Monthly Archives

February 2009

Sweet to tweet

By | Blogging, Facebook, MySpace, Twitter | 8 Comments

In another sign that Twitter is crossing the chasm, or at least getting close to it, the FT today had a full page analysis on the company and its prospects under the heading Sweet to tweet, which made me think again about how the business will scale.

That thought process took me back to the thinking of Stephen Johnson as expressed in his fine book Emergence.  I’ve written before about his theories applied to social communities.  The following is an excerpt from that post:

per Emergence the success of communities is determined by:

  • The number of members in the community
  • The rules that govern the behaviour of members
  • The feedback loops which re-enforce certain behaviours and filter out others

Johnson does a case study on Slashdot which illustrates this well:

  • Size – when the community was small everyone could read all the posts, but when it became larger the number of posts became too large and sophisticated rules and rating systems were required to keep the site usable – the optimum rule set changed as the community grew
  • Rules – the introduction of a 1-5 rating system, vertical subdomains, the formation of a cadre of people with sufficient status to review and critically the emergence of an unwritten rule or community norm that “slashdot status” is desirable – the evolution of this sophisticated rule set was critical to the success of Slashdot
  • Feedback – the rating system they devised has a complex feedback process which encourages quality submissions and fosters the emergence of an elite group of moderators and to maintain a position in that elite your contributions to Slashdot have to be highly rated by the community generally – the ruleset incorporated sophisticated feedback mechanisms

As another example of this remember how Facebook has continually changed the rules for applications in order to maintain the right balance between spam and viral growth.

All this is interesting for Twitter because unlike Slashdot and Facebook it doesn’t control the user interface and therefore can’t change the rules which govern the service in the way that they can.  Instead it is up to the Twitter clients (Tweetdeck, Twhirl etc.) to develop tools that get users over the problems that will inevitably emerge with scale.  (The first of these problems was keeping track of DMs and @replies as the volume of general tweets grew which Tweetdeck solves by capturing them in separate columns.  I suspect the next problem will be keeping track of conversations.)

This trick of outsourcing the evolution of the rules for Twitter to third party developers is at once clever and risky.  Clever because it absolves Twitter from the need to impose changes on the community which might backfire and instead allows them to benefit from the successful experiments of others without suffering if they fail.  Risky because in some sense the rules are the community and outsourcing them to third parties means you are depending on them getting it right (or at least one of them) and also because you risk the community becoming more resident in the third party client than in Twitter itself (remember Photobucket and Myspace).

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If you love your customer set her free

By | Online retail, Privacy | 12 Comments

There is a great story on Jared Spool’s blog of how a desire to build a relationship with customers can be counter-productive (thanks to Joe Andrieu for the pointer).

The un-named etailer made the mistake of asking customers to register with the site before they checked out – I can fully understand the impulse behind this – build a list of registered members, improve their future purchase experience, and hopefully improve their loyalty and repeat business stats.

The result, however, was very different.  Total mayhem in fact.

Firstly, when it came to it customers didn’t like having to register:

We conducted usability tests with people who needed to buy products from the site. We asked them to bring their shopping lists and we gave them the money to make the purchases. All they needed to do was complete the purchase.

We were wrong about the first-time shoppers. They did mind registering. They resented having to register when they encountered the page. As one shopper told us, “I’m not here to enter into a relationship. I just want to buy something.”

Some first-time shoppers couldn’t remember if it was their first time, becoming frustrated as each common email and password combination failed. We were surprised how much they resisted registering.

Without even knowing what was involved in registration, all the users that clicked on the button did so with a sense of despair. Many vocalized how the retailer only wanted their information to pester them with marketing messages they didn’t want. Some imagined other nefarious purposes of the obvious attempt to invade privacy. (In reality, the site asked nothing during registration that it didn’t need to complete the purchase: name, shipping address, billing address, and payment information.)

Lesson 1 is don’t make people feel like you are making them trust you or that you assume they want to be your friend.

I’m not here to be in a relationship – that sums it up for me.  If I think about the good relationships I have with offline retailers they didn’t start on the first visit – they started some way down the track, once we had started to get to know one another.  The first visit was all about efficient execution of the purchase process.

Secondly, even if people don’t mind registering in theory, in practice it is a massive hassle:

Except for a very few who remembered their login information, most stumbled on the form. They couldn’t remember the email address or password they used. Remembering which email address they registered with was problematic – many had multiple email addresses or had changed them over the years.When a shopper couldn’t remember the email address and password, they’d attempt at guessing what it could be multiple times. These guesses rarely succeeded. Some would eventually ask the site to send the password to their email address, which is a problem if you can’t remember which email address you initially registered with.

(Later, we did an analysis of the retailer’s database, only to discover 45% of all customers had multiple registrations in the system, some as many as 10. We also analyzed how many people requested passwords, to find out it reached about 160,000 per day. 75% of these people never tried to complete the purchase once requested.)

The form, intended to make shopping easier, turned out to only help a small percentage of the customers who encountered it.

Read the punultimate paragraph in the above quote again – those are some jaw-droppingly-big numbers.

Asking people to register makes the mistake of assuming you are important enough to the customer that they will remember the details they have used.  The second lesson therefore is the folly of that (arrogant) assumption.  (Note this pattern will shift as OpenID and Facebook Connect gain traction.)

Joe quotes Doc Searls as saying “a free customer is more valuable than a captive one” – I’m a big believer in that.  Trying to capture people (or forcing them to register) makes you less attractive.  In the real world we have always known that being needy is a turn-off – yet somehow this doesn’t always get translated online.

And the punchline?  When the un-named retailer changed the process so people weren’t forced to register sales lept up by $15m in the first month and $300m in the first year.

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It is tough founding a business

By | Entrepreneurs, Startup general interest | 14 Comments

The Wall Street Journal today has a great article designed to help potential entrepreneurs figure out whether they are cut out to found their own businesses.  If that is you then the whole piece is well worth a read.  Being an entrepreneur can be a fantastically rewarding occupation both financially and at a personal level, but it is manifestly the case that not everyone is cut out for it.  Moreover, unlike most jobs, once you have founded a business and employed a few people leaving the company can be prohibitively difficult.

The article is structured around 10 questions that entrepreneurs should ask themselves and then after each one there is a brief discussion of the issues.

In the remainder of this post I’m going to bring out the single best question and the subsequent discussion and the list the remaining questions without the discussion (you can go back to the WSJ for that).

Single best question: 

Are you a self-starter?

Entrepreneurs face lots of discouragement. Potential buyers don’t return calls, business sours or you face repeated rejection. It takes willpower and an almost unwavering optimism to overcome these constant obstacles.

John Gartner, an assistant clinical-psychiatry professor at Johns Hopkins University and author of the book “The Hypomaniac Edge,” theorizes that many well-known entrepreneurs have a temperament called hypomania. They’re highly creative, energetic, impatient and very persistent — traits that help them persevere even when others lose faith.

“One of the things about having this kind of confidence is they’re kind of risk-blind because they don’t think they could fail,” Prof. Gartner says. And, he adds, “if they fail, they’re not down for that long, and after a while they’re energized by a whole new idea.”

The other questions:

  • Are you willing and able to bear great financial risk? [there is a reason many entrepreneurs are already wealthy]
  • Are you willing to sacrifice your lifestyle for potentially many years?
  • Is your significant other on board?
  • Do you like all aspects of running a business?
  • Are you comfortable making decisions with no playbook?
  • What is your track record of executing ideas?
  • How persuasive and well-spoken are you?
  • Do you have a concept your passionate about?
  • Do you have a business partner?

I have seen many entrepreneurs struggle with different questions on this list and their companies have hit bumpy patches as a result.  Conversely just about every successful company I can think of has been able to cover off all of them.  Not necessarily via a single individual though – and founding teams need positive answers for these questions between them not for each person separately.

Many of these questions apply also to ‘professional CEOs’ who come into startups when they through the inital founding stage, but are still small.

Related articles by Zemanta:

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The potential in realtime

By | Blogging, Facebook | 12 Comments

The life of the VC is a perennial search for the next big thing, and Steve Gillmor had a great post on TechCrunchIT yesterday arguing that it will be ‘realtime’.  He puts it thus:

As Marc Andreessen reminds in his fascinating conversation with Charlie Rose, the Internet didn’t take off until the browser. The infrastructure was in place for some time already, but when the browser appeared, the TV generation sat up and took notice.

Now we’re at the threshold of the realtime moment, and history seems to be repeating itself. For some of us, the advent of a reasonably realtime message bus over public networks has changed something about the existing infrastructure in ways that are not yet important to a broad section of Internet dwellers.

I have previously written about the potential for shared data services, and I’m starting to look at the realtime web in a similar fashion way.  Twitter and it’s ilk are unlocking whole new modes of interaction and at the same time generating some very interesting data.  Twitter search allows you to peer right inside the mind to see what the world is thinking at this precise moment, and I think that has to be good for something!  Adding credence to the notion that there is something important in realtime are 175 million users on Facebook looking at their feeds to see what their friends are doing in realtime.

I will admit that it is still early to say for sure, but if you are a naysayer on realtime read these next points from Steve’s post very carefully:

The standard attack on realtime is that it is the new crack. We’re all addicted to our devices, to the flow of alerts, messages, and bite-sized information chunks. We no longer have time for blog posts, refreshing our Twitter streams for pointers to what our friends think is important. It’s the revenge of the short attention span brought on by 30-second television ads — the myth of multi-tasking spread across a sea of factoids that Nick Carr fears will destroy scholarship and ultimately thinking.

Of course this is true and also completely irrelevant ….

….. The browser brought us an explosion of Web pages, produced first by professionals, then by small business owners, and finally, with blogs, by anybody. The struggle became one of time and location; RSS and search to the rescue. The time from idea to publish to consumption approached realtime.

The devices then took charge, widening the amount of time to consume the impossible flow. The Blackberry expanded work to all hours. The iPhone blurred the distinction between work and play. Twitter blurred personal and public into a single stream of updates. Facebook blurred real and virtual friendships. That’s where we are now.

Realtime has to be managed. The first tools in any transformative period are hard coded to the sensibilities of the radicals, the pioneers on the front lines. Scoble may appear ridiculous in his zeal for the extremes of the social media envelope, but his calculation is much more conservative than you might think at first glance. By opening himself to the tyranny of the crowd, he connects with that reality we each face.

In other words just as it was very hard to see the evolution of the command line pre-browser internet to the web we know and love today, so it may be hard to see what the realtime web might grow into.  After all, the major problems most people see, distraction and too much noise, are both issues that can be addressed by user interface development – and as with the internet if there is value to be had from realtime the tools to unlock it will be built.  The evolution of web tools Steve describes from technology through devices through to web services is worth re-reading with this thought in mind.

Another interesting point that Andreessen makes in the interview linked to above is that the iPhone might be as revolutionary for mobile networks as the browser was for the internet.  The infrastructure has been there for some time, but this is the first device that makes it easy enough for people to do what they want to do on that infrastructure.

Comment system

By | Blogging | 14 Comments

In the words of Bono “I still haven’t found what I’m looking for” – but I saw it on someone else’s blog tonight.  I would like a comments box like the one in the picture below, which is taken from TechCrunchIT which also features threaded comments.  On top of that email approval is a big winner for me as it allows me to reply to far more comments that would otherwise be possible.  And it needs to be a WordPress plugin.

I’m going to stick with IntenseDebate for now, but I may be back to Disqus shortly.  (Disqus is pretty good, but there is no notification to commenters when their comments go to moderation which has confused a lot of people, plus I’m not that keen on people being automatically approved to leave comments just because they have a Disqus account.)

Facebook spreading its tentacles around the web

By | Blogging, Facebook, Social networks | 7 Comments

Yesterday Facebook launched its first social widget for Facebook Connect.  There has been a lot of chatter about this around the web, mostly debating whether the comment service it provides is any better or worse than existing services like Disqus, intensedebate and JS-Kit, but for me the more important point is the way Facebook is rapidly extending it’s tentacles outside the walled garden to potentially everywhere else on the social web.  As a result Facebook integration has now become one of the most important criteria when I’m thinking about social features for this blog.

As a case in point I’ve been using Disqus for a while now and whilst I love the email approval and threading it has been a little bit unsatisfactory overall (commenters aren’t told when their comments are being moderated leaving them unsure what is going on, plus I am getting a much larger number of very low value comments that I suspect are coming direct from the Disqus site).  So I have been looking around for an alternative and as I do so integration with Facebook Connect is on my list of must have features.  (For those of you with an interest in blogging tools I am now part way through installing IntenseDebate having failed to get JS-Kit working – both of these and Disqus work with FB Connect.)

Similarly there is now a MyBlogLog equivalent which I think will show last visitors to my blog based on their Facebook accounts rather than their MyBlogLog accounts.  The extra reach of Facebook makes that sound much more attractive to me and I will be trying out their widget shortly (probably alongside MyBlogLog to start with).

I think Facebook Connect could substantially increase the reach and appeal of Facebook – if all of a sudden the easiest way to be visible across the social web is to stay logged into Facebook then I think people will do just that.  Then the added bonus of having your activity pop up in your FB feed (offering similar benefits to FriendFeed) will drive more people back to Facebook and the whole thing could become self re-enforcing.

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Enterprise2.0 – McKinsey reports it is starting to work

By | Enterprise2.0, Social software | 13 Comments

You know something is approaching the mainstream when it gets a write up in a McKinsey quarterly report, and so it is with Enterprise2.0, or as they would have it web2.0 in the enterprise.  They have been studying 50+ early adopter enterprises in this space for two years now and the write up shows that there is an even mix of success and failure, but growing consensus that there are real productivity gains to be had from increased employee collaboration using lightweight web tools.  Clay Shirky refers to this as an immense ‘cognitive surplus’ that can be tapped with participatory web services.

The article is well worth a read if you are into this space.  It covers many topics that we have discussed here before including the bottom up (edge-in) nature of these tools, the challenges for management in implementing them, the appropriate balance between central direction/encouragement and putting the user in control, the importance of building these tools into workflow, and how ego and public recognition are important incentives to drive adoption – and it does so with the structure and rigour you would expect from McKinsey.

I’m going to pull out just three things in this post.

Firstly – Adoption cycles – as regular readers will know I think time is everything in venture so it is interesting to note from the chart below that McKinsey believes that adoption is still limited and yet to reach the rapid growth phase.  That tells me the real excitement is yet to come for startups in this space, but that the likely big winners are probably already up and running and doing business.

Secondly – The technologies – in the table below McKinsey provides a helpful list of the technologies that we are talking about here.  The standout conclusion for me when reading this list is that they are not technically challenging to develop.  Thus for startups to have value in this space they will need to demonstrate massive growth and customer traction.  I think it is unlikely that we will see big ticket acquisitions for the sake of technology alone.  This is different to traditional enterprise software.

Thirdly – Market size – McKinsey has it at $1bn globally, which is, as they point out, paltry.  Further it isn’t clear if services are included in that figure.