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Archive for January, 2009

Email Needs a “Reply to Community” Instead of “Reply to All”

Posted by Bob Warfield on January 31, 2009

I read with interest AC Nielsen’s decision to eliminate the Reply All button from their email in an effort, as Andrew Cawood, Chief Information Officer for Nielsen Company, puts it, to “eliminate bureaucracy and inefficiency”.

Robin Wauters thinks the idea this will eliminate inefficiency is absurd, and I agree.  In fact, absent an alternative mechanism for communication, Nielsen is eliminating one of the few mechanisms Old School organizations have to reach across silos on any regular basis.

After thinking about the problem, and about how we prefer to use email at Helpstream, I had an inspiration.  If Reply All is intended to facility communication with broader audiences, and I think it is, why not make it a “Reply to Community?”

Assuming your company has some for of internal community, as ours does using our own software, one of the biggest problems is getting people to move email discussions into the community where they can be more effective and more accessible.  It would be awesome if I had a “Reply to Community” button that would copy the email thread up to that point into a community forum, for example.  Instead of a list of recipients, I would be prompted for which forum the thread should be started in, and whether I wanted to just use the Subject as the name of the thread or whether I wanted to create a new name.  Everyone on the distribution list would automatically get a note telling them the conversation had been transferred to the community thread, and they would be automatically email subscribed to it as well.  While we’re at it, depending on what other tools your organization uses, checkboxes should be available to engage them as well.  Perhaps a thread wants to be moved to Twitter, or perhaps you want to Tweet updates to the community thread to a particular Twitter account.

Wouldn’t this be a useful facelift for email?  Then it could be primarily used for 1:1 more private communicates while seamlessly transferring broad participation to a tool that’s better suited to it in the first place.

Posted in user interface, Web 2.0 | 1 Comment »

Balancing Process and Agility, Google’s Cautionary Tale

Posted by Bob Warfield on January 31, 2009

For about an hour this morning. Google was reporting every search result as leading to a site with malware.  Some were chuckling that Google even reported its own site as a bad risk.

Marissa Mayer reports that the error was due to a 3rd party, called StopBadware.org, which periodically sends them a list of the bad site URL’s.  In this case, the list contained the “universal URL” consisting of just the slash:  “/”.  The upshot is that for a while, you had to manual cut and paste results into your browser and you had no idea if you were going to a site that really did have malware, or a site that was simply afflicted by this obvious bug.   To make matters worse, Mayer’s original explanation, that they got a bad file from StopBadware, turns out to be wrong.  StopBadware says Google generates their own files, and Google amended their statement, but they still claim it was a simple human error.  It was, but that error was in creating the bug and not testing for it that allowed this to happen.  It wasn’t because someone put a “/” in a data file, although that is also a human error.

Of course this raises lots of questions that range from the wisdom of letting Google be a single point of failure in our Internet lives, to it being no big deal–an obvious problem that shouldn’t confuse anyone that would likely be quickly fixed.  I guess I am somewhere in the middle, but mostly towards the right.  The incident is an embarassment for Google, but didn’t really cause lasting harm.

The question is how much of this sort of thing a company like Google can tolerate before it does harm the brand, and what should the company be doing to protect itself.  A couple of thoughts present themselves:

-  “/” is a pretty obvious case to test for, but clearly it hadn’t been tested for.  Google originally blamed a third party for giving them bad data, and that turned out not to be the case, but even if it were true, most QA organizations I know of would blame the software as well for not having been thoroughly tested.  It begs the question of what other mischief is lurking about that hasn’t been tested for.  What level of process and quality should Google be aiming for?

-  This is a time when Google is trying to be more financially efficient, and when the old culture of hire the smart ones as fast as you can and we’ll figure out what to do with them later is rapidly being cast off as unworkable.  Is the culture capable of increasing the level of process, testing, and other “overheads” which will mean further cuts on the innovation side to pay for it? 

Process and Quality are not quite the same thing, but they are certainly related.  And, they are often viewed as costs or overhead, rather than as benefits, although the Japanese certainly showed that quality can be a powerful factor in success, and Microsoft is certainly showing that a lack of quality (percieved if not outright) can make selling difficult even for a monopoly.

But there are trade offs to be balanced.  Originally I wanted the title of this post to be, “Balancing Process and Innovation,” to underscore the investment in more developers to make new things versus other investments in process to increase quality.  Google could’ve spent more time testing it’s malware detection, it could have instituted some simple testing (wouldn’t have taken much to catch the latest) every time a new set of URL’s came in, or it could have done a variety of things that may have contributed to quality, but would have reduced available investment in innovation.  But as I was writing the post, I realized the tradeoff was more between Process and Agility than Process and Innovation.

Why?

Because if you can respond fast enough, you can successfully respond after the fact.   Such a response might still be ineffective at preserving customer satisfaction if the problem was bad enough, but in general, the fewer customers that experience a problem, and the less it impacts them (whether due to lower severity, shorter time, etc.), the better things are.  Having no problems at all may be best (though not always, more on that in a minute), but failing that ideal, having many fewer percieved problems is not bad.

Some time ago, while I was with Callidus, I did a benchmarking survey of SaaS companies and On-premises companies that were in transition or thinking of moving to SaaS.  We did this to understand what was involved and to help us decide whether the move to SaaS was right for Callidus.  We ultimately decided it was, and the transition has been going very well for Callidus, but I learned some interesting things.  At one point, I started asking Customer Service organizations at On-prem software companies what percentage of product problems reported were fixed in the latest release.  The answer that came back surprised me.  It ranged from 40% to as much as 70%.  What was happening is customers were reluctant to move to the latest On-prem release for whatever reasons, and so they were encountering bugs in old versions that had already been fixed.   A SaaS company has the luxury of control over what version of their software customers run, so they can fix bugs as soon as they are discovered by just a few customers so that the majority of customers may never see those bugs.  It’s an abject demonstration of the value of Agility versus Process.  The On-prem companies can invest the same in QA, but deliver a worse experience because they can’t be as Agile about fixing the problems.

