Archive for March, 2008

Three’s a Charm for the Social Graph

March 31st, 2008

Clearly it is “social networks on the brain” day. Here’s my third and final post of the day on the topic.

I just read Brad Feld’s post about Loic LeMeur’s post (whew!) about his distributed social graph.

Loic penciled out a kind of map of his online life and concluded that he would rather have it all run through his blog than live in 10-15 different silos devoted to specific types of communication (video, short-form blogging, long-form blogging, etc.). Brad tied this to his firm’s principle of investing in companies that form the “glue” among internet presences.

I realized that there is an idea in here that is a component of why so many of my friends are on Facebook but I find it unsatisfying. I posted my thought as a comment on Brad’s post, and I am re-blogging it below.

I just listened to an interview with Clay Shirky (http://tinyurl.com/3y72d5) where he identified a big gap between “famous” and not famous people- the difference being (online and off) the ability to respond symmetrically to every conversation directed to a person.

Loic wants everything on his blog because he produces a lot of content, gets a lot of attention and can’t respond equally to all of it- i.e. he’d rather respond in comments on his own blog than click through to other platforms, log in, comment, etc. He wants a magnet more than he wants glue.

People with more symmetrical graphs may be happier using something else (eg Facebook)- or lots of places- as the hub(s) of their social graphs depending on how they respond to others as well as what they produce. A layer of glue would work better here.

The glue metaphor is breaking down for me. I wonder if “synapses” is more accurate- not sticking things together permanently, but constantly forming and re-forming connections, getting stronger and smarter as it goes.

. . . mmm, glue still has a better ring.

I am not a “famous” person on the Internet. I can respond in kind to everyone who reaches out to me. I do produce a lot more long-form content than most of my friends, though. This puts me in the middle. I don’t need to run everything through a single point like Loic, but I do find a limit at around 5 social network outlets to check in with regularly.

The glue that works best for me links networks, but doesn’t replace them. I like Disqus because it sits on top of my blog and Tumblog, but doesn’t replace them. I can’t get excited about Friendfeed or Plaxo because they just create more places for me to visit.

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Just When I’d Concluded that Twitter is Utterly Banal (Not that there is anything wrong with that)

March 31st, 2008

Moira Gunn’s Tech Nation podcast covers a lot of ground and has some great interviews. One of the most interesting I have heard in a long time was with NYU professor Clay Shirky, who wrote a recent book on social media.

The best part of the interview was where he talked about the use of social web tools for political purposes. Starting with a reminder that Chinese students used fax machines in 1989 to obtain Western reports on the Tiananmen Square protests and crackdown, he went on to discuss several examples of social media being used to record things that matter to the world- as opposed to everyday events that matter to specific individuals. My favorites:

* A flash mob convened in October Square, Minsk, Belarus in May 2006 (in Belarussian(?) with lots of pictures) to eat ice cream. Mass gatherings in October Square are illegal and security forces monitor the same social networks as the activists, so plainclothes police were ready and arrested a number of participants. Photos document the entire episode, including the arrests.

*Twitter used by Egyptian activists to let the community know their whereabouts, esp. whether they have been arrested. Shirky pointed out that when the fact of a person’s arrest is widely known, the likelihood that the person will be seen again increases dramatically. In this case, Alaa was able to Twitter the circumstances of his detention from his mobile phone.

Shirky opines that tools like Twitter and SMS mean that connectivity is an all-or-nothing proposition for repressive governments. I don’t think he has it quite right- China and other countries manage to screen web sites effectively. The point is well taken, though- lightweight communication tools can find ways through the walls. This is really inspirational stuff.

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Why is Facebook the Place I Have the Most Friends, but Get the Least Value?

March 31st, 2008

I write this blog, I have a tumblog/lifestream at www.park3.org, a Twitter account and a Facebook page.  These are my principal forums for self-expression on the web.  I’ll come right out and say that I don’t like Facebook very much.  I’ve tried to find value in it, but I have mostly failed.

