SmoothSpan Blog

For Executives, Entrepreneurs, and other Digerati who need to know about SaaS and Web 2.0.

Archive for October 24th, 2007

Social Network Fatigue: Different Personalities Want to Spend Time Differently

Posted by Bob Warfield on October 24, 2007

Do you have children?  If so, you’ve probably heard them say to you many times, “I’m bored.”  Kids are always in search of something to do.  Something other than homework and chores, that is.

Do you know many adults like that?  Not too many here.  Most adults I know complain that they don’t have enough time to do what they’d like to be knowing.  Most know exactly what they want to do.  If they express boredom, it is often about a job or the lack of a relationship, but they don’t mean it in the same way kids do.  They don’t usually want you to immediately drum up something to alleviate their boredom.  Most adults are reasonably comfortable sitting quietly for a few minutes of quiet introspection.  They often welcome the calm.

What does this have to do with Social Networking?  I’ve come to worry that this need by my kids to be entertained by something all the time, no matter how trivial, says something profound about Facebook and more generally about how to construct a Social Network to appeal to different audiences.

There has been a lot of posting in the blogosphere about how college kids are amused by attempts to use Facebook for business.  Joyce Park, creator of a successful Facebook application for sending your friends virtual drinks says:

No one makes money on Facebook. Not even Facebook.

We all know that their ads have low (the worst?) clickthroughs.

It’s not clear that FB users have high purchase intentions. Why should they?

What are FB users doing?

Dating. And looking at pictures of people they’d like to date. Trying to pick up.

Folks, FB is A DATING SITE FOR COLLEGE STUDENTS! If you’re not in college, get over it.

Facebook is for people without jobs. And while that’s good for their users, it’s not for you.

That’s really telling it like it is and pulling no punches!  To underscore her point, Park goes on to quote Compete’s figures that show 50% of time on Facebook is looking at other people’s Profiles.

I have noticed on Facebook that while I have a lot of friends, most are dabbling at best, or inactive at worst.  It is the folks who are vicious networkers and extreme extroverts who seem to get the most from it.  Many others just want to be seen as being on Facebook, but aren’t really using it for much that I can see.

Zoli Erdos continues by saying:

The Facebook Fanclub’s recurring theme in comparing LinkedIn to Facebook is just how resume- and jobsearch-oriented LinkedIn is: go there, get what you want, then there’s nothing else to do there.

I’m sorry, but since when is this a complaint? Isn’t business all about having an objective and efficiently reaching it with minimum the time and effort? I suspect most of the LinkedIn “deserters” who switched to Facebook are independent types who have the time to hang around in Facebook, and are striving to enhance their personal brand.

Doc Searl has been saying life is too short for Facebook for some time:

Anyway, lif’e’s too short, and this list of stuff is too long. If you’re waiting for me to respond to a poke or an invitation,or a burp or any of that other stuff, don’t hold your breath. Or take offense. I’ve got, forgive me, better things to do.

All that poking and sending of virtual drinks does feel a lot like kids trying to avoid boredom or perhaps flirting behaviour to go back to what Joyce Park is saying. 

I’m not sure why, but this Phil Windley quote today (which I read right after Doc Searl) really rang my bell:

The problem is that Facebook is annoying because that’s what works. Facebook’s success depends on bothering you incessantly and creating things for you to do.

I think Phil is trying to say that Social Networks succeed by doing this, but it crstallized an entirely different reaction from me.  It makes me feel old to say it, and it may even be career limiting and oh-so-not-hip, but I’m beginning to think:

Facebook is software created by kids for kids to solve a kid’s biggest problem:  they’re bored.  They want something to do.  They want a date.  They have tons of time and no idea what to do with it.

That pretty much means Facebook isn’t going to be the whole Internet, because an awful lot of people, people who have the most money to spend, don’t suffer from the disease that Facebook cures.  So now I’m stuck in the middle.  The Kara Swisher’s of the world will be saying, “Duh, we’ve been saying this for so long you are late to the party.”  The Facebook True Disciples will be saying, “That guy is so old he doesn’t even understand Facebook.” 

C’est la vie!

From a broader perspective, I think this has ramifications for other would-be Social Networks.  Think about what your target audience wants to get out of the experience and make sure they’re getting it.  That may seem trite, but it’s important.

Related Articles

Microsoft pays $250M for a stake in Facebook that values the company at $15B.  Apparently advertising to kids who want to date is extremely valuable!

GigaOm is skeptical about advertising on Facebook

Mathew Ingram says the deal makes sense because its worth $250M for Microsoft to:

1. It gets to keep Google out, so that’s good.

2. It gets to serve ads to those millions of devoted users who check their Facebook every five minutes.

3. It has effectively bought a call option on the future of the company.

And besides, they only had to come up with $250M, not $1.5B. 

