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Archive for May, 2009

SaaS: Why Warren Buffet Won’t Invest in High Tech

Posted by Bob Warfield on May 27, 2009

Buffet is one of my heroes.  He is the pre-eminent and most successful investor of all time.  It’s unclear his record will ever be equalled, let alone exceeded.  How does he do it? 

There are whole books available on his strategies, and I have read several.  It all boils down to one thing, in my opinion: 

Buffet’s strategy is to buy stocks producing great earnings that he will never have to sell. 

That’s a very interesting strategy, and it has deep implications.  Asked why he doesn’t invest in high tech like his bridge player buddy Bill Gates, Buffet’s reply is very, “Aw shucks.”  He’ll say it’s because he doesn’t understand those businesses.  But the real reason is more subtle.  Buffet wants companies that are as immune to change as possible and that have unnaturally high margin businesses.  They will preserve their unnaturally high profit margins essentially forever.  If they grow, so much the better, but he doesn’t even insist on that. 

He wants no part of the Innovator’s Dilemma or Paradigm Shifts.  The likelihood that a company can successfully beat the S&P 500 year after year is higher over a long period if they don’t have to deal with change.  Change is often destructive to those unnaturally high margins, if only because you have to invest to keep up with it.  Hypergrowth plus high margins can’t last.  The math simply doesn’t hold up.  If you work it out year after year, you wind up with every man, woman, and child on Earth having to spend a lot of money on something they never will. 

In 1957 Buffet had his first investment partnerships, and he was a millionaire in 1962.  He’s still at it today in 2009, over 50 years later.  It takes a long time perspective to be successful on his scale.  The magic of compound interest works slowly, but there is no more powerful force given time.

What does this have to do with SaaS?

Just that big companies are more like Warren Buffet.  They don’t embrace change.  It works well for them over time as they steadily grow and gain power, particularly if they are monopolies as so many are.  But change is destructive to them.  It is anathema.  It means they’ve reached the plateau, they see higher peaks, but they must descend and start to climb over again to reach them. 

SaaS is forcing that change inexorably on the big software firms.  Some, like Oracle, have turned to acquisitions over innovations to insulate themselves somewhat from change.   Eventually, there will be no more companies of a scale that matters to Oracle to buy that still sell on-premises software.  Certainly they have narrowed the field considerably.

That leaves only two outcomes:  either SaaS really only applies to an uninteresting subset of the market (largely SMB and only certain kinds of software are the usual claims) and the Oracle’s and SAP’s are safe, or big companies will eventually have to embrace the change or die as SaaS continues to take hold higher and higher up the food chain to ever larger companies.  The first is a heck of a bet, and one that I think is wrong, even though there will likely always be some categories that can’t use SaaS.  The latter is a heck of a challenge that most companies will fail at.

Michael Krigsman got me thinking along these lines (not that I haven’t thought of the subject before) with his excellent post today wherein he asks VC Mike Fitzgerald whether Enterprise software companies can do SaaS.

The post got me thinking about all the reasons it is so hard for big companies to embrace SaaS.  They range from Mike Fitzgerald’s point that these companies have a culture that is hooked on Big Deals.  That culture can’t deal with selling $1000 a month subscriptions.  We could riff on that theme alone in so many ways:

-  It takes a completely different kind of sales person to do Big Deals versus small deals.  Not only can you not afford to pay a Big Deal Salesperson to close Small Deals, the tools they use will be ineffective as well.  Fail on two levels.

-  The marketing works completely differently.  As Geoff Moore put it in a recent strategy session with my company, Helpstream, if you have a $200K deal, you can afford to create buzz inside an organization that may be a customer through feet on the street.  If you have deals of $50K or less, you have to create the buzz through PR and marketing.  Deals in the middle can’t win either way. 

-  It isn’t just the deal size.  It’s the margin on the deals.  SaaS companies have to be very numbers conscious because their margins are razor thin.  When you close a big license deal for $1 million, probably $900K of that is pure profit.  You do whatever it takes.  On a $10K deal where maybe $6K is margin, you have to do very little lest you invest more than you can ever make back on the deal.

I am reminded of a scene that played out while I was in school.  We were all shocked the day DEC’s Ken Olsen went on record as saying PC’s made no sense:

“there is no reason for any individual to have a computer in his home”

I remember realizing some time later that this statement probably had as much to do with the fact that Olsen’s minicomputer salesforce couldn’t tolerate selling in the computer stores of the day as much as any technical grounding Olsen may have felt the idea had. 

The most destructive change is change that affects how products are sold.  Add to that change that affects how revenue is collected and even how profit accrues and you have the Mother of all Nightmares for Warren Buffet or any Big Company.

SaaS is all that and more.

Posted in saas, strategy | 2 Comments »

10 Things You Don’t Need to Do In the Clouds

Posted by Bob Warfield on May 25, 2009

Sometimes a breakthrough paradigm shift eliminates the need for all kinds of things.  Word processors and laser printers killed a lot of other things that were once thriving including typewriters, liquid paper, and Linotype machines.  So it is with the Cloud.  When I chat with my Director of Operations at Helpstream, we’re always chuckling about how much better life is in the Amazon Cloud for our company.