I like to write, which is my I like to blog.  Facebook isn’t about that at all.  Fair enough.  I like music a lot and FB lets me pull content from Last.fm, Pandora, Sonic Living and the Hype Machine, but I can do less in the applications on my FB page than I can on the original sites themselves, so there’s no draw there either.

I tried using Facebook to aggregate content from my other online outlets, but it does that poorly because each aggregation source is siloed in an application box on my profile and the whole thing gets cluttered pretty quickly.

Photos are one of Facebook’s strongest suits.  I continually tell myself to take more photos.  Maybe if I can do that I will start using FB photos more.

Groups and fan pages are useless- nothing ever happens on them that I can tell.

That leaves the other Facebook-native features: Wall, Poke, Zombies, etc. I know a lot of people who have fun poking one another and leaving wall messages.  That’s great, but I find it unfulfilling.  Messaging is good and I use Wall, but chest bumping, fish-slapping etc. don’t appeal to me at all.

All that said, I have connected with more real-life friends online through Facebook than anywhere else.  What this means, practically speaking, is that I get the most value on Facebook from status updates.

Why is this the case, though- why are more friends on FB than anywhere else?  I think it’s because it is so easy.  Twitter and Flickr do a much better job at status updates and photos, respectively, but Facebook brings them together and does them both just well enough to be a single point of focus, and throws in the quick-touch poke stuff to help people feel close even when they aren’t in real life.

I didn’t mean to end this post so cynically- saying that Facebook is really a lowest common denominator that does enough things just well enough to be appealing to the broadest segment of the population- that’s what it seems like to me, though.

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Finding Success in the Middle of the Market — HBS Working Knowledge

March 25th, 2008

Harvard Business School’s Working Knowledge newsletter is one of my favorite regular reads.  This recent article teases apart market segments in a smart way.

Finding Success in the Middle of the Market — HBS Working Knowledge

Per the article, most people tend to think of markets as a trade-off between the high-margin, low-volume top end and the low-cost high-volume structure at the other end.   

Author/professor John Quelch says that this ignores the substantial middle section of the market.  In the automotive world, he points out that this is where the Ford Taurus and Toyota Camry live- mainstays of each company’s product lines.

My question is- what is the best way to fill this market?  Ford is too old a company to be a meaningful example.  Toyota has moved upmarket from the high-volume end over the past 30 years but still has such a "value" imprimatur that it had to introduce Lexus as a new brand to capture the premium market.

If I have an idea for a company and would like to play in Prof. Quelch’s "midfield", am I better of starting with a premium product and gradually moving the price point down, or starting at the low end and working up?

Is controlling the midfield a reasonable goal at all, or does it require too much luck and carry to much risk of losing focus?  

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ESPN: The worldwide leader in selling ads solo? » VentureBeat

March 24th, 2008

Ads are the backbone of the Internet. Without them the “content is free” ethos would be entirely a lost cause. The ins and outs of who sells ads on the internet and who benefits from them is as important, therefore, as just about anything else out there.

VentureBeat discusses ESPN’s decision to stop using third-party ad networks, hire its own salespeople and bring in the advertising directly. As the world’s largest sports website, VB believes ESPN has the clout to pull it off.

ESPN: The worldwide leader in selling ads solo? » VentureBeat

I’m sure ESPN has its own salespeople for the cable portion of its business, so this is probably not breaking completely new ground.

However, here’s a thought about how it might get different. What if ESPN builds out its web-ad sales network really well? What if it then says to itself “hey, the content is free to consume but expensive to produce. Can we generate some extra revenue by placing ads on other sports networks as well? Maybe we’ll compete with ourselves a little for the pageviews, but if we get the right commission structure in place we’ll be just as well off.”

And then what if the New York Times has the same thought? They still have the cash to fund that kind of shift and they desperately need a new revenue model to replace paper subscription sales.

Is it too big a stretch to see the major news content producers turning into major ad networks? Maybe, but then again the 10% of my Sunday (paper) newspaper devoted to advertisements tells me maybe not. TV and print media have always been about wrapping ads around content in the best possible way. The Internet just makes it easier to sell ads around other people’s content as well.

Fun thought either way.