This applies to the Google case in two ways.  First, if Google had to patch software on every one’s machine that accessed Google, that would be a nightmare.  Much slower and more painful.  Instead, they were able to fix it on their own servers so the total incident lasted a relatively short time.  Second, Google had the opportunity to mitigate their risk further by expanding on this theme, but they didn’t take it.  It should be straightforward for Google to roll out changes like this to subsets of their audience.  Perhaps they would do so by data center, region, country, or time zone.   Doing such a staged rollout would ensure that they got early warning of catastrophic and obvious problems before their entire infrastructure was infected.  They could rollback whatever changed happened and stop further rollouts until the problem was resolved.  That’s a level of agility that would greatly benefit any organization that has as many customers as Google does.

Consider SaaS companies.  Multi-tenancy is great for cost savings, but it carries the risk of Google’s problem.  Namely, every customer gets fed the “bad” change at once.  No large SaaS organization really tries to put every customer onto the same instance.  Salesforce has NA1, NA2, NA3, EMEA, and so on.  The question is whether their process for rolling out patches and new releases is always uniformly applied to every instance, or whether they apply to one instance, wait and see whether there is an adverse impact, and then move on to the rest of the instances after a suitable settling period.  Such a policy seems very prudent to me, and capable of helping reduce the risk that your customers get upgraded to a bad release.  To be sure, I am absolutely not advocating everyone running a separate code release.  I am advocating finer granularity in rollouts that lasts for a very temporary period as a way to mitigate risk.

Does such an approach risk the cost savings of multi-tenancy?  Not at all.  That savings is based on dynamically allocating unusued capacity between the tenants, and on reducing the management overhead so that management of a single instance yields management of many tenants.  Having a few more instances (or even a lot more for a big outfit like Google) doesn’t really impact either benefit.  the virtualization benefit (sharing unused capacity) probably means a smaller instance than you may think.  Take the smallest (in terms of machine resources) instance that will run your largest customers and start putting small customers on it.  It’s pretty efficient.  Now take an instance 2x larger than needed for your largest customer.  Put the largest customer on it with a bunch of very small customers to fill in the “gaps”.  It runs pretty nicely.

My own company, Helpstream, uses the Cloud to facilitate this sort of thing.  We use Amazon for our Cloud, and it has really helped us.  For example, we roll out a Beta instance to our biggest customers (eventually to everyone) 2 weeks in advance of a new release.  It has all of their data on it, so they can start playing with it and tell us any problems they see.  We also recently rolled out our first private instance for a customer that wanted to see what their performance would look like on an isolated instance.  Over time, we’ll use relatively more instances together with the ability to seamlessly move tenants (our customers) between instances to provide a great deal of operational flexibility.  And I fully expect we’ll get to staged rollouts of new releases as well.

Google and other large Software as a Service or web companies should already be doing so today.  If you’re in a position to limit the impact of a change to a small audience, and to fix it quickly if there is a problem, Agility can take the place of the expensive process needed to prevent any error from ever happening.   But, you have to plan ahead to be in a position to operate this way.

Posted in cloud | 2 Comments »

Is Green Already In Trouble Despite Obama?

Posted by Bob Warfield on January 29, 2009

I read a very surprising story in JJ Cramer’s investment newsletter today (sorry, I’d link, but it’s inaccessible paid content, but there is more here too).  Trinity is a company that builds wind power systems.  At one point it was vying with GE for dominance of the space.  I remember reading about them at the peak of oil prices and wondering whether I shouldn’t add some to my portfolio.  The announcement is that they’re actually taking some wind capacity offline and laying people off.  As Cramer points out, this is saying that the company couldn’t even wait to see what stimulus our new President would put in place.  The economics of the business were bad enough they had to take immediate action.

It’s going to be hard for Green to get it’s feet under it if energy economics make the success of these technologies so fickle that they’re our entire future one moment, and the next they can’t even afford to keep operating at capacity.  Does it bother anyone else as much as me that Trinity is actually pulling capacity offline that was built and working?  If the economics are that tenuous, the government can’t afford enough stimulus to make it go, even with all the billions being talked about.  Worse, the idea that the right infrastructure investment makes us more efficient is also suspect if the investment goes to areas that are ultimately not economic.

This story was a shock to me.

Posted in saas | Leave a Comment »

Interview with Zuberance’s CEO Rob Fuggetta

Posted by Bob Warfield on January 26, 2009

I recently had a chance to meet with Rob Fuggetta of Zuberance, a fascinating startup that has managed to raise a $4M round even in the depths of this economy.  I’d been hearing good things through the grapevine about Zuberance, so the news of their round together with those good things led me to reach out for an interview.

Rob, give me the basic profile of Zuberance

We were founded in February, 2007, we raised a $4M round on November 14, 2008 from Emergence.  We’re located in San Carlos in the former Obama campaign headquarters…

<Interrupting> Wow, that’s some good karma, eh?

Yes, absolutely.  A lot of what we do and how we operate is very similar to how Obama approaches things.

We have 12 employees, and 10 large Enterprise customers including Symantec, Polycom, and TomTom.  Our customers tend to be large enterprises with 1000’s to millions of end user customers.  We have a couple of mid-sized organizations like Vertical Response, but we fit best with medium to large enterprises.

What does Zuberance do?

We enable customers who are genuinely and authentically enthusiastic to share that enthusiasm with others.  As I mentioned, we see a parallel with what Obama has done with his followers.

How much does the service cost?

It starts at $5000/month.  There is typically a one time $10,000 configuration fee.  So, that’s about $70,000 a year.  You can unleash an army of advocates for less than the cost of a single sales person.

Tell us more about how Zuberance works

We call ourselves a customer salesforce software company.  It’s a very pragmatic positioning.  Many CEO’s have said to me, “Our highly satisfied customers are our most effective salespeople.” 

That’s truer today than ever before because customers have never been more distrustful of paid media.  69% of consumers do not believe advertising according to the big advertising firms.  In general, most leads from lead generation programs result in less than 1% qualified leads.  Sales and marketing productivity has been plummeting because of mistrust.

In place of paid media, we turn to networks of trusted friends.  Word of mouth has always been the most powerful convincer, but now it has moved online through services like TripAdvisor for hotels or Yelp for restaurants.  People will at least search Google, or go to LinkedIn for a reference on a candidate.  Consumers are tuning out paid media and tuning in these networks of trusted peers and colleagues.

What Zuberance does is we give sales tools to your customer salesforce.  We give marketers management and tracking tools to manage this salesforce.  If you buy our system, you could increase leads and sales in the same quarter using your best customers as a volunteer salesforce.

How does all this fit with social media?

I didn’t mention any of the faddish things people are talking about.  We believe social tools, online communities, and tools like Facebook are just tools to get something done.  We leverage those technologies to arm and empower customers.

<At my day job, Helpstream, we’re big on the idea that communities need a reason for being.  Generic communities can be hard to harness effectively for business results.  I think what Rob is saying is that Zuberance is a way to give Generic communities a purpose so that they can be empowered.>

Make it real.  What do I see when I use Zuberance?

The Enterprise subscribes to Zuberance just like they would Salesforce.com or WbeEx.  We’re SaaS, and our SaaS apps enable 3 things:

- Identify

- Mobilize

- Manage and Track

The first step is to Identify the advocates.  We enable brief online surveys via emails or web banners.  We ask the ultimate loyalty question:

How likely are you to recommend us to a colleague?

Zuberance launches those 1 question surveys.  Customers who answer 9 or 10 are considered advocates.  Advocates are then given an invitation to join an online community of advocates.  They register, upload a profile, and then they are given access to sales and advocacy tools.  This is the Mobilization phase.

Here are 3 examples of our sales and advocacy tools:

- Advocates can create a review.  They fill out forms, and then, with their consent, we publish the reviews to places like Amazon and CNet.

- Advocates can share a promotional offer with a friend or colleague.  Exclusive promotional offers for friends and family are a powerful tool.  They get to send a coupon to someone in their personal community.

- Advocates can answer a prospect’s questions.  For example, with Symantec, you can talk to a Norton customer now.  To ask a question, the prospect provides their email, so that results in a lead.

The advocates get poins.  We have an application called ZPoints.  You can redeem points for discounts, or to make donations to non-profit organizations.

Can they get cash for points?

No.  It’s bad business practice to give cash, but it is good business practice to recognize advocates.  We prefer to give them special or preferential treatments.

<The recent debacle with Belkin, where people were being paid to post reviews and positive comments, is a good example of why paying cash is a bad idea!>

And what about managing and tracking your advocates?

We provide a management portal for marketing to manage their advocate community and track their results.  They can see the content the advocates are creating and they can create promotion offers.  This is another big difference with our service: most social media is not trackable or manageable for a business.

<Amen!  Helpstream is all over that manageability and trackability.  So much so that our latest release actually gives you a report that shows the ROI of community for your Customer Service web portal.>

Is this service like Facebook Beacon?

There are big differences between Zuberance and Beacon.  I said Beacon is doomed to fail because Beacon didn’t respect the users.  It was a service that was meant to benefit brands only.  Our belief is that you have to deliver equal value to brand, advocates, and in-market buyers.  If you don’t maintain the balance, it won’t work.  

How is Zuberance going to market?

Our advocates are doing our marketing for us.  We started with Symantec.  They have 22 million active subscribers to Norton.  So they launched Norton Advocates in beta in June of last year.  They started by surveying 100,000 customers.  They got several thousand advocates almost immediately.

How did you get your first customers, before you had any advocates?

We used Direct Sales, and augmented that almost immediately with advocate leverage.  Look for our Zuberance Zealots program soon.

What has been the impact of the Economy?

This is the worst environment I’ve seen in 2 decades of Enterprise marketing.  100% of CMO attendees at a function I attended last night are losing budget.  It’s a tough environment.  Products and services without provable ROI will go by the wayside in 2009.  In our case, we can deliver results this quarter.  Customers get 10x ROI on their investment in our solution.  Plus, it makes so much sense.  CMO’s get what we do because they already have the religion.

Conclusion

Zuberance is a fascinating company.  Their story certainly made sense to me, and resonated with a lot of what I’m hearing from others.  In this economy, it is extremely hard to get new customers.  You need to focus on keeping your existing customers happy, driving repeat business from those customers, and I would say, leveraging those customers to find your new customers.  Zuberance helps with all of that.

Posted in Marketing, strategy, venture | 1 Comment »

Are We Surprised Cisco Will Build Cloud Computing Servers to Compete With HP, Dell, et al?

Posted by Bob Warfield on January 20, 2009

A fascinating article from the NY Times just hit Techmeme.  It’s all about how Cisco is planning to start building servers.  To be precise, servers equipped with virtualization software.

The article expresses some surprise at this move, but it seems terribly obvious now that the news is out.  After all, there is already a move afoot to create Cloud Servers.  These a stripped down machines best suited to doing nothing but being the commoditized ubiquitous guts of some massive Cloud data center where there will be thousands of them.  The emphasis will be on reliability and cost efficiency.  I’ve likened the advantages of such highly standard machines to the business advantage Southwest Airlines gets by standardizing all of their aircraft as 737’s.  Companies like Google have already seen the light and taken these steps.

When you look at a server not as a complex machine optimized for maximum performance, but as an interchangeable box optimized for value and low cost of ownership, doesn’t it suddenly sound a lot more like the boxes Cisco has traditionally been making?  Don’t they know a lot about how to do that sort of thing?  And what did we think was inside those Cisco network boxes anyway?  Surprise, they’re mostly just computers with special software.  Cisco already has a huge leg up on how to do this stuff.

Mind you, these boxes are not strictly for the Cloud, but the vision of highly standardized corporate datacenters where the important thing about the machines is virtualization and efficiency more than absolute maximum throughput is pretty much what the Cloud wants anyway.

It’s going to be interesting to watch, but this isn’t the first or the last time that the Cloud will change the dynamics of the marketplace.

Posted in cloud, data center | 2 Comments »

Taking Exception to a Few Posts

Posted by Bob Warfield on January 18, 2009

There’s more in my Google Reader almost all the time than I can write about.  Articles that are perfectly on theme for this blog, that are about important issues, that I really want to write about, but don’t have the time for.  Given my day job, I do well to get 2 or 3 blog posts a week out. 

Some bloggers shoot a post out periodically with a bunch of links and comments on each link.  Over time, I’ve gotten to where I delete these posts immediately.  I don’t know why, but I just don’t want to read them.  It’s too much trouble to interpret the one line comment and then click the link to see more.  And sometimes there are a LOT of links!  I prefer for such bloggers to do what I do, and share items like that to Google Reader.  I’ve had a number of folks comment that they really like my Shared Google Reader feed.  I think it’s because the Reader shows you enough of a post that you really can decide whether to click through or not. 

So here I am going to break my rule a little bit and publish a bunch of links to things I disagree with.  They’ll be short, but longer than most of the link posts I”ve seen.  Long enough so you can get an idea what I’m disagreeing with and decide whether you want to read more of the original article or just move on.

Posts I Take Exception To

Beta is Dead:  I think I agree more than disagree with this GigaOm post, but I want to be clear, given the provocative title.  Reading the whole thing, would could assume that Google invented betas for web sites, and that’s a lot of bullocks.  But the real controversy is around the practice of having very public betas that potentially go on for years, ala Google.  There I agree with the author and many of those quoted.  That’s a ridiculous practice, despite Google calling it “a branding thing.”  Jason Fried of 37Signals has it right when he says:

Calling something a public beta is like saying ‘We don’t take responsibility if it’s not any good.’”

OTOH, having Beta tests I think is very useful.  I don’t see them as a tremendously successful vehicle for testing, as some seem to.  My experience with betas is they uncover a few bugs, but there are much more efficient ways to find problems.  However, as a means of getting early feedback quickly, and as a means of educating your customers about an upcoming release, I think they’re excellent.  My company, Helpstream, is able to do betas of new releases because we’re hosted in the Amazon Cloud.  Doing so gives customers a chance to see what’s coming and get ready for it, rather than having it dropped into production without any chance for familiarization–a practice many other SaaS companies follow.

R&D is the Biggest Cost of SaaS:  Not!  Bernard Lunn writes this one over on his RWWeb article about why the current economy should unlock innovation in India.  He seems to think that SaaS unlocks the sales and marketing costs leaving just R&D costs, and that since India can do that cheaply, SaaS is a big opportunity for them to innovate.  His examples for why this is true are 37 signals, Automattic, Zoho, and DimDim.  His formula:  Take a basic software service we all need — say, CRM — and offer something that is comparable to the market leader at a fraction of the price.  This is all fine and well, especially when Bernard mentions briefly that, “This is an opportunity for thousands of small companies to go after niche markets.”  The emphasis of the article should have been on “niche”.  There is no magic in SaaS that has anything to do with making sales and marketing free.  The magic of the companies Bernard talks about lies a lot more with the niches and target audiences than any free marketing.  Bernard starts out going on about beating Oracle and SAP.  If he wants to talk in that vein, he needs to compare the big SaaS companies and look at what they spend on sales and marketing, because it isn’t what 37signals spends.  In fairness, SaaS is still cheaper as I’ve written before.  But if you look at the R&D part of the SaaS equation for non-niche SaaS, it is in fact the smallest piece and sales and marketing is still the biggest.  As for whether India will have a big advantage for niches because of cheap R&D, the jury is still out on that.  But one thing that usually helps niche players is lots of domain knowledge.

Fred Wilson on Selflessness vs Selfishness:  Fred is up in arms because some businesses and entrepreneurs are trying to figure out how to get a slug of Obama’s economic stimulus package.  It’s an entertaining article because Fred makes it sound like the poor government is almost a victim when it comes to pork barrel spending, and that it is the rest of the country that needs to become a little more altruistic:

We know that congress is susceptible to being lobbied successfully by people, institutions, cities, states, and corporations.

