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Archive for March, 2008

Everyone Isn’t Great in Every Medium: The Sarah Lacy Story

Posted by Bob Warfield on March 11, 2008

Wow!  Sarah Lacy’s interview of Mark Zuckerberg at the South by Southwest conference is the story of an audience that turned militant on an interviewer.  Were they justified?  What went wrong here?  Was it a train wreck of an interview, or a witch hunt gone mad?

Taking opposite sides of that argument are Dave “it was an astonishing case of Nuclear F-Bomb Fail” McClure and Michael “the crowd was out for blood” Arrington.

If you weren’t at the conference, Arrington has the video up on Techcrunch so you can watch it and form your own opinion.  McClure didn’t like Arrington taking exception to his analysis that Lacy bombed, BTW.  In a later post, he basically tells Arrington his point of view is worthless because he wasn’t at the presentation.  Aside from the fact that it makes a classic ad hominem attack on Arrington rather than addressing his points, I found it disappointing because it doesn’t reflect the spirit of the web.  Claiming the only way to have insight into something is to go be there and physically report on it is surprisingly old school coming from a guy that’s complaining about how Lacy couldn’t relate to the latest greatest Geek Think well enough to interview the Zuck.  Is all this really just about who is cool and who is not and who gets to be at which conferences and meet which people?  Perhaps, people are like that, but the web generally tries to claim it’s about a better way.

I did watch the video, and came away with a somewhat different impression than either the view that Lacy totally botched the interview or that it was purely a witch hunt by a few bad actors in the audience.  First, the whole blogosphere controversy is a mountain out of a molehill.  Yes, the interview was boring.  Yes, Lacy seemed to have a hard time relating to Zuck and the audience.  She was trying to match her world and strengths to his, and frankly she wanted to control things and couldn’t quite get a grip on Zuckerberg because his personality and values are so different than hers.  She was visibly uncomfortable, and when she couldn’t find good touchpoints for the interview she tried being flirtatious, I think as much to be funny and keep control as anything.   And yes, the crowd was unfair.  Arrington did a poll where most people voting agreed that was the case.

Some folks think it was the questions Lacy asked were just not interesting (some don’t think she asked enough questions).  Maybe better questions would have helped.  Lacy did try to engage with questions, they just didn’t get interesting answers and they seemed a little too focused on being provacative from the perspective her Forbes business audiences have rather than the perspective the attendees at SxSW would have.

Others took the view that the interview was doomed because Zuckerberg was set on not providing any news.  He would not chat about anything that wasn’t already well-known and scripted.  When asked about a Facebook music service, for example, he replied, ““We have nothing to talk about right now.”

I think something a little different happened.  Something that is a lot harder to fix.  This interview was not only not in front of Lacy’s home audience, it also wasn’t her home medium.

If it was just a matter of knowing the audience a little better and coming up with some different questions, that would be one thing.  But a really good interviewer would have done what many suggested: they would have read the crowd and done a course correction.  That didn’t happen. 

I often comment in the world of UI design (what the heck does that have to do with this?) that everyone isn’t great in every medium.  Everyone thinks they’re great UI designers because everyone consumes UI.  Marketing people tell me everyone thinks they’re a great marketer because they all consume ads.  But the reality is that only a few people really understand these different mediums.  Steven Spielberg is a fabulous director.  John Grisham is a wonderful author.  They’re two different mediums.  Spielberg is as unlikely to be a great author as Grisham is to be a great film director.

So it was with Sarah Lacy.  You would have to assume its fun to be interviewed by her for one of her books, even watching the long boring interview of Mark Zuckerberg.  But authors are different than interviewers that work in front of crowds.  They take away their interview notes and they synthesize a conclusion that is the theme of their book.   It’s their book, not the interviewees.  If you talk to people who’ve been written about in books, they often say the book didn’t resonate at all and they can’t understand how the author got they ideas they printed.

Lacy was trying to replay her book up on stage with Zuckerberg, and it wasn’t working.  It was neither an interview nor a book.  She couldn’t play out her theme regardless of what Zuck said because he was sitting right there. 

It’s important to know your medium and stick to it.  Lots of lessons to be learned there.

Here’s another lesson:  Twitter fundamentally changed the old interviewing in front of a cloud medium.  By cutting friction down and linking the crowd, it empowered sharper dynamics.  If you’re sitting in a disconnected crowd, you may be thinking, “This interview is really boring,”  but absent confirmation from others, you remain silent.  Perhaps you daydream or think about what the next session at the conference may bring.  Now here comes Twitter.  Your attention is not only split between speakers and Twitter, but others are confirming you darkest thoughts.  That confirmation is what emboldens people to speak up.  Ultimately, it emboldens them to become an ugly mob.

Think carefully about that kind of dynamic in anything you do, because the Internet can touch all of it.  David Armano calls it The Age of Improvisation.

Posted in Marketing | 2 Comments »

Mark Cuban Gets It: Fine Tuning the Startup Culture

Posted by Bob Warfield on March 10, 2008

Lots to like in Mark Cuban’s response to the whole startup rules meme I recently wrote about.

A few quick ones:

- Sales Cures All. Know how your company will make money and how you will actually make sales.

Amen.  One of my mentors was recently at a startup that was hand wringing about whether to get going selling or to keep giving away product and fine tuning.  He basically said that in order that they could still look themselves in the face in the mirror each morning they were going to sell $1M of product that year.

-  Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap.

Yep, it isn’t about saving money and working people to death.  It’s about spending capital wisely, and spending it where it matters.

-  An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for closers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs.

Amen again. This is a point I made too.  In fact, I love being in a downtown environment where it is easy to take a walk and get a fresh perspective.  When I worked in downtown San Jose, I used to take most of my one on one meetings walking to or from Starbucks or Petes.  It seemed to help people relax, let their hair down, and share what was on their minds more effectively.  It also pumped up the energy levels to have a quick change of scenery.

- No offices. Open offices keeps everyone in tune with what is going on and keeps the energy up. If an employee is about privacy, show them how to use the lock on the john. There is nothing private in a start up. This is also a good way to keep from hiring execs who can not operate successfully in a startup. My biggest fear was always hiring someone who wanted to build an empire. If the person demands to fly first class or to bring over their secretary, run away. If an exec wont go on salescalls, run away. They are empire builders and will pollute your company.

Once more I agree.  Communication is the biggest thing for startups.  Got to communicate to get everyone rowing in the same direction.

I had an interesting open office situation one time.  The boss wanted the execs seated together instead of with the teams.  Sounds like it would be bad for communication and just a convenience for him, no?  That was my first take.  I was wrong.  Good managers have to communicate with their teams, they’ll get it done.  They won’t necessarily communicate that well with peers, however.  In this case, it was a good thing.  It brought all the functions closer together.  Interesting dynamic.

-  Make the job fun for employees. Keep a pulse on the stress levels and accomplishments of your people and reward them. My first company, MicroSolutions, when we had a record sales month, or someone did something special, I would walk around handing out 100 dollar bills to salespeople. At Broadcast.com and MicroSolutions, we had a company shot. Kamikaze. We would take people to a bar every now and then and buy one or 10 for everyone. At MicroSolutions, more often than not we had vendors cover the tab. Vendors always love a good party :0

One more vote that too much workaholism can be a bad thing.  Treat people like part of the team, not as employees.  Some companies go way overboard about who is a founder or not.  To the point it is exclusionary.  There is value in celebrating founders, but I want to celebrate founders who are not managers.  I like the idea of letting everyone one have “Founding Team Member” on their business card if they were around at all before the first revenue comes in.  That whole period is a founding period, not just the guys that came before the VC’s.

In terms of events, be creative.  We had a fun event that was our “Engineering Oscars”.  We created some interesting categories, 8 or 10 I think, got a keg, had people walk down the runway, and gave each winner a new iPod.  Try to do something fun at least every 6 months.  And always celebrate success:  closing a round of funding, blowing out you numbers, shipping a new release, it all needs to be recognized.  Plenty of time to agonize on the next challenge!

Posted in saas | 1 Comment »

Is Startup Software “Bought” or “Sold”? Startups Discover Demand, They Don’t Create It… (And Zoho HCM is Out!)

Posted by Bob Warfield on March 10, 2008

Got an email note from Zoli Erdos, whom I read religiously, about a new SaaS HCM offering from Zoho that’s being launched this morning.  Cool!  Love to see more SaaS entrants.  I believe fervently in the model.

Zoho has been a fascinating company to watch because they produce so much.  Here is a startup sized company that is just cranking out products right and left.  And they’re quite good too!  The thing is, there is so much activity, at times I’ve wondered what they’re up to.  What ties it all together?  Zoli’s note this morning had the answer, at least an answer that I latched onto.  In it was a short passage that speaks volumes:

…there are no marketing and sales plans.  It will just be released out on the wild, like all other Zoho apps.  I am known to be a fan of the “pull-model”, software “bought” rather then sold, …

I too am a big believer in the “pull-model”.  I don’t believe startups can create demand.  They are too weak, they don’t have enough money, and demand is way to expensive for them to create when you look at how conventional companies go about creating demand.  Instead, startups discover demand.  I like to use an analogy for what demand discovery is like that’s fairly graphic.  I liken it to breaking through the window on a jet airliner.  We’ve all seen the movie clips where one minute things are pretty calm and then the window gets broken and suddenly there are hurricane force winds and it’s all anyone can do to keep from being blown out into the void.

When a startup is searching for the right product/market fit, they’re tapping on various windows with a hammer.  The window itself is brittle, and not all that hard to break.  It represents getting the word out to a large enough critical mass that you can tell whether the hurricane will develop.  Most windows have dead air behind them, so you have to keep looking.  If you hit on the right one, you’ll be catapulted into a growth crowth that will take all your energy just to keep up with.

Coming back to Zoho, they’ve clearly figured this out.  They’re tapping on windows like crazy, and by all accounts they’ve found several promising ones.  Perhaps this new SaaS HCM application will be the latest.  Check it out.  The first 10 users are free for your organization.

Zoli, in a follow on post asks whether it isn’t crazy for an enterprise app to be launched simply by announcing it, without sales or marketing.  I don’t see this as all that crazy.  I’m not saying you don’t need sales and marketing, but I do think it can be brought to bear prematurely, particularly for startups where cash is king.