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What Happens Online When a Person Dies in Real Life

March 24th, 2008

This post is a little macabre. It is also personal and I am having trouble sorting through my feelings in a coherent way, but need to get a few thoughts out of my head regardless. Apologies in advance.

A friend died suddenly and tragically two weeks ago. His friends and family organized (and continue to organize) a number of real-world events to celebrate his life and to say goodbye. This is about what happens in the virtual world.

Matt had a Linkedin and a Facebook account. The accounts are free, of course, so presumably they will stay up unless/until someone figures out how to get his passwords, log in and remove the accounts.

I don’t know why anyone would want to do this any time soon. Friends have left messages on Matt’s Facebook wall and turned the page into a memorial of sorts. His Linkedin page is more sterile, predictably, and stands as a record of his work life. People could leave messages of some sort (post-mortem recommendations, perhaps?), but no one does.

I find it comforting to visit his Facebook page once in a while and see a reminder of Matt the way he recorded his life unfolding. There is a memorial blog as well where people can leave comments for/about him and that is also a really nice thing, but it is about him. His own pages are him.

Writing this has produced a lot more tears than I expected. Facebook is “a social utility that connects you with the people around you”. It is also designed to be transient and ever-changing as the page owner’s life unfolds. When the person isn’t around any more his life-record freezes, but the connection continues as friends stop by, leave messages, tag him in their photos, etc. It is extremely poignant.

Maybe someday someone will decide that the Facebook page has served its purpose and remove it. For now, though, it is a way for Matt’s friends to reach out to him any time and remember him the way he wanted to be remembered. It helps.

So long Matt.

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What Needs to Go in My Business Plan?

March 21st, 2008

I have read many business plans from clients and friends over the years, and helped write more than a few. I have strong opinions about what works and what doesn’t and I have been mulling a post on the subject for a while.

As I started writing though, I found that lots of other bright people have also written extensively on this topic. More to the point, many of these people are VCs in the business of funding companies. Here, then, is a whole lotta link-love on the subject of business plans, with my own editorial comments.

*Purpose. Guy Kawasaki says that writing the plan is a really valuable exercise to “to solidify the objectives (what), strategies (how), and tactics (when, where, who)“. He also says (two lines prior) that it is a “mechanical step in due diligence”. Translation- no one is going to read the whole thing, so figure out how to make the important points stand out without being ostentatious about it. Use descriptive headings.

*Length. Around 10 pages is all you need. Guy says 11 and even allows an extra 9 for good measure. The best ones I have seen have all been concise. If you have trouble reducing the essence of your business to that amount of space you are too close to it. Get a friend who knows nothing about the idea to review it and tell her/him to cut out everything the tiniest bit extraneous.

*Executive Summary. The Woodside Fund allows 3-5 pages for this. Brad Burnham says 1-2. Guy says 1 and I agree with him. Remember that your audience may look at 10 of these every day. Hitting the major points so a reader can take them all in a single scan is a big help.

*Management Team. This is the hardest for most people, because new businesses are usually in new areas for the founders so their prior experience isn’t necessarily relevant. This is also the least-discussed area of the business plan by all of the VC blogs I researched for this post. Ask the VC cites the ability to build the product and ability to sell it as key attributes in founders. I’m willing to bet there are more exceptions to this rule than any other, though. I can name a half-dozen clients whose founders had vision and managerial/organizational skills, but no technical or sales experience per se. What is the secret then? I’d say it is to instill confidence in the audience that you can do what you say you will do. I hate to be so vague, but I really believe if you can convey that everything else will follow.

*The Business. Dick Costolo nails it- for web companies at least: “You do need to intimately understand where you sit in the proverbial value chain and what your position there means for your company, but you don’t need to know precisely how you will extract value.” You’ll be lucky to garner a $250M valuation while “starting to focus on making money” like Meebo, but a good idea can go a lot farther on the web than in many other places without a clear revenue stream.

This is really three sections in one: the problem (why people have been clamoring for your product without knowing it), the solution (why your product will satisfy the unrequited, unvoiced longing) and the business model (where you fit in the value chain, if not how to monetize). Give adequate attention to each part.