I’ve said in the past it’s a brinksmanship move.  Microsoft can easily afford $250M to push Facebook out of reach on total valuation.  This can have interesting consequences too.  It may make Facebook over confident and cause them to shoot for the moon and lose in the end.  Towards that end, it is interesting the MSFT ultimately invested only half what was being talked about.  I guess they aren’t completely bullish on the idea!

I read that overall traffic to Facebook grew 102% year on year, but that the growth for the 35 year old and older demographic was only 19% for the same period.  Adds credence that this one is for kids, but I’d love to see the data for the 25 year old break over.

Scoble is aggressively rumor mongering on what this means. 

Posted in strategy, user interface, Web 2.0 | 4 Comments »

The Desktop Isn’t Dead, But Why?

Posted by Bob Warfield on October 24, 2007

I liked Ryan Stewart’s title so well, I borrowed for further commentary on the subject of why desktop software isn’t dead.  This is all prompted by comments made by Jeff Raikes, president of Microsoft’s Business Applications group, which includes Microsoft Office.

Despite Office 2007 not being on everyone’s list of favorites (I still find I have to get people to download the converter pack for older Office versions because they don’t want to upgrade), the Microsoft desktop is alive and well.  Raikes focuses on the example of Google Gears as evidence that even web companies want a desktop presence.  Ryan Stewart points out that this is just the offline connectivity story and there is a lot more to it.

I agree with Ryan, but think we should not underestimate offline connectivity either.  Tools like Gears and AIR are important if they support the ability to keep working away from an Internet connection.  I’m living in Silicon Valley, and there are frequent times when I can’t get a WiFi hot spot.  I imagine it’s much worse in other places.  If nothing else, you have to consider airplane time (at least until they all get WiFi!) as time when a lot of business professionals are working on their laptops.

As for factors beyond the offline story, Ryan mentions several:

It’s about branding, it’s about things like file type registration, operating-system drag and drop and being able to leverage the local resources for computing power.

This is all good stuff.  It makes me wonder given how large a share Internet Explorer has whether we’ll actually see Microsoft cooperate with giving web apps such capabilities or whether it will have to be done despite Microsoft.  Ray Ozzie has spoken about extending the browser in areas such as cut and paste, so we’ll see.  Despite my view that Microsoft has a rift with the web, this would be a good way for them to offer a show of good faith.  Incidentally, as Microsoft has uptake problems with new releases, a recurring revenue model as offered by web applications is a good business opportunity.  The trick will be to carefully navigate those waters without the usual disruptive effect of converting short term license to long term payments that SaaS has.

Lest you think I do nothing all day but bash Microsoft, I want to bring up what I think is the most important criticism of web apps versus the Microsoft desktop.  To be blunt, the other applications are just not good enough yet.  When I read that Google’s spreadsheet is still adding very basic features like the ability to hide columns, it gives me pause.  That’s pretty scary.  We had that function is the world’s first spreadsheet, Visicalc.  Don’t get me wrong:  MS Office is seriously bloated, and a meaningful web competitor need not rebuild all of that.  However, it feels like we have a little ways to go before critical mass is reached. 

A second issue is stability.  I love Rich Internet Applications and seek them out at every turn.  Yet they are quirky.  I’m composing this blog post in the WordPress blog editor online.  It’s quirky!  Every now and again it hangs up.  I’ve lost a couple of articles, never very much data, but it is concerning.  Clipboard functionality is very funky.  Being able to translate rich text to HTML remains problematic for most of these applications.  Perhaps HTML isn’t quite expressive enough, but I understand even Adobe’s BuzzWord doesn’t get this done.

These are minor growing pains that will ultimately go away.  A lot is reflective of attitude among the web companies.  Don Dodge nails this in his post, “Why Google Will Fail in Enterprise Software”.  Dodge is writing specifically about Tech Support, but it boils down to attitude.  Google doesn’t value Tech Support is Dodge’s message. He admits it doesn’t take rocket science, and I’ll add that Microsoft Tech Support is no picnic, but it is available.  So too with lack of features and bugs in web software.  Many of these companies are run by youthful founders who are more akin to the consumer web space than anything business.  To riff on Dodge’s remarks, these companies don’t value what business users do so much as what’s cool to them.  We have to move away from the idea that it is so amazing we can run a spreadsheet or word processor on the web and over to the focus of making it work so well everyone will want to do it.  The novelty has to pass.

Is it possible?  Yes, absolutely.  Business SaaS follows these dictates and values the right things already.  It comes out ahead of most traditional business software on these measurements.

