Monthly Archives

October 2009

Twitter Weekly Updates for 2009-10-25

By | Weekly Twitter digest | No Comments
  • Published a new post: Twitter Weekly Updates for 2009-10-18 http://cli.gs/Hn4M7 #
  • Published a new post: Beware the halo effect http://cli.gs/PM8jJ #
  • McKinsey talks about the changing social contract – social standards are coming to market based relationships – http://bit.ly/uh7pO #
  • At web2.0 hearing very positive story on economy and tech from Mary Meeker – still plenty to worry about though #
  • The virtual goods blitz continuesRT @TechCrunch Ning Launches Virtual Gifts Allows Network Creators To Design Their Own http://bit.ly/4CvfJO #
  • @ev on stage at web2.0 saying 97% of company's effort still focused on building tech and site, ie not on monetisation #
  • I'm getting good value out of @azeemazhar viewsflow app – articles I've found there have stimulated two blog posts already this week #
  • Published a new post: More evidence of ads not working http://cli.gs/H4bpj #
  • US traffic growth on Twitter.com has slowed. Now rumours Bing and Google close to licensing firehose: http://bit.ly/3JV1yU. Coincidence? #
  • RT @ajkeen: Ultimately e-readers will have be interoperable across platforms. iTablet will likely change everything #
  • @fredwilson writes about the challenges of investing in a product pre-launch http://bit.ly/2ZObVk #
  • Published a new post: Bing, competition, and search http://cli.gs/Bd9j0 #
  • Screenshot of Google's music service – http://bit.ly/26iT67 – the interest in this space is staggering given the business model challenges #
  • @davidjwbailey I agree. My point is that it is difficult for VCs in reply to davidjwbailey #
  • Published a new post: Tech companies are cashed for make acquisitions http://cli.gs/5U9um #
  • AOL has gone from 500 to 2,000 journalists in the last six months. #w2s #
  • AOL has 270m uniques, 100m in the US #
  • MSFT posts great results, buoyed by Windows 7 – which beat Harry Potter to become the most pre-ordered item on Amazon http://bit.ly/3kb7uM #
  • Good article on the EA-Playfish saga – http://bit.ly/2oGLSM #
  • Published a new post: An open, sharing culture is good for the startup ecosystem http://cli.gs/UBDHt #
  • @plc thanks Peter. Seems to be ok now? Let me know if not, and of any future probs. in reply to plc #
  • @vwadhwa thanks Vivek, and I still don't think that post was a real slamming 🙂 in reply to vwadhwa #
  • #chelsea – conspiracy theory – mgt allow long queues into Matthew Harding coz more people get here earlier increasing matchday bar takings #

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An open, sharing culture is good for the startup ecosystem

By | Startup general interest, Venture Capital | 2 Comments

I had an interesting meeting this morning with two-time-entrepreneur turned Berkeley, Duke and Harvard based academic, Vivek Wadhwa who has a keen interest in understanding and promoting entrepreneurialism and startups.  You can find some of his recent posts on Techcrunch here.

We were talking about the history of the US startup scene and he described how in the 1980s Boston and the Valley were more or less on a par, but now, as we know, there is far more activity here in CA (where I have been this week).  He told me about some research into why Boston had failed to keep up which came up with three reasons that explained the difference:

  • The Valley’s open, sharing culture works better for startups than the more secretive formality on the East Coast
  • Many more immigrants from India, and to a lesser extent China, headed for the Valley
  • The Valley has better and stronger networks, the most prominent of which is TIE

Anyone who reads this blog regularly or who has talked with me or heard me speak will know I’m a cheerleader for the London and European startup and venture scene.  There are still far fewer startups in Europe than over here, but the gap is closing and for many companies, particularly the best companies, it isn’t too much of a stretch to say that the same levels of finance and support are now available on both sides of the Atlantic.

I’m very interested in the things that will help close the gap more quickly, particularly now in late 2009 after the recession has knocked everyone’s confidence a little, which is why I picked up on Vivek’s comments above.  The default culture in much of the UK and Europe is more secretive than sharing, I think that is changing, but it could always change more quickly.  I often find myself saying that if you tell ten people about your idea there is a much greater chance of finding someone who will help you than of getting your idea ripped off.  Similarly obscurity is a much greater risk for most startups than having their idea stolen.

Sharing, of course, happens within networks and their events and parties, both formal and informal.  So my final point here is to say kudos to all the folk in the UK and Europe who make this happen.  Singling out a few names Mike Butcher of Techcrunch, Saul Klein with Seedcamp, Andy and Ali of Huddle with DrinkTank, Sam at Chinwag, Simon Grice with Mashup and Mark Littlewood with his BLN dinners and Robert Loch with a variety events over the years have been key to bringing everyone together and putting us on the trajectory we want to be on (please forgive me if your name isn’t on this list, it isn’t supposed to be exhaustive).  We can’t have too much of this.

Tech companies are cashed for make acquisitions

By | Exits | 3 Comments

The last month or so has been a strong one from an M&A perspective, with Cisco making two $3bn acquisitions (Tandberg and Starent Networks), Intuit acquiring Mint for $170m and Adobe acquiring Omniture for $1.8bn – and that is just off the top of my head.

Take this activity and add the rumours circling about tech companies receiving pressure from shareholders to use some of their cash to make acquisitions and one could almost forget that it is only 13 months since Lehman filed for bankruptcy and people were predicting the end of capitalism.

In this context I thought you might be interested in the following list of cash holdings at leading tech companies.

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There is a lot of cash there which needs a home people.

Bing, competition, and search

By | Google, Microsoft, Search | 6 Comments

We’ve all heard the old adage that the search problem is only 5% solved.  My news today is that I got a much better idea of what the next few percent will look like, largely from a Microsoft sponsored session this morning here at the Web2.0 Summit talking where they are taking Bing.  It was a pretty impressive session and I was left thinking that they had done a good job of thinking where search works at the moment, where it doesn’t, and what the small concrete things they can do about that.

Some examples (and I could have given many more):

  • The ‘hover feature’ which allows you to preview more of the content on a page before clicking on the link, so you will have less of the frustrating hitting the back button to return you to the results page when you click on a link that you hoped would give you what you want, but turns out not to
  • Including facts in search results – going beyond far beyond weather to include many more facts e.g. traffic and flight status if you type in a flight number
  • Bringing the features that you would use from sites direct into the search results – e.g. a search for UPS brings you a UPS track parcel search box right into the results
  • Visual search for shopping so you can flick through literally thousands of e.g. HDTV’s, and they have some nice tools to refine the search based on parameters – e.g. 37-42 inch TVs
  • Bringing aggregated review results direct into search results, and they have done some nice work helping the user to quickly derive meaning from the reviews

Stepping up a level, these initiatives are changing what search is about, which is a response to changes in consumer intent when they are searching.  When we first started searching we were generally looking for a link to a site that we knew – so the intent was navigational.  That remains the case for a large number of queries, but for an increasing proportion the intent is simply to find information.  For this set of customers the search paradigm changes from being one of ‘get me off the search engine and to where I want to get to as fast as you can’ to ‘get me to the information as fast as you can’.

In other words search engines are becoming destination sites in their own right, in part at least.

Four of the five Bing features I list above can be understood in this light (check out the screenshots below).

Notice I have not said that all of this will be enough for Microsoft to take a chunk out of Google, but I do think it gives them a shot, and at the very least we will get some good parallel innovation from Google.  Taking a more optimistic view you can see a scenario where the search market gets more competitive and margins start to come down which, amongst other things, would reduce the cost of clicks and hence customer acquisition for many startups.  Remember also that we are talking about a paradigm shift in search which is one of the reasons I think MSFT has a chance.

In related news we have just heard that Microsoft and Twitter have done a deal which will see the full firehose turning up in Bing search results.  It is unclear how that will look over time, but realtime is another area where search becomes more destination site than hop off point.

Update: I’m listening to Marissa Meyer announcing that Google is now also receiving the full Twitter firehose and talking about some neat social additions to their search results page

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More evidence of ads not working

By | Advertising | 7 Comments

There was an interesting piece on ReadWriteWeb a couple of days ago reporting on some research from marketing firm Brand in Hand which found that female iPhone users are barely interacting with mobile ads.  They are too busy using the phone to waste time clicking through to find out what might lie on the other side.

I would bet that this phenomena will spread to other parts of the population as well, maybe to all of it eventually.  My logic is:

  • Being short on time is increasingly a problem for everyone, and this trend is accelerating
  • Ads don’t offer anything to the consumer anymore – if you want to find out about a product or service you can now do much better searching on Google than clicking on an ad.  This fact of modern life is getting better and better understood by more and more of the population

Note also that these arguments are not limited to mobile.

So where does advertising go?

Two answers to that spring to mind right now (note this isn’t supposed to be an exhaustive list):

  • from broadcast ads to engagement driven marketing, the same ReadWriteWeb piece has an example of an app from Kraft foods that is working really well for them
  • discount or voucher driven marketing – vouchers are becoming an increasingly common part of the purchase process
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Beware the halo effect

By | Startup general interest | 3 Comments

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There is a good piece in the Economist today on how misleading first impressions can lead to bad decisions due to the halo effect, particularly in recruitment and when assessing company performance.

First a definition:

[The halo effect] is the phenomenon whereby we assume that because people are good at doing A they will be good at doing B, C and D (or the reverse—because they are bad at doing A they will be bad at doing B, C and D). The phrase was first coined by Edward Thorndike, a psychologist who used it in a study published in 1920 to describe the way that commanding officers rated their soldiers. He found that officers usually judged their men as being either good right across the board or bad. There was little mixing of traits; few people were said to be good in one respect but bad in another.

It is pretty obvious that in practice the truth is more nuanced, very few people are good at everything.  This phenomena is particularly relevant for startups where senior execs have to wear many hats (as an aside – in my opinion the many hats aspect of startups puts a premium on raw ability over experience, hard to assess as it may be).  The widespread negative impact of the halo effect on startups was noted in the Harvard Business Review in 2002 (also from the Economist):

In our experience, CEOs, presidents, executive VPs and other top-level people often fall into the trap of making decisions about candidates based on lopsided or distorted information … Frequently they fall prey to the halo effect: overvaluing certain attributes while undervaluing others.

We also need to be aware of the halo effect when assessing successful startups, again from the Economist:

Much of our thinking about company performance is shaped by the halo effect … when a company is growing and profitable, we tend to infer that it has a brilliant strategy, a visionary CEO, motivated people, and a vibrant culture. When performance falters, we’re quick to say the strategy was misguided, the CEO became arrogant, the people were complacent, and the culture stodgy

Again the truth is more nuanced.  Even highly successful startups are like the proverbial curates egg – good in parts.  This is something that can get forgotten with other startups blindly copying elements of today’s hottest company.  Equally on the downside, most businesses that fail probably had some good parts to them, particularly if they were venture backed.  For this reason having been part of a failed company can still be a net positive on your CV if you were involved in the good stuff there.

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Twitter Weekly Updates for 2009-10-18

By | Weekly Twitter digest | No Comments

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CPM in the doghouse

By | Advertising, WAYN | 6 Comments

image As you may have seen, display advertising was the only part of the online mix to show negative growth in the UK in H1 this year (negative 5.2% as per the IAB).  I think there are lots of reasons for that, not least the economy and growing questions over how much value gets delivered, but an important factor is the obsession with CPM as the measurement tool.

A couple of weeks ago Shellie Bonnie wrote a popular guest post on Techcrunch: Let’s Kill The CPM addressing precisely this issue.  The full post is well worth a read, but for those of you who like a quick summary his main arguments are:

  • Counting impressions is the wrong way to measure the effectiveness of ad campaigns and dissuades people from being creative
  • Publishers deliver what they are paid for – page views – but in reality low quality top 10 lists, and photo galleries don’t do much for the consumer or the advertiser
  • Inventory is limitless and we see so many ads that very few stand out
  • Pay for performance (CPA and CPC) is not the answer.  It has its time and place but that is limited to situations where people know what they want and are close to buying.

All great points, and behind it all lies the fact that the much vaunted measurability of internet advertising is something of a red herring.  It is true that for certain classes of advertising it is possible to track the user and understand the effectiveness of your ad spend more effectively than was possible offline (mostly), and that part of the market should continue to trend towards CPA and CPC, but for the rest it isn’t sensible to be looking for immediate correlations with transactions.  It is more akin to brand advertising, e.g. sponsoring Wimbledon or the Superbowl.  Understanding how many people have been exposed to a message remains part of the story, but needs to be weighed alongside other factors including quality of impression and engagement.

As an example of this, for the past year WAYN has been selling packages to tourist boards which combine all of these elements – quality impressions via home page takeovers and default skins, engagement via competitions and chat rooms, measurement from a combination of impressions on WAYN, engagement metrics (quantitative and qualitative) and traffic out to the client’s site.

This is also part of a shift that Fred Wilson has started describing as a transition from paid media to earned media.  A good part of the scepticism over the value delivered by display comes from the growing hostility to being on the end of broadcast messages.  Brands’ alternative way of getting their message across is to get people talking about them voluntarily by doing cool things with and for their customers – event sponsorships, competitions, forum participation, social media engagement and so on.  This is one of the reasons the tourist boards like WAYN.

The upshot of this is that brands will divert budgets from buying media to many different kinds of participation.  By this logic CPM will remain in the doghouse for a long time to come and brand advertising might be the next market to get shrunk by the internet.

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It’s raining smartphones

By | Mobile | No Comments

image Walt Mossberg yesterday reviewed two new touchscreen smartphones – the Blackberry Storm2 and the Android based Motorola Cliq.  The runaway success of the iPhone was bound to attract competitors and in the words of Walt “new super-smart phones models seem to be appearing weekly”.

The iPhone remains the gold standard but this is a reminder that we live in a multi-device world.  Walt has the latest app counts across the different platforms are iPhone 85k, Android 10k, Blackberry 3k (for the newer models) and a few hundred each for the latest Windows Mobile phones and the Palm Pre.

Apps remain much more popular on the iPhone than the other platforms not least because they are easier to buy, but there is a clear catch up going on.  And with the half life of many apps measured in weeks rather than months the large headline number of available apps is not the asset it is sometimes held up to be.

The iPhone isn’t perfect either.  I’m back carrying two devices for the first time since I traded my Palm Pilot and Nokia for my first Blackberry.  I used to think that it was only a certain type of guy who carries two phones but now I know it can be because you want an iPhone for browsing and for the apps, but you need a Blacberry for email ;).  Going down a level of detail, having a proper keyboard is an advantage for the Blackberry, but for me not a clincher.  Rather it is email archiving, which is sufficiently quicker on the Blackberry that I can’t even bring myself to start a 30min inbox clearing session on my iPhone.

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