*Financials. Everyone wants to see them and everyone knows they are always dead wrong, so what to do? Ask the VC says that the user adoption piece of the projections is the most interesting, but it is the part most likely to be wrong and over which you have the least control. The answer is that the ideas that matter more than the actual numbers on the page. The financial projections convert the concepts in the business model through into cash terms. Don’t get hung up on whether growth will hit in month 19 or 27 because you will have very little control over that. Instead show that you understand your place in the value chain.

Other key points: one page of projections for a new business, shown monthly for 2-3 years, then quarterly through year 5. And don’t provide best/average/worst case projections. Work out a growth plan and be able to justify it.

*Flexibility and Adaptability. Or as Josh Kopelman says “your business plan is wrong”. You know everything is subject to change, as do your readers. State your plan confidently, but don’t get tied to it.

I realize I could continue almost endlessly on this topic. That’s enough for now, though. More later.

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On Raising an Angel Round for Your Startup

March 21st, 2008

Here is a thoughtful post on raising money from angel investors. Author Charlie O’Donnell points out that it is really the same process as any other kind of networking- get out and meet people in your space and over time you will develop the kinds of trust relationships that faciliate investment.

This is going to be BIG! – The Secret Life of Angels: Raising an Angel Round for Your Startup

The problem I have seen many people run into is finding a great idea for a business and then trying to find the capital. Occasionally it works. So does looking for relationships in bars, but the odds are better if you aren’t going at it randomly.

The companion to this is the advice from Jeff Clavier and Brad Feld about making sure your investors are accredited. Everyone says they are accredited and as long as the company does well everyone is happy. In the worst case burnout, though, unaccredited investors put the burden on the company to say that risks were properly disclosed.

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tartley.com » The Long Overdue LinkedIn Backlash

March 18th, 2008

This is a great read. The author penned a scathing Linkedin “recommendation” of another user, pointing out in the process that Linkedin is built only to allow positive reviews, which makes the system less than valuable.

tartley.com » The Long Overdue LinkedIn Backlash

What to do then, when one thinks that a person should not be trusted with a pencil, never mind a job? Be honest or let the matter drop? It would be nice if our “trust networks” let us trust the collected wisdom, but it is a hard nut to crack. Ebay has worked hard at it, but it still requires egregious conduct to merit a negative review.

The problem, in my opinion, is endemic to virtual communities. Written text (email or site-based) is tone-deaf. Nuance is lost completely and context is nearly so. Compare this with a private conversation in which negative points can be explained and put into accurate context, and couple it with the adage that negative feedback outweighs positive by a factor of 10:1 or so, and the problem becomes apparent- no one wants to be dissed, and few are willing to risk the fallout from posting a negative opinion of someone else. VentureBeat has extensively chronicled thefunded.com‘s efforts to create a fair and honest feedback system. It’s not easy.

This is not to say that the nut can’t be split, but capturing the real meaning
and reasons behind someone’s negative comments and framing them accurately may require extreme fact- and situation-analysis. Thefunded has it easier than most in this regard, since the VC-entrepreneur relationship is well-defined.

When all is said and done, though, Linkedin is among the worst at producing meaningful feedback. They should take comments like these as the must-fix issues they are. Get after it, Linkedin. You are too useful to be sidelined by a lack of trust in your recommendations.

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Meebo raising round, valued up to $250 million. Bear Stearns sold for $236 million » VentureBeat

March 18th, 2008

The headline from VentureBeat captures the spirit of the times just about perfectly.  Meebo, the IM-in-a-browser company that is "starting to focus on making money" is looking to raise a chunk of change at 4x the valuation of its last round and pegs itself as worth a quarter-billion dollars before that happens.

Meanwhile, Bear Stearns earned $233M last year according to its 10-K filing(and $2.3B in 2005 and 2006- oops) and was scooped up by JP Morgan for 1x last year’s earnings. 

It’s going to be a strange year.

Meebo raising round, valued up to $250 million. Bear Stearns sold for $236 million » VentureBeat

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