It’s still very much a horse race for the desktop.  The factors above mean there is time to respond.  Microsoft can continue to own it if they give a little.  They can enhance the browser and have a headstart building software around those enhancements, one of their traditional advantages.  Their culture is already built around more complete feature sets, stability, and security.  Business trusts them, despite what many on the web would say.  An ideal starting point would be to meet these online office apps with Microsoft offerings that are much less full-featured (but still featured enough) than Office 2007.  Offer these at a monthly add-on for Office 2007 purchasers to protect the underlying revenue stream behind Office.

Microsoft’s biggest challenge is to embrace a scary proposition without being afraid of hastening it.  Their second biggest challenge is to overcome internal inertial forces that lead to the incredibly long development cycles Microsoft currently experiences.  Web software turns the crank many times faster.

Related Articles

Google exec talks innovation: can you find the Apps pitch?  Google Apps are not yet innovative per my post above.

Posted in business, strategy, Web 2.0 | 6 Comments »

Interview With 3Tera’s Peter Nickolov and Bert Armijo, Part 2

Posted by Bob Warfield on October 24, 2007

Overview

3Tera is one of the new breed of utility computing services such as Amazon Web Services.  If you missed Part 1 of the interview, it’s worth a read!

As always in these interviews, my remarks are parenthetical, any good ideas are those of the 3Tera folks, and any foolishness is my responsibility alone.

What can a customer do with your system, and what does it do for them?

3Tera:  AppLogic converts applications, all of the load balancers and databases, firewalls and Apache servers, to metadata. This is done simply by drawing the topology of the application online, as if it were a whiteboard.  Once that’s done, your application becomes completely self-contained. It’s portable and scalable. In fact, it literally doesn’t exist as an app until you run it, at which point AppLogic instantiates it on the grid.

A 2-tier LAMP stack application can be set up in 5 to 10 minutes.  Once you’re done, you can operate your application as easily as you open a spreadsheet. Starting, stopping, backup and even copying are all single commands, even for applications running on hundreds of cpus. You can also scale resources up and down, from say 1 ½ cpus to 40 cpus, which covers a range of say 6 to 3000 users. You can make copies, or even move it to another data center. 

To make it easy to use existing software, we have what we call Virtual Appliances, which are a combination of virtual machine, virtual network and virtual storage that act together. You can install almost any Linux software in a virtual appliance and then manage the appliance as a unit, which is better than having to go machine by machine.
Applications are then created by simply dragging and dropping Virtual Appliances on an online whiteboard, and become a type of template.  We offer a bunch of these already configured for lots of common applications like the LAMP Stack, and there’ s even one for hosting Facebook applications that somebody did.  Probably half our customers bring everything up with these pre-defined Virtual Appliance templates and they never change anything there, they just run.

In a couple of weeks we’ll introduce new functionality we call Dynamic Appliances, a sort of Infrastructure mash-up, that let’s you package data center operations in the same way.  You can implement performance based SLA’s, offsite backups, and virtually any other policy.  Once added to an application, the app will then manage that function for itself, becoming more or less autonomous.

Our larger Enterprise customers have told us how hard it is (impossible really) to implement standard policy across several hundred applications, but we make it easy with Dynamic Appliances because you’re dealing with the needs of just the specific application.

The bottom line is we eliminate the need for human hands to touch the servers.  You can do it all remotely, and we make it possible to automate most things.  You can configure, instrument, and manage even the largest online services with a web browser.

Bob: (I’ve spoken to a number of people about the 3Tera system, and they all confirm how expensive and painful it is to setup and manage servers.  Jesse Robins over on O’Reilly Radar recently wrote a post called “Operations is a competitive advantage” that talks about exactly what 3Tera offers.) 

What kind of technology is behind these capabilities?

3Tera:  There’s quite a lot, as you can imagine.  Let’s take storage as just one example.  We decided up front that we needed to run entirely on commodity hardware because it keep’s our customer’s costs low.  There are no hardware SAN’s or NAS storage as a result—we work entirely off the local disks attached to the servers in the grid.

But, we also felt users needed redundancy and high-performance. The solution – we’ve written a virtual SAN that runs within the grid, controlling all the available storage out on the grid. Our volume manager runs on top of this and makes mirroring totally painless.  If you lose your disk or a server, access to data isn’t interrupted and we’ll mirror that same data again as well. 

People complain that Amazon has no persistent storage, but Amazon didn’t need to have persistence for their application, so you can’t blame them.  If you choose the same architecture as them, it works great, but if not, you have a lot more work to do.  The trouble is, all the apps we see need persistence for their databases, so we gave it to them.  We’re offering infrastructure that matches the common architectures everyone uses.

The other important foundation for the service is our component assembly technology. This is what allows AppLogic to capture infrastructure definitions using the whiteboard metaphor and package the application. More importantly, it’s what allows AppLogic to then convert that into running applications on the grid.

