Please consider this really carefully:
“If you are not paying for it, you’re not the customer; you’re the product being sold.”
(via blue_beetle on MetaFilter, I believe)
Read More“Stop Making Social Networks, Facebook Won” by Nelson Minar is an interesting blog post that’s getting a lot of attention over on Hacker News right now.
The gist, if it wasn’t obvious enough from the title, is that Facebook is “Layer 7″ of the Internet (a reference to the OSI network model) with it’s tight yet comprehensive control of the social graph. Minar asserts it is the de facto social graph for the Internet.
What’s odd about the post is that it acknowledges several problems with declaring Facebook as the winner, but doesn’t provide any workable suggestions. In brief, the issues are:
- Facebook will let some entities tap into their graph via Facebook Connect but not others (eg Apple Ping was refused at the last minute)
- Facebook has a lot of limitation as to what you can do with the social graph data, caching rules, etc – although this is loosening
- There is no uber social graph: My Facebook Graph isn’t anywhere near the same as my LinkedIn Graph (both ‘tier 1′ graphs for me) and again are very different to my Flickr, FourSquare, etc
All of these issues would appear at odds with declaring Facebook the winner of the social network and social graph battle.
The author concludes:
“Sadly OpenSocial is a failure and because of network effects I think it’s too late to displace Facebook”
What’s bizarre about his post is that it fails to look at the history of the Internet – where patterns and paradigms can be identified and extrapolated into the future.
They said that Larry and Sergie were doomed because Yahoo! had all the network effect. Ditto Jobs vs Microsoft.
What Nelson hasn’t factored in is that ultimately companies have a lifecycle and Facebook’s will wane too. It’s why I laugh at my friends who are buying up Facebook stock on the secondary market at $70/unit @ $33bn valuation right now. Perhaps you could make an argument that it’s worth that, but what kind of headroom is left for Facebook to get so much bigger that you will see a return on your investment?
As a company grows, it can only innovate so quickly. It becomes more conservative, less willing to take risks and in Facebook’s case it will ultimately have to bow to external pressures post-IPO.
All of these make excellent targets for disruption. The model I like to talk about these days is not that of incumbent disruption but that of disruptor disruption. When the new school gets kicked by the new-new-school
We must also not ignore the insatiable consumer-driven appetite of man kind – we all want to be driving a new car, drinking at a new bar, etc. Facebook is already becoming passe in many circles and that will continue.
So I say let’s not give in to Facebook. They haven’t won. They probably will always be a dominant force for the foreseeable future of the Internet, but there’s plenty of opportunity for others to beat Facebook at it’s own game.
Just look at the list above for the obvious points for disruption:
- Create a proposition that has a social graph that lets a user delegate two way access to anyone the user wishes. Facebook can’t do that.
- Create a proposition that lets users manage intersecting graphs (family vs work vs friends vs niche use x). They say it’s too complicated for regular users to understand – maybe 2 years ago but now it’s a more apparent problem most users will understand. Facebook stopped trying because it was no longer was beneficial to them (this feature is no longer shown when you add a friend).
- Utilize PoCo and other open formats that let you map nodes (users) in the graph that are not even registered with you yet – to flattern the network effect Facebook currently has against everyone.
- Build your social graph around uses and applications that Facebook won’t compete with or have failed to launch a strong product in – eg video, photos (FB sharing is terrible, Flickr is terrible these days), etc
There’s plenty of opportunities out there, I’m working on a few – what are you doing?
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I’ve just completed my registration for SxSW 2011 and was pleasantly surprised to see that the organizers have increased the price of Interactive badges by ~15% for early-bird and ~40% for the on-site price.
SxSW Interactive 2010 prices were $395 (early-bird) and $550 (on-site), SxSW Interactive 2011 prices are $450 (early-bird) and a whopping $750 (on-site).
(yes, SxSW 2011 tickets are already on sale and you need to get a ticket before you can book a hotel room as SxSW pre-books all of them. And hotel rooms sell out quickly. And attending SxSW with an out-of-town hotel room sucks.)
…back to this price increase. Yes, I said pleasantly surprised at the increase.
