheap now. What are the resulting implications when non-programmers can put up a complete solution without having a team of programmers?

10. This was one that just came up: marketers now can own distribution channels for their brands. This is directly relevant to the book I am writing on online display advertising and also to the changing ways advertising affects the revenue potential of my startups. It's an area I am watching closely.

Which trends are directly relevant to you? What concerns you the most about the way the internet is moving and changing our lives?

Advertisers Are Also Your Customers

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I was just reading this post Techcrunch Europe: The long lost formula for start-up success. No, really by Nigel Eccles and found it to be a great summary of Steve Blank's Customer Development methodology. But one thing stuck out for me which was a rather short two liner:

For apps that are supported by advertising, your customer is the person who hands over the cash. That is the advertiser, so the criteria still holds.

So much insight packed into these two sentences and yet no further discussion on it!

This was something that we discovered through the dotcom bust years at Yahoo!, and really didn't become something more apparent until we were down in the dumps in revenue after the crash of 2000-01 years.

For years, Yahoo! built its products on the mantra of always taking care of the users. Do what users want and traffic will come, and with it all the rewards including revenue. It really did work great, and arguably Yahoo! became the powerhouse it did back then amongst users because we had a single focused view on users' needs. It seemed to us that no matter what we did, money still came in and the product teams largely ignored any extra effort in taking care of our advertisers who were paying our bills.

This was exceedingly apparent in the ad banners that we ran and refused to change for years, which was the 468x60 banner. When traditional advertisers started toeing the internet advertising waters, they looked with disdain on the small rectangle that sat on our pages, which, when compared to the traditional ways of doing advertising, provided no where near the capability of producing "wow" for their clients. Our technical specs didn't help either; while they protected users from downloading huge files and slowing down their web experiences on Yahoo!, they severely limited what advertisers could do in those little rectangles.

And so it was that we went through the dotcom boom to bust period, saw its primary sources of ad revenue die away - the OTHER hugely funded dotcoms - and with traditional advertisers who really didn't want to put any time or effort into producing ads for Yahoo!, but were looking elsewhere at sites who were beginning to use other ad technologies like floating ads. It wasn't until Yahoo! started loosening up its standards and allowing different and new ad technologies on its pages that traditional advertisers started coming on board Yahoo! and trying internet advertising.

We realized that we actually had another customer besides our users, which was our advertisers. We also realized that our business was like a three-legged stool. The first leg was the company, which benefitted from having users and revenue from our advertisers; the second leg was our users; the third leg was advertisers. All three legs must be in balance or else the stool tips over. In our early years, we really only took care of two legs, which was the company and our users. The third leg existed, but we didn't really do anything about it because no matter what we did, revenue poured in, and mostly from all those dotcoms that had way too much money to spend on advertising. These dotcoms just wanted to get exposure to users and fast, to build their businesses quickly and get out ahead of their competitors (never mind that their business models weren't sustainable). So they spent a ton of money advertising on Yahoo! to do that and Yahoo! didn't really need to do anything else to get them to come on board.

When these dotcoms died, so did the revenue and we realized that we really didn't do much for people who had been doing advertising for years, well before the internet existed. So we worked hard to remedy this and bring our advertising technology to a place where it could support what traditional advertisers were looking for. The three legged stool became truly balanced and Yahoo! launched ahead of its competitors in the years following 2001, as we went out and wooed advertisers with much improved ability to create "wow" (as well as all the other important things like advertiser sales, support, and operations).

I think too many startups today don't think enough about the three-legged stool. They focus on their company and their users, and then slap ads on their pages and get frustrated when they pull in a small amount of money every month and wonder why their CPMs are so low. Or worse, some companies build their businesses solely for advertisers and forget that their users need to have a product or service that helps them, and not just advance the wishes of advertisers. Thus the three legged stool becomes unbalanced yet again.

Not suprisingly, users and advertisers go hand in hand. Advertisers look for users to market their products to. But not just any users; they want exactly the users that would want their product. Just giving a bunch of users to advertisers means giving what is called remnant inventory to them; it's the lowest cost inventory that they're willing to pay for since you haven't been able to tell them what kind of users they are reaching. So sites need to find a way to deliver those exact users that advertisers want to see their ads.

Users on the other hand, tend to hate advertising because most of the time it's irrelevant to anything they want or need at that moment, can be annoying, and a lot of it can be interruptive of whatever it is they are doing at that time. Aspirationally, companies need to find ways of delivering the right ad to the right person at the right time. Tough job, probably tougher than figuring out what kind of users you have to sell to advertisers.

However ignoring the third leg of the stool is just folly. If a site is going to ad supported, startups should realize there is a third customer for their site, the advertiser, and put steps into motion from the very beginning to take care of this customer. As we learned at Yahoo!, doing it later on is potentially painful - you don't want a downturn, or watch your startup's bank account run down to zero, to shock you out of the realities of what you should have been doing.

It's happening all over again. Check this out:

OPA Members Strive For Higher Impact In Online Ads

Members of the OPA are launching new ad units, much larger than current IAB sizes. Here they are (quoted from previous Mediapost article):

1. The Fixed Panel (recommended dimension is 336 wide x 860 tall), intended to appear naturally embedded into the page layout, and scrolls to the top and bottom of the page as a user goes up or down the page.

2. The XXL Box (468 x 648), providing page-turn functionality and video capability and expandable to 936 x 648.

3. The Pushdown (970 x 418), which opens to display the advertisement and then rolls up to the top of the page (collapsing to 970 x 66).

Back in 2001 when the dot-com bust was upon us, I was at Yahoo! and we worked with the IAB to roll out and standardize new larger ad sizes, which you see at the IAB ad size standards page. In fact, the industry had grabbed hold of a lot of the new ad units already and Yahoo! was painfully behind in adopting the new standards until the industry had just tanked, and the major source of ad dollars during the dot-com boom had disappeared - other over funded dot-coms who all but died in/around 2001. Yahoo!, along with all the other publishers were forced to adopt new larger ad sizes and introduce new ad experiences to woo advertisers onto their sites.

It worked great. New larger ad sizes were standardized, new ad experiences were conceived and offered like expandable ads and floating ads - we gave advertisers more opportunity to do what they do best: create WOW.

As time goes on, these ad units became commoditized both in the eyes of advertisers and users. They weren't special anymore, so prices that advertisers will pay dropped and users got used to them and starting ignoring them.

But it seems like it took yet another economic downturn to create innovation in ad units. Isn't this dumb? It would seem to me that publishers should take an active role in managing the roll out of new ad units and ad experiences on a regular basis to keep interest in them high from an advertiser and user perspective, and thus prices and value are also kept high. Unfortunately, this didn't happen. At least now the industry is forced to introduce new things into the marketplace.

The other funny thing that is happening again is the rise of the direct marketer in graphical ads. When all the dot-coms died back in 2001, ad units from known brands disappeared and all that were left were ads from direct marketers. These ads were the best of the best in deception - there were tons of ads that looked like dialog boxes and read "Your hard drive is deleting! click here to stop". They were also just inapprorpriate - I remember an ad that had a picture of an old lady lying on the ground that read, "Help! I've fallen and I can't get up!" Awful stuff. At Yahoo! we created strict content guidelines that just got rid of all these ads AND we worked super hard at bringing traditional brands onto Yahoo! so that we eliminated our revenue dependence on these direct marketers.

But they're back:

Ad Recession Brings on the Belly Fat

While these ads aren't deceptive, they are pretty offensive in their design. But yet, they are effective at driving traffic to lose weight websites as they offend the rest of the population. And they aren't all that wonderful at creating a great brand experience within anyone's website. This is why all the male enhancement ads are placed all the way in the back of popular men's magazines; if you saw them in within their main content pages, you might think that this men's magazine has an undesirable perception amongst its readers.

The same will happen to websites if these ads are found on their pages. Do you want your brand tarnished by the ads that run on your pages?

In the short term, direct marketers have the cash. Perhaps we are forced to take these ads in the short term as we figure out new ways to generate revenue. I hope that in this case, history repeats itself in that the industry will innovate yet again and more desirable advertiser dollars will flow into the ecosystem. But instead of getting rid of direct marketers, can't we find a way to help them create more acceptable ads from a design perspective but are ALSO as effective?

On Thursday night, I went over to the offices of Daylife to see Jeff Jarvis talk about his new book, What Would Google Do?.

His presentation was a bit rushed as his prepared powerpoint was a lot longer than his talk. But I had read some of his book by the time I got to the presentation.

I think his book is pretty good at gathering together a whole bunch of disparate strategies and thoughts from the state of the Web and its effects on a variety of businesses. To us in the biz, I think it's stuff that we deal with every day, but it's nice that somebody put it all in one place.

The one thing I think could be better is the title. It's deceptive because there are things that are described in the book that are valid and true, but they are not what Google would do. In fact, Google itself would never do them ever because it doesn't make sense from a business standpoint for them. And it's funny that even if Google doesn't do them, they enable those activities to be done by others.

I would probably call the book something like, "This is the Way the Internet Is Now and What to Do About It".

Increasing Site and Social Engagement in Detail

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Over the last few years, social media has really become a popular buzzword. People talk about social networks and the importance of implementing them, as well as the drawbacks and potential dangers. Rather than talk about social media as a strategy, I wanted to point out some actual detail level things to try rather than stay at the 10,000 foot level of discussion. Based on working on social media projects over the last year, I have found the following techniques to be effective at creating and maintaining a vibrant social environment that produces results:

Voyeurism
Related to: Dating/Hooking Up, Expression (receiving end of)

People love to follow other people for a variety of reasons. From telescopes in apartments buildings to eavesdropping on a nearby conversation to hearing and passing on gossip, the lives of others around us seem infinitely more interesting than our own. We follow other people for many reasons: to keep up with what our friends are doing, to check out hot women, to see what trouble celebrities get into - we are always curious, sometimes to the point of obsession, about what other people do day to day. Successful social networks allow people to post and describe their daily lives so that others can take a look.

Communication
Related to: Dating/Hooking Up, Connecting with Context, Entertainment, Validation

It is human to want to contact someone else. We are social creatures and we want to talk to others. Providing a way for people to contact and maintain communication with others is crucial to the lifeblood of a good social network. Just as important is the ability to shut people out, and give people ways of *not* talking to everyone or only certain people (ie. annoying people, spam, ex-boyfriend).

Dating/Hooking Up
Related to: Voyeurism, Communication, Masquerade, Entertainment

Let's face it. Lots of guys surf pictures just to check out hot women. But then sometimes you'll want to make contact and see if you can get a date. Simply providing a means for surfing photos in profiles and a system for communication can enable this activity, but providing additional functionality to facilitate this activity can make the experience more enticing and fun. Think HotOrNot.com and the ability to rate people, and then pick out only the HOT rated people to contact, or show interest by sending someone a virtual flower. Or I'm In Like With You where auctions meets dating and you bid on the ability to meet someone.

Entertainment
Related to: Communication, Dating/Hooking Up, Competition, Fame

Having a good time on a site increases engagement. Providing ways of having fun keeps people coming back to have more fun. Games are the obvious one, and playing by yourself is good but playing against others is often better. Sometimes it's the content posted by users, like funny videos of themselves posted on YouTube or pictures on Flickr to be watched on their Flickr streams. Or if a fun spin can be put on mundane activities, then the unique fun that activity brings will draw people in and keep them interested.

Fame
Related to: Competition, Expression, Entertainment, Showing Off/Vanity, Validation

It's fun to do an activity and play a game, but enabling a way for people to get acknowledged and recognized for their skill rewards people by the notoriety they get for being good at something. Leaderboards on gaming sites allow users to show the world that they are #1 in a game, and they'll screen shot that and put it on their blog. It also means that they'll keep coming back to keep achieving or maintain their #1 position on the leaderboard for bragging rights.

Competition
Related to: Fame, Entertainment

There is something in the act of striving against other humans that people love. They want to test their ablities and measure themselves against others and be measured and will keep coming back to try. They like to see continual improvement and enjoy a rise in skill. There is also competition against themselves so it's not always about other people. And, there is the ultimate prize of being number ONE. Perhaps we'll never get there, but maybe we will. No matter what, we love the struggle and the journey to number ONE. In games and sports is where we most often see competition, but it can also be other things like getting the most views on posted content like a video. Great games and activities constantly provide the ability to raise the bar just a little more each time to keep people competing, but don't raise the bar too high or else people will give up. Not raising the bar at all will cause people to achieve that level and then move on because it's too easy. This bar can be set by other users, like when you're competing against other players in a sports game, it can be set by a computer which auto-adjusts for your skill level.

Expression
Related to: Fame, Voyeurism (contributing to), Showing Off/Vanity, Validation

Constantly we are on stage. The world is a theater and we are its actors. From the clothes we wear to what we say or do, we are always showing the world who we are. Providing a means for people to express who they are means they will continually do it, especially if there is a mechanism for validation like commenting on photos in Facebook.

Showing Off/Vanity
Related to: Expression, Fame

The extreme form of expression is showing off and trying to show that we are special and unique. Showing our crazy stunt videos, or photos of us drinking a 3 foot tall beer, or next to a movie star all show the world that we are not boring people but that we have the biggest peacock feathers. Allowing people to show off and giving validation mechanisms like commenting on photos, or leaderboards, or graphical badges of honors on our profile pages reward us for posting and showing off, and encourages us to do more.

Validation
Related to: Communication, Fame, Expression

We always want to know that who we are is noticed and special by others. We like it when we get comments on our photos and videos from our friends. It makes us feel that others care and that we are not alone in the world. Implementing means of giving validation gives users that special feeling that others do notice them, and they'll keep on posting to get more validation. The simplest form is commenting on photos and videos, but it can be focused by providing context like on Dailystrength.org where you can post an issue and get support from strangers and friends via the internet.

Masquerade
Related to: Communication, Community

Sometimes we're boring. Our lives are so mundane that we get sick of it. Or maybe we're not in the social mainstream. We feel shunned by the general masses and can't seem to get in the flow of society. Or maybe we're just tired of being ourselves and want to try being someone else. On the internet, the ability to be someone else is very easy. Simply creating a new screen name and building a personality underneath it has been done since the early days of the internet. People can pretend they are the opposite sex, older or younger, more fun, more engaging - whatever. It is something that is not easily achieved in the real world. Acting out the fantasy that they have either personality traits not in the real world or entirely someone else can be an activity that keeps people returning. The unfortunate thing is that people often masquerade for negative reasons like stalking children, and this needs to be guarded against.

Community
Related to: Masquerade, Connecting with Context, Communication

Humans want to belong. It's often to easy to feel outcast in the real world. On the internet, communities can be more accepting of people than in the real world. If a site can create a means for people to be a part of something, they will want to come back and continue to participate to be part of that community. Think of the instant groups that Facebook has, based on tags created from your interests, or your hometown. These are ways for people to find commonalities on which to connect on, which foster communication and validation.

Connecting with Context
Related to: Community, Communication

In watching social networks over the years, I am a firm believer that social networking for social networking's sake is a path to declining activity. It is much more engaging for users when you create a context for which socializing happens. MySpace's usage came from the fact that they were always about promoting indie music. Yes, other things happened there, but you knew that you could always find indie music on MySpace. Facebook started out by being exclusive to colleges and there was no way to taint the population with random people who were not attending your university. Everyone you found there went to your college and you could relate easily. LinkedIn's network is built on professional networking, another popular activity in business and its functionality is focused on making that activity easier. Contrast that with Friendster, who had a meteoric rise when it first came out and then usage tapered and dropped because people got bored there when applying this list of social techniques was not done well or not at all.

For all my projects, I try to think about applying some or all of these techniques in creative ways. I also think about the context since not all techniques are effective in every context. For example, dating could be a hard sell in a social stock picking application, but competition and fame would definitely work well. Some of it is experimental, as there could be unexpected results of applying something you thought wouldn't work in a context. So let's turn my example around. Suppose you did create a social stock picking site which had an underlying dating application underneath? Perhaps it could link up all the superficial, money hungry people by allowing you to find, meet, and date the richest, best stock pickers in the world...? Socially unacceptable? Perhaps. Successful? Who knows...

Facebook Messaging vs. Old School Email Part II

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Following on my last post about Facebook messaging...

Today I exchanged Facebook messages with someone. I connected this person via traditional email (via his last known email address that I had for him) with some folks. It was an urgent communication, so I immediately logged onto Facebook and sent him a Facebook message telling him that he had an email waiting for him, so that he could respond quickly.

Isn't it funny that since I had not corresponded with this person for a while via traditional email but rather Facebook messaging, that I would tell him he had a traditional email waiting for him via Facebook?

As soon as I clicked on the Send button in Facebook, I paused and thought that I should check out where his notifications (that he got a Facebook message) were going. When I looked, they were going to same place that I had sent a traditional email to him!

Facebook...Email....Facebook...Email...?

Facebook Messaging vs. Old School Email

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One thing I heard about the young generation is that they never use email anymore. I began to wonder why that was, where corporate America and us old folks who grew up with nothing but email couldn't live without email now.

Lately, I started trading messages with people on Facebook through their messaging system. I wasn't sure what to make of it at first. Some people began sending me messages while I would initiate some just for kicks. It seemed like a novelty more than something that was useful.

But I started recognizing the advantages of messaging like this:

1. Email is filled with spam. Yet, Facebook messaging is not. I guess spammers haven't figured out good ways of getting into the messaging system. Each time you create an identity on Facebook, there are verification steps to show that you are a real person. Once someone creates a fake identity for spam purposes, it's pretty obvious, even if you get past the verification steps. They often have a big link posted to their website and I immediately report them as inappropriate to Facebook authorities. I once met Jonathan Abrams, founder of Friendster, who tossed out the idea of using a social network as an email system, because it would effectively eliminate spam. I think he was right.

2. It sorts emails by the conversation. It presents each message thread, which is incredibly useful from a conversation standpoint. In Outlook and other email programs, somehow the sorting by sender or subject doesn't solve the entire problem. It doesn't do auto-grouping by conversation, which I am finding to be very useful in a Facebook GUI; subject sorting just doesn't cut it. And last, threading never seems to work well, because sometimes attempting to derive threading via the RE: of a message subject can be daunting, especially if it has been editted.

3. Going further, the presentation of each conversation once you click into it is very nice. There is no antiquated '>>' for presenting the previous body of the message into replied email, which can make for difficult reading. You can see the whole thread at once and see where people replied. I do wish I had the option of copying some of the previous message into my current message. Sometimes there are multiple points in a message and you want to reply to each one separately and clearly. I have cut-pasted message sections into a new message and then typed a reply to that, just so the recipient knew I was talking about that section of a message and not another part.

4. If you want to start a new topic, you can just start a new message thread. This helps keep conversations organized instead of devolving from the original message where you may forget to change the message subject or just too lazy to, and then the conversation starts going every which way.

4. You can only receive messages from friends. Thus, you have already designated a list of safe message senders, which along with item 1. above helps to eliminate spam.

5. Private messaging is available, but you can also do public messaging. This is not available to the email world. Via the wall, you can have a more public conversation which can be entertaining and/or useful, if you intend on others to see it.

6. There are many types of communication happening on Facebook. People can comment on your photos, write on your wall, have activity and you get notified of it, and send you personal messages. Having all that accessible in one place is very useful. Otherwise, I'd have to flip between Outlook and several other websites to check activity. Sometimes I can send activity to my email, but then it just gets mixed in with all the other spam and normal important conversations I'm having. It's not very optimal. On Facebook, the newsfeed gives it to me all and a light notification on the front page gathers for me all the communications one can have with their friends and community in one convenient place. It's no wonder that people today have switched to Facebook from email as a primary communications vehicle.

The moment of epiphany for me happened when I began my Facebook messaging to friends AND I left a browser window up with Facebook in it. I would find myself hitting reload on that page many times during the day as well as checking on Facebook through my iPhone. I began to understand why today's youth almost never use email and just use Facebook messaging.

As my usage of Facebook messaging grew, I could also see parallels with another project I've been deeply interested in, which is email innovation. Facebook messaging solves so many things that I hate about current email. But could email innovation just be a dying concept as email gets supplanted by Facebook messaging?

Four wishlist items for Facebook messaging:

1. Offline messaging.

2. Save messages and conversation threads on my hard drive.

3. SMS messaging.

4. File sending.

Still, I do not see myself totally removing myself from email. The corporate world, and most of my generation, still use email as a primary communication vehicle. But for a significant and growing population of people I associate with, Facebook will become my primary communications method with them.

You Asked Me About Yahoo!...

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In the last few weeks, I've been asked what I think of the recent events at Yahoo!. As an once insider, people think I've got some inside knowledge and insight into whether the changes are good or not. To be honest, I do still have some connections with Yahoos, but they get more tenuous each passing day. Still, it's been interesting polling both insiders and outsiders about Yahoo! and its future.

Since the announcement of Jerry Yang becoming CEO (and Sue Decker becoming President) and Terry Semel leaving, I have thought a lot about what this means for Yahoo!. I also went around and talked to ex-Yahoos and current Yahoos about what they think. It's been an interesting experience hearing what they've had to say.

I have found an amazingly wide range of opinions but there seem to be some trends:

1. Those who just joined Yahoo seem more optimistic than those that have been there for a while. Some guesses as to why this is so:

a. They joined at the current state of affairs, so they must be bullish on the company or else why would they have joined up?

b. They must be bullish or else they would quit. This could be real or self-delusional. Who knows. But they must make themselves bullish or else they would lose all psych in their job, which they arrived at not too long ago.

2. Veterans seem to have mixed opinions. Why:

a. They have more experience in the company and know what works and what doesn't. They've been through change before at Yahoo and can be both optimistic and pessimistic.

b. It seems that this is highly dependent on position and location in the company (see next item).

3. Higher level employees unanimously are bullish on the company. This is not strange; they have signed on to be an exec in the new regime and have to like it. Otherwise, they would leave. And politically they can't express any fears; it would scare the troops. So it's been hard to pin down what they REALLY think about the new Yahoo.

4. Pockets of bliss exist. In many small, local areas, people are doing really great work and getting lots done. The opposite is also true, that there are also many areas of despair as well. These folks cite all the typical stuff, like growing politics, impossible to get stuff done, no direction from leadership, etc. etc.

What do I think about Jerry being CEO?

I totally think he should have been CEO a long time ago.

I think that in order for someone to run a company effectively, you must have instinctual knowledge about the industry. We would not put a DOW chemical exec in charge of GM. Likewise, for someone to run an Internet company, you must have some great resonance with the Internet and are in tune with what people want and like.

Who out there could qualify for this? Larry and Sergei are two. Filo and Jerry are another two. I actually think Dan Rosensweig could have done it. He used to run ZDNet and thus had a lot of knowledge about the Internet as well as executive experience. Well, we're not going to get Larry or Sergei, and Dave Filo is still working on engineering issues. So who is left. Jerry Yang.

Can he turn the ship around?

While I think Jerry is the right person, I also think he has an enormous task before him. Think of trying to turn the TItanic by pushing on it with your hands. In certain crazy and inventive situations, I bet you could actually turn the Titanic that way, ie. if you were Superman, you could do it - this is sort of like answering one of those famous interview questions in a Microsoft interview. So I believe that turning the Yahoo ship can be done, but it remains to be seen whether or not there is so much inertia and momentum that it resists turning fast enough.

One possible consequence of turning the Yahoo ship will be some down revenue quarters over the next year, potentially two years, as restructuring plans take hold, removal of waste, taking down sites that shouldn't be worked on, etc. etc. However, it will be amazing if revenue can be kept growing in the midst of such change.

Only time will tell. My money is definitely on Jerry Yang to bring Yahoo into its next stage of evolution.

Avoiding Blur

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I was just talking to a startup about their website and we were strategizing what it could become. We noodled, talked, brainstormed, argued, and finally agreed for over 5 hours and developed a sense for what we want the future site would be like.

At the end of the session, I was still feeling uneasy about what we came up with. The main reason was that it was merely a combination of what other sites were doing in part. One site would have this feature, but not the main direction for the site. Another site had people doing the activity, but in a different way. Some of the bigger sites out there also had the ability to do what we were doing, but of course their missions were much more broader and not focused like ours. Could we do better by simply having a niche, focused mission but having many of the same tools as other sites, and also competing against the fact that users were already using our competitors for that same mission we wanted them to focus on with our site?

This was the source of my unease. If there are competitors or near competitors, or even non-competitors, who allow users to accomplish the same thing on their sites, whether it is their main mission or not, AND these competitors exist already, this is a danger point. I call it "blur".

The blur occurs in users minds when they hear about what you want them to do, but can't figure out where to do it. They may already be doing it on some other site, by either using some existing functionality, or jacking some other functionality to get the job done.

Blur is heavily related to product differentiation. You want something to cut through the blur. When they think of something they want or need to do, you want them to think of you. Whatever functions you have must be cool, creative, and original enough to attract them to you despite being in a similar place with other existing sites.

Here is an example. Suppose you want to build a site to allow users to connect with friends. Let's say your main interface is email, as a possible differentiator. However, as a user who hears about your offering, "connect with friends via this new way, but with email", they'll think all sorts of things like:

Hmm I'm already on Facebook and that works for me.
I have my address book on Outlook and email people just fine.
All my friends are on MySpace. Why switch?
I don't have time to try something new, let alone learning it and THEN getting all my friends on it.

The problem here is that when you express your mission to users, they get caught in the blur of other competitors being able to do pretty much the same thing and you don't have something to justify the switching cost of going to your service to do something they can do already somewhere else.

You need to find that one (or more) things that people can do on your site that no one else offers, AND is cool enough to get them to come over and learn something new.

It's always a danger point for me when I hear of entrepreneurs who design something supposedly really cool but then I point out that people are already doing these things on other sites. I ALWAYS get pushback because they think their creation is the best out there, and nobody has mashed up the functions in such a focused manner.

It might actually be great. I'm just talking about risk here and the realities of getting users attention in a crowded space. You might actually have something that is a ton better at doing something, than for them to do it on some existing site.

I'm into risk reduction. Why try to fight with through user blur with something that isn't shouting "Come here and try me because I'm different" loud enough? You could run out of resources and funding trying to bulldoze your way into users' attentions. If you had several million dollars in the bank, yeah potentially you could market your way to success in a certain category.

Or you could spend a little more creative time and figure out something to build that is actually cooler and hasn't done before, and that users will want to spend time with. Enough to get past the switching cost and try your service.

WIth that previous startup I mentioned, after 5 hours of discussion, we spent another 20 minutes talking about something that wasn't mentioned and was something very unique in their offering. I think that 20 minutes is going to turn out to be most valuable part of that day. Because I think we added back something that would cut through the blur and thus reduce our potential risk in attracting users to our site, to do something that they could do somewhere else in general, but being able to do that one thing that they CAN'T anywhere else.

We could have gone home after 5 hours. But spending that little bit of extra time and effort to find something to avoid the blur was worthwhile and I believe, critical for the success of the company.

Social Networking is the Web 2.0 "In" Thing to Do

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Yesterday I went through an exercise with one of my companies on the social networking feature set. We went through the basic list first:

1. Add, edit, manage, invite friends.
2. Sending and receiving messages privately.
3. Announcing to friends when some activity is accomplished on the site, with announcements going out via email. Management of such communication to your friends list (instead of knowing and typing in tons of email addresses).
4. Commenting on your friends. Approval of comments to appear.

Then we added some more on top of the basic list:

1. Tracking activity of your friends via RSS feeds or announcements.
2. Affecting your public and private activity setting, by being able to expose your activity only to your friends instead of totally public and totally private.
3. Rating your friends. Enabling reputation building through rating.
4. Enabling reputation building through activity on the site.
5. SPAM management.

After that we talked about something I wrote about a while back, which is about Fame and Competition on the Net. I think fame refers to:

1. Fame amongst your circle of friends so that you feel important and have notoriety and show expertise.
2. The creation of your personal fame, which is a great way to encourage activity on the site. Create a system by which people build up their rating and reputation to create fame.
3. Application of that fame in opening up new functionality to those with higher reputation, versus those with little or no, or negative reputation/fame.
4. The ability to see their fame expressed, in leaderboards, star ratings, in comments on users, in lists sorted by fame.

Competition refers to:

1. With respect to fame, competition encourages activity by making people compete to be more famous than other people.
2. When you make things visible like reputation and ratings to the world, you foster competition when users want to have higher reputation and ratings over their friends. Leaderboards, graphical elements like rating stars, reputation building comments like those found on Yelp, are all great ways to show how great you are, which in turn encourages more activity on the site to make you chase greatness over and above your friends.
3. Getting to the top of certain lists, or placement on a certain page like a home page fosters competition. For example, if there is a module on the home page which shows recent activity, a user might increase activity just to be able to say that he got his activity shown on the home page.
4. Competition amongst people you know is great as well as to the rest of the world. A user will want more notoriety within their circle of friends as well as to the world at large.
5. If orchestrated right, competition can bring an element of gaming into the equation which can make the activity fun and engaging. That's not to say that gaming needs to be in the arcade sense of the word; it just means that a sense of play, of being able to strive and to win are elements that need to be present.

Social networking for meeting and activity management are the basic functions. But I would argue that they are not enough. There are enough social networks out there where you can perform these functions. A site who wants to employ social networking needs to rise above common functions, such as with elements which generate fame and competition. You want to make your site more than just a place for meeting and hooking up. Design activities which foster meeting AND fame and competition AND encourage activity on your site and you'll win across multiple goals.

Drinking the Kool-Aid Ain't So Good

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When I worked at frogdesign, I remember our team going to a PC client and getting reprimanded for not using their company's PCs If we were going to work for them, then shouldn't we be using their products and getting to know how "great" their products were by living with them day to day?

The same thing happened at Yahoo!. I remember a sales rep who had a major PC manufacturer as a client and he immediately went out and bought a laptop made by that company to show solidarity and support for the client. I don't know if he used it when he got back to the office, but definitely he brought it with him to client meetings. He even switched his cellphone to that company's brand (maybe you can figure out who this company was now heh). It was all to show that he was in full support of the manufacturer as client and supported them so much that he lived and breathed their products, as much as what he did with them at Yahoo!.

I drank the Kool-Aid too. When we worked on Yahoo! products, we were told to always use them. It kind of made sense at the time. If you lived and breathed the products, you could make them better. You could spot problems, make suggestions, and overall show the world that a company who uses its own products must obviously have the highest confidence in them to do so.

After observing and experiencing this behavior for many years, I'm going to take the contrarian view. I am going to suggest that using solely your company's products is not so good as people claim.

I reached this conclusion just now, almost 3 years out of Yahoo! and have been out there using whatever it was that made my life easier, instead of just using Yahoo! products only. I found that there were a huge number of products out there that were really great, and often much better than what Yahoo! could offer. I even took Yahoo.com off my home page button, which had occupied that button since 1995. Drinking too much Kool-Aid too long made me miss out.

If you are constantly using your own products, I would put forth that it's the best way to put blinders on. Sure, your company's products may be the best there is when they come out, but they may not be at some time in the future. With Web development happening so fast, it could happen sooner than you think.

In today's Web, things move so fast. People come up with stuff that you personally would not have dreamed of. The more you focus on your own products, the more the likelihood that you fall into that comfortable place where you don't need to change, you don't look for something better, and you just don't feel like learning something new. You get complacent and feel that what you have is good enough, or you think it's world class because you worked on it and people have told you so. How can it not be? You take pride in what you've done and nobody can knock you off the mountain. Everyone tells you to research and look at competitors' products, but yet nobody finds the time to do so. It is a small number of people who actually have their own personal curiosity to go out and try somebody elses products. It's too freakin' busy to go and do this in your spare time!

I would put forth that the blindness that happens with being comfortable and focusing on yourself and your own company is precisely the way you get blindsided by some fast moving kids out of college developing something that is so cool and compelling and you see them gaining traction only after you've fallen behind.

What's the best way to combat this?

USE THE BEST PRODUCT OUT THERE FOR WHATEVER IT IS YOU DO.

Force yourself to always try new things, even when your boss is telling you to use the company's products. Fake using Gmail when you go to a client meeting, but return back to what you think is the best product for email when you're out of that meeting. Use the best cellphone for you, but when you go back to work carry your Sony-Ericsson.

You can't learn about a product by just trying it; you really need to live with it and become a real user of that product and internalize why it is great.

Always ask your friends what they use. Read magazines and blogs about what they recommend. Collect your insight and feed it back to your own development process for your own products.

Don't get complacent about your own products by missing what's happening in the greater world. This is more than just being "innovative". It is experiencing and acknowledging the world is a bigger place than just you, your product and your company. Broaden your horizons and you'll be a superior product person for it. Truly in today's Web, the best product does win.

POSTSCRIPT:
When you realize that you are practically using none of your company's products because your competitors' products are so much better, and you can't get your company to realize this, I think it's time to leave.

POSTSCRIPT Part II:
If you're a boss, don't be an ass and make everyone on your team use your own products, if they aren't as good as your competitors'. That should be motivation enough to make your own stuff better.

Changed My Home Page on Firefox, New Portals

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I never thought I'd see the day. Today I changed my home page from the venerable Yahoo.com to Netvibes.

If you've never tried Netvibes, it's basically what My Yahoo! should have evolved to. Lots of cool Web 2.0 features like dragging modules around, in-page DHTML adding/removing of feeds. It just makes the personalized page experience that much better.

I used to open up Firefox to the familiar view of the Yahoo front page. But I find that it isn't all that useful for me anymore. Occasionally, I enjoy the interesting headline that shows up, like today's headline on how much Bush paid in taxes since it is the tax return deadline today. But usually, I don't even try to read what is on the page. Previously, I also enjoyed seeing the cool ads that popped up. But none of those show up in Firefox and only in IE, which I almost never use.

So today, I resigned myself to switching out my home page to Netvibes, which is a page I look at multiple times a day and has great use for me. Now why not My Yahoo? I used to use My Yahoo, but never set my home page to it. Somehow it just didn't fit the bill and was too Yahoo content focused. Sure, you can now add RSS feeds. But it wasn't as nice to work with as Netvibes and I just abandoned it after using it for years as a second home page.

As I pulled up Preferences in Firefox and hit the "Use Current" button for setting the home page, I ruminated on the fact that all the old portals had barely changed: Yahoo!, AOL, MSN, Google. All were just rehashes of the same old thing. Just a Web page, some flash, but lots of links, and not feeling very useful to the Web world beyond their own boundaries; I could only get at Yahoo! stuff on the Yahoo! front page.

It brought back some thoughts I had about a year ago regarding portals. None of them had taken into the account the changes in Web surfing behavior; they all basically stayed the same. I thought of all the issues they face, like legacy issues in technology, thinking, politics, fear of change, commitments to partners and advertisers, lack of innovative thinking, closed door protectionist attitudes towards driving traffic to their own services. These are real barriers to what a portal really could be in today's world. But it also meant for me an opportunity.

If you were to remove all those barriers and start building a portal for today's Web, what would it look like?

Site Takeover of USPS.GOV!

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This is amazing to see:


Visit usps.gov - Enlarge image

When I started working on online ads, it was acknowledged that c|net.com was one of the most innovative in online advertising. Then came the portals, and pushed by all the advertising technology companies like Eyeblaster.com and Pointroll.com. We'd all be doing floating ads and site takeovers, popups and popunders, expanding ads, video ads and wondering what our users were thinking about all these things flying around on their pages.

However, it was only those companies that were innovative and daring enough, and desperate enough for revenue, that would try these ideas. Some worked, some didn't. But pretty much everything generated revenue. Some of the older institutions would never try these ideas. They worried about annoying users or creating experiences that would degrade trust of their users. For the most part, they were right. But sometimes we found they were wrong.

It's hard to predict what users think. The world keeps changing and users' preferences and tolerances change as the internet presents experiences that, in the beginning, are unique and potentially shocking, but then over time become commonplace.

What does this say about the internet when a venerable organization such as the United States Post Office joins the online advertising revolution-now-become-commonplace and places a site takeover on their top page?

The Pesky Blogosphere

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Recently, when you search on David Shen Ventures on Google or Yahoo!, I come up on some other blogs now.

If you know how blogs seem to work these days, there is a lot of rehashing of content to create content. Bloggers follow other sources and then paraphrase, rewrite, or add onto the content by commenting on it. It's an easy way to generate material for articles, versus coming up with something yourself.

But sometimes, they get it totally wrong. It's a problem with citizen journalism. Professional journalists have methods of working and standards to uphold (at least most of them anyways). One big characteristic is truth in journalism, and the verification of facts before publishing something so as to maintain/increase reader trust, which is a good way to get readers to come back and read your stuff.

Today's new citizen journalists often don't have these standards. Nobody taught them how to be like professional journalists. They just started writing and sometimes are unaware of things like holding high ethics and standards. They have different motivations like creating content which generates traffic which generates revenue through ads and affiliate programs.

So now I've been mentioned by some citizen bloggers, who I am sure are just trying to create content by following activity on my companies page. Unfortunately, the information is wrong. They say I have invested in a bunch of companies but it is not true. Even though a company is mentioned on my companies page, it does not mean I have invested in it. My model is to be advisor to every company listed, but I could be advising without investing.

None of them have taken the time to verify the information. They just made some assumptions and posted them.

Think what would happen if reporters on CNN reported this way. How would you feel about their news? Still trust it?

Junk Filter Hell: Outlook is Simply Ridiculous

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OK so I've been complaining about Yahoo! Mail Spam filtering for a while now because it's catching so many important emails from people I want to get email from. I try to add people to my address book as fast as possible, but often I don't get them there fast enough. I just grin and bear it; it's better than receiving 1000+ spam emails but missing that one super important one isn't a good thing.

But today, my Outlook's Junk Filter started JUNKING EMAIL FROM MYSELF. Is that ridiculous or what?

This is why Microsoft will never produce products as cool as Apple's, or win in the long run.

I Need MOOOOO Therapy

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These Moo cards are really starting to take my brain and feelings for a loop.

The impulse to make more is staggering. It takes a huge force of will to not go and upload more pics and order more.

When I order them, my intent is to use them as a personal ID card or as a unique business card design. But I find that when I get them, it is super hard to part with them. I like them so much that it's hard for me to give them away! I think it's the fact that I took those pics on the backs. I have a deep attachment to them simply for that fact alone.

It's also their novelty and size. The slender aspect ratio of these cards makes them almost cute and you want to own them. I can't part with them because they are so keep-a-ble!

Then when I show them to others, they like them too. But they won't take just any card; they want to pick. They look carefully through them and only pick the one they like. Or take more than one. How strange. They want that special one that appeals to them alone, even though I took those pics and like them all.

It is even more pronounced when I show my biz cards. In case you didn't know, the backs of my business Moo cards have images of my startups that I take on occasion to document their "Making Of". So when they take my Moo cards, they don't want some strange image or dudes on the card backs; they want something that is familiar to them, like either their own company or if they know the people.

Moo cards are strangely addictive and produce such interesting reactions in myself and in others. I think I am going to need some MOOOO therapy soon to figure this all out...

By some fortuitous circumstance, I met these guys at FlipperNation:

FlipperNation is about 2 guys who are trying to make it rich by flipping houses. The episodes show their misadventures at flipping their first house and all the strange people they deal with around house flipping like other realtors and contractors. It's really great stuff and I can't wait for the next episode.

What was really interesting about my meeting with them was that it got me thinking about the state of video content today in the world of the Internet, interactivity, and declining TV viewership. As I wrote my first email to them, giving them some feedback on what could make their internet video show better, I thought about the ways that some video outfits were getting really creative at leveraging the Internet and interactivity to engage the viewership in ways that was not possible in the days before the Internet.

Passive TV consumption is waning. Users are getting more sophisticated and want something that involves and communicates with them rather than sitting there like drones and just receiving.

My first encounter with interactivity aligned with a TV show was way back around 1999 when "Who Wants to be a Millionaire?" was the big thing, and they rigged this Internet game that played along live with the TV show itself. You could play against other players who also played along, and winning gave you points which could land you on the main leaderboard. It was incredibly well orchestrated, and it must have been a nightmare to manage as it needed to coordinate with the current live showing in 4 time zones.

Another example of using the Internet is with Sci-Fi Channel's Battlestar Galactica where, between seasons, they shot a whole series of shorts that connected the last episode of the previous season with the new upcoming season, and showed them on their website. It was a way to inexpensively engage viewers while the new season was being prepared, but yet keep them interested and wanting more as the story line unfolded. Also on the website are podcasts, additional commentary, images, interviews with the stars - Sci-fi Channel did a great job of filling out the blanks for curious fans to consume, whereas in pre-Internet days this information was impossible to see.

FlipperNation already had employed some of these types of ideas. They have employed guerilla marketing such as getting on MySpace and each character has a page as well. Their website includes a whole bunch of content related to real estate and the art of flipping houses. They have an email address where you can submit your house to be on the next episode of FlipperNation. We brainstormed on many more ideas at our meeting yesterday, extending on the usage of the Internet, engaging the viewership and keeping them humorously hooked.

I think FlipperNation has legs. They are now looking to sign up with a studio and go big. I will be watching them and hope one day I can say, "I knew those guys when they were nobodys, and now they're somebody!" That's show biz!

The Amazing Pace of Change at My Alma Mater, Yahoo!

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I just found the email that detailed the re-org at Yahoo! from Sue Decker, head of the new Advertiser & Publisher Group. It's posted at Techcrunch:

Text of Email to all Yahoos, Techcrunch

I have been out of Yahoo! since Sept 2004, and in 2+ short years, I see:

* Lots of EVPs and SVPs. They used to make you run the gauntlet before making even VP.

* I only recognize about 6 names in the email out of about 15. The influx of new people is staggering at the higher levels. Where did all the people I knew go?

* The company is organizing in a very "large company" way. The changes were in the making while I was still there, but now they are extended more.

* Valleywag's post about slightly less kneeling before Zod is a bit cutting, but it does make a point. I am not sure that splitting engineering (and by the way I heard through the grapevine that my old user experience group is reporting into the product teams now too) is going to be good for the company in the long term.

To me, companies always undergo cycles; they try things, they work or don't work, and then they go back to try old things, and then they work/don't work, and then you're back to trying stuff you tried before. I suppose it's one way to keep the world off balance to distract you from other possible issues with the company.

One of the coolest things I've seen is when one of my startups gets their first site or application up and running. VoxPop has been busting their butts getting their first two promotions up:

EW.com Presents the 79th Annual Academy Awards: Pick the Winners

WCBS Newsradio 880 Presents the Yankees Decade of Dominance Tournament

Incredibly well done and designed. Their contest engine is working nicely and the front end design is beautiful. Check them out and enjoy!

Learn more about VoxPop on their site...

The Power of Referrals

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Just recently, I've been thinking more and more about the power of referrals as applied on to Internet businesses.

Think about Digg.com. I "digg" an news article, so I hit the "digg" button and it gets tossed onto the Digg.com list. Because I "digg" it, I am essentially referring it those who subscribe to the Digg feed of news articles. In aggregation with the crowd's opinions, as well as with some newly discovered editorial color on top of it, my referral could get sent to the those who like the Digg referral style of consuming news, as a way of uncovering interesting news.

On NYTimes.com, I just learned that they consider the number of times a story is emailed a better measure of popularity than just the number of clicks to read a story. If you think about it, calculating most popular based on clicks can have a self-fulfilling prophecy aspect to it; those on the most popular list are seen by more users who click on them more, and those stories inevitably stay on the most popular lists longer than they should. But, if you think the number of times a story is emailed, then you realize that if someone were to think this story is great, then they're going to refer it to friends. It's an added metric on top of how many times the story is read and helps fine tune out of self-fulfilling prophecies.

A new site I was just introduced to works on the same referral principle: downfly.com. It is a simple application which allows you to post a link on the site and it gets "passed" to your social network. Every now and then, I'll get an email from the system that sends me links that get passed to me. As I use it more, I find it to be entertaining, a great way to discover new sites, and I also get to see what people in my network are thinking about and consider important enough to pass down their social network chain. But as I become a "passer" of links, I can't help but think about what I'm passing and why and the ramifications of passing. I want to pass good links, not junk. I don't want to waste peoples' time by passing stupid links. I think about the value they're going to get and make sure they get some from whatever site/link I'm passing them. I also can't help but think about what they think of me as they're receiving my link passes. That would be something interesting to implement is a feedback system that allows people to easily comment or feedback on the stuff they're getting, as a mechanism to see if I'm doing a good job or not.

I see this referral aspect also in my advising/investing business. I see part of my job eventually is to help my early stage companies raise funding. I also see part of my job is to utilize my network to bring them valuable business partnership opportunities. But I told myself long ago that I need to build trust in my referrals to these folks. Investors don't want to keep seeing junk from you; they'll never take your call if you keep wasting their time with lame businesses. Potential business partners don't want to see junk either. I think deeply about whether there is true value in a partnership with someone before I introduce them. I don't want to make frivolous introductions, again because I want to continue building trust in my network that when I refer somebody to them, that I'm not doing that randomly, and that 10 times out of 10 it will be something they should look at.

Look at the effects of referral:

1. You the referrer have a desire to bring value to the receivers of the referrals. This altruistic notion forms the basis of the positive effects and power of referrals.

2. You think heavily on what could be interesting or valuable to them, so you're careful at referring things to them. Thus, you as a referrer need to get to know your receivers at some level to know what could be interesting to them. If you don't know them well, your referrals could have a negative effect on you as the referrer as your referrals could be perceived as random or junk. They may ask you to stop. Refer effectively by getting to know your receivers.

3. Successful or valuable referring can have positive effects on your reputation. It builds trust in your receivers of the referrals that you are giving them something valuable. It also builds trust in the thing you're referring, like a website, or business opportunity, or news story. It was checked out by the referrer, whom you trust, and thus you have a tendency to trust it more too.

4. If they like your referrals, you may get value back, in the form of good referrals or otherwise. If there is some measure of how good a referrer you are, like a ratings system, you can gain in reputation in a visible way. That rating is value to referrer, as is other things.

5. Referrals can be a better measure of popularity and "this is valuable or good" based on all of the above, and helps remove self-fulfilling prophecy effects of other forms of popularity measures.

6. You refer poorly, or annoyingly, and people will shut you off. Trust is lost, and thus reputation is lowered. And also they will lose trust in the thing you refer. As an entrepreneur, make sure you get referred by someone who is trustworthy as a referrer, and not somebody who has low or potentially low trust amongst the people you're trying to get referred to. This can be very hard to determine who is trustworthy as a referrer and who is not, so tread carefully.

7. The system which enables referring effectively can use this as a viral marketing tool to gain more customers or users.

As I think on the effects of referral, I am going to try to employ it more often in thinking on product strategy with my companies.

Today, the headlines wrote that Miss Nevada in the Miss America competition would be replaced by another, on the revealing of exposed breast pictures and other 'deemed inappropriate' acts several years ago as a teenager. Apparently, a friend had taken those shots and then posted them on the Internet. Consequently, they were discovered and Miss Nevada was disqualified and the honor given to the next in line. She is realizing firsthand the dangers of actions which happened years ago coupled with the openness of the Web.

The Internet has become a place for free expression but fraught with unexpected consequences for those we express without restraint or forethought. We are in a transitional generation learning with trial by fire (or error) and missteps on what the Internet can do and what dangers it can represent.

Prior to the Internet, our society's private information was very much protected by the lack of technology and by physical barriers. We never had to worry about people seeing our pictures because they just sat in old shoe boxes or albums and nobody could see them except those whom you wanted to. Our personal information was our own; what we did in our bedrooms, closets, and homes never had webcams focused on them or digital phone cams to send to others.

With the emergence of sharing tools in technology and on the Internet, it was now possible to take all that information and put it out there, often times simply because someone asked for it, or because we thought it would be funny....for the moment. Somehow in our naviete we thought that we could put it out there, it would do its thing, making someone laugh, or be just a passing comment on a post or instant message, and then we forgot about it, thinking it be lost in the masses of information on the Web.

The Web sometimes loses things, but most of the time it does not disappear. Search engines make finding things easier. We all get googled now before we meet people just to see what we can learn about them before we meet them. Information is archived on sites because every page a site has means more page loads for ads to be shown on. It doesn't make sense for Web companies to blow old information away. Text gets saved and copied, and re-pasted or quoted somewhere else. Pictures and videos are saved and re-posted. Even if you think your picture is deleted in one place, someone else may have saved it for their own use and it may re-emerge.

So now it's not our own naviete but the responsibility of others both close to you and not. Even if you don't post something, someone else could. Embarassing pictures taken at an office party get posted to your favorite blog; your drunken actions at a frat party re-emerge to make you lose a job offer years later. The news is filled with instances where everyone is getting googled and embarassing information surfaces about that person that pre-Internet would never have been found, like to the detriment of Miss Nevada.

Openness is good and to the extent we can find out more about the people around us is probably positive in the long run. But for us, in the transitional generation, we have not done well enough in teaching our youth or ourselves about the dangers of posting text, pictures, and video on to the Net and the future ramifications of doing so. We need to do better in knowing that we need to think more carefully before we act impetuously in hitting the enter key. And that sometimes, our actions not only affect ourselves but others as well.

My hope is that our educational resources will add materials about the positive and negative aspects of posting to the Internet as soon as possible to their curricula. And for us, who are out there with our school days behind us, I hope that we can just pause a moment before we hit that enter key and think on whether sending that file or post is really the right thing to do, even if it is funny in the moment.

Fame and Competition on the Net

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It started way back in the middle of the Internet boom years. I got onto eBay and started bidding on toasters (I collect antique toasters...!) As I bought and sold stuff, I collected positive ratings for my transaction behavior. As my positive ratings grew, I became more obsessed with responding quickly and often about my transactions. If I was buying, I would send payment as soon as possible or notify the seller that I had a delay. Likewise for selling, I would make sure I respond quickly and let the buyer know exactly when to expect the item. My rating was my reputation on eBay and it became one of the most important things I would build on the Internet, which was a trust rating that I cherished and allowed me to do things on eBay with other members that untrusted, poorly rated members would not.

Around the same time, Who Wants to Be a Millionaire? became one of the hottest TV shows. But something that ABC did that not many knew about was the fact that you could play real time along with the show and compete against others also playing via the Internet. I also started playing along with the show and the designers of the Web game did some really great things like allow you to accumulate points upon answering questions successfully and in a timely fashion (more points for faster answering). Players with the most points were put up on a leaderboard which you strived for. It was amazing how many points some people had accumulated. It made you really try to get to the top of the leaderboard and feel....famous for being the best. And the world knew you were the best because the leaderboard was visible to all.

Fast forward to 2004 where I discovered that HotOrNot.com had put up the ability to send virtual flowers to people you liked and wanted to meet via its meeting service. But they did something clever. If you received virtual flowers, they would appear next to your picture. It gave you a sense of superiority; I've got 10 roses! How many do you have? It made you feel great about yourself and showed the world that others thought you were hot enough to send flowers to.

And now, as a frequent contributor to Yelp, I find myself racing to be the first reviewer of a restaurant. When you are, you get a little icon that states you are a first reviewer and then on your profile, it shows how many first reviews you've made. Then, I started writing witty reviews instead of boring ones. Because readers can rate reviews on the basis of Useful (big deal) or Cool (yeah!) or Funny (even better!). For some reason, I sought to write better reviews in an attempt to get more Cool and Funny ratings! It's easy to write a Useful review, but not many can entertain or be noted for being "cool".

Fame and competition go hand in hand on the Internet. It's one of the best techniques for getting users continually engaged on your website. You hook them in by making them feel like they are the best at something, and let others know about it. If others can say your cool or the best, that's even better because now you have validation from the crowd. How much validation do we get in real life, even from the people we know and love? Often times - ZIP. But on the Internet, the millions of surfers can come by and tag you as cool, or see that you're the best at something.

Then since you know the crowd is watching, it makes you want to participate more, and it pushes you more to do better at whatever you're participating in. It draws you in and the reward is fame and notoriety whereas in the real world you may not have that chance.

It's easy to reward people with money. But it's costly and you need money first before you can give it away. When the reward is not money, sometimes it's more powerful at encouraging and reinforcing user engagement. I would argue that it is even more long lasting because if it's some contest you're in and you win, that's where it usually ends. There is no more beyond that. With a well crafted fame and competition scheme, you can engage users for a much longer time and at much lower cost.

Working with my startups on developing fame and competition systems tailored for their services is something I think about all the time.

Social Networks: Recruiting and Reconnecting

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Recently there has been a bit of press regarding LinkedIn. Also, I've noticed that there has been an uptick in LinkedIn invites lately. A lot of that has happened when former colleagues at Yahoo! are thinking about leaving and they realize that they don't want to lose their connection with previous colleagues, or they want to renew their connection with those who have left.

I too find LinkedIn to be quite useful in finding old colleagues. For David Shen Ventures, LLC, I am often recruiting for positions in my companies. And I have found that my social networking site memberships have been extremely useful in finding and contacting people. To date, I have used Friendster, Yahoo! 360, and LinkedIn the most in locating folks. Surprisingly, our Yahoo! alumni network Yahoo! Group doesn't work so well. I think that Yahoo! Groups is probably the old generation social network and needs to be updated with today's functionality. It is too limiting in its ability to let members communicate with one another. The membership is private and it only allows broadcast of messages out, which so far has proven to be not very helpful at all.

On LinkedIn and Yahoo! 360, I can contact people directly and a personal message has been much more effective at reestablishing someone whom I have not talked to in a long time.

Through my connections, I am tied to literally every Yahoo! that ever worked there. It is quite amazing. Of course, LinkedIn is much more informative from a recruiting standpoint since people post their company info there.

If you think about the way Web companies go through cycles of waxing/waning success and employees go through their own mini-cycles of entering/exiting companies, it seems that LinkedIn usage is tied to these cycles. It would be interesting to do some research into correlating industry and personal events to traffic and usage of LinkedIn and other social networks.

Online Anywhere with Verizon!

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Today, I'm sitting on a train to Delaware from NYC and decided to blog a bit, as well as try out my new Verizon broadband wireless card in a very tough environment; that of a moving commuter train racing at high speed from one major metro to another.

I figured that Verizon might actually setup service along the train route, but I am always doubtful that service will be continuous or of good quality.

I was definitely pleasantly surprised. I suppose the sheer number of business folks with wireless broadband cards must be substantial, as service was very continuous and at least 2 bars the whole way. WOW! An online junkie like me who can be online the whole way on Amtrak from NYC to Delware! Amazing!

I love it when I see big corporations actually being successful with this kind of technology. It's nice to not be disappointed every once in a while.

Get your Verizon Wireless Broadband card today!

Incubators and Transferrance of Resonance

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The concept of an incubator keeps coming up in my travels. Everybody knows about the big Internet incubators like IdeaLab during the Internet boom years. Lots of investors pouring money into these operations, big plans and huge infrastructure was built to support the development of business ideas, on the assumption that certain resources could be pooled together and shared to increase efficiency and cost. These were building space, internet access, servers, expertise - you name it and you could find it at an incubator in the late 1990s.

The spectacular demise of these incubators put a damper on the creation of new huge incubators. Even now, the lawsuits still go on where angry investors, having lost hundreds of millions of dollars in these investments, are litigating to get some of that back. When I started into this investing business, my ex-venture fund partner and I tried to form an incubator called Ignited Brains where we would employ inexpensive outsourcing to Internet ventures and try to let the marketplace decide on their viability. When we went out to get advice on our operation, we were met unanimously with negativity; incubators, we discovered, was a dirty word in the venture/investing community. Nobody wanted to have anything to do with us at all, which caused us to switch gears to try to raise a traditional venture fund.

As we worked on our traditional venture fund, we also discovered that incubators did exist in other forms. Some venture funds developed the concept of Entrepreneurs in Residence (EIRs), where entrepreneurs with a track record got office space and sometimes were paid staff and they were free to work on whatever projects they wanted. If they were on to something good, the venture fund would then finance it and off they would go. In fact, we had an "lab" in our venture fund which we would activate, with permission of the investors, to operate essentially as an incubator for our own ideas. Another interesting model came up with YCombinator where the two principals would get college students to work with them for 3 months and they would fund them for that time and help them get an Internet business prototype out the door. This is interesting to employ college students who have lots of energy, are super smart, and have skills to throw at a given problem. Another incubator model was tried by those who came through the Internet years with at least one large exit, and thus could fund their own ideas. Basically, they would get some of their smart buddies together, form an LLC or corporation, and work on an idea with minimal cash to see if they could get traction with it.

For me, I think I would have tried the last model, which was to take my own ideas, form a team, and run with it to see if it would work in the marketplace. Upon further thinking and research into this, I think there are limitations on this model. In short, my belief is that you can't work on many ideas, if they are your own AND expect them to be successful in the way you envision them.

The problem has to do with resonance with an idea, and transferring that resonance to other people.

First, an idea has to resonate with me. I must love the idea, understand it, and know how it could be successful. So naturally, I get how to make it work, what a target user might want from it, how to market it, etc. You might say I would be a natural to lead the business.

Herein lies the problem. You can only work on so many things so that they get enough of your time and benefit of your ideas and leadership. It's pretty hard to be CEO of one company, let alone 2 or 3.

And you can't rely on others to take your idea and run with it. That's where the transferrence of resonance comes into play. Since everybody is different, it is a very rare event, in my experience, to be able to transfer your own resonance with an idea to another person so that they feel it as deeply as you do. Without that shared resonance in others, they'll never be able to take an idea to the place you can take it to.

Over the years, in various jobs, I've tried to sell concepts time and time again. And I can't recall a single time that an idea survived longer than me driving it. As soon as I stopped working on an idea, it was impossible for the people there to continue work on it. I believe the same applies to incubators. In fact, I talked to an entrepreneur who actually launched a personal incubator with all his own ideas in it and he also had the same experience I had, which caused him to kill all the other projects and focus on the last two. Once he did that, the two are now flourishing, whereas previously they were actually languishing without his focus on them.

If someone can figure out how to transfer resonance to others, please let me know. Otherwise, are we ADD entrepreneur types doomed to only work on one or two things at a time?

Public Square Plotting

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Working with my friends at Public Square at Coupa Cafe:

I am helping Public Square with their business model and strategy - Coupa Cafe seems the perfect place for that - but we have to look over our shoulders to make sure nobody is peeking!

I am working with a number of companies at the pre-company stages in planning the business. I have found that it is very exciting to be at the very early stages of company and business formation where you can affect the strategy of the company at the very beginning.

I'm in NYC right now and missed the episode of Lost last night. I think, "Hey, no problem! Abc.com is streaming all their shows."

I click through to launch last night's episode of Lost...legally since abc.com is allowing this...and start to watch. Everything works pretty well until...bandwidth is lost.

What?

I close that window, wait a few minutes, then launch it again. This time it makes it further in the video, and then bandwidth is lost again.

WTF?

It is obvious to me. Verizon Broadband is cutting off my bandwidth. They see me streaming a high bandwidth video on their network, figure it out at various times, and then shut me off. The same thing happened with SBC on the West Coast. I was streaming the Ironman Championships from Kona all day, and finally after 9 hours, SBC decides to cut me off.

This sucks. When are the internet providers going to just allow me to do this whenever I want? They need to upgrade their networks so each of us can stream that much all the time, 24/7. It's the way the world is going and they have to live with that.

Update on David Shen Ventures, LLC

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I've been doing David Shen Ventures, LLC for about 4 months now and it's been a truly positive and educational experience.

Coming off the difficulties of raising my own venture fund, Chroma Ventures, which showed me that the current market was just too unfriendly to new fund managers, I leaped into the world of early stage internet startups on my own. With only pocket change, when compared to the mega venture funds out there, I tiptoed into the world of angel investing.

Big Education

Early on, I knew I had to learn everything as fast as possible. All this investor stuff was very new to me. I had learned some of it while trying to raise Chroma Ventures, but I hadn't gotten everything yet. So I enlisted my lawyer to sit down with me for about an hour and a half and just go through a whole bunch of financing docs and talk briefly about all the different ways people could screw you.

Lawyers can definitely be worst case scenario guys. They will scare the crap out of you on how you can be taken by everyone. It sure scared me, hearing all the stories of how people were cheated out of millions of dollars, and what happens if you invest on the wrong terms. I listened to all this and it could have made me run for the hills....but it didn't.

Investing in early stage companies, internet or no, is an inherently risky business. I like to think of it as better than gambling as you can personally affect the odds in early stage investing by making the right bets among other things. So you have to take some risks and be ready to lose that money. And sometimes, the investment terms aren't exactly the way you like them. I've walked away from terms that were just too risky. I've also invested in terms that were still risky to a point, but I thought there was a good chance of my risk being mitigated by other things. Basically, to invest in early stage companies, you have to be willing to lose a lot but hopefully win it all back on one or two big wins. (My advice here: if you're not a risk tolerant person, don't invest in early stage companies; you'll drive yourself and the entrepreneurs crazy.)

Learning about terms was one big education. I think I'm getting better at solo-ing on reading a term sheet, but still like my lawyer to go through it and get his take on it. Finding out what terms were company friendly and what terms were investor friendly was really enlightening. I had wished that it was all standardized, but it's actually the wild west of terms out there. Everything is done to personal taste so you have to read every term sheet carefully.

Huge Positive Response

As I went out there, I had no idea whether people would want my involvement this way or not. I already had met some folks who were doing the same thing I was doing: advising for an equity stake in the company. Many were actually paid as consultants to help their ventures. They also touted their contacts in the venture world so they could help an entrepreneur through the funding process. They seemed to be doing OK and had an active roster of entrepreneurs they were working with. But I had no idea on how to find these entrepreneurs.

I started by going to a Silicon Valley Meetup. I met some folks there but also realized that it was not such a good thing to advertise my status as an angel investor - too many people are out there working on stuff that won't ever make it - or they themselves are not true entrepreneur material. I didn't have time to field every business plan that came across my email, nor did I have time to check up on every person to see if they were on the level.

I also met with some ex-Yahoos who had started their own startups and they were plugged into the entrepreneur "underground" in San Francisco and Silicon Valley. This seemed to be a better route than going to the more public forums. Getting to know these guys personally and by referral was much better.

But then, once word got around to the ex-Yahoos around the valley that I was doing this, the response picked up. They all knew me and I knew all of them and thus I focused on a (thankfully) constant stream of referrals to entrepreneurs working on all sorts of stuff. Filtering by referral is much better; your own personal reputation is at stake when you refer someone to someone else!

I also noticed one other thing about the positive responses - they really needed my expertise in their fledgling businesses. Mostly this was in the areas of:

1. Internet user experience and design
2. Product strategy
3. Online advertising and the media world

I thought back to the people I met who were doing the startup advising thing professionally, and there were no people who were operating these particular areas - only in business strategy and engineering. And in talking to entrepreneurs, they lacked someone with experience to lead them in these areas. This was hard won Yahoo knowledge from the 9 years I spent there working on just about every type of product out there. Over the last few years, it has only been in recent years where Yahoos have started leaving, and the knowledge is starting to get out there. But even then, how would an entrepreneur find an ex-Yahoo if you're not connected?

Developing Criteria

It's nice to be wanted. Now how do I work with the companies? I had to develop a strategy for picking the right entrepreneur, company, and business to work on. I did not want to work on everything that came by and I wanted to see if I could do better than that.

First, I said to myself that my knowledge and experience could increase a company's probability for success than without. So if I was going to invest money, then they would have to involve me. I figured an advisorship was the best way to formalize that (rather than being a bothersome investor). No involvement, no cash. (NOTE: I don't invest in everything I work on. A lot of things have to fall into place correctly for me to put money in, and not all of those are in my control.)

Second, I had to develop a set of criteria to base my decision on whether or not to get involved. These are:

1. The team must consist of quality people. They must be trustworthy and I must like to hang out with them. I want to have a good connection with them, and I want them to want me to be around. If I don't like hanging out with these people, then I would be less inclined to keep bugging them on their product and company. The moment something doesn't feel right, I don't do it. (NOTE: Honing one's intuition is paramount.)