This comes under the heading of marketing and sales being “tragically knowable.”  Many companies do tests of messaging before putting wood behind the arrow.  Traditionally, this is done in secret, with focus groups and one way mirrors.  But why keep things secret?  The web lets us move faster and with less friction.  By launching the package without much fanfare, Zoho gets to see who wants to be an early adopter.  They can look for themes among that crowd and then amplify those themes with sales and marketing to bring more along.  I think it is an interesting way to change the order things are done in.

The biggest risk for startups is lack of information.  They should be far enough off the beaten path that they’re not just doing what the big players are doing.  To combat the lack of information they have to get out there and collect some.  When you’re dealing with uncertainty, setting up a Darwinian system with lots of cheap experiments works.  Monitor the results, double down on what works, and try some more experiments.  Eventually you’ll find the right window.  You will discover the demand that’s waiting for your startup and its products.

Posted in strategy, venture | 2 Comments »

Startups Have One Job: Get to Their Product/Market Fit ASAP

Posted by Bob Warfield on March 9, 2008

Lots of folks are optimizing for a proxy, instead of for the real problem when it comes to startups.   It is very easy to think you’re optimizing for the right thing, but to find out later you optimized something peripheral, a proxy for the right thing.  The trouble with proxies is that they contain enough of a grain of truth to be distracting without really guaranteeing you’ll get what you want. 

What every startup needs to be doing with all it’s energy and resources is getting to a product/market fit as soon as possible.  Achieving product/market fit is having a great product, where “great” is defined by market uptake.  Let’s look at some of the conversations in the blogosphere about what startups need to do to be successful and analyze it in the light of achieving product/market fit.

There are two big areas that seem to be centers of controversy:

1.  A startup’s job is not to save money, it is to spend it in whatever manner gets it to a successful product/market fit as fast as possible.

Jason Calcanis, Michael Arrington, Fred Wilson, and others have said that startups have to save money.

Money is the ultimate fungible tool.  Save it only so that you can spend it on something more important to achieving a product/market fit.  I see a lot of folks getting wound up to save money for all the right reasons, but in the process they create work and friction that slows down the process of getting to a product/market fit.

Some of the big ideas for saving money make me wonder:

-  Outsourcing:  Great idea to outsource things that don’t matter to your distinctive competency (which is getting to a product/market fit!).   HR and accounting, sure.  BTW, it may cost you more to do this, but it keeps the distractions away.  OTOH, outsourcing to the midwest to get talent cheaper as Calcanis suggests makes me wonder.  Productive software development is all about good communication.  Any outsourcing, working too much from home, or remoting interferes with communication.  Are you moving close to product/market fit doing that?

-  Don’t buy a phone system, nobody will use it.  This really depends on the startup and business model, and I’m sure the folks recommending it have models that are commensurate.  A SaaS company will likely still still need a salesforce of some kind and they’ll need a phone system to talk to customers.  A social network will not.  There are no blanket suggestions–all are viewed int erms of what impact they have on achieving product/market fit.

-  Bring lunch and coffee in, don’t let people go out.  I could not disagree more.  My favorite setting for a startup is a downtown area.  My last company, Callidus, was in downtown San Jose.  There was a Starbucks and a Peets across the street and dozens of bistros for lunch.  Calcanis underestimates the value a good break can have in clearing the mind for renewed energy.  He also underestimates the value of unstructured communication and getting a little exercise with a short walk.  Trying to keep people bottled up interferes with creativity, clear thinking, and communication.  It is a false economy.

2.  A startup’s job is neither to fire people who are not workaholics nor to molly coddle diletantes who like the idea of being in a startup but who aren’t producing results.  It’s job is to bring together the people that are going to produce that product/market fit as fast as possible in an environment that facilitates their doing so.

This was a big source of the firestorm backlash against Calcanis.  Mike Arrington and Zoli Erdos are on Calcanis’ side in cracking the whip.  It’s a pretty common attitude, especially among the higher ups.  But it doesn’t always work. 

The problem is in equating activity with results.  I’m here to tell you that for creative pursuits, and software is one such, that is not necessarily the right thing.  It is a function of the people and the stage things are at.  It is a function that it is very hard to schedule inspiration.  There is often a stage at the beginning of a startup’s life that just requires a lot of brainstorming.  It isn’t about grinding out a product.  Zoli is closest in saying that passion counts, but passion may not express itself as cubic man hours in front of a computer or at one’s desk.

In the end, these 2 ideas of saving money and hiring workaholics are micromanagement, not epiphanys.  They are not the secrets to startup success.  I’m not even sure they’re highly correlated to startup success.  They’re worth thinking about, but think harder about how to drive faster to you product/market fit.

Posted in venture | 8 Comments »

10 Ideas to Take LinkedIn to the Next Level: Because It Needs It (Sorry Guys)

Posted by Bob Warfield on March 3, 2008

In many ways I think LinkedIn has a much more interesting story than Facebook.  They’ve made very few mistakes, they’re trusted where Facebook is not, and they’re well positioned to be the Business Social Network, while Facebook is not for business.  

Yet something is missing.  LinkedIn doesn’t get nearly the attention that Facebook does.  They are announcing a few new initiatives, but there is not the sense that they’re exploding with momentum and changing the world.  Facebook changes their UI by adding a few tabs and it’s big news.  Whether it’s mighty Facebook or little Twitter, these others get more respect than Facebook.  I’m convinced it is a combination of product and positioning, and the antidote is radical innovation.  LinkedIn needs to show the world they can lead the way and not just follow in Facebook’s wake.  Here are 10 ideas that could take LinkedIn to a whole other level if they implemented them:

1. Build, Buy, or Partner with Xobni and Nail Down the Outlook Connection

There are rumors that Microsoft is in acquisition talks with Xobni, the cool Social Graph add-on for Microsoft Outlook email users.  That’s bad for LinkedIn.  Xobni lets Microsoft build the first tier of LinkedIn’s information (people’s current business contact info but not their history) almost instantly from the huge installed base of Outlook users.  LinkedIn needs a strong answer to this threat.  Yes, I know, I have the LinkedIn Outlook Toolbar and I’m sure LinkedIn thinks they have this base covered, but they don’t.  Xobni just does it slicker, and it is so critical to seamlessly integrate with Outlook for LinkedIn’s domain that more work is needed.  The most crucial advantage is Xobni’s contextual information.  As you move through mail, Xobni provides updated info on the sender without any need for keystrokes or mouse clicks.  By contrast, the LinkedIn toolbar has “Search”, where I retype the name and then it just does a vanilla search on LinkedIn with that name.  Sorry, but that’s just lame. 

Get the Xobni hotness whether by hook or by crook.  You can build the technology yourself, partner with Xobni for a special “LinkedIn” enabled version, or acquire Xobni.  Personally, I would take a stake in Xobni, partner, and acquire a little later.  I believe they’d like to stay independent a little while longer.  At least the blog is still talking about investors.

There are only two companies that can pose a credible threat to Xobni:  Microsoft controls the Outlook side, and LinkedIn is the cloud presence for what Xobni wants to do.  Strategically, both companies need to come to grips with this.  If Microsoft acquires Xobni (and remember that Bill Gates himself demoed Xobni recently), LinkedIn had better have the base covered without Xobni.  Convert this strategic problem into an opportunity by creating a transaction or partnership with Xobni that has a bigger potential and that will be more fun than just taking a quick Microsoft cash out. 

It’s probably time to crank up the Business Development engine at LinkedIn anyway, so start here and make sure something good happens!

2. Start a Coffeehouse with WebEx to Foster More Interaction between LinkedIn’s Members

Speaking of Business Development, LinkedIn needs a strong partnership with WebEx.  Why?  Because WebEx can be the communication medium behind a new Coffeehouse experience for the LinkedIn Community.  Business people probably spend more time collaborating with others in various ways  on WebEx than any other Social web platform, including LinkedIn.  It’s the ideal location shifted way to have a high bandwidth dialog, whether that involves a demo or just being able to gather around the same PowerPoint slide show. 

A Coffeehouse experience would be one that makes it easy to schedule WebExes via LinkedIn’s Social Graph.  Would you like to get together a round table of experts to kick around some idea?  Use LinkedIn to set up the WebEx by helping identify the right people, sending invites, and then coordinating the whole experience.  Make it easy to put out notices that you’d like to have a Coffeehouse meeting about some topic or other and let people sign up for it.  This could rapidly become an indispensible market research, sales, and communications tool, and LinkedIn has a vital role to play that is greatly enhanced by bringing in WebEx.  Ultimately, the two will come together as an offering with a revenue split of some kind.  You can certainly paint a bright future for why Cisco should want to get involved in this way. 

One more reason to get that Business Development engine fired up.

3. Expand LinkedIn’s Premier PeopleSearch Status to a Full Ecosystem with API’s, Toolbars, and Widgets

PeopleSearch is a term I made up that amounts to getting an instant virtual profile on anyone just by typing in a name, title, email, or other identifying characteristic.  We all rove the web, and one of the most important semantic entities on the web is people.  LinkedIn is a wonderful tool for finding people this way and learning more about them, but currently you must go to LinkedIn to get this benefit. 

Like Google and others, LinkedIn has to create this valuable point presence to a broad ecosystem that cements their leadership position.  This is done by extending LinkedIn’s unique capabilities to other web properties via API’s, toolbars, and widgets.  This would enable a huge number of interesting tie backs to LinkedIn.  Let’s consider just one example.  Blogs have had a blogroll feature for a long time, where they list blogs they link to so that you can see that list and go to those other blogs.  LinkedIn could provide a “PeopleRoll” feature for popular blogging platforms that automatically lists names written about in the blog and provides links back to their LinkedIn profiles.

LinkedIn is well positioned to own the business PeopleSearch market.  To do so requires taking the final step of reaching outside LinkedIn to let others take advantage of this unique capability and create a larger ecosystem.  I know you’re working on API’s, but make sure it’s really great, get it out there already, get people talking about it more, and make sure there are toolbars and widgets for key social platforms out of the box so you can get started without programming.

4. Overhaul and Tune Up the UI

I know.  You just launched a UI overhaul, so why another one?  Because your overhaul was totally incremental, and sorry to be brutally honest, but the Internet pretty much yawned.  Why?  Because there was nothing new there.  At best it eliminated a few negatives, but it didn’t blaze any new ground.  It didn’t turn people on.  One of my old bosses used to joke that every time you hire a new VP of Marketing it costs a fortune because they insist on rebranding and never have much to show for it.  That’s what the facelift feels like.  I could barely even find anyone in the blogosphere that wrote about it but Techcrunch whose conclusion was, “these updates feel like an attempt to mimic Facebook.”  Another was Laura Bergells who dubbed it a hideous new look.

Let’s work this out:

The LinkedIn UI grew more organically than systematically.  There are a lot of little quirks and things are often hard to find.  Just a couple examples: 

- Search focus at startup:  Go to eBay or Google.  You can start typing a search immediately.  Go to LinkedIn.  Focus is shifted away from the search type in immediately and you have to annoyingly go select the search box.  It’s a little thing that points to the need to fine tune the UI.

- Make it easy to eliminate duplicate profiles.  I know lots of people that have duplicate profiles on LinkedIn, and I frequently see dupes in search results.  I don’t know a single one that got there intentionally.  It just happened to them and they don’t know why.  Nearly all of them would like to easily merge the duplicates so they have a single profile.  Clearly there are some usability problems at work here.

-  Groups sound intriguing, but even in the new UI they’re buried.  There are notices like, “The groups directory is not currently available for new groups.”  Come on now, that’s pretty lame.

Worse, there’s no innovation here.  Like the other web players say, you seem to be just chasing Facebook. 

LinkedIn needs a real UI overhaul.  It needs a richer, sexier look and feel, as well as real usability improvements.  Pursue a deep overhaul, one that will be a big improvement and not a lot of little incremental improvements.  Make Facebook’s incremental improvements such as tabs look lame.  Find some serious Social Networking UI innovation to call your own.  Do a bunch of usability testing, hire real experts, do a full on invitation-only beta, and when you’re sure you have it right, launch with big fanfare to capture the marketing and momentum value.  Strive for an Apple-quality final product and then keep the religion going as you move forward.    

Last UI suggestion:  Make this next overhaul around Adobe Flex.  Since you just had an overhaul, you can do the Flex version and offer it in parallel.  This will look better than launching another total overhaul in six months. 

5.  More Mobile Hotness:  Personal CRM for Road Warriors

I’m a Road Warrior.  I have my iPhone or Treo (support the iPhone wondefully, support the Treo/Blackberry/et al adequately) in hand.  I am immediately pre- or post- meeting with someone from my company, a customer, or a new prospect.  How can LinkedIn help me to be more successful?  It could be the total must-have application after voice and email on a mobile, but it isn’t.

The current mobile interface is better than none at all, but it scratches the surface.  The world is clearly used to the idea that LinkedIn does not innovate on UI, and especially in this area, else why would Techcrunch write an article, “LinkedIn Goes Mobile–Finally” that opens by saying LinkedIn is six months late compared to Facebook. 

The best mobile devices are all in the hands of business people, not college kids dating.  LinkedIn has disappointed here when it should be establishing thought leadership.  Yes, I want it to be very convenient to invite people using my mobile device as soon as I meet them.  But I also want instant business intelligence on anyone I meet, hear about, or am about to meet.  I want the ability to add personal notes and reminders attached to names.  I want to link all that to my LinkedIn nerve center so I can get organized and do something about it.  In short, I want LinkedIn to be the hub of my own personal CRM system that manages all my contacts in the world and gives me a 360 degree view of what’s happening with them and what I need to do next to manage my relationship with them for the better.

6. Do Some Heavy Lifting in the CRM and Marketing World

Speaking of CRM, LinkedIn is in the catbird see to be the quintessential must-have component for a CRM system.  When my salespeople connect with a prospect or customer, a LinkedIn PeopleSearch API needs to bring back to my screen a profile on that person so I have a quick précis on who they are.  Salesforce Labs has what is basically a demo version of this, but it’s time to look for some heavy lifting to do here.  Your future will have as much to do with the Enterprise world as the Web world, and you have some catching up to do there.  This is a way to get fully engaged in the Enterprise.

Get a package of functionality together that will really move the needle and go out and partner with Salesforce and others to get it out there.  This is a service you can charge for and do a revenue share with the CRM vendor.  Start from the profile I mentioned.  Move on to being able to slice and dice marketing data using additional attribute information from LinkedIn.  That slicing and dicing is part of the Business Relationship Semantic Web function that I’ll describe in a minute.

Let companies go in and figure out benchmark style information.  If they send you a list of their customer’s names and titles, you should be able to tell them how much of the available market of similar titles is left out there.

Your database has the information needed to make a lot of this other software really come alive and dance.  Get companies to use your system as the source of truth for identity.  When customers register, have them choose which LinkedIn profile is theirs rather than entering all the data fresh.  If the customer has no profile, take the opportunity to sign them up.  Facilitate de-duping and richening of in-house lists with new data about names that have already opted in so there are no privacy issues.

7.  Get More Private and Premium White Label Services for Companies

This is a rich area for innovation.  Companies will find most of their people are already on LinkedIn.  How can they leverage LinkedIn while still controlling the Trust Fabric enough to be comfortable?  It needs to be possible for companies to have LinkedIn features that are totally private to them and their employees. 

One simple example: an employee skills directory.  There’s already a lot of information in LinkedIn about experience.  Skills go deeper.  Let companies and individuals add skills information and then make it easy to search on it.  I need to find someone who knows how to set up memcached with MySQL.  I need to find a machine tool operator at our firm who has used live tooling on a CNC lathe.  Let companies enter internal contact information that is not accessible outside that group.  This way I have the telephone extension or internal email immediately for everyone in the group, but only my company has access to that.  I’ll bet you’d be surprised at what companies can do with the ability to add fields to a profile that are only visible to the company or group.