As I read through unread blog posts with Google Reader, I’m going to note 10 things we don’t need to worry about since we’re in the Cloud:

1.  NetApp’s new DataDomain data de-duping product.   NetApp bought a company with a cool technology.  Plug it in place of you tape backups and you can backup to hard disk because this thing eliminates redundant data–sort of a very backup-savvy compression algorithm.  But if you’re in the Cloud, who cares?  Your Cloud vendor worries about this stuff.  You just buy it by the gigabyte, as much as you like, and do whatever.  Backup already looks like it is a hard disk with S3 and especially Elastic Block Store.  This is one whole chunk of costs and complexity you can safely ignore because it just doesn’t matter to you and you couldn’t install it in your vendor’s Cloud if it did.

2.  Server power consumption.  It’s out of your hands.  Sure there are really cool new technologies, like Dell’s Fortuna server that is the size of a hard disk and uses 20-30W.  But it doesn’t matter.  You aren’t choosing the servers in your Cloud.  The good news is that any really large scale Cloud vendor like Amazon will be choosing servers with great performance per watt, because it lowers their cost basis.  If they’re selling a commodity, like EC2, they’ll have to pass those savings on to you too.  Best of all, you can feel good about these being more green solutions than you’re likely to have the expertise to create in your own data center.

3.  Worrying about big iron or little iron (or little big iron where a proprietary cpu is in a small chassis?).  Should I run the best servers Sun (or some other Big Iron vendor) can provide?  Or should I just run lots of little commodity “Lintel” (Linux + Intel/AMD) boxes?  Quit worrying about it, because you can’t affect this.  In all likelihood your Cloud vendor has Lintel.  You have no idea which hardware brand they use, so you can quit caring about that too.  All those specs, which rack form factor, yada, yada, just don’t matter any more.  You have a handful of virtual machines you can choose from.  There are relatively few specifications to focus on for those virtual machines.  Someone else has probably already figured out how to set up memcached or whatever on those machines and how to optimize the software for that footprint.  You should certainly try some experiments because your software may be different, but the search space is sharply limited.  That’s a good thing, isn’t it?  Now you can focus instead of poring over a gillion spec sheets outer joined to a gillion different purchase deals.

4.  Worrying about MIPs in general.  As Om Malik so correctly points out, its the megabits (of connectivity) not the MIPs that count these days.  We haven’t been able to get more MIPs like we used to for a while, because of the multicore crisis.  Sure, we get more cores, but we don’t get faster clock speeds.  Everyone is ooohing and aaaahing that the iPhone will get a 1.5x faster cpu.  Does anyone remember back when you got a PC twice as faster every 18 months?  They never felt twice as fast.  Most of the time you could only tell if you went back to the slower machine, which seemed sooooo slooooow.  People will hardly notice the faster iPhone, unless they go back to an older one.  Meanwhile, those in the clouds can get all the MIPs they want, provided they’re ready to use elastically scaled cores loosely coupled over a LAN.

5.  Wholesale bandwidth costs.  Why worry about it if all your data is in the Cloud?  All you care about is how fast an individual browser can access that Cloud.  Granted, a big office requires a fair bit of bandwidth, but nothing like a data center.  Moreover, your Cloud vendor probably has multiple data centers in multiple geographies as well as CDN capabilities, so you are now geographically distributed in terms of connectibility.

6.  Which load balancing box to buy.   Forget about it.  Your Cloud vendor does this for you, and even if they didn’t, you’ll have to use software because you don’t get to install any custom hardware in their Cloud.  With the advent of Amazon offering load balancing as a service of their Cloud, all you need to think about is how to use it with your application.  Life gets simpler and more focused again.

7.  Hardware monitoring.  Amazon’s new CloudWatch service tracks all the usual low level monitoring (cpu load, disk i/o, network i/o, and so on) on one minute intervals.  The data is kept around for two weeks.  This is all stuff you’d have to monitor somehow.  You’d have to find some monitor software, install it, learn how to use it, yada, yada.  With CloudWatch, you just have to learn to use what’s already there.  Amazon had to get this and a lot of other things to work just to have a Cloud.  You get a handy assist from that.  People who want to compare Amazon on a raw server cost basis never look at these kinds of costs.

8.  Creating multiple data centers for redunancy and for multiple geographies.  Werner Vogels, Amazon’s CTO, makes it sound so simple:

The Amazon Elastic Compute Cloud (Amazon EC2) embodies much of what makes infrastructure as a service such a powerful technology; it enables our customers to build secure, fault-tolerant applications that can scale up and down with demand, at low cost. Core in achieving these levels of efficiency and fault-tolerance is the ability to acquire and release compute resources in a matter of minutes, and in different Availability Zones.

Elastic availability of compute resources in multiple different Availability Zones (e.g. datacenters) in a matter of minutes?  First, it’s impossible for small companies to afford multiple redundant data centers.  They all reach a scale before dealing with that.  The Cloud levels that playing field so anyone and everyone can afford it day 1.  Just the sanity of having your data backed up to S3 with multiple copies in different physical locations is wonderful.  Second, even when you reach the size of being able to afford multiple data centers, it is a hugely expensive and complex undertaking.  Why would you ever want to deal with this if you didn’t have to?

9.  Exactly how to configure complex software like MySQL for my particular server instances.  Most of the Clouds have libraries of machine instances where somebody else (hopefully even the vendor who made the software) has set it all up, blessed it, snapshotted the image, and made it available.  Mount that image on an EC2 virtual server and away you go with something you know works.  Even if you are not on Amazon and don’t have Amazon Machine Instances like that, other clouds have these options too.  3Tera, for example, builds software for Cloud Owners and has what they call their Enterprise App Store.  These are pre-configured and ready-to-run instances. 

10.  Worry your engineers are spending valuable time worrying about infrastructure and worse physically visiting that infrastructure instead of doing something that gives your company a distinct competitive advantage.  Why build a datacenter if everyone else has one?  Let them make that investment while you invest elsewhere.  Werner Vogels gives a great example that is appropriate since the Indy 500 just ran Sunday.   Their site has a unique problem.  It requires a huge amount of resources to deliver a rich user experience:  multiple video streams including views from the cockpits of drivers’ cars with audio feeds and telemetry.  The challenge, as Vogel puts it, was that it isn’t used very frequently:

This is a high load application but it only runs three times a year. They found that they had to move a lot of engineers into data centers to keep their servers up. When they moved to cloud infrastructure they made 75% cost savings, the majority of which was on the people side; now they can manage everything from their armchair at home.

So there you have it.  10 things you don’t have to deal with if your data center is in the Cloud.  These are 10 things based on the pseudo-random collection of blog posts in my Google Reader RSS feeds.  There are many more out there, and I’m not even going to claim these are the 10 most important things.

Don’t you need fewer things to worry about so you can focus on what actually makes the difference?

Posted in amazon, cloud, data center | 18 Comments »

eBay Dying Because It’s No Longer Fun? Hogwash!

Posted by Bob Warfield on May 23, 2009

So I’m reading this Techcrunch guest post by Keith Rabois on eBay.  He apparently was at the Social Graph Symposium and was asked (by Dave McClure?) what the Social Graph could do to revitalize eBay.  His response was, “nothing.”  He thinks the Social Graph is what killed eBay, because people were largely coming to eBay because it was once.  Once the Social Graph provided other sources of online fun, eBay was toast.  In his words:

Over the years, it has lost online ground and eyeballs to pure entertainment destinations such as YouTube and social networking sites like MySpace and Facebook.

As someone who spent a lot of time with eBay, its buyers, and its sellers as part of founding a startup with a service called PriceRadar, I can tell you this is pure hogwash.  Rabois doesn’t give a shred of conclusive evidence in his post either for why this idea that eBay died over lack of fun has any legs at all.  He even points out that an internal eBay campaign aimed at restoring the fun called “windorphins” failed.  Why did it all fail?  Again, in Rabois’s words:

Chad Hurley and Steve Chen of YouTube fame, Peter Thiel (Facebook), Jeremy Stoppelman (Yelp), Max Levchin (Slide), David Sacks (Geni and Yammer), Reid Hoffman (LinkedIn, board member of Zynga) and others, myself included, were all too alienated by eBay’s bureaucratic and political MBA culture. So we decided to create our own fun elsewhere instead.

Oh come on.  LinkedIn is fun?  PayPal was fun?  Yammer is fun?  Really?  No.  They’re useful services that are differentiated.  eBay is too, but it was much more so back in the day than it is today.

So what really happened at eBay?  It’s pretty simple, really.  eBay benefited for many years from being a low friction way to list all kinds of things for sales on the web.  Amazon didn’t sell anything but books.  There was no Craigslist.  And creating a storefront of any kind was incredibly painful before the LAMP stack and Open Source software had come along not to mention PayPal for credit card processing.  The reality is that an eBay auction was the hardest possible way to buy anything.  Having to deal with an auction and to win that auction to get you merchandise was a lot of pain and trouble to go through.  At PriceRadar we heard eBay buyers ruefully shaking their heads that only eBay would call something “winning” whose definition was that you had agreed to pay more money for something than anyone else was willing to. 

The natural reason to use eBay today is because you like the auction format.  That is the only differentiated feature of the service.  All of the “Buy it Now” listings have to compete with Amazon, Craigslist, and a web that has a lot more merchants with real storefronts.  In other words, they are not a destination reason to go to eBay.  Who prefers the auction format?  Well there is no question there are a large number of people who do.  Auctions are perenially popular, in fact.  But not for everyone.  Some buyers think auctions mean bargains.  Many sellers think auctions mean elevated sales prices.  My startup, PriceRadar, was in the business of using some potent data mining algorithms to deciper the truth of what things were selling for on eBay.  To make the long story short, it was possible to list many items (certainly not all, perhaps not even the majority, but close to 50%) and sell them for more on eBay than they could sell for at retail.  We sold our service to companies like Sharper Image to help them do just that.

How could such a thing work?  Why would people pay more?  As I used to say back in my PriceRadar days, I think there is a gene that sits right next to the compulsive gambling gene (why play a game when the odds are rigged in the house’s favor?) for those who prefer buying from auctions.

The thing is, there are not enough people who prefer to buy at auction.  As I say, it is the hardest possible way to buy.  So for a time, eBay benefited because even those who wouldn’t normally buy at auction were going there to buy things that were otherwise hard to find on the Internet.  This is exactly how eBay got started.  Pez dispensers and other offbeat items were certainly hard to get any other way.  Particular comic book issues and items associated with exotic hobbies.  Industrial surplus items.  Fashion collectibles like Louis Vuitton.  Used items, for when you wanted something but were unwilling to pay retail.  All of that stuff and more was on eBay, and it was only on eBay. 

And then the world started changing.  Used items were readily available on Craigslist.  Especially for people afraid of being ripped off by unscrupulous eBay sellers, Craigslist put you in contact with people nearby who had what you wanted.  You could go look at it before buying.  And you didn’t have to go through one of those blasted auctions.  The WSJ says use of online classifieds has doubled to 49% of Internet users from 22%, and that 9% of all Internet users visit these sites daily.  That 49% is the same number Rabois quotes for eBay’s reach Back in the Day.  These people did leave eBay because it wasn’t fun, but not because eBay made it less fun.  They left because they were never power auction participants anyway.  Auctions are the hardest possible way to buy things.  These people left because they just wanted classifieds, and they killed not just eBay, but newspapers too.

Amazon now accounts for 1/3 of all US e-commerce transactions according to RBC analyst Stephen Ju.  That’s truly a staggering number.  It represents the great sucking sound made by people who used to have to go to eBay to buy a lot of new items moving over to Amazon.  Amazon makes it trivial to create a storefront, just as easy as eBay.  They deliver tons of visitors to their search.  If you have a product that people want to buy, they’ll make sure your customers find you if you joing their ecosystem.  Back in the day, eBay was the only game going for this. 

At PriceRadar, we interviewed all kinds of sellers in this category.  Yes, there were the people that ran around garage sales, estate sales, and flea markets buying merchandise to resell on eBay.  But there are not enough goods, and buyers of those goods, to make for a very large eBay if that’s all there is.  People selling new merchandise are very much the majority.  We talked to no end of people who got started with mall stores and other bricks and mortar store fronts, and then found their margins were better if they sold out of their houses via eBay.  They liked their hours better too–work was at their pace, not their store front’s business hours.  But why would you sell your new merchandise only on eBay when it is so easy to list on Amazon too?  And having done so, it then becomes a battle over who has a search engine better suited to the task.  This has always been an Achilles Heel for eBay.  Their search is terrible even today.  Back in the day, you got different results if you search for “binocular” versus “binoculars.”  Merchandising of the kind that Amazon understands so well (people who bought X, also bought Y, so they make sure X buyers see that Y is available too). 

But it isn’t just Amazon.  PayPal is darned near as big as eBay’s selling business.  That tells you there are a lot of PayPal transactions that have nothing to do with eBay.  People are doing e-commerce in all sorts of places.  It’s dead easy to create a web site, and PayPal makes it dead easy to process credit cards there too.  That took away one more advantage for eBay being the easiest place to create a storefront.

Then there was the unsavory aspect of eBay.  A lot of people were defrauded.  I lost $1000 myself on the purchase of a welder.  For years eBay completely favored sellers, even sellers ripping off buyers, because only the sellers were paying eBay fees.  I went through their whole dispute process on the welder, they adjudicated in my favor, but I never saw a dime and the seller was allowed to continue to sell on eBay.  When I brought that to their attention, they ignored me.   This went on a lot, and is something I never have seen happen with Amazon.  With Craigslist, you go see the merchandise because it is local, so it doesn’t happen there either.

So eBay didn’t die because it wasn’t fun, at least not in the sense that Rabois intends.  People didn’t go there for entertainment, except for the dyed-in-the-wool-yes-I-have-the-compulsive-auction-gene players.  They went there to buy.  And there simply got to be better places to buy.  Places that were focused around the kind of non-auction buying most people prefer.  Places that had better merchandising and other amenities.  Places that had just as much or more traffic than the old eBay did.

Forget competition from Facebook or YouTube for fun.  Think about it like a buyer.  eBay stopped being unique and started being one of the harder places to buy from instead of the only game in town.

Unfortunately, I have a hard time seeing how the Social Graph will fix that, so Rabois and I agree on that much.  It may already be too late for eBay to get ahead.  Back in the day we tried to sell eBay PriceRadar as a better search engine that would give them the kind of merchandising capabilities that Amazon had.  They were completely uninterested.  Hard to invest in the future when the franchise you’re sitting on is growing by leaps and bounds without any effort at all.

Posted in business, strategy | 2 Comments »

Why Do SaaS Companies Lose Money Hand Over Fist?

Posted by Bob Warfield on May 19, 2009

This discussion comes up time and time again in the eternal SaaS vs On-Premises debate.  The SaaS guys (yup, that’s me) wax eloquently about all the advantages of SaaS only to have the On-Prem guys shoot us down by proclaiming SaaS companies aren’t real businesses because they can’t make a profit.  The thing is, it just ain’t so.

The latest bout of this I had was amongst my Enterprise Irregulars blogging group, and comes in the aftermath of Sapphire (SAP’s User Conference), which always brings out a lot of discussions like this.  Our discussion got started through Michael Krigsman’s excellent post on SAP’s continued commitment to their SaaS product, Business by Design.  As Michael points out:

The economic differences between delivering software via SaaS and on-premise methods are substantial, with profound implications for how software companies optimize internal operations.

While the group generally agreed that the product had made a lot of progress from the user experience side, it is still extremely hampered from the standpoint of dealing with these economic differences.  In fact, despite having been introduced years ago in February 2006, and despite SAP setting a target goal of 100,000 customers by 2010, the product is nowhere in sight on reaching such goals. 

The continued commitment Michael refers to is a commitment to overcome these problems.  Yet the amount of time that has passed and we still find ourselves at a point where SAP’s CFO has to personally approve any sales of BBD because they lose money on every sale, leads me to believe the challenges must be huge relative to the reality.  In fact I suggested that nothing less than huge architectural issues could delay them so long.  Issues of the kind that often require a complete rewrite of a system to overcome.  I wrote a long time ago that this problem was SAP tacitly quantifying the advantage of SaaS for customers in my post, “SAP Admits that SaaS is Cheaper for You Too.”

It may also be that they aren’t trying hard enough.  Perhaps there are forces inside SAP, as Dennis Howlett hints, that are not enamored of BBD.  As Vinnie Merchandani points out, SAP does not see the SaaS market as very important—perhaps 5%.  Inevitably, all this angst triggered the On-Prem crowd to come forward and argue that it’s a lot of nonsense to pillory SAP for a lack of profitability with BBD when the SaaS companies themselves do no better.

Having looked at the numbers many times, I decided to take a tour once again through these numbers, this time with a comparison versus SAP.  Do SaaS companies really spend money hand over fist to accomplish little?  Are On-prem companies, of which SAP has to be one of the gold standards, run tremendously more efficiently?  To find out, I selected two SaaS companies, SuccessFactors (because it was brought up in the discussion as a well run SaaS company that had a hard time making a buck) and Salesforce.com (because how can you have the discussion without looking over Salesforce?).  We’ll compare the numbers from these companies against SAP.

Given the radically different scales of these organizations, I favor comparing percentages over actual dollars.  How many dollars of Sales and Marketing expense are required for each organization to make a dollar of revenue?  How many dollars of R&D to do the same?  And so on.

Here is what I found, using the most recently reported financial periods:

Sales and Marketing

Let’s start here, because this is really the crux of the argument.  It’s where SaaS companies spend the Lion’s share of their budgets, and where On-prem seemingly doesn’t spend much at all.  Here’s what the numbers look like:

-  SuccessFactors spends a ripping 56 cents for each dollar of revenue they bring in.  Analysts expect about 85% growth in exchange.

-  Salesforce is spending almost as much:  54 cents to bring in a dollar for which the analysts expect 44% growth.

-  SAP has a much more frugal 29 cents per dollar brought in, but the analysts only expect them to grow 17.5% next year.

As a function of pure cost, SFDC and SFSF spend 2x what SAP does for an incremental dollar of revenue, which on the face of it looks highly inefficient.  But, before we write the SaaS guys off, note that by spending so much, they manage to deliver 2.5X to nearly 5X the growth of SAP.  Which one is more efficient?  Not hard to make an argument for the SaaS guys when you look at S&M dollars as payment for growth. 

  1. Either company would be extremely profitable if they wanted to slow down spending, but they’re investing in growth.

SuccessFactors covered this issue in great detail for investors on their IPO road show.  They demonstrated how profitable they could be any time they wanted (you can throttle Sales and Marketing pretty fast) and argued convincingly that they should be allowed to grow.

General and Administrative

This is a category everyone loves to hate.  It’s overhead that delivers no value.  Surely the SaaS companies must be wasting a lot of money here?  Large organizations benefit from economies of scale on G&A, don’t they?

-  SFSF spends 21 cents on this for every $1 of revenue.

-  CRM spends 16 cents for every $1.

-  SAP spends 17 cents.

 

I could almost expect that economies of scale ought to lower G&A over time and that this is SFSF’s problem versus CRM.  However, that wouldn’t explain why SAP doesn’t get a further reduction in G&A.  These SaaS companies seem reasonably efficient with G&A.

Research and Development

-  SFSF spends 16%

-  CRM spends just 10%

-  SAP spends 21%

Lots of R&D going on in Germany, I would say!  CRM seems to me is starving the innovation side worse than these other 2 as well, which is kind of interesting.  At some point, Salesforce ought to invest more in developing new products.  I will speculate they have the throttle hard over investing in Sales and Marketing, and that long term, they may wish they’d spent more on products.  In any event, we have heard from many sources it is cheaper to develop SaaS software (no need for multiple platforms, no need to support patching for customers who won’t upgrade, etc.) and these figures clearly bear that out.

Cost of Revenue

This is one of my favorites.  Keeping the cost to deliver the service low is essential for SaaS companies.  The fact SAP says they lose money on every sale of BBD is a direct reflection on this number.  SaaS companies use a variety of technologies like multi-tenancy to keep costs lower, and it seems likely SAP has missed these tricks.  We can’t get the numbers for BBD, but we can compare SAP’s cost to deliver software (largely cost to deliver maintenance, which is Tech Support) to the costs of a SaaS company:

 - SFSF spends 24% to deliver their service.

-  CRM spends just 13%

-  SAP spends 22%

It’s fascinating that SAP spends more than Salesforce spends to run the product and deliver support just to deliver Tech Support.  We can also see that SuccessFactors has a ways to go improving their operational efficiencies.  They spend nearly twice what Salesforce spends, which puts them at a disadvantage.

Conclusion

It seems pretty clear these SaaS companies could be just as profitable as SAP if they were prepared to dial back significantly on their growth.  SaaS companies spend money hand over fist because they’re engaged in a land grab.  The big players like SAP are extremely slow getting to SaaS for various reasons.  As long as these companies can grow like this, they should keep investing heavily in it.  The likelihood an on-prem vendor will dig these customers back out again seems very low.  Customers being taken this way are probably lost for good to the SAP’s of the world.

Posted in saas | 34 Comments »

Search Isn’t Broken

Posted by Bob Warfield on May 18, 2009

Henry Blodget has another Techmeme-noted article about Wolfram Alpha wherein he says WA isn’t a Google-killer because search isn’t broken:

Another next-generation search engine launches.  It looks more differentiated than the much-ado-about-nothing known as Cuil, but that’s not saying much.

Our prediction: Wolfram Alpha (terrible name) will see a nice spike in traffic for a few days, then it will disappear unnoticed along with all the other “next-generation” search engines.

Why?

Because search isn’t broken.  It can be improved, yes, and companies like Wolfram Alpha will show Google how to improve it.  But no search engine we’ve seen, including this one, comes close to making the quantum leap in performance required to get real volumes of Internet users to switch.

Others says WA isn’t Google and shouldn’t be compared to Google, but this misses the important point Blodget is making, so we should all stop right here, quit worrying about WA versus Google, and take a deeper look at Blodget’s key proposition, that search isn’t “broken.”

We can put it into more classical business strategy and product marketing lines by restating his proposition more along the lines that there isn’t enough pain associated with Google that any of the alternatives can save to be worth switching.

True or false in your experience?  I think I’m with Henry on this one.  By and large, Google works pretty darned well.  Do I wish it worked better?  Yes, but it would have to work a lot better, and with all due respect, I think it’ll take some real hard core AI before that happens.

We’ve been nattering around this problem for ages, but let’s face it.  No matter how much semantic slight of hand we throw at the problem, computers don’t understand human languages.  They guess with some statistical precision at what we might want.   Wolfram Alpha does this, Google does this, and so does every other engine out there. 

It’s a messy problem to extract interesting signals from the noise.   Google’s essential breakthrough was Page Rank, which was a very clever take on Mark Twain’s approach of getting someone else to paint the fence.  It was a breakaway heuristic, because it was so broadly applicable.  It’s also very vulnerable.  Google is involved in a continuous arms race to stop the SEO’s from totally gaming the value of the algorithm away.

We could use some more breakaway heuristics while we wait for the Singularity (I’m not holding my breath!) to deliver true AI.

Meanwhile, I read Don Dodge’s post about Microsoft Live Search.  Don says Live Search will surprise you in a good way, so you should try it out.  He writes about how he searched for a local restaurant and was surprised at how easy it was to get great directions.   I typed “Gayle’s bakery Santa Cruz” into Google and proceeded to get directions, a link to Gayle’s site, and reviews just like Don got from Live Search.

Don, it’s like Henry was saying:  search isn’t broke, and even if it is, LiveSearch doesn’t fix what’s broken.

Posted in saas | 1 Comment »

Provocation is Pragmatic, Personal, or Prescient

Posted by Bob Warfield on May 15, 2009

Provocation is an important marketing tool, some would say the only important marketing tool needed to generate buzz and awareness.  Provocation makes your story interesting, which means others will tell it for you.  Provocation is a measure of the leverage of the message.

What is provocation?  It is Marc Benioff proclaiming the End of Software for Pragmatic reasons related to ROI and cost savings.   It is Apple making fun of the PC or Larry Ellison attacking his competitors, which is very Personal.  It was Netscape proclaiming the operating system was irrelevant because of a Prescient Vision where the Browser was all you needed and the status quo was obsolete.  There is considerable overlap in all of these.  Apple certainly views itself as Presciently Visionary and has earned the right.  Benioff gets very Personal about the On-Premises vendors.  And Larry Ellison has built an extremely Pragmatic acquisition strategy.

Most companies and executives are afraid to be Provocative.  We are trained not to offend Customers, and Provocation is designed to Offend at some level or another.   Focus on getting a stream of prospects who are really fired up alongside a stream that disagree with you so much that they will spell your name correctly when they say so to the world.  Avoid a dribble of lukewarm respondents who are not offended but who have to be evangelized into action after they show up to the party. 

Provoked buyers are self starters.  Moderately interested buyers require too much prodding.  Always seek violent agreement and disagreement over indifference and inattention.

Be very deliberate in your choice of who to agree with, who to disagree with, and why in the following 5 ways:

1.  Agree with those standing next to you, in the place where the puck is coming in terms of market direction.  If you choose well, your provocation is enduring and you need not ever change it.  If the puck moves away, your message will become irrelevant and lose its power.

2.  Disagree with those standing where the puck has been and is rapidly moving away from.  Disagreeing with conventional wisdom is time honored.  People love hearing that the conventional wisdom which has been so hard to live with is actually completely wrong, so you don’t have to put up with it any longer.

3.  Agree as much as possible with those who have a strong say in whether to buy your product.  Be prepared to disagree with some of them if necessary.   Benioff’s “No Software” was brilliant.  It focused the disagreement around IT at the same time it empowered the Business to decide without IT.  Powerful Business Jiu Jitsu indeed!

4.  Agree or disagree about something that matters a lot to your market.

5.  Choose a topic that does not immediately close the sale.  This is the narrative hook that gets them to listen to the sales pitch.  It isn’t the pitch itself.  Anything too close to the pitch will be discarded as spam.  This is a subtle point, but if you analyze successfully provocative messages you’ll see that it is true.  Creating buzz and nurturing leads require different messaging.

Go forth and provoke!

Posted in Marketing, strategy | 2 Comments »

Why Do So Many Big Companies Suck At Innovation?

Posted by Bob Warfield on May 15, 2009

Larry Dignan writes about big companies spending too much on R&D.  What he really means is they’re spending too much on the “R” (Research) in R&D and not getting anything for it.  Larry’s article is largely focused on Microsoft, which has supposedly spent $36B on pure research over the last 5 years.  What have they gotten for it?  The ill-fated Microsoft “Bob” user interface is all I can remember.

But we shouldn’t just pick on Microsoft.  History is littered with big companies investing in fundamental research and then being unable to cash in on the results.  Xerox had PARC.  IBM invented a plethora of things that mostly others made the money on (Relational databases, RISC cpu’s, the floppy disc, the hard disc, and on and on).  There are many others.  I remember being offered  jobs out of Computer Science grad schools with IBM’s Thomas J. Watson Research Center and AT&T’s Bell Labs.  The Bell Labs offer was particularly interesting.  It included a high salary for an engineer and the promise that I would have a lab budget so that I could buy a VAX computer (or the equivalent in cash) and do anything I wanted with it.  Is it any wonder that while Bell Labs produced a lot of interesting stuff very little of it was of commercial value to AT&T?

What then is the problem?

Some companies get into a mode of collecting IQ points.  They think if they can hire all the smart people, they will have a monopoly on innovation, and therefore they will prosper.  You see all the trappings of this at Microsoft or Google in terms of how they go about hiring.  It is focused on programming or thinly veiled IQ tests (why are manhole covers round?).  I’ve interviewed with Microsoft on three separate occassions, and it was very entertaining to watch the dance that took place.  Every person I talked to (and there were at least 5 for each interview) found an excuse to deliver the same short message at some point in the interview:

-  Microsoft is filled with extremely smart people–much smarter people than the interviewer.

-  Bill Gates is the smartest person at Microsoft (and by implication, probably in the world).

Such an emphasis on smart.  But not so much emphasis on Joel Spolsky’s wonderful “Smart but gets things done.” 

Google seems very similar.  My company, Helpstream, is situated in the midst of Google, right next door to Mozilla.  It’s like being in the middle of a college campus.  Bright nerdly kids everywhere so self-absorbed in their thoughts they regularly step off the curb risking life and limb.  Drive very carefully if you’re in the Google Zone!  They have the IQ tests to join, the focus on good schools.  They even have the moral equivalent of AT&T’s “free VAX for every researcher” in the form of the famous 20% time.  Yet with so many projects running around, so much 20% time, so many IQ points gathered together, there often seems to be little innovation.  They are smart, but other than the core business, do they get things done?

In the end, I don’t believe too much in Big Corporate Research.  Microsoft’s $36B and boatload of PhD’s have not produced a Google-killing search algorithm.  Not even close, and you have to guess they wanted to.  It is beneficial to the Human Race to discover new things, but it is not a viable source of commercial innovation that drives shareholder value.   Knowing new pure research is not the same as having a hot product.  Even having a lot of patents, which is how IBM keeps score is not the same, although sometimes it is a little closer.  There is a unique combination of knowing what the customer’s problem or need is, building an insanely great product, and knowing how to package up a message that has legs that have little to do with what goes on in these Egghead Incubators or in University Graduate Schools either, for that matter.  The chip companies like Intel seem to do relatively better in this regard, but I suspect it is because they’re able to focus their pure research in ways that directly lead to smaller faster chip features, and because what may be their bread and butter will often sound like pure research to the rest of us!

What then, should big companies do about innovation?

Whenever you lack a systematic process or algorithm to produce a result, you are searching through some problem space.  Call it a needle in a haystack, but you are searching a very ill-defined problem space.  The best possible algorithm to do that has been present in nature since the beginning of time.  Call it Darwinian Search or a Genetic Algorithm.  You need to take your dollars and invest them according to return.  Return is simply a measure of fitness as in “survival of the fittest.”  In nature fitness is measured at all times and at every point.  Mutations are extremely short lived.  They don’t get to go on and on “in case they might turn out to be valuable” or because their creator is particularly charismatic and smart.  Life is nasty, short, and brutish with Genetic Algorithms.

There is a model for this already.  It’s called investing in startups and venture capital.  It insists on results pretty short term.  It casts the net wide by not investing too much early on.   It doubles down bets that are working and cuts off bets that are not.  $36 billion would have bought Microsoft a lot of investments.   When you consider their money invested alongside others, it goes even further.  If you don’t want to invest in startups, or can’t figure out how to make it work profitably, invest in pre-IPO acquisitions.

Many companies have done this extremely successfully on the product side.  Cisco is my favorite in the Tech World.  There are people who’ve been acquired multiple times by Cisco.  They build an innovation, prove it out in the market, get acquired, and then use the resources of Cisco to figure out what to do next so they can be acquired again.  Clearly Cisco has an enlightened view of how to use an ecosystem to facilitate innovation and a culture that doesn’t just milk the life out of it after acquisition–products are kept vibrant and growing.  Cisco is not an end of life acquisition model like some others.  My old company Borland can trace the roots of every successful product it had to some acquisition or another.  Philippe Kahn had a great way to embody “Smart but gets things done”.  He very much viewed acquisitions of small companies as building the brain trust, but rather than evaluating their raw talent, he evaluated the market’s reception of their product.  Wonderful concept.  It’s how I came to be at Borland myself.  The pharmaceutical world has long worked this way as well.

The right answer in business is so often to create a process that can effectively manage a decentralized and empowering paradigm.  Don’t confuse this with anarchy or writing blank checks to people to work on whatever they want.  Innovation needs a clear cut strategy and business process just like every other important business problem.

Related Articles

Great minds thinking alike.  Bruce Cleveland at Interwest published this the day after my post:  Spin Ins–A Strategic Opportunity for Venture Capital and Large Software Companies

Posted in strategy | 2 Comments »

The One Thing That Annoys Customers More Than Anything Else Happened to Louis Gray with Adobe

Posted by Bob Warfield on May 14, 2009

I read with wry amusement Louis Gray’s two blog posts about his dealings with Adobe.  Seems he had a terrible time getting them to fulfill his order.  In my experience, nothing is worse than having the money, being ready to spend it, but finding the merchant unwilling or unable to take your money and give you product.  I feel for ya, Louis!

In this case, Louis ordered via the Internet and directly from Adobe a downloadable version of the Creative Suite for over $1000.  You’d think ordering this way would be the fastest possible way to get product, no? 

No.

They put a hold on his order and 2 unhelpful customer service calls later he was still held up.  The finger pointing started up with Adobe firmly holding to the story that it was the credit card and the credit card company saying they’d already cleared the transaction.

It’s pretty darned silly in this day and age for these shenanigans to be going on.  The worst part of it was that it left Louis stuck.  If it had been me, I would’ve known I could stop by Fry’s on my way to work and pick up the software, but I’d have thought it more convenient just to download it right away.  Winding up with the worst of both worlds (download didn’t work, and now I have an theoretically closed purchase so I can’t just go buy it either) would’ve sent me straight to the moon.

Shame on you Adobe for this foolishness!

Posted in saas | 2 Comments »

In Search of Enterprise DNA for Social Software

Posted by Bob Warfield on May 13, 2009

Some Enterprise Irregular bloggers recently raised some interesting questions about CubeTree, a new Social Software startup for the Enterprise.  In general, they were reacting to a video of SAP talking about the product that they regarded as a bit too enthusiastic (some called it creepy in that cultish sort of way).  They went on to argue that the video didn’t answer a lot of important questions one would have about any startup, but that are particularly important for Enterprise startups.  Rather than pick exclusively on CubeTree, there was concern about whether any Social Enterprise startup could make it in the wake of these challenges:
-  How are they differentiated?  CubeTree is fast following something, but what?  Is it enough just to bring together more Social features that others have already implemented in various point solutions?  Only if we’re early in the hype cycle.
 
-  How do they get enough credibility so big companies will buy them?  CubeTree have started well by getting adoption at a Lighthouse account like SAP.  But will the video play well?  Will they get other Lighthouses?  Is it a one off based on some personal relationship?
 
-  How do they protect themselves against competition?  The IP question.  Note that there are two strong protections available to startups:  IP is the obvious one, but the right partnership strategy can also be very effective.  Hence my company’s partnerships with Salesforce and Oracle.
 
-  Is their timing right?  Too soon and the big guys have to do it before the startup has any critical mass.  Too early and nobody has a clue what they’re on about.
 
Startups all grapple with these to a greater or lesser degree.  I’m on my fifth startup with Helpstream, and I can tell you they are absolutely critical questions to answer.  But there are other questions specific to the Social Enterprise space that I think are more interesting.  What I see as a bigger problem when selling to the Enterprise among these Social startups is a lack of Enterprise DNA, and equally, a lack of savvy about platforