Monthly Archives

September 2010

Social commerce – on its way back in?

By | Ecommerce | 9 Comments

A couple of years back there was a wave of social shopping startups (e.g. Kaboodle, Crowdstorm) looking to combine reviews and recommendations with friend lists to help people shop more smartly.  Unfortunately none of them got too far – but the idea is back, now called social commerce, and maybe this time it will stick.

There is a post up today on Practical Ecommerce which gives a good primer.  First a definition:

helping people connect where they buy, and buy where they connect

Thinking this through it become obvious that you either help people at or around the point of purchase (i.e. at the ecommerce sites ‘where they buy’) or you stimulate conversation about commerce where people are already communicating (i.e. on the social networks ‘where they connect’).  The first generation social shopping sites sought to be destination sites in their own right, which is maybe why they struggled.

In this vision of the world the social commerce startup opportunity is providing tools to ecommerce sites for reviews, links to social networks which bring intelligence from friends or friends of friends, and intelligence from people I don’t know who are ‘like me’ or experts.

Tools like these could provide a lot of additional comfort to online shoppers as they make their buying decisions and thereby increase conversions.

So far this market is at a very early stage and speaking for myself at least I don’t see much connecting where I buy.  I’m a big user of reviews on Amazon, and the ‘X people found this review useful’ intelligence is very helpful, but they could go a lot further e.g. with links through to my Facebook social graph or by mining the data they have about me (and can get from third parties like Facebook) to help inform my purchase decisions.  This stuff doesn’t have to be complicated either, a brief pointer that says XYZ people in your extended network have viewed or bought this item would help a lot.

Thanks to @fabiodebe for the pointer to this article.

Enterprise 2.0 and middleware-as-a-service

By | Enterprise2.0, Facebook, Google | 2 Comments

A friend of mine is currently considering taking a senior role at integration software vendor Tibco, a business I’m pretty familiar with from my Reuters days.  We were discussing their long term prospects as applications move increasingly to the cloud, which raised the question of how companies will integrate (or share data between) the offerings of the different cloud apps (or Software-as-a-service apps) that they use.

Three companies who have an answer to that question are Google, Salesforce and Yammer.  They have all developed a core application and then a platform which third party apps can plug into, much like Facebook has a core social networking offering and a platform which brings third party apps into the site and gives them access to the newsfeed and other communications features.

In the case of Yammer they have been going with an enterprise Twitter service for a couple of years now which has reached a very credible user base of 80,000 companies and one million end users, and then this week they have announced their platform offering.  Techcrunch used the following words to describe how the Yammer platform will work with third party apps:

Yammer is giving third-party developers the ability to sell and create applications like those that Yammer will now offer. For example, a Crocodoc app will allow you to highlight and comment on PDFs, Word documents, images and other files that are attached to Yammer messages. And new Zendesk app will allow users to attach a Zendesk customer service ticket to a Yammer message. The company says Box, Expensify and Lithium Yammer apps are currently in development.

As well as launching their platform Yammer have extended their core service from Twitter for the enterprise to Facebook to the enterprise, adding a newsfeed, an events app and other social networking features to their existing status update service.  I think this makes a lot of sense.  People benefit from the increased information flow that social networking brings as employees in the same way as they do at home, but they don’t want to share the same information with colleagues as they do with friends and it therefore makes sense to use different networks.  This is the promise of enterprise 2.0 about which I used to blog a lot a couple of years back, but which seems to have gone a bit quiet recently.

Google and Salesforce are, of course, a good deal larger and better resourced than Yammer and have had offerings in this space for a little while already.  Google has the Google Apps Marketplace which lets third party apps integrate with Google Docs and Salesforce has their Force.com platform.  So Yammer won’t have everything their own way, that said, this product area is very new and fast moving and it could well be that Yammer finds the sweet spot before its larger competitors.

Enhanced by Zemanta

Vodafone embracing its destiny as a pipe

By | Mobile | 5 Comments

There is an article on the front page of the Financial Times business section today which reports that the ‘architect of Vodafone‘s push into internet services is quitting amidst signs that the mobile phone operator is retreating in its battle with Apple and Google over the wireless web’. He follows a couple of other recent departures of high profile individuals who were involved in Voda’s push to add a software and services line to their network business, including e.g. Tommy Ahlers, founder of Zyb the mobile social network Voda bought a couple of years back.

I have been pleased to see that Vodafone is turning away from ambitions to compete with Google and Apple as well as the numerous startups in this space, although for many industry observers the shift has been a long time coming, maybe too long.

I say that for three reasons:

  1. They were never going to succeed in building great mobile web services – partly because they lacked capabilities and partly because they were hobbled by the fact that their services would only be used by the small fraction of the global population who are on their network.  This limitation of audience limits the amount of investment they can profitably make when compared with global competitors and it also undermines the quality of socially oriented services.
  2. Many of the global competitors I mentioned in (1) were startups who found themselves in competition with the owners of the networks they needed to use and with customer bases they wanted to access with the result that they found their businesses stymied.  Hopefully mobile operators will become better partners now.
  3. The operators will now focus on network quality and innovation which should enable startups to offer more new services.  In the title to this post I said Vodafone is embracing its destiny as a pipe without specifying what type of pipe.  Their opportunity now is to be a smart pipe and maintain margins by offering great APIs in areas like location and billing.

On the wired web the confusion between network operator and service provider disappeared a long time ago I think to the benefit of all parties.  It is good to see mobile going the same way.

Enhanced by Zemanta

Chris Sacca talks value add from venture investors

By | Exits, Startup general interest, Venture Capital | One Comment

Many of you will be aware of the ‘angel gate’ saga enveloping the US ‘super angel’ scene which started a week or so ago with Mike Arringtons’s A Blogger Walks Into A Bar post which describes his encounter with a bunch of ‘super angels’ who he alleged were meeting in secret to collude on deal terms and other matters.  I have been loosely following the posts, but haven’t commented because I think the whole thing is a bit far-fetched, but I’m pleased to say that now at least one good thing has come out of it, and that is this long email from Chris Sacca posted on Techcrunch today.

I love the way he talks about how he and other ‘super angels’ work tirelessly for the companies they invests in and for the startup ecosystem in general.  I’ve never invested alongside him and he might be talking out of the side of his mouth, but I really don’t think so. 

He also argues that adding value by serving entrepreneurs is the only way to make money in the venture capital business:

Entrepreneurs outnumber us and they talk more than we do. The good opportunities are more than any of us can handle. There are legions of investors at the gates hucking checks at today’s founders. The only possible way any of us can stay in business is by serving. If we are not demonstrably and materially helpful to entrepreneurs, we are dead.

This isn’t quite true in Europe yet as, regrettably, we don’t have ‘legions of investors’ here, but we are definitely headed in this direction.

That said, there is another side to the venture industry that is important, another group of people who we need to serve, and that is the Limited Partners (LPs) who invest in our funds (and this makes us different from angels).  Just as there is no venture industry without entrepreneurs, so there is no venture industry without LPs and as fund managers we need to work hard to deliver to both groups, and sometimes to balance their conflicting needs – something a lot of VCs don’t like to talk about. 

Perhaps the most important example of where the balancing act can get difficult is the need of VCs with closed end funds (which is most of us) to exit companies as our funds come to the end of their 7-10 year lives.  This need can put VCs at odds with entrepreneurs who would like to run what is often called a ‘lifestyle business’. 

I think it is important for companies considering taking venture capital to understand and consider this constraint and the others we operate within when considering taking on venture.  I would even go so far as to say that considering the constraints is as important as considering the value add you will receive, although the constraints talk more to whether it makes sense to raise venture at all and the value add talks more to which VC you should go for once you have decided to raise money.

Enhanced by Zemanta

Twitter Weekly Updates for 2010-09-26

By | Weekly Twitter digest | One Comment

Powered by Twitter Tools

Facebook’s valuation

By | Exits, Facebook | 7 Comments

You may well have heard talk recently about Facebook’s $33bn valuation and similarly high valuations for other private companies on SecondMarket.  I’m writing today to share a few thoughts on why we need to be careful with these numbers, but before I go any further, I want to make the point that I think Facebook is a fantastic business with good prospects which has done a great job of innovating beyond their initial product.  Similarly, I think SecondMarket provides a valuable service and it is helpful for small shareholders in private companies to be able to sell their shares before larger shareholders are ready to exit, particularly for companies on the IPO track who are waiting much longer than they used to before listing.

So back to Facebook’s £33bn valuation.  When I first read that number I thought ‘wow, that is high’ but as I said above I’m a believer in this company and I didn’t think it was so high to be worthy of comment.  Reading this post on the 37Signals blog by David Hannheimer Hannson changed that.

David’s argument that Facebook is not worth $33bn has two components:

  1. The $33bn is based on what minority investors have paid for a tiny slice of the company and if they tried to sell the whole thing (or float it) they would get less.  A valuation isn’t really a valuation unless it applies to a whole company.
  2. Standard valuation methodologies would generate a much smaller number – it doesn’t look like they are generating much in the way profits on their $1bn of revenues, so discounted cash flow analysis wouldn’t get you to $33bn, and if you make generous assumptions about the profit they might be making you still get to very high profit multiples (David estimates the highest price to earnings ratio Facebook might have is 165 – which is 7.5x where Google trades).

These arguments are pretty compelling and they apply equally to the other private companies listed on SecondMarket.  It doesn’t hurt anyone to have shares traded at high prices and for these big company valuations to be in circulation provided nobody reads too much into them, which is why I’ve written this post.

For a bit of fun making the same point you can read Press Release: 37Signals Valuation Tops $100bn after Bold VC Investment.

Enhanced by Zemanta

Mark Zuckerberg – mobile fragmentation is a “disaster”

By | Facebook, Mobile | 5 Comments

Mark Zuckerberg gave a long interview to Mike Arrington at Techcrunch yesterday (full transcript here) and whilst most of the commentary is about whether Facebook is or isn’t building a phone to me the most interesting thing is the range and extent of development Facebook feels it needs to undertake to get the features they want to as much of their user base as possible.

Zuckerberg described Facebook’s goal as “trying to make every app social whether it’s on the web, or mobile, or other devices”.  This means two things – deep integration with apps and reaching out to as many devices as possible.

On the deep integration side Facebook wants to ‘make every app social’ but without making it ‘crazy from a UX perspective’ which means persistent login to Facebook and automatic integration with Facebook when you open the app.  The only way to do this really well is deep integration with the OS – and from this perspective the open source Android platform is far more attractive than any of the alternatives, which is one of Arrington’s big takeaways from the interview.

There are of course many more people who don’t have Android phones than do, and Facebook isn’t neglecting them.  Zuckerberg says Facebook is putting more investment into the iPhone than any other platform at this point, and if Windows 7 takes off then they will put resources on that.  Further, they have people ‘working on lowest common denominator HTML5 stuff that works across all systems’, and finally ‘maybe we’re not building a lot of specific stuff for RIM and Blackberry, but the HTML5 stuff we’re doing will work there’ (emphasis mine).

Zuckerberg goes on to explain that as well as building specific apps for Android and iPhone they’ll also build integration into the OS, for the reason explained above, whilst for other less popular platforms they might only build an app, or only offer an HTML5 solution.

That is a lot of platform specific development, and towards the end of the interview Zuckerberg indicates how difficult it is, even for a company the size of Facebook:

We’re working on Questions, and it’s like OK. So we build Questions for the web, then we build the “m” site for Questions, then we build the Touch HTML5 version of questions. Then we build the iPhone version of Questions, and then the Android version, and then maybe.. (Elliot Schrage: iPad…) Right, the iPad stuff. And then we don’t work on a RIM version and then a bunch of people are pissed because it’s not available on their phone.

It’s kind of a disaster right now. I really hope that the direction that this stuff goes in is one where there’s more of a standard

Amen to that. 

If mobile fragmentation is difficult for Facebook it is verging on disastrous for startups.  For the last couple of years the success of the iPhone has made the mobile world less fragmented.  The tide has now turned back the other way.

Enhanced by Zemanta

Google Instant makes it harder for the small guy to do SEO

By | Google, Search | 12 Comments

There is a good post on Techcrunch today about the impact of Google Instant on SEO.  SEO company RankAbove has done some research and from the two weeks of data available it seems that one of the big changes is reduced traffic to long-tail keywords, here’s why:

Because Google Instant focuses the user’s attention on more popular search phrases, by suggesting them and showing their results as the user types, fewer users will use longer tail, less popular phrases. Searchers typing a longer, more obscure variation of a keyword are unlikely to complete it before they see the results—automatically loaded onto the SERP [search engine results page] —they were looking for.

A company selling iPod Car Adapters, but ranking for a lesser-used phrase, like “iPod Car Cables,” is unlikely to get much traffic from that phrase, as a searcher using Instant would almost never get to that search before seeing relevant results. For a site counting on unpopular, “forgotten” long-tail phrases like that, their traffic will dwindle.

I think startups are likely to be disproportionately hit by this development, losing out at the margin to companies that have the scale and resources to optimise for the most popular queries.