Another:  facilitating internal recruitment.  This is a big plus to be able to manage internal opportunities and offer them first internally.  LinkedIn is ideally suited to help facilitate that.

Procurement:  LinkedIn has been about people.   But people are involved in procurement of goods and services.  Why isn’t LinkedIn ideal for facilitating that?  Why do we need some other alternative market like Elance or others?  Give companies a way to be in control of this and they’ll be excited about it.

8.  WebMentions:  Link out of LinkedIn to web mentions

When I want to know who someone is, I go to LinkedIn for a quick overview and then I try to track down mentions of the person on the web.  LinkedIn can streamline and own the entire process.  As I mentioned recently, one of the unique things the web enables is linking.  A site called “LinkedIn” needs to develop the currency of linking out.

How about a newsfeed for each person that’s entirely a list of places on the web where the LinkedIn person is mentioned?  Given all the information in a LinkedIn profile, it should be easy to construct a search that returns pretty clean results.  This feed should have not just random web mentions of the person’s name but more specialized and specific contextual mentions ala their bookmarks on Del.icio.us, StumbleUpon and Digg, recent photos on Flickr, music on Last.fm and videos on YouTube.  Those are more or less socially related.  In addition, LinkedIn needs to seek out the business related.  If the person is an officer in a company, there should be a link to the Management page on that company’s web site.  If they’re mentioned in a press release, that should be called out too, because press releases carry a lot of interesting semantics versus random web mentions.

Let the individual optionally mark mentions as “that’s not me” so they disappear from the list.  The individual must remain in control of their profile. 

9.  Better Searching inside LinkedIn

What if I search for someone and they’re not there?  It would be extremely interesting to know that people are trying to find me on LinkedIn.  How about coming back instead of saying they’re not there and asking for an email?   Suggest sending an invitation to LinkedIn on the behalf of the person providing the email.  Before doing that, make sure the email doesn’t turn up inside LinkedIn.

What if they have a common name?  Help guide me through the process of refining the search.  As it stands, the search field is cleared every time and I have to retype my old key words together with some new keywords to refine the search.  That’s silly.  Try a search in Google or any other search engine.  They don’t clear the search terms because you may need them to refine your search.

10.  Create a Business Relationship Semantic Web

The Semantic Web enhances the search-ability of the web by going beyond just words and adding tags that convey meaning unambiguously.  The problem is in creating all that tagging.  What if LinkedIn stakes out the strategic ground around semantic information about people?  In a sense, this is just part of the whole PeopleSearch idea, but it’s more than that too.  It’s about taking people information as it appears in plain text, and adding enough behind-the-scenes context that algorithms can process it without human intervention.  One simple example is disambiguation.  Put the proper tag around the name “Bob Warfield” that says it is “LinkedIn’s Bob Warfield” and you’ve added a lot to that name by uniquely identifying which “Bob Warfield” is being talked about.  Now take it to the next step.  What’s the standard set of things someone wants to know about a person beyond their name?  What is their current job seems like one that is right up LinkedIn’s alley.  LinkedIn understands education as well. 

What can we do with this?  Quite a lot.  At the simple end, imagine a little popup like you see around links on this page, only it pops up whenever your cursor hovers over a name.  In the popup is quick information from LinkedIn and the ability to click to go to the profile and learn more.  That’s a widget you’d provide for others to make use of, such as blogs.  That one is definitely more on the PeopleSearch end of the spectrum, but it could work off the semantic tags to tell it what to display.  What LinkedIn would be doing is trying to get out on the leading edge of defining how the Semantic Web processes names, titles, and perhaps companies.  It would provide a toolkit that makes it easy to link back into LinkedIn ala the disambiguation example whenever a name or title is referred to.  What this accomplishes is powerful integration and query facilities. 

Becoming the owner of Business Relationships and People in the Semantic Web is a very long term strategic goal.  It isn’t a single or even a small set of features or technology.  It means participation in a lot of groups and it will be a time sync for some very smart people.  But if you pull it off, it is worth its weight in gold.  It’s the sort of thing that transcends mere features to change the way people use the web. 

So there you have it.  10 ideas.  Don’t jump on all of them at once, but don’t ignore all of them either.  Something needs to be done to show the world that LinkedIn is not just a fancy way to exchange business cards on the web.  Kick things up a notch!

Posted in strategy, Web 2.0 | 10 Comments »

Microsoft SaaS News Looks Disappointing

Posted by Bob Warfield on March 3, 2008

So far it looks to be just Exchange and SharePoint.  Arrington is calling it disappointing and Nick Carr hasn’t commented at all.

I continue to think it makes a lot of sense sometime soon for Microsoft to announce more SaaS, but as I also cautioned, I won’t be surprised if it drags out quite a long time.  In particular I wonder if the investment community is ready for new shock waves after the Yahoo ordeal.  It could be that Microsoft is thinking discretion is the better part of valor until that saga is done.

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Phil Wainewright says the issue is concerns over profitability with the SaaS model.  As have said, introducing SaaS at the right point in Microsoft’s lengthy upgrade cycle, after most have upgraded, creates a window to minimize this effect.  But, I can’t see investors letting them do it.  As Phil says, “Office in the cloud? Steve Ballmer will lose his job before that happens.”  Too bad for Microsoft!

Posted in saas, strategy | 7 Comments »

ISVs Say “No” to Force.com

Posted by Bob Warfield on March 3, 2008

There are a couple of interesting posts from Sinclair Schuller and Renee Boucher Ferguson about an incident that took place at the OpSource SaaS Summit in San Francisco recently.  Apparently Phil Wainewright conducted a show of hands survey about the attendees intentions with respect to SaaS.  They had three choices. 

From an audience said to be about 250 ISV’s, 30 or 40 plan to build their own SaaS platform but let someone else host it–they don’t want to build a data center.  That’s definitely something I’ve been saying for a long time and it resonates with what I’m hearing around the Valley.

10 hands went up on the issue of using some else’s platform as well as hosting elsewhere.  Okay, it seems to me there aren’t very many platforms to choose from yet, so not surprising the response is way down.  In fact, I’ve said before that a lack of good platforms has impeded the creation of new SaaS companies.  There’s too much technology to build in today’s capital-shy VC market where companies are expected to bootstrap to customers on just a whiff of capital. 

The last question was the kicker.  Asked how many would build on Force.com for their application, only 2 hands went up and they said they were undecided.

Opps!  This is not the press they were looking for, I’m sure.  The two pundits discuss several reasons why this might be the case including:

- OpSource’s Treb Ryan suggests people don’t want to foreclose the option to partner with other players besides Salesforce.

- Schuller says that Force was an extension platform for Salesforce, and isn’t necessarily a great general purpose platform.  He goes on to raise the issue of IP and Business risk trusting everythign to Salesforce’s proprietary language.  Lastly, he summarizes the value of Force.com as marketing, not product.

I agree with Sinclair on a couple of his points, but both of these articles miss the biggest reason why ISV’s avoid Force.  I’ll explain in a moment, but I want to comment on the other issues.

First, on the idea that Force is just an extension platform and may not be a good general purpose platform, again, I agree.  I’ve suggested in the past that Force suffers from being “Same Old Platform as a Service”.  It adds value, but it isn’t revolutionary.  In my opinion, the value add is not commensurate with forcing development in a purely proprietary and non-open language.

Schuller’s second point about trusting your IP to this company and its proprietary language is another one I agree with.  I’ve said in the past that Platform Vendors need to act like Switzerland, and Salesforce ain’t no Switzerland.

Okay, that’s fine and well, but are those compelling arguments?  Won’t a few go with Salesforce just to partake of their tremendous momentum, particularly in light of their most recent quarter?

The answer is they can’t, and that’s the real big issue that the other commentators haven’t mentioned.  Force.com is too expensive.  The economics of SaaS are stark, and never more so given the capital raising climate of today.  SaaS vendors should be able to deliver their service for about 25% of what they charge for it.  Some do it for less (Salesforce in particular is a little more than half that), and some do it for more (Google’s “SaaS” is much more expensive, but still around 40%).  See my post on Multitenancy for more detail on this.  Here’s the punchline:  Force is priced at about $50 a seat month.  If you’re going to get that 25% Cost of Services, that means you’d have to charge $200 a seat month for your SaaS offering.  That’s 2x the premium offerings from Salesforce itself.  It’s a total non-starter for those who’ve done the math. 

Folks I’ve talked to who are starting SaaS companies are well aware of this.  Their view is that Salesforce is not a platform for developing your flagship app, it’s a platform for generating sales leads, which ties back to Schuller’s comment that Force is all about marketing not technology.

Note that Salesforce is trialing much lower pricing as we speak, but it’s pitched as promotional pricing only.  That’s a problem too.  Having already showed their (potentially greedy) hand, how do ISV’s trust that even with the right pricing SFDC won’t raise the stakes and instantly take all the profit out of their business at some future point?

Platform vendors have to be Switzerland. 

Force.com will likely sell reasonable well to Corporate IT for internal projects because they’re not price sensitive.  It may already be too late to reverse course well enough to bring on many ISV’s.

Posted in platforms, saas, strategy | 6 Comments »

Publishers Stunned by Kindle Sales

Posted by Bob Warfield on March 3, 2008

I like Richard McRoskey’s Silicon Valley Insider article about publishers being stunned by how well their work is selling on Kindle. I chalk it up to a couple of factors. First, I would expect the early Kindle adopters to have voracious appetites. Second, any new and successful paradigm is startling in how fast it can grow.

I’m still waiting for Kindle 2.0 before making my purchase, but I’ll bet we’ll see it in 5 or 6 months.

Posted in amazon, Web 2.0 | Leave a Comment »

Empathy Bridges the Gap Between UsWare and ThemWare

Posted by Bob Warfield on March 2, 2008

Jeff Atwood writes of UsWare and ThemWare:

  1. MeWare
    The developer creates software. The developer uses it. Nobody else does.
  2. ThemWare
    The developer creates software. Other people use it. The developer does not.
  3. UsWare
    The developer creates software. Other people use it. The developer uses it too.

These ideas originated with Eric Sink, but the discussion is based on Jakob Nielsen’s First Rule of Usability: Don’t Listen to Users.

The question is not whether to ignore your users, but how to listen to them.  Users are often too literal in what they want.  They want to tell you about the feature or change that you must make to your software, rather than the real problem they need to solve.  This is treating the symptoms and not the disease. 

Often they don’t know the real problem they want to solve.  This is where empathy can bridge the gap.  With UsWare, we don’t need empathy so much, because we developers are the users.  With ThemWare, we run the risk of following the wrong suggestions, or following the right suggestions too literally because we have no compass to guide our decisionmaking about features.  Anyone who has seen software built by the classic Product Management triage and prioritization approach knows it is a recipe doomed to create mediocre software:

- Canvas the user groups for what they want.

- Prioritize according to some metric.  All too often the metric is whatever the Product Manager thinks is cool.  Ideally the metric has some relationship to the business results the Software company hopes to achieve.  It’s very easy to get bogged down in these metrics with Balanced Scorecards and a host of other contrivances that stand in for true understanding and empathy.

- Put it all down on stone tablets called “Product Requirement Documents” and hand those to Engineering with the proviso to implement them precisely as they are written and don’t ask too many questions.

By contrast, Empathy means we have some sort of true understanding of why users want what they do.  This helps us to know things like:

- Which things can and should be safely ignored.

- Which things will really change the user experience for the broadest market.

- Which things will be interesting “almost good enough” features that are demoed often but seldom used.

Empathy is a bit different than Vision.  It’s deeper because it’s rooted in the Domain.  Find someone with Empathy in your Domain and that someone will be completely comfortable conversing with your users about their problems.  They’ll be able to persuade those users they are right, albeit perhaps requiring a prototype or two to get there.  The reason?  They speak the user’s language.  They get it.

Make sure someone on your team has this Empathy for your market or you’ll have a very difficult time.

Posted in user interface | 2 Comments »

Microsoft Switching Office to SaaS? Makes Total Financial Sense!

Posted by Bob Warfield on March 2, 2008

Nick Carr and Michael Arrington are both saying Microsoft is about to start switching over all of its offerings to SaaS.  The news, if true, would be a bold move for Microsoft.  I think the timing makes a lot of sense.  Here’s why:  people are mostly done upgrading, the market is saturated, and Microsoft’s product cycles are very slow. 

In the old days, Moore’s Law meant that every 18 months or so computers got twice as fast.  That was a compelling argument to buy a new computer every couple years.  Things have slowed way down on that front, which has led to the multicore crisis.  But it’s also led to another factor.  For a desktop software company, in the old days, driving big growth meant driving rapid upgrades and new purchases.  The new purchases would take care of themselves via Moore’s Law, especially since most businesses bought more copies of the software for new machines.  the upgrade cycle could be used to help juice things further.  But as Moore’s Law has changed from faster PC’s to more cores, the drive to upgrade machines has slowed.  Meanwhile, Microsoft has always been getting slower and slower on their upgrade cycle:  Office 95, Office 97, Office 2000, Office XP, Office 2003, and Office 2007.  At this rate, the next Office update wouldn’t be due until say 2011.

So what’s a poor monopolist to do in order to keep the revenue and growth fires blazing?  Switch to SaaS, that’s what.

Let’s speculate a bit on what they might charge.  A typical formula for SaaS is to charge enough so the vendor is ahead versus license after 36 months.  That would mean on a $399 Office 2007 package to charge about $11 a month.  Hey, that even sounds like it might be reasonable for a “real” MS Office product.  There is talk of ad supported versions, and that’s a possible alternative too.  My bet is they won’t go cold turkey to adds, but rather there will be different versions.  It makes sense to pay more to eliminate the ads, or pay a little and put up with ads. 

Okay, now the next thing to do to understand the sense of this is to compare the two options.  I’ve graphed a scenario I dreamed up to compare the two:

msftperpetualsaas.jpg

The red line is SaaS, and as you can see, it quickly overtakes the blue perpetual license line.  How does that work?  I’m graphing cumulative revenue, which is $11/month for the SaaS version.  For the perpetual/retail version, it’s a little different.  Here I have factored in the upgrade cycle.  I assume we have a brand new version of the software in year 1, and that 50% of the installed base upgrades that first year, 20% the next year, 10% the next, and 5% in the fourth year, followed by another new release in Year 5 and the same cycle starting over again.  As you can see, perpetual has a temporary advantage when the early big upgrades occur, and that peters out.

Now you can clearly see why this is a great time to introduce the SaaS version: they’re past the early big upgrade wins.  The cream has already been skimmed.  By introducing SaaS now, they have a chance to have their cake and eat it too.  Of course the revenue advantage will not be as dramatic as what I’ve painted.  There will be a changeover period of some kind where part of the revenue is perpetual, and part of it is SaaS.  The important thing is that Microsoft has several years to manage that transition, and with a little care, they can make sure it only means further growth moving forward.

Ryan Stewart goes onto tie all this up with the offline version of Silverlight that’s expected.  I wouldn’t be surprised if there is a delay before any SaaS announcements are made.  It is a necessary move, but it is also one that will make some parties nervous.  Investors, in particular, will want to understand the full financial ramifications SaaS will have on Microsoft’s financials.  They’re already fairly upset at the loss in Market Cap the Yahoo debacle has caused.  It’ll be interesting to see whether this delays any SaaS moves, whether they just work harder to explain it, or whether they just go for it and investors be damned.

Posted in saas, strategy | 6 Comments »

 
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