Since my last post was all about choosing what business to not be in in order to claim a strong market position, I can’t help but point to Will Price’s recent post where he offers a great anecdote illustrating the same basic point.
Fred Wilson wrote a piece about Facebook’s valuation a couple days ago, and it reminded me of the most frequent advice I find myself giving to entrepreneurs (or any business decision makers, for that matter). It’s not really what Fred’s post is about, but it comes down to strategy, or more specifically market positioning — what you might also call your brand (as an aside, these words often get used interchangeably, yet you’ll find “experts” who will give you lengthy explanations about specific distinctions — the word “brand” in particular is used to mean many different things).
The issue is choosing what not to do with your business as a means of having a stronger position in the market. This is certainly not a new idea, and I don’t claim any ownership over it, but it’s a very important idea and one that very rarely is embraced by startups (or any business for that matter). Here’s the bit from Fred’s post that reminded me of this:
I asked Jessica [a student Fred knows], who is a Facebook fan (she switched from MySpace when she got to high school) about the possibility of Yahoo! buying Facebook. She was fine with it, as long as “they don’t change it”. She’s not happy about the opening up of Facebook to everyone. She liked it because it was exclusive. Not everyone could be a member.
When I told her I had a Facebook profile last month, she was shocked. That shouldn’t happen in her view of Facebook. She says that MySpace has “sketchy old men” on it and Facebook doesn’t. She’s worried that Facebook is going to become another MySpace and if it does, she’ll move on.
The above quote is in the context of Facebook looking to maximize its valuation by opening up to more than just students — to embrace a wider audience in order to have more users and thus more page impressions and thus more ad inventory. This graph from Alexaholic really says it all about the position Facebook finds themselves in (click to enlarge):
And so Facebook and so many others face a dilemma: stick to the core of what we’re about (in their case, students at colleges and universities) or try to grow the brand to be something more. And this ends up being the kind of decision a lot of startups tackle: what market are we in. But, a more productive way to ask the question is often: what markets are we NOT in. To stand for something in the minds of your customers and to have your customers relate to you personally (and, ideally, to consider your brand part of their own identity) you can’t be all things to all people — and you can’t even be a lot of things to a lot of people. Now, of course, there is a balance here — you don’t want to be so narrowly targeted that you don’t have an attractive market to play in. Certain brands also lend themselves to being broader than others. Facebook put a stake in the ground long ago that they were all about colleges and universities (the very name “Facebook” screams that fact). Yahoo! and Google, for instance, both chose to start as something much broader than that conceptually (though, in both cases it still remains to be seen if they can truly come to dominate areas other than their core — and Yahoo! in particular is taking a lesson from the big companies like Procter & Gamble and building a portfolio of brands that target specific segments rather than try to make the Yahoo! name dominant in every new area they explore). This also doesn’t mean you can’t ever go into new markets (though many of the best companies do so with new brands), but it does mean that there are often hard choices to make about which opportunities you will and won’t pursue.
Most will pay lip service to this concept — ask a room full of CEOs “who here wants to have a strong brand and a differentiated market position?” and all or most of the hands will go up. You’d be hard-pressed to find a CEO who doesn’t want to make strategic decisions about their market, but I am continually amazed how few are willing to actually make those decisions when doing so involves forgoing what seem like fruitful opportunities even when it’s reasonably clear that going after such opportunities will undermine their core brand positioning. It’s very tough for any company, especially a cash-strapped startup looking for revenues and growth, to actively decide to ignore market opportunities that present themselves. And yet, making those tough calls is the very essence of having a well-targeted, differentiated position.
I have the picture of Michelangelo’s David with this post because I like to use it when doing presentations on this topic. Michelangelo has a famous quote that I’ve seen articulated several different ways, but it boils down to that he doesn’t create the sculpture, he sees the figure in the block of marble waiting to be uncovered and merely removes the bits of the rock that are in the way. Next time you’re pondering your strategy, try reversing the question and ask yourself what bits you need to remove that are in the way.
I love the concept of OneWebDay, but I can’t say I’ve seen much tangible evidence of it other than it being mentioned. It’s probably because I don’t live in San Francisco any more.
Anyone doing anything to celebrate?
Andrew Parker of Union Square Ventures recently invited guest writers to submit to his blog in an experiment he’s conducting on community blogging. Looks like not many people took him up on it, but never one to turn down experimentation, I gave it a shot and today discovered that he’d put up my post.
For those not inclined to click through, my basic point was that guest blogging doesn’t necessarily make any sense because blogs are an interesting phenomenon precisely because they are personal and primary — that is, they are generally about the first-person experiences of specific people who have real personality and real perspective, in stark contrast to much of what we are fed by the MSM.
OK, so the word “stream” is probably not the right one here because it already has a reasonably specific meaning in the technology world — perhaps “channels” is a better metaphor. What I want on YouTube (and its ilk) is a way to create my own “channel” of programming. As I’m watching a particular video they do a decent job of showing “related” videos in the side bar, and after a video they now give you proactive suggestions on where to go next. However, there’s no good way to just line up a bunch of different videos, then sit back and watch them all. As someone who uses a computer as his television, that would go a long way to make true convergence a reality in my world. Ideally, you might even be able to create more than one “channel” and just add videos as you’re browsing around YouTube (or see one out on a blog somewhere) to any of those channels — you can then decide at a later time to just watch that channel. This might be possible just using an RSS feed, but it would be a better business opportunity for YouTube to have me come back to their site to watch my channels.
Will Price’s recent post about consumer confidence and macro-market trends and possible correlations to VC returns deserves some link love. I’m bullish on the power of the VC industry to fuel the economy, but I’m also one of those people who thinks we have probably already seen the zenith of American prosperity (especially relative to the rest of the world). A friend of mine has been living and working in China for the last 20 years or so, and he is convinced that Americans will ultimately have a hard time keeping up economically given our expectations of work/life balance (not to mention educational system). That may be a bit dour, but hubris and complacency aren’t a good combination. Let’s just say I think it will be important for my kid to learn other languages and other cultures if he wants to prosper — being fluent in Mandarin Chinese probably wouldn’t hurt.
Fred Wilson posted a back-of-the-[digital]-envelope estimate of YouTube’s potential to monetize their traffic yesterday. I think his estimates of the percent of content that is “high quality” and thus monetizable is pretty high, but that’s not the point of this post.
I was struck by this line:
I realize that there are many people (including possibly YouTube management) who think introducing a 10 second pre-roll will negatively impact the viewing activity. It could certainly cause the audience to move elswhere in search of ad free video content. It could also reduce the amount of views.
As everyone wonders just how and when the various video sharing sites will start to be real businesses this line really brings into focus one of the major issues of any online endeavor — switching costs that approach zero very quickly. If it’s true that even a 10-second ad could send users searching elsewhere for their video content (and I suspect it would have a more dramatic impact than Fred does) then it seems all of these sites are playing a game of chicken — each seeing how far they are willing to go before pulling the trigger on advertising, in the hopes the other guy loses his nerve first. OK, so that’s a stretch as a metaphor, but it makes for an amusing title to this post. The point is that if it’s true that people (”that’s we — as in you and me) will seek out ad-free content over ad-full content (assuming relatively even quality and selection) then it’s going to be tough in this ramp-up phase of video sharing for anyone to go whole-hog into the advertising game. Of course, the even quality/even selection is a big assumption — there are definite advantages to going where everyone else is in terms of critical mass of content/viewers, but how long before meta-networks of video sharing make that a non-issue?
I think about broadcast media, where the percent of advertising content that can be tolerated is a well-known science (or, at least, I bet it felt well known prior to the YouTubes of the world changing the entire media landscape). In the peer publishing world those percentages are not yet known — we are still in very early days of figuring out how all of this content is going to make people a lot of money. Perhaps more interestingly, how it will make a whole lot of people just enough to make it worth their while rather than just a few big companies getting most of the revenue. In Fred’s post he digs into numbers on revenue sharing with someone like Lisa Nova and YouTube — in his scenario, she doesn’t exactly get rich, but she’s making a lot more than YouTube is from her own content. And that’s how it should be, but it really demonstrates how power is shifting in medialand. Can Lisa Nova graduate from YouTube and not even rely on them for the revenue share? If people end up with decent tools to aggregate the content they are interested in (uber-TiVo for the web), the power of the “channel” (formerly NBC/CBS/etc., now YouTube, etc.) diminishes even further. Although today measurement makes such a scenario difficult, how long before someone like Lisa Nova can just sell her own ads through the various ad networks (the AdSense model for video that many are working on) and has enough brand recognition such that YouTube can’t wait for her to upload more? In that scenario YouTube becomes just a proving ground for talent to rise to the top, and those that do can build their own little empires (and they only need economics attractive enough to be better than a day job), as Lisa Nova is on her way to doing. Which is not to say that YouTube won’t still have millions of videos being watched, which should still make it possible for them to be a “very big business”.
I had my first experience with producing a podcast this week as part of my Fellowship at UC Berkeley. The Lester Center for Entrepreneurship and Innovation there was interested in trying out some of the new media methods, and podcasting was an obvious place to go.
The first episode is an interview with Prashant Shah, Principal at Hummer Winblad Venture Partners. The interview was done on the spur of the moment with very unsophisticated equipment, but I think the whole thing turned out to be not too shabby for a first shot.
You can find the direct link to the MP3 on the Lester Center blog (also part of the new media experimentation), or subscribe to the podcast feed.
For those interested in the mechanics of it all and my first impressions of podcasting production, read on…
The recording was made using an iSight camera as the mic and GarageBand to record and mix on my PowerBook. We talked in a conference room. In the future I’ll try to talk in a smaller room, as I don’t have the audio equipment to overcome the acoustic challenges of sitting in such a big room with a single mic between us. I also wish I’d asked Prashant to sit a little closer to the mic.
The recording itself sounds far from professional, but in this age of peer production I don’t think that matters much — it’s definitely good enough to get the point, and if we’d been in a small room I think it would have sounded even better. I have learned that it’s a lot harder than you might thing to actually find a “quiet place” to record voices — even doing the little voice intro had to be done a few times because of random background noises in my house getting picked up. I suspect if I had a better microphone and had any clue what I was doing when it comes to audio mixing it wouldn’t have been as much of an issue.
GarageBand is a pretty nice program when it comes to mixing together tracks — and it was very easy, especially after my experience in iMovie, to whip together a little intro music and deal with fade-ins, fade-outs, etc. My giant complaint about GarageBand, and I’m not alone judging by some Google searching, is that it can’t export directly to MP3. That’s just a load of crap — I’m surprised that Apple would have been so blinded by their love for AAC that they would push GarageBand as the best way to make a podcast and then make you jump through hoops just to get your files in the format that everyone on earth is using (and the same goes for music!). The basic option is to import the song into iTunes, then convert it to MP3 (then dig around in your music folder looking for the MP3 it created) — and there doesn’t seem to be a way to specificy on a per-convert basis what kind of MP3 compression you want to use. I have mine set very high for ripping CDs, so I had to go in and change it to much lower resolution or the file was going to be too big.
In terms of publishing, I just used Feedburner, which has the very nice feature of “SmartCast”, which automagically detects when you have links to rich media files in an RSS feed and turns that into a podcast feed with enclosures (and optionally all the iTunes add-in info). Given that I don’t have great access to the web resources at Berkeley I struggled a little on that end, but that’s not really relevant to anyone else.
I did find that WordPress.com is considerably less flexible than installed WordPress software. I’m not terribly surprised, but I was a little shocked to find out that when you click on “Categories” in a WordPress.com feed you are actually clicking through to a global tag-based search for all WordPress.com blogs, not just the posts in your blog with that category (for that, you need to follow the links in the Categories sidebar widget, which took me longer than I care to admit to figure out since I had turned off the Categories sidebar widget). You also can’t upload MP3 files to a WordPress.com blog apparently, which is a bummer. I’m a huge fan of the WordPress software this blog is running on, so I hope WordPress.com will iron out some of those kinds of issues (though, in fairness, they likely don’t think of those things as ‘issues’, merely features). I still think I’ll suggest WordPress.com when people ask me what blogging service they should use (people who couldn’t install their own WordPress or have interest in buying a hosting account that does that), but I’ll have more caveats than I used to.
My final comment is that podcasting can be time-consuming to get started if you want things like intro music and don’t have a ready-made way to store your files and serve up your feeds (if I’d hosted it on a WordPress installation of my own it would have been much simpler, for instance), but now that I have the basic template down, I think I could crank them out quite easily.
Any tips from experienced podcasters out there?
New Macs Cheaper Than Equivalent Dell Machine. The juicy bit of the article:
The difference in price — and that it was in Apple’s favor — was so surprising that I contacted Dell to confirm that I had not made a mistake in configuring its workstation.
Dell spokesman Marco Pena suggested that the numbers might be closer after configuring the Mac to include a three-year warranty similar to the Dell offering. “But I think we’re still going to end up a little higher than the Mac,” he said.
“The results were a bit surprising to me, too,” he said. “But it is what it is.”
(Hat tip to Wil Shipley for the link)
As someone who used to build web applications for a living, I’m still curious to know what technologies people are using under the covers. I also end up being asked for my opinion on the topic of which technology is best to use in launching a new Internet site. There was a time when I would get into the details of the various features and performance characteristics of a given platform, but over the years I’ve realized it’s really not a technology question, it’s a people question.
The issue is who is going to build it, and who are you going to want to hire to continue to build it. Anyone who has been around software engineers (or any engineers, I suspect, but software is what I know) knows that a truly great engineer is worth many mediocre engineers, so it’s critical that if you are starting a technology-intensive business you will be able to attract high caliber people. If it’s not a technology-intensive business then you might focus more on the cost side. For instance, I know that Adobe ColdFusion (formerly Macromedia ColdFusion, formerly Allaire ColdFusion) is an extremely productive platform for building web applications — in terms of getting something done quickly it’s hard to beat. But, good luck finding great engineers who want to work with ColdFusion — deserved or not, ColdFusion has a reputation in the industry for not being a “real” programming environment (as an aside, there’s a whole other discussion to be had here about the perverse nature of the inverse relationship the ease-of-use and productivity of a programming environment and the credibility it receives in broad engineering communities — a comment that could draw out some flames), and the vast majority of great software developers wouldn’t want to be forced to work with it for fear of their skills atrophying. Again: this is not a statement about how “good” ColdFusion is as a technology (I happen to think it’s great), but rather it is a statement about the realities of putting together a team.
That is a nuance lost on a lot of entrepreneurs and managers who haven’t done hands-on coding before — the tools you choose define the nature of the team you will build moving forward, and in most cases it’s extremely difficult to switch gears. To be fair, this nuance is also usually lost on engineers, who can easily burn a lot of cycles debating the merits of Ruby on Rails vs. PHP vs. Java vs. ASP.NET vs. ColdFusion vs….. In the end, all of the tools listed here (and others) are mature enough now that they can basically all accomplish most tasks in creating a web-based application. Some might take longer, some might not scale as readily, some might not integrate with other technologies as easily, but from the standpoint of “can it be built in a reasonable amount of time and be production-ready at a reasonable rate of scalability” the answer is “yes” in all cases.
I just spent 20 minutes playing with the Google Image Labeler — it’s set up as a “game” where you and an anonymous partner attempt to find matched ways of describing a series of images over a 90 second period. You score points when you find a match (at which point you move on to the next iamge). I was recently trying convince someone that people won’t do “work” as a “game” no matter what you call it, but I suppose at some level I proved myself wrong by sitting in front of this thing for 20 minutes. I don’t see going back to it, though, but I suppose if they can get enough people to spend 20 minutes it doesn’t really matter if any of us ever come back.
I do have to question the results, though — I found that the match was almost always on the most generic of words I typed in. Even when I happened to know something specific about an image the match ended up being something like “women” for some random picture that happened to be of two women or “clock” for a picture of some people that happened to have a clock in the background. It’s better than nothing, I suspect, and given enough data over time Google will still have tagged millions of images where they used to have no realy information about them.
But, back to the issue of gaming as work — in the last 18 months I have run across an increasing number of references to using the techniques of gaming in work settings. Everything from using the World of Warcraft model to send people on quests for working (at least one person, if he read this, would think I was giving away his secret sauce, but I had heard this concept elsewhere first — which is always a sure sign you’re seeing an emerging “thing” in the hype cycle). Certainly it makes a lot of sense to learn from the things that cause people to spend many hours in front of a game in order to make productivity software more useful/productive/fun, and like all things that hit the hype cycle it will over-promise and under-deliver, then start to show some real value over the medium-term after the wave of attention and investment has calmed down.