Bob: (I thought the virtual SAN was very cool.  It will be interesting to see how Amazon addresses the persistence problem.  There are several companies working on a solution for mySQL, but I suspect Amazon has their own internal efforts as well.  OTOH, Amazon’s S3 has a lot of fault tolerance that seems to go a bit beyond 3Tera’s out of box capabilities.  The truth is that a finished complex application will require a number of different capabilities in this area ranging from the immediate problem of keeping the database up to the problems of making sure their are good off-site backups and replication.)

Who are your competitors?

There really isn’t much of anyone unless you want to think of Amazon as a competitor.  We don’t, though, because most users are coming from collocation or managed service providers today.

Challenges for Utility Computing

What concerns do your prospects have when you first meet with them?

3Tera:  Their first concern is how long it will take to learn the system.  It turns out its really easy, and most users are up and running in a couple weeks.  Just to make sure customers know we’re going to make them succesful, we put together a program we call the Assured Success Plan.  It’s designed to take a customer from zero to full production in 2 to 4 weeks.  We charge $300/month for it.

Customers who sign up for the Assured Success Plan get a 1:1 relationship with an assigned 3Tera engineer.  They communicate via WebEx and teleconference.  Their first session is an orientation, and their homework is to just install some app on a grid.  The engineer and customer choose which app.

The second session, they go over the homework, and then they start talking about how to fit the customer’s app onto a grid.  By the third session, they’re ready to try to install the app.  The customer is asked to make a first go of it, and then the 3Tera engineer goes over how the customer did it and gives feedback on how to do better.

The fourth session is really interesting.  Here the customer tests failures and learns to deal with it.  It’s really easy with our management tools to simulate a failure anywhere in the grid.  So the customer practices failure management and recovery.  Most customers never get a chance to thoroughly test these failures when building out with physical servers because the time and cost is prohibitive, so we’re adding a lot of value going through the exercise.  The customer, meanwhile, is getting comfortable that they can manage the system when the chips are down.

Bob: (The assurance program sound like an excellent and very practical introduction and training for the system.  This is classic SaaS.  Why do a proof of concept if you can be up and running in the same time?)

Do customers stay paying for ongoing service?  How do you do Tech Support?

We made the Assured Success Plan cheap enough that we think customers will like to keep it running. After the initial consultations, it converts to pre-paid support.  At the same time, we offer support in units of 5 hours for $300.  Most customers buy at least a unit of support as part of their contract, and we make it easy for them to flex that up if they’re having an unusual amount of trouble.

What about costs?  How do customers get comfortable with what you cost?

First, understand, in many cases they can’t do it at all without a service like ours.  Our service is an enabler.  We make it possible to fund a data center pay-as-you-go on a credit card.  Even in Enterprises, we see a lot of customers go hosted, label it as a “proof of concept” to keep IT happy, but once things are running, they never go and move it to their own data center.

Second, our hosting provider partners are brutally efficient at cutting costs and passing those savings along.  They know they have to be competitive and they’re good at it.  We add a surcharge on top of that, but it’s offset by your savings in management overhead.  You don’t have to buy or write your own infrastructure software, and you can manage your grid with far fewer people.  One person part-time can run 100 servers easily.  A full time person could run probably 500 servers.  Do the math on what a person costs and you’re net/net way ahead.

Our most popular configuration is an 8 server.  It costs about $5000/month as a grid.  If you shopped very carefully, you might save 30% on that.  However, you’d have none of the management advantages we offer.  You’d spend that difference very rapidly either developing infrastructure to automate management with scripts, or hiring people to do it by hand.

Bob:  ( I asked one Director of Operations for a SaaS vendor what they thought of a 30% markup for this kind of service.  He laughed and said they would make that back in productivity savings so quickly that 30% would never be an issue to them.)

What’s a nightmare story you helped a customer with?

Imagine a largish bank.  What do you suppose their procedure and policy is to release code?  They need 1000 signatures over 9 months!  Most of the signatures involve internal manual processes.  They’d developed numerous layers of management to ensure stability and now they can’t get it done internally any other way. Because of this, many projects simply couldn’t get started. The cost wasn’t justifiable.  AppLogic eliminates many of those manual processes because the application is packaged as a unit. No one needs to touch the servers, the firewalls, or the load balancers. Plus, test applications can run in a hosted configuration, outside the corporate data center where there’s no interference with production systems. When they’re completed, they can be migrated inside with a single command. Thus, many of the issues with test deployments just don’t apply.

So this customer was able to move their project, which was dead in the water internally, into PoC. 

Next Installment

Next installment we’ll wrap up with a discussion of SaaS Sales and Marketing and Business Model thoughts from 3Tera.  Be sure to click the “subscribe” link at the top left of the blog page so  you don’t miss out on future posts!

Posted in data center, grid, platforms, saas, Web 2.0 | 1 Comment »

 
Follow

Get every new post delivered to your Inbox.

Join 322 other followers

%d bloggers like this: