Category Archives: Internet/Online

Talking It Up: Launch Capital and Betaworks Voicecamp 2017

“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, 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

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 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

Today I just sent this email to a buddy of mine working on a startup:
If [] 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?

Google+, Competing Via Firehose, How Much Better is Enough?

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]

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 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

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

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 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

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 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

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

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 468×60 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.