The other change of note is that less people are clicking through to the second page of results, which will similarly lend advantage to companies that have the muscle to get onto the first page.

Caveat: This analysis is based on just two weeks of data and the results might change as volumes increase and people get through their periods of learning to use Google Instant and settle down to a consistent pattern of behaviour.  The other thing is that Google Instant doesn’t work if you search directly from the nav bar or toolbar, so any changes wrought will only apply to a percentage of users.

Update: In the comments Benoit Cundy pointed me to this chart which shows that very little traffic went to the second page of results anyway.

image

Enhanced by Zemanta

Moving from an Apple ecosystem to a mobile ecosystem

By | Apple, Google, Mobile | 4 Comments

image Regular readers will know that in the past I’ve been critical of Apple’s attitude towards its partners in the mobile ecosystem.  I have argued that their insistence on controlling and approving everything and on adherence to the Apple way of doing things makes life harder for startups and stifles innovation.  Jobs’ Thoughts on Flash published in April were to me symptomatic of Apple’s belief in the superiority of all things Apple and their lack of respect/understanding for their ecosystem partners.

In the last couple of weeks it seems that Apple might be changing.

They have done a bunch of things that many thought they never would:

Taken together these developments are pretty significant and if Apple continues in this vein then pretty soon the mobile ecosystem will look pretty different.  Up until now Apple has dominated the mobile internet/mobile app world and sought to lock everyone else out – a domination based on the twin strengths of devastatingly good hardware and an app store that was far stronger than the competition’s.  Their position was sufficiently strong that they felt comfortable forcing developers to make choices between their platform and others (largely Android, Symbian, Blackberry, Windows 7), and despite the significant hassles of dealing with Apple most developers swallowed the pain and went for the platform with the greatest numbers and best payment mechanism.

Now it seems that Apple are bringing the barriers down, and we are taking the first steps towards a world where Apple is (the most important) part of a wider mobile ecosystem rather than an ecosystem in and of itself.

These recent changes might reflect a sudden realisation at Apple that helping their partners ultimately helps them too, or it may be a response to the rise and rise of Android, but either way these developments are welcome.  Long may they continue.

Enhanced by Zemanta

Twitter followers are more valued than Facebook fans

By | Advertising, Facebook, Twitter | 9 Comments

I have a long standing bet with an old friend from university that 50 million people will Tweet in December this year and over the weekend he pointed me to articles on ComputerWorld and sociamediatoday saying that as little as 17% of Twitter users actually send Tweets and that Twitter seems to be positioning itself as a media consumption platform.  That took me to a more recent post on socialmediatoday which argues credibly that Twitter followers are more likely to induce advocacy and future purchases than Facebook fans.

Socialmediatoday was picking up on an emarketer reported survey which found:

Daily Twitter users who followed a brand were more than twice as likely as daily Facebook users who “liked” a brand to say they were more likely to purchase from the brand after becoming a social media follower.

The precise survey data is in these two charts.

Likelihood of purchasing from a brand:

image

Likelihood or recommending a brand:

image

The explanation for the difference between Facebook and Twitter centres around the point made above that Twitter is more of a content distribution platform than a communications network – at least in comparison with Facebook.  Or, as some say, “Facebook is for people you know while Twitter is for people you don’t know”.

Getting into more detail – the way Facebook is set up is less well suited for content distribution than Twitter.  Firstly, and probably most importantly, the bi-directional friendship relationship is at the heart of Facebook and the fan pages which mimic the ‘follow’ model on Twitter were added later.  Secondly, rather than show every post from everyone in your network the Facebook default home page shows you a feed filtered for relevance.

Additionally, socialmediatoday credibly argues that the two step process of following a brand on Twitter (click on a link which takes you to their Twitter page, then click ‘follow’) filters out less committed consumers who would complete the one click ‘like’ on Facebook.

It is good to see marketers differentiating between different social media platforms like this, and also good to see them looking beyond headline numbers of fans to the quality of the list.  This sort of thinking will result in improved campaign performance and ultimately more money flowing into the sector.

I want to finish this post with the point that there are plenty of ways for advertisers to spend money on Facebook outside of fan pages, so this argument is not that Twitter is better for marketers than Facebook, not at all.  I continue to hear a lot of excited stories from affiliate types who are running very effective targeted display campaigns on Facebook taking advantage of social graph data and other information Facebook makes available.  From a Facebook perspective this is the big deal.