Those poor gullible people in Congress!  If only they had known what evil the lobbyists were up to they never would have been corrupted!  Yeah right.  I heard on the radio today Brian Copeland pontificating about, “Do we expect too much from Obama?”  He went on and on about what if Obama can’t turn around the economy?  What if he can’t get us out of Iraq?  What if, what if, what if.  Fred may as well add, “What if Obama can’t avoid spending most of the stimulus on pork?”  Did we expect too much from him?  Well if he doesn’t accomplish any of that in his term, we are going to be one mighty unhappy nation 4 years from now.  We are none too pleased today.  If he can’t accomplish any of it, I think we’re entitled to be disappointed.  What else would the job of a President be?

Scoble, your audience curves do not prove video is godly:  Scoble is responding to Steve Rubel, who says that text beats video.  Of course Scoble, he of the video-even-if-its-just-from-a-cellphone, disagrees.  To prove his point, he presents this curve comparing Techmeme (text only) with his own FastCompany.tv.  Just one problem with the curve, Robert, it doesn’t prove your point!  I see 2 curves where a service that started later, Techmeme, is growing faster and rapidly closing the gap while Fastcompany.tv looks plateaud.  Has Fastcompany really grown much since, I don’t know, May?  Techmeme sure has.   The problem here is that we shouldn’t be trying to pit these two in a horse race against each other.  Video loses.  If it didn’t why are we still reading and writing so much on the web?  But, video is still cool for a lot of things, so I do agree that we should do both.  And Rubel is right.  Text is easier to consume, more scannable, more searchable, and it does generate more conversation.  Let’s just don’t throw the video out with the bathwater.   Rather, let’s keep it in perspective.

Posted in business, strategy | Leave a Comment »

The Best Thing That Can Happen to a Startup

Posted by Bob Warfield on January 16, 2009

What’s the best thing that can happen to a startup?

More sales?  Yes, but, any given sale is just an incremental step forward.  There is no leverage in that.  You have to get more sales, but how do you make it easier?

Another round of funding?  Again, slightly less tactical than another sale depending on how you spend the money, but still tactical (sorry, VC guys!). 

The best thing that can happen to a startup is an event that is broadly leveraged.  Something that makes raising rounds and making more sales easier.  Across the board. 

For startups, that usually boils down to some form of validation.  Some event that dramatically increases the “believability” of what the startup is selling.  There are a lot of different kinds of validation, and my own startup, Helpstream, has been blessed with several of them. 

One of the most obvious forms of validation is happy customers.   The first thing any startup has to do is get an interesting collection of customers happy enough that they’re willing to tell others about it through references and ultimately referrals.  Reaching a stage of have at least a dozen referencible customers is an important stage in the development of any new business.   Over time, validation through happy customers scales into particular communities.  At first it is enough to have happy customers.  Then you want a collection of happy customers that are all in a related business, and hence part of a community.  I’ve watched a number of companies grow through the strategy of targeting these kinds of communities.  For example, at my last company, Callidus, we followed this track of getting three or four referencible customers in a particular market and always found it became easier to sell to that market after that point.  Three or four banks and the next 10 banks are easier.  Likewise with insurance companies, manufacturers, or whatever means you want to use to segment you markets.  The reason?  Because you’re actually targeting communities by targeting similar companies.  You are learning to talk their talk and walk their walk.  You’re gaining an understanding for how they think about the business problem you solve.  And you’re injecting your messages into their daily world where they talk with others in the same industry.  It’s a powerful technique, and I’m happy to say we’re onto that second stage at Helpstream where we have a critical mass of general references so now we’re trying to create segment-specific references.  In a couple of segments we’ve also had enough success that we’re starting to see the tipping point of easier sales.

Another form of validation is partnership.  Startups often benefit from partnership with a larger company when it comes to validation.  In Helpstream’s case, we’re part of the Oracle Inner Circle partner program for CRM.  It’s been great.  We are exposed to deals we wouldn’t otherwise see because Oracle brings us into them.  We also have the credibility that the association with Oracle brings.  There are a number of other partnership opportunities in the offing for Helpstream, and we’re very excited about them because they will bring further validation for what we’re doing.

The last type of validation is perhaps even more interesting, because its something that happens that is completely beyond the startup’s control.  Some startups fear it for this reason, but in my experience, it has always been a wonderful thing if the startup was prepared to take advantage of it.  I’m referring to the case where a big player suddenly starts saying some of the same things your startup has been saying all along.  Helpstream’s story has always been about Community-Based Customer Service.  We uniquely combine the new tools of Community and Social Media, with the tried and true Customer Service tools of Case Management and Knowledge Bases.  The deep integration of these has been absolutely unique to Helpstream, and very powerful.  We’ve gotten a lot of endorsement from forward thinking analysts for this approach.  Paul Greenberg, for example, was kind enough to say:

this is one of the best crafted CRM 2.0 applications I’ve seen to date. Period. End of sentence and definitive statement.

While I’m on the subject of comments like Paul’s, I will point out that recognition by press and analysts is another important validation step.  But now we have yet another exciting form of validation in the form of Big Player Salesforce.com starting to talk more about how communities fit with customer service in conjunction with their Service Cloud offering.  It’s a pretty cool product, but there’s nothing about it that would cause a customer to choose that product over Helpstream’s, so we think it’s awesome that they’re pushing it.  That’s the best possible way for them to help us out by validating the basic concept that Communities and Social Media are important to customer service.

Why is that so great?  There are two reasons.  First, because Salesforce made the announcement, a whole raft of people were suddenly talking about Communities and Customer Service.  I’ll provide a list at the end of the interesting articles I saw.  Second, because its newsworthy, Helpstream has a chance to join that conversation and a whole bunch of folks are interested in hearing from us that weren’t necessarily clued in before.  Those are both hugely valuable to a startup.  They make it a lot easier for us to get the word out, so we’re delighted.  BTW, Salesforce are not the only ones.  Oracle has been talking a lot about Social CRM, and that also helps us tremendously, especially since we have a partnership with them and can be a part of helping them deliver that vision.

I’ve also been with a company that didn’t get the validation of a big player in the market.  That’s tough, because its up to the startup to spend all the money and do all the heavy lifting to get the word out.  That makes growth a lot more expensive and may ultimately cap the size of the market if the small company leading the market can’t reach a critical mass of buzz and attention.

So, I’m feeling pretty good as the New Year starts to unfold.  We’ve had a lot of validation at Helpstream.  Momentum is definitely way up.  And there’s more to come!

Related Articles

Just to give an idea how much press was suddenly generated by Salesforce’s Service Cloud announcement, here were just the links that came through my feed reader:

CRM News:  Great quotes by John Ragsdale, President of the SSPA.  John is a seasoned analyst of the space who has commented on Helpstream in the past.

Larry Dignan:  One of my favorite bloggers, Larry has a good overview of the Service Cloud offering.

MyCustomer.com:  Includes an amusing quote from NetSuite, welcoming Salesforce to the Cloud where, “they’ve been for years.”  The quote is amusing, but there is little on NetSuite’s web site to suggest its true.  They have a pretty basic Old School on SaaS customer service product.  At least it doesn’t read to me anything like what we say about Helpstream on our web site.

TechCrunchIT:  TechCrunch is always a good news source, and they’re no exception here.  That first screen shot of the Service Cloud gives a great flavor for what it really is.  They’ve basically created a simple mashup that lets you view these different sources out on the web as either Knowledge, Ideas, or Cases.  It’s an interesting model, but I find it somewhat strained to force everything through one of those three buckets when some of these things just need to be viewed as what they really are.

GigaOm:  Alistair Croll sees Service Cloud as CRM 2.0 more than Customer Service.  He has a point.  I have a hard time imagining that most Customer Service Representatives want to go looking for a lot more inputs that they need to deal with and be measured on.  It’s a little more plausible to me that a marketing organization would use this tool to track what others are saying about them, although even then it seems like there are better ways to go about that.

Posted in Marketing | 3 Comments »

Preposterous Stories Make for Good BS Indicators

Posted by Bob Warfield on January 13, 2009

Recently the story has been making the rounds that Google searches are killing the planet–too much CO2 involved in one little search.  This due to a story in the London Times that a search uses as much energy as it takes to boil half a kettle of water for your tea.  There is just one problem:  that story was total BS.  Even the physicist they quoted says he never said that.

I doubted the story as soon as I read it.  Even if it were true, I was still certain that conventional paper media of any kind had to be far more destructive in terms of total energy costs to produce it.  So I dutifully gathered up all of the articles with an eye towards waiting for this particular BS bubble to burst (hey, methane is a powerful greenhouse gas, be careful producing BS!) so I could see how the various blogs and articles looked in the cold light of that reason.  It’s a good way to see who added some sort of value, and who just tried to surf the meme for their own ends.  Remember that you can’t always tell where the BS ends, so its good to see this sort of thing when you have a clear idea what’s going on.

So here is the list in the order the articles appeared in my reader:

Nicholas Carr “Strip mine media“:  This was a classic meme for Nick to pick up.  He delights in writing about whatever rubs the conventional wisdom’s nose in the dirt.  It always makes for an entertaining read, if sometimes your own nose does get dirty when you disagree!  Nick called BS by saying he doubted the results were true.  He ultimately reports that Google calculates the numbers are 0.2 grams of CO2, not 7 grams.  But, Nick doesn’t miss a chance to wax eloquent about Google’s moral dilemma as they still must surely be damaging the environment.  Points of for failure to present objectivity on that even when Nick himself suspected the result was BS.  Nick, you’re a sensationalist!

Techcrunch “Are We Killing the Planet One Search at a Time?”:  Jason Kincaid writes an excellent post that asks all the right questions from my perspective.  Bully for Techcrunch.

GigaOm “Why Pick on Google?  How Green are We the People?“:  Om Malik also wonders what other activities generate just as much CO2, and winds up with a bit of a sermon on how people need to moderate all of their activities to produce less CO2.  Oh good.  Liberalism is alive and well.

Google’s Official Response Post:  Of course Google had to respond, since it was called to task for heinous environmental crimes.  I thought their response was nicely measured.  Good job, Google!

Larry Dinan on ZDNet,  “Signs of Armageddon:  We’re Worried About CO2 Emissions of a Google Search“:  This was by far my favorite post.  Larry does a wonderful job of calling “Chicken Little” on this whole Google Search CO2 meme.  Hand wringers beware:  Larry isn’t having any of it.

James Governor, “How Green is the Cloud?”:  James cuts to the heart of the matter, which is that a lot of entities want to use the Green Banner for their own business ends.  He pretty well calls out Nick Carr on that front (looks like James sees him much the same as I do), and warns that the Cloud vendors themselves will try it too.  This is a problem I have with a lot of (but by no means all!) do good activity in the world.  I think it is important to do good, but I see too many cases where the participants have their hand in the till.  They’re simply doing good so that they will do well themselves.  That isn’t doing good, is it?

Techcrunch, “Revealed: The Times Made Up that Stuff About Google and the Tea Kettle“:  Appropriately, Jason Kincaid closes this meme down by reporting that the physicist quoted now denies making any of the claims.

What have we learned? 

First, that a tremendous number of people are interested in all things Green.

Second, many will try to cash in on that interest in any way they can. 

Third, be careful about cashing in.  If you back the wrong horse, or lack real conviction, you can look silly in the aftermath.  By and large I’m very pleased that the blogs I followed saw this story up front as being pretty silly and said so.  I do wish they’d had more to add to the story, but they wanted to catch it as it unfolded, I’m sure.  But others obviously thought it was great or the story wouldn’t have taken on such a life of its own.

Companies face the same issue as they wonder what causes to back and which horses to ride.  There will be a tremendous temptation to want to appear Green.  But you have to ask whether you or your company can come off sounding really sincere doing that, or whether it just sounds like you want a free ride off of concerns the public has about the environment.  The best test I know of for that is to check your own convictions.  If you interest is in the money, traffic, or other ancillary issues, that conviction is lacking and you should steer clear.  If it is truly for the cause, maybe its worth sharing that conviction.  Maybe you’ll do some good in the process.

Posted in cloud | 3 Comments »

Did Amazon Just Damage Their Ecosystem?

Posted by Bob Warfield on January 10, 2009

There’s a lot of back and forth over whether Amazon has just damaged some of their ecosystem partners by launching the AWS Console, which provides an easy way to control your Amazon Cloud usage from a web browser. 

Elastic Vapor trumpets, “Amazon Crushes Ecosystem.” 

GigaOm says the new offering competes with RightScale, Elastra, and Enomoly, but doesn’t crush them out of existence.

This is not the first time this has happened.  Elastra and others were queing up to solve EC2’s persistence problem and Amazon delivered Elastic Block Store and made the whole issue moot.

So what’s the deal?  Is Amazon doing evil to its ecosystem?  Have they violated my oft-repeated dictum that platform vendors have to act like Switzerland?  Is this good for the competition, as Paul Lancaster Business Development Manager at GoGrid says:

“Better opportunities for other cloud vendors as AWS console de-values partners who build business on the platform. Good news for the competition.”

I don’t think Amazon has done evil and I do think ecosystem players need to position themselves to expect this sort of thing.  Amazon needs to do whatever is necessary to make adoption of its platform easy.  Ultimately, that will grow the ecosystem too.  Yes, there was some pretty low hanging fruit out there in the form of gaps in Amazon’s initial offering.  EC2 persistence was one.  Having only a command line interface and no web client (addressed by this AWS Console announcement) is another.  It’s fine for the ecosystem to be nimble about nailing such opportunities early on, but they can’t very well expect Amazon to let them hold on to franchises that are pivotal to Amazon’s own success as a platform.  As such, I don’t see Amazon’s actions as evil.  I think the ecosystem has to expect this sort of thing. 

In fact, all indications are that companies like RightScale were in the loop that the announcement was coming.  That’s a pretty clear indication Amazon didn’t mean to do evil to them, but wanted them to have a chance to prepare themselves and respond. 

When you’re riding the wave that is someone else’s ecosystem, it behooves you to stay well informed about their direction, anticipate they’ll fill in their functionality, and keep pushing the envelope to stay ahead of them.  If your ecosystem addition was built by a small team in record time to solve an obvious need, keep the thought in the back of your mind that it may just have been a little too easy and start looking for something harder to do to add value.

Posted in amazon, cloud, Partnering | 2 Comments »

If You Thought SaaS Was Annoying, The Cloud Babies Will Piss You Off!

Posted by Bob Warfield on January 7, 2009

I’ve been enjoying a spirited exchange with some of the Enteprise Irregulars around SaaS and Big Software for the Enterprise.  I won’t bore you with too many of the details, but we wound up in one of the classic cul de sacs these arguments often do.  Big Software was expressing their annoyance that once again incredible magic was being claimed, “Because it was SaaS.”  They were so annoyed at all the hype they percieved SaaS to be, and felt it was duping customers into believing too much in the name of SaaS.  If you read this blog at all (or have had a look at my resume), you will know I am an unabashed SaaS supporter, so when I hear someone shaking their head and bemoaning that SaaS is just a lot of hype, I spring into action.  Like any good evangelista, I launched into a long sermon about the many innovations SaaS has brought about that would be appropriate for any Enterprise (Big Software) Software to adopt regardless of whether they have a SaaS offering.

As it was happening, I was surprised myself at how it was coming out.  I’m not sure I ever heard anyone say SaaS had innovations that should be copied back into on-prem software before, but as I was waxing forth on the topic, I realized it was one of those things that had been germinating in the back of my mind for quite some while.  Let’s talk about that for a minute and then I’ll get into the whole Cloud Babies thing. 

What innovations has SaaS created that others would do well to adopt?  I’m talking about product architecture and functionality here.  Largely, it boils down to the idea of making software that is flexible without requiring expensive custom SI work.  Big ERP is legendary for the amount of expensive SI work that is required to install it.  The cost of such work is extraordinary, and the price tag when that work goes awry has created some legendary scandals in the Big ERP history books.  Getting away from all that is one of the promises of SaaS, and as I was quick to point out in that debate, it’s not just hype.  The economics of SaaS won’t support the expensive SI customization work. 

So how do SaaS vendors deal with the problem?  First, let me be the first to admit that a lot of them don’t.  They just restrict the scope of their offering and you live with that.  Sometimes that means the offering can only be successful for Small or Medium sized businesses and Big Enterprises can’t make use of it.  But that’s not the best answer.  The best answer is to find a way to deliver the flexibility in a way that doesn’t require expensive custom work.  There are two ways the SaaS world tackles this–for some problems metadata is the answer, and for other problems end user-approachable self-service customization works.  Let me give some examples of each.

Metadata is literally “data about data“.  As such, it is a beautiful thing.  Let’s consider the database.  It is very common for different organizations to want to be able to customize the database to their own purposes.  Let’s say you have a record that keeps information about your customers.  A lot of this information will be common, and could be standardized.  We all want the customer’s name, their address, phone number, and perhaps a few other things.  But then there will also be a lot of things that differ from one organization to the next.  Perhaps one wants to assign a specific sales person to each customer.  Another wants to record that customer’s birthday (obviously this is a much smaller organization than the first!).  And so on.  Without metadata, each database has to be customized and changed.  With metadata, rather than changing each database, you build the idea of custom fields in, and then you can just tell the database what the custom fields will be in each case but the structure needn’t change.  Metadata is not unique to SaaS, but it is an important part of the “multitenant” concept.  It makes it possible for all those tenants to live in the same database, but still get to have all their custom fields.

Metadata can also make it possible to enable that second method for flexibility.  Customizing a database without metadata is going to require someone to get into the database, modify the schema, make sure reports are modified to deal with the new schema, make sure the schema changes don’t break the product, and on and on.  Such work is definitely the province of expensive and highly technical experts.  However, once we have metadata, we can create a simple user interface that lets almost anyone add new fields, and that handles all the rest of it automatically.  Suddenly we have made what had been a difficult and expensive technical task approachable in a self-service way by non-technical customers.  Not only that, but they can make these changes quickly and easily, and they can even iterate on them until they get it just right.

Hopefully you can see why making expensive “flexibility customization” easy like this is essential to SaaS.  It makes no sense to sign up for cheap monthly Software as a Service and then have to spend millions to get it customized before you can use it.  Salesforce.com and others have done a fabulous job figuring out how to deliver this kind of thing.  There were a few non-SaaS companies doing this earlier, but nobody had made it an end-to-end requirement for the whole application install experience before the SaaS world came along and its economics made it imperative.  One example of a company that did this sort of thing to good effect was Business Objects.  It’s essential BI innovation was to make it possible to have the DB experts define the metadata needed to make querying the objects easy.  My old alma mater Callidus Software was another.  Our software computed Sales Compensation, which requires a lot of complex business logic.  Most of the players required expensive custom work to create comp plans, but we offered a product where business analysts could create the comp plans using formulas a lot like what you’d find in Excel.

The time is ripe, I would argue, for Big Software to be examined for opportunities to apply the same lessons.  Much Big Sofware is a couple generations older than the SaaS products of our time, so it isn’t suprising there should be some innovations worth looking at.  And in fact, Big Software are no dummies either.  See for example this discussion with Henning Kagerman of SAP’s changes in thinking about how to customize business processes.  Their Business By Design offering is not only a SaaS offering, but also a new generation concept for On-premises, and it is ripe with these sorts of ideas.  SAP has long been one of the customization heavyweights, but the pendulum seems to be swinging to the idea that next generation architectures might need to find ways to maintain flexibility while reducing the cost of customization. 

Adoption of these new ideas by the mainstream even outside of SaaS will be a good thing for all concerned.  But such adoption usually signals the maturation of an area, and this triggered little warning bells in my head.  If Big Software is upset and annoyed at the SaaS upstarts, who will upset and annoy the SaaS guys?  Who will unleash not just all the hype and disruption, but like SaaS, a set of innovations that SaaS, Big Software, and others will want to adopt too.  We’ve got a billion dollar SaaS leader in Salesforce, a gaggle of successful SaaS public companies still growing rapidly, an economic climate set to magnify the SaaS advantage further, and a number of exciting SaaS startups such as my own Helpstream.  The other thing is I’ve noted that when bubbles burst and everyone is wringing their hands in anguish, just as the hype from the last binge is dying down and consolidation is setting in, that’s usually when the next cycle is being born.  You just have to look around for it and it’s probably right there in plain sight.  Enter the Cloud Babies.

I call them Cloud Babies not out of any desire to denegrate, but because the Cloud is still in its infancy.  I am intentionally distinguishing SaaS from the Cloud too.  I mean the Cloud in the sense of Amazon, and perhaps Force.com.  The Cloud as a platform and a datacenter that is not only not the customer’s datacenter, but not even the software vendor’s datacenter.  I mean utility computing and everything that implies.

The Cloud Babies will be just as annoying to those not yet on the Cloud as SaaS is for those not yet selling (or buying) SaaS.  It’s going to seem ridiculously over hyped.  It’s going to seem like it isn’t real, that it won’t last, and that it will only matter to certain market segments or to small businesses but never large enterprises.  In fact, you can already ready most of that out there.  But I have already seen enough of the Cloud (Helpstream moved to Amazon recently) to know that there is a lot more to it than that.  There is a kernel of hard reality to it.  The Cloud is disruptive.  It will lead to innovation.  It will lead to architecture changes that give fundamental advantages.  If you thought the Sequoia memo of doom about what startups should do in this economy was serious, they missed an important point.  Any startup running their own datacenter today is at a huge disadvantage to those who are already in the Cloud.

I saw on Twitter earlier today that Fred Wilson means to sell GOOG and AAPL tomorrow and buy AMZN.  I agree.  If the SaaS Guys were annoying, you ain’t seen nothing yet.  The Cloud Babies are really gonna piss you off!

Posted in amazon, cloud, data center, enterprise software, platforms, saas | 5 Comments »

 
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