One of the biggest gripes I had with the 2010 event was many attendees didn’t seem very vested in actually attending any of the conference itself. Many, by their own admittance, were just there for the parties. Even I fell into the trap of:
“oh, I can’t be arsed to get up and go to the sessions today. If it’s $395 for 5 days of conference, that’s only $79 of conference I’m missing out on! Bah!”
People just turning up to cruise for parties creates a different mindset and I think it really changes the overall vibe of the conference. I therefore am glad to see the increases as I hope they encourage people to see a greater value in sessions. This is partly based on the old adage that sometimes the best way to make people feel more appreciation and value for something is to charge more for it.
It also puts more pressure on the conference organizers to curate a better conference, of course. This year’s panel picker still had tons of panel submissions by PR firms shilling their clients and creating faux-conversation around the launch of their client’s products, without any disclosure. When those panels are picked, those people essentially get a free badge to push their product. There’s a whole blog post here, actually…
What remains to be seen is how this actually effects the attendance of SxSWi 2011. The comments on this post outline a lot of the resuling concerns: That freelancers and startups won’t be able to attend, creating a more corporate and homogenized event. And that many people will just turn up to attend the parties and not even buy a badge (the latter is somewhat mitigated by the fact you can’t easily book a hotel near to the conference as SxSW books up entire hotels for the event and ‘official’ parties are not supposed to let non-badge holders in. Of course there are ways around both.)
What do you think? Will you be attending?
photo by Mike Rohde, CC: BY-NC-ND
Read MoreI’ve been wondering who will head up and run Google’s social network Facebook competitor. For me, the man/woman at the top steering the ship will probably be the single biggest factor as to whether Google can pull this off successfully (which needs to happen else the social network space will remain a monopoly).
And so with news that Google as acquired Slide I’m guessing that question has been answered: Max Levchin.
Max obviously has experience with social (from Slide) and also payments (from PayPal), the latter of which will be crucial to any financially successful social network/social games play going forward. Assuming I’m right (and Max must be getting some kind of top-job at Google), I’m actually glad it’s not an existing Googler – they’re are some great people working there at all levels but I can’t identify any executive-level folks who really get social.
I’m also guessing Max Levchin as GM is more palatable to Google than Mark Pincus, which further suggests that an acquisition of Zynga by Google is off the table now.
Liquidation preference?
In other thoughts, I’m wondering whether common shareholders will see any return? With Slide raising $78m at a $500m valuation and then a sale for $128m, will there be much left after costs + liquidation preferences, etc?
Read MoreI’m pleased to announce the unveiling of my latest startup from my advisory portfolio – brand new WordPress Hosting Platform WPEngine!
I’ve been involved with the WordPress community for several years (all the way back to B2 in fact, which was the precursor project that WordPress was forked from). However as interest in WordPress has steadily grown into the mainstream, one of the pain points I’ve seen people experience time-and-time again is hosting.
WordPress.com is great, but once you want to run a custom theme, plugins or embeds from sites that Automattic don’t have a BD relationship with, you’ve kinda reached a glass ceiling with the service. Self-install solves those problems but how many bloggers are really in a position to be installing, maintaining and updating a WordPress install on a hosting account? From my own anecdotal evidence most just don’t have the technical interest and/or time and I’ve spent many hours helping friends install, update and migrate WP blogs over the years.
Reports that WordPress is insecure almost always arise from people not keeping their WordPress self-install instances patched and up-to-date.
When I sat down and talked to the WPEngine founders about how they intended to solve this problem I was very excited. I love working with companies who are addressing real-life problems I can directly relate with. I’ve been working with WPEngine since SxSW to help them build the platform and bring it to market.
WPEngine is serving platform, not a hosting account
We’ve taken all the greatness of WordPress self-install and bundled it together into a blog serving platform that is designed solely just to serve WordPress.
You come to us and either create a new blog or migrate your existing WordPress blog over using some one-click export tools we’ve built.
From there we look after the installation, management, security, upgrades, backup and day-to-day running of WordPress. Everything looks and works the same as far as what the blogger uses – the same old familiar admin tools. But behind the scenes we make sure the WPEngine WordPress Platform is kept up to date and optimized for performance.
Behind the scenes everything is kept in compatible formats to WordPress self-install so you could migrate out and walk away if you ever wanted to. No lock in here.
The service is ideal for pro-bloggers, fledgling blog/news sites (like TechCrunch, Mashable, etc) and small-to-medium businesses that use WordPress as a CMS for their sites. Many doctors surgeries, law offices and other businesses use WordPress to power their site and WPEngine is ideal for those who don’t have any in-house technical capabilities to keep their sites running in optimally and securely.
Invites!
We’ve been successfully hosting in stealth-beta some pretty high profile blogs – including Balsamiq’s Blog, OtherInBox (their entire site) and Jason Cohen’s highly trafficked A Smar Bear blog (who is also a co-founder).
Tonight we’re announcing we will be opening our platform via invite. You can follow coverage on Read/WriteWeb, Mashable and others.
If you would like an invite, just visit this sign-up form to request one. We’ll be getting back to people in the next day or so.
Advisory Capital
As mentioned, WPEngine is the latest company I’ve added to my portfolio. They are actually my pick of SxSW 2010 as I now make a habit of meeting as many Texas based startups as possible each year I visit Austin, with the view to working with one as an advisor when I return to SF. Last year’s startup was NutShell Mail, which of course just had a successful exit to Constant Contact.
I intend to write more about my growing portfolio as I am enjoying that this is now taking up a more significant proportion of my time these days. Watch this space!
Read MoreI’ve always found Zappos’ exuberant approach to customer service and employee perks somewhat peculiar. Masterminded by its CEO, Tony Hsieh, I’ve seen him speak several times on the subject and read countless stories in the media and blogosphere on how amazing it all is.
Don’t get me wrong, it’s great that you can call them up and order a pizza and every employee gets to decorate their cubes.
But I’ve never been convinced it really converts into increased profits in a mainstream, volume-orientated, retail vertical selling commodity products like shoes.
As much as I want to believe in it all, we’ve never seen the hard numbers on sales because Zappos has always remained a private company. Yes, they revealed they did $1bn in sales in 2008 but that doesn’t mean anything – that could be against $1.2bn in costs at which point they’d be operating at a loss. And I don’t see the point of cheerleading an established company that has never turned a profit.
So it was interesting to read a somewhat bitter-sounding Tony Hsieh reveal some insight to Inc. Magainze on the operations of his company and why he sold to Amazon.
The two juicy nuggets I found interesting:
1) Even with $1bn in sales, Zappos was trading on a $100m line of credit
By 2008 we were doing more than $1 billion in gross merchandise sales annually
…
At the time, Zappos relied on a revolving line of credit of $100 million to buy inventory. But our lending agreements required us to hit projected revenue and profitability targets each month. If we missed our numbers even by a small amount, the banks had the right to walk away from the loans, creating a possible cash-flow crisis that might theoretically bankrupt us. In early 2009, there weren’t a lot of banks eager to give out $100 million to a business in our situation.
In other words it doesn’t appear Zappos was even making $100m/year profit on that $1bn/year in sales (a rather poor 10%) – if it was, presumably it would pay off the debt that was leaving it in such a precarious position. Given that Zappos has never competed with other retailers on price, and thus been able to maintain healthy margins, one has to wonder whether all that amazing customer service and employee benefits have been proven overly expensive?
2) Zappos’ Board had no confidence in his corporate culture methodology and just wanted to exit
Although I’d [Tony Hsieh] financed much of Zappos myself during its early days, we’d eventually raised tens of millions of dollars from outside investors, including $48 million from Sequoia Capital, a Silicon Valley venture capital firm. As with all VCs, Sequoia expected a substantial return on its investment — most likely through an IPO. It might have been happy to wait a few more years if the economy had been thriving, but the recession and the credit crisis had put Zappos — and our investors — in a very precarious position.
…
Some board members had always viewed our company culture as a pet project — “Tony’s social experiments,” they called it. I disagreed. I believe that getting the culture right is the most important thing a company can do. But the board took the conventional view — namely, that a business should focus on profitability first and then use the profits to do nice things for its employees. The board’s attitude was that my “social experiments” might make for good PR but that they didn’t move the overall business forward. The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes.
Despite controlling the common stock, Tony was at risk of being ousted as CEO at any time and replaced with someone more traditional. In other words it appears he sold out to Amazon not because it was a match made in heaven but really just to eject the board and keep his position safe. And Jeff Bezos had the check waiting.
Conclusions
I don’t have any firm conclusions right now as I’m still digesting the rest of the article (an excerpt from his book) but it’s pretty frank and telling. I’m actually very surprised Tony has given such a revealing account given he is still the CEO.
But I do think this indicates a friction between the much lauded Zappos corporate culture and the realities of establishing a profitable business – specifically that Zappos failed to prove it.
While everyone working at Zappos was able to pick up a solid pay check while working in nice conditions and customers could call up the helpline and talk about whatever they wanted, it appears that Zappos hasn’t become the business success many have drunk the kool-aid over.
Read MoreMicrosoft says it’s shuttering Bing Cashback program next month because:
…after a couple of years of trying, we did not see the broad adoption that we had hoped for
But while the main tech blogs are assuming that means that the site didn’t get traction, they’re missing the real story here.
What was hailed as a great innovation in lead-gen actually fell flat on its face. The idea was that users would move to searching for products on Bing Shopping knowing that many advertising retailers would then offer a 5-20% cashback on the purchases, generating leads that might not of otherwise occurred. Don’t forget, these advertisers were paying Microsoft for the placement and then having to foot the bill for the cashback too.
Instead many people, including myself, would simply get to know which online retailers offered Bing Cashback. When they went to buy something from such a retailer we’d hop over to Bing and click through via the Bing Cashback link to get the extra discount. No lead generated at all, but still with a financial cost to both the retailer and Microsoft.
I’ve probably ‘earned’ (well, saved) over $2,000 in the last few years by doing this, sometimes by saving up to 40% off during special promotions. Thanks Microsoft!
For example, every time I’ve found something to buy on eBay I’ve noted the auction details, cleared my cookie, searched for eBay on Bing and clicked through. Performing that slightly but not terribly inconvenient task has netted me up to 30% refund on my eBay purchases. Ditto for B&H, Dell and others.
The various deal sites such as SlickDeals are rife with this activity – every time a deal is mentioned that is sold by a Bing Cashback retailer you can expect a reminder to perform the above trick to get the extra discount. Here’s a super-thread on all the Bing Cashback retailers and how to get the deals. (And here’s the thread where the free-loaders are up in arms about the closure!)
Aside from SlickDeals & co, there are many other people I know who have also been doing this. And let’s be clear with these examples:
- These purchases were going to be made anyway – thus no lead generated
- None of these people have switched over to Bing search engine (known as the halo effect)
- None of these people have switched to Bing Shopping for non-Cashback purchases
- Microsoft and the retailers have been paying handsomely for our hacks
It’s my bet that the above situation accounted for a large amount of Bing Cashback purchases, especially repeat/return vistors. Microsoft has finally got wise to the game (or the cost/benefit has leveled out) and cut the gravy train.
Read MoreOn hearing the news that my friend Tantek had accepted an offer to work contract at Mozilla as a Web Standards lead, I remarked via Twitter that now none of the ‘high profile open standards’ advocates remain independent.
This caught the attention of a number of folk, including GigaOm’s Mathew Ingram who wrote about my comment this evening. (a post which ended up being syndicated to Salon.com and NYTimes – congrats Om, Mathew and co on those distribution deals btw)
Indeed I was referring to the likes of David Recordan (now at Facebook), Joseph Smarr (now at Google), Eran Hammer-Lahav (now at Yahoo!, albeit for sometime now) Will Noris (now at Google) Chris Messina (now at Google) – and now Tantek Çelik (now hired by Mozilla)
All of these folks have made significant contributions to the Open Web and Open Standards movements while either being independent, working at a startup or working at a company which itself had little active involvement in open standards (SixApart in the case of David R and Plaxo/Comcast in the case of Joseph S). That’s significant because their motivation behind their labour and efforts was (I believe) altruistic and not to forward the interests of a specific vendor, employer or other sponsor.
Since making their many significant contributions independently to the Open Web, all of them have been hired by larger and/or more significant entities. All of these companies are clearly are interested in benefiting not only from the influence these individuals have in the community but also their board seats/key positions on projects such as OpenID, oAuth, Portable Contacts, Open Web Foundation, etc.
Clearly this must create a conflict with each of their previous independent endeavors. In response to my tweet, Google engineer Adewale Oshineye commented on my Google Buzz “[Y]ou could say that the ‘open web usuals’ have all found ways to make an even bigger impact.”
I disagree and here’s a stark example of why, involving Adewale’s own employer Google.
Last week I attended a panel session at Google IO 2010 on social network standards and APIs, which included Chris Messina representing Google and specifically the Google Buzz team. Having reflected on Facebook’s current woes due to a perceived lack of respect for user privacy, panel moderator Kara Swisher asked Chris to elaborate on the virtues of Google Buzz and the way that Google have strived to protect user’s privacy. What seemed to be an intentionally ‘softball question’ towards her conference host, actually had a deeper, almost perverse, dimension to it given Chris’s staunch personal perspective that there is no such thing as online privacy.
“personal privacy is an oxymoron. you know less about yourself than the mass of services and companies out there that collect, individually or collectively, information about you and your activities, for their own selective proprietary uses
…
you think you have privacy left to protect?
…
privacy today in general is a fallacy: it’s an impossible dream that we should’ve woken up from some time ago.
…
repeat after me: “PRIVACY … IS … A … DREAM.”not for you. not for me. only for the government, big corporations, disappearing persons.”
Do read the rest of it this in his post “Pry, To”, along with “Privacy? What privacy?”, “The Krypton of Privacy”.
It was pretty uncomfortable to listen to Chris wax lyrical about how Google understands why user privacy is important and the various steps it was taking to ensure users were aware of the privacy options Google offered.
Now before you think I’m performing a character assassination on Chris, please be clear: I agree with him. I think the concept of expected privacy in any social media setting is an illusion.
But the problem is that you have radical individuals, ones who were compelled to spend their own time ripping up and recreating the way we handle stuff like authentication and contact exchange, being forced to remain ‘on message’ with their new corporate masters.
Why is this?
Aside from the tensions alluded to above, the issue no one is talking about is that there are slim returns for being independent proponents of the Open Web. While you spend your evenings and weekends working on specifications and evangelizing these brave new ideas, there are plenty of companies who are looking to profit from the good work achieved.
I’m a member of the OpenSocial foundation, having worked on the project while I was contracting with MySpace (yes, not independently). While I have not been under contract with the former social network for several years, I still feel some affinity and sense of responsibility to maintain OpenSocial, having (in a small way) helped to create it in the early days.
However, I’m immediately bought back to reality when I remember that my unpaid time participating in work groups and/or potentially being on the board is going to help the likes of Zynga, Slide, RockYou, etc continue to innovate and generate further $Millions out of their use of OpenSocial to deliver their profitable social games and apps.
It’s not that I won’t work on Open Standards or Open Source projects for free. But simply that the returns others are making feels disproportionate to what the individuals doing the actual groundwork are getting back. While joining the likes of one of these companies could be one way of continuing this work while receiving some-what fair remuneration, it wouldn’t be the same as I would have to make decisions based on my given employer/client’s needs and not those that made the best sense for the ecosystem as a whole.
(And rather tellingly, to the best of my knowledge neither Zynga, Slide or RockYou contribute at all to Open Social or any other Open Standards project they rely on)
Ultimately I don’t know why Chris Messina ended up accepting the place at Google. The offer of a prestigious employer, intelligent peers and a guaranteed pay check may be enough – but to me that feels like selling out because you can no longer represent what you really believe in. When Chris began to answer Kara’s question on privacy in Buzz it seemed like he’d had to give up much of what he really believed in so that he could regurgitate Google’s talking points that his handlers in PR had fed him earlier.
Instead I wonder if there were more fundamental reasons why he joined Google – ones that you can begin to understand. Being an independent is hard and usually financially unrewarding. It’s a tough economy, maybe he wants to settle down with his girlfriend and set up home, I don’t know. There are all sorts of personally legitimate reasons.
But it shouldn’t have to be like this. The ecosystem as a whole (users, developers, vendors, startups, VCs, BigCo’s, etc) desperately needs independent participants like the Messina’s, Recordon’s and Smarr’s – and we can’t expect the best people to stick around looking out for our interests while others profit from the good work created.
How we resolve that, I don’t know. It’s kinda for the community to decide.
UPDATE: This post continues into the comments where Joseph Smarr responds to my post and I follow up with further thoughts.
CC flickr photo by Pat Hawks
Read MoreAt the end of last week I left a cryptic tweet saying I was ‘working on some important paperwork‘… Well, I’m pleased to announce that NutShell Mail, one of the companies in the portfolio of startups I advise, has been aquired by email marketing campaign solution Constant Contact.
If you’ve not yet checked out NutShell Mail, it is one of those really smart ideas you wish you’d had yourself, which is why I was so excited at giving the opportunity to contribute to it.
NutShellMail delivers to your email inbox a nicely crafted email of the activity streams from all of your social networks. You set this up to occur a couple of times a day, and what you are presented with is an email you can quickly digest during natural breaks in the day. It’s particularly good for people who are easily distracted by the updates from a desktop client and constant Facebook email notifications.
Back to the aquisition: I’m so pleased and overjoyed for founders David Lyman and Mark Scmulen along with David N, Nirav and Todd. They have all worked so hard for this.
I’ve worked with them for just over a year and in that time they have achieved so much. Highlights for me have to be them moving out here for fbFund and their pivot expansion into providing email digests for Facebook Fan Pages, which is probably one of the areas Constant Contact is particuarlly excited about.
Advisory capital
However, this also validates my decision to dedicate a proportion of my time on forming and working with a select portfolio of companies in an advisory capacity. A concept Stowe Boyd once described as “advisory capital” (the link to his blog post sadly seems to be broken).
I love working with startups and so anything I can do to help steer product strategy decisions, give platform advice or leverage my contact network is really fulfilling.
With this in mind, I’m going to be formalizing this part of my work over the coming weeks, and no doubt taking on a few more companies to mentor and advise. If you have thoughts or ideas on early-stage startups that I might be able to bring value to, please let me know.
Read MoreFrom the blog posts and photos coming out of China, it looks like everyone on the Geeks on a Plane trip to China is having a great time. Friend + GOAP organizer Dave McClure, along with few others, even got to meet Secretary Clinton who happened to be visiting Shagahi at the same time:
However, some of the email conversations I’ve been on with members of delegation have included their surprise at the sites that they are unable to access due to the censorship of Internet connectivity there (aka the Great Firewall of China).
Apparently Twitter, Facebook, email posting to Posterous and even Louis Gray’s blog are blocked. But don’t worry, Scoble’s isn’t anymore.
Joking aside, many worthwhile and important sites, such as BBC News (disclosure: I am a former long-term employee) remain blocked and unavailable to the population of China.
It is for this reason that I personally would have been uncomfortable about visiting China in a business capacity, and certainly on a high-profile organized industry trip like GOAP (which I was invited to attend but turned down for other reasons).
As it happens, I’ve visited China, but simply for leisure to ‘see for myself’, especially to explore the nature of the censorship, regime and the way of life there.
This is not an attack on my friend Dave and I support the increase of industry ties with other countries.
However I hope that the GOAP trip of Internet entrepreneurs is not perceived to be a legitimization or acceptance of the regime’s censored internet access. Nor should we forget the still recent attacks on Google and other western-operated internet assets that appear to be state-sponsored. It is also worth remembering that China does not welcome foreign companies and startups to operate out of China without domestic co-ownership.
At a time when Google is clearing out its offices in China and refusing to cooperate with China’s censorship demands, the lack of any acknowledgment (and perhaps even condemnation) of these issues by GOAP is definitely disappointing.
As I said, this is not an attack on Dave or anyone else attending. And I also understand that while they are physically in China it may not be the best time to express these opinions.
But before the chapter is closed on the GOAP:China expedition, I certainly hope that some recognition of these issues are made – perhaps even some suggestions on what we can all do, as Internet entrepreneurs and professionals, to place pressure for change. For freedom from censorship, freedom from attack and freedom to operate a wholly-owned entity in the local market.
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