2. I wanted to work with people who geniunely wanted my knowledge and participation, and not just my money. I am trying to be super sensitive of any sign that someone is looking only to get my money and don't really care about my participation. That participation needs to work from both sides; a team needs to pursue my knowledge just as much as I want to help them with it. It's too easy for a startup team to get caught up in the day to day and not leverage their advisors. I am trying to avoid it as much as possible but know I will not be 100% perfect in reading entrepreneurs on this matter.

3. I need to resonate with the product. See my Resonance post.

4. I need to believe in it and see a future for it. If I can't see the future for it or don't believe in it, I don't think I should work on it. That doesn't mean that someone else couldn't take it to success; it just means I'm not the right guy.

5. I like certain types of projects more than others. See my What Do I Think is the Next Wave of Business for the Web? post.

6. The team number must be between 1 and 10. I have found that it works best when there are not people in place with skills similar to mine. See my The Sweet Spot Number post. If there is a number on the team greater than 10, a red flag automatically goes up in my head.

7. Generally, I like teams with track records than without. And I also like teams with very strong people in them. If you don't have smart, experienced, motivated people from the beginning, you'll be severely hampered very soon. Let's not start the project with sub-standard people, shall we?

8. I am starting to be a bigger believer in the distance rule for investing. I have increased that to encompass San Francisco from Silicon Valley, so instead of the 20 minute rule is more like a 50 minute rule. (Hey, I've got a Prius with carpool lane stickers so driving ain't so bad - heh). Right now, I am concentrating on companies in Silicon Valley/SF, Los Angeles, and NYC. While that may seem like the distance rule is a bit stretched with this list, I count the distance rule from my place of dwelling in each of those places, which I am in a lot for a variety of reasons.

My message to entrepreneurs is this:

1. You shouldn't put me on critical path. We'll both be frustrated as I don't have the time to take projects to completion on my own.

2. By the end of my advisor term, my goal is to find replacements for all the skills and knowledge I bring to your table. This can be either by the hiring of individuals or by the actual teaching of knowledge to you.

3. Use me to the fullest. I am available to bring along to meetings, evaluate vendors, evaluate products and services, etc. Just schedule me ahead of time and if I have time, I 'll make best efforts to come along and help you.

4. I only take equity as payment. I do not want to charge hourly and drain an early stage firm's bank account. Save that money for operations and product. Let's build the damn thing together and win big later.

That last message expresses my philosophy in working with entrepreneurs. I am not in it to make money in the primary sense. If I were, I would have continued trying to raise money for Chroma Ventures or tried to join up with another venture fund. I get the most kick out of seeing a company grow from nothing to something big, and hanging out with a bunch of really cool, determined, smart individuals to do it. It was what it was like back in the old days of Yahoo; just a bunch of buddies hanging out doing great stuff. I truly believe it is the formula for great success.

An Unexpected Source of Inspiration

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Sitting at a coffee house this morning eating my breakfast, I brought a pile of magazines to read. One of them was PC Magazine, Nov 7 '06 issue which featured 99 surprising new websites. Between articles like this and TechCrunch, I always like to look at what else people are working on.

But as I read through this website list, I thought about a web application that I discussed with a friend yesterday. It was a very early conversation where an entrepreneur has an interesting idea, but I felt it needed more work to take it beyond just a tool to something bigger. As I read through the websites in PC Magazine, I encountered one that was a content website. But it also sparked an idea related to the one that an entrepreneur had. So the area in which the content website played created a possible improvement to the entrepreneur's idea. I had not expected PC Magazine to help me with this entrepreneur's idea, but then isn't that how creativity works sometimes?

I find that expanding one's view, as well as experiences, increases the chance for creativity. Our brains have more information to link and cross link together in new and unique ways. It is why I consume tons of reading material from all subject areas. Magazines like The Economist, Popular Science, PC Magazine, WIRED, BusinessWeek, Discover, DWELL, Time, Runner's World, Newsweek, Triathlete, Esquire. Books from science fiction to novels to non-fiction in all areas. It is also why I have traveled a lot; experiencing other places, cultures, and people also helps to expand my creativity.

A long time ago, my art professor told me about traveling and its relationship to creating art and design. I did not fully understand what he was talking about until the broadening of my experiences happened. It made me my creativity more powerful simply because I had more to draw from than just from my imagination.

Broaden your experiences. I am sure it will work for you as it did for me.

FanLib Office, Circa Oct 2006

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Circa Oct 2006, FanLib in their West Hollywood office:

Our first major operations meeting at my apartment building's conference room:

Thank god for the Polycom USB Speakerphone and Skype to allow us to connect with remote team members!

Already outgrown their one man office plus reception area, they are set to move by the end of the year.

Meetro Office in Palo Alto, Circa Sept 2006

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Circa Sept 2006, Meetro at their Cowper St., Palo Alto office where all the guys were piled into an apartment:

Some of them lived there as well! Imagine doing job interviews in one of the bedrooms...!

I've encountered this many times already in silicon valley. Often companies will start in someone's apartment in an attempt to save money, and eventually we see a whole full blown office show up there courtesy of IKEA furniture. They're now in a cool office in SF - pictures coming up soon...!

Getting Pinged Out of the Blue: Becoming A Believer

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So I'm an old guy. I never grew up with the Internet being around, but helped bring the Internet into existence while working at Yahoo! That meant that it was an additive experience for me, to be muddied by all my old offline traditional baggage like social interaction preferences and such.

Trying to understand how the new generations who are growing up with the Internet all around them is sometimes a challenge. Seeing Meetro in action was like that.

At first, I didn't get Meetro. I do get instant messaging, having worked on Yahoo! Messenger and probably having one of the largest buddy lists around (a great help in debugging the Yahoo! Messenger login feature of Meetro haha). Using instant messaging is great for a variety of reasons: work, keeping in touch, just saying hi, etc. But these were with a defined list of friends. With Meetro, it's not like that. You don't have just friends visible and available to talk to; you have the entire universe of logged in users and sorted by those close to you.

Being an old world guy, I am used to people being physically close…or not close. You see them. You smell them. You can touch them…maybe if they let you. With Meetro, they were close…virtually. How weird is that?

And they were total strangers.

Many thoughts entered my mind as I stared at the initial screen of Meetro where you see a huge matrix of pictures of people who are logged in now. A little more clicking and you find out they are actually close to you, maybe at the table next to you…!

Do I just talk to them over IM? How do I approach them over IM? What do I say? Is this socially acceptable? What will they think of me? Will people think I’m weird throwing an electronic hello to them? Will they reject me?…I hate rejection!

This goes on for a couple of days and then I get my first random IM from someone in the Philippines.

Whoa. But I wasn't there to return the IM and couldn't reply (c’mon guys get the offline messenging feature up!).

Then a day later, someone from Russia pings me. Some more in the U.S. And I'm around for many of these now and we have some decent short conversations with people I didn't know. Amazing!

It was like a light bulb lighting up in my brain. All of a sudden, I viscerally experienced how and why someone would meet and contact a total stranger over Meetro. I suddenly UNDERSTOOD.

Social norms changing. Internet enables. Walls coming down. New interaction styles emerging. Total strangers wanting and now able to connect easily.

This is the stuff that our children, the people who are growing up with the Internet around all the time, are going to accept as normal while we, the old farts of half old way-half Internet, have to adjust and adapt to.

As an old world guy, I NOW BELIEVE. If you are old world too, will you believe? Or maybe the real question is: Can you?

REPRINTED FROM: Meetro HQ Blog

Check this Meetro widget out. Who's close to you?

Free WIFI Ain't What It's Cracked Up to Be

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Today I went to Starbucks and Noah's Bagels for breakfast in Cupertino. Unbeknownst to me, Starbucks cancelled their T-mobile Hotspot there because....MetroFi launched all over Cupertino.

So I connected to MetroFI and MAN IT WAS AWFUL. It was incredibly slow and right before I left, it crawled to a complete stop. AND, they proxy-served every page so that there was this annoying banner ad on top of every web page.

Remember when we were all excited about free dialup services like Netzero? They forced us to watch banner ads but we could get online for free. Now free WIFI works the same way.

Well OK. Maybe they gotta find a way to support it somehow. But I totally ignored those ads and most of them were terrible anyways. But then, on my T-series Sony VAIO, screen real estate is precious due to its smaller height. So every web page got an extra inch cutoff!

So not only could I not view webpages better, but I couldn't even really get online because everybody else around me was surfing an obviously overloaded connection. I bet they were streaming videos and music too.

In Palo Alto, there is the same deal with Anchorfree. They put banner ads on every page too. AND, Gmail didn't work. Are they blocking specific ports? Or did the Gmail server not respond in time to the browser and just time out? Again, since it was free, I guess everybody got on it and overloaded that network too.

Thank god for the Apple Store network. I managed to find a cafe across the street from the Apple Store in Palo Alto and connected to that. IT WORKED GREAT.

If I were a cafe in Cupertino or Palo Alto, I'd just spend $50/month on DSL and then buy a $50 LInksys router and let people surf much faster than using this broken free crap.

Bring back T-Mobile! I pay a monthly fee to use T-Mobile specifically at Starbucks and in the Admiral's Club lounge at the airport. The price factor limits the number of people using it...and that's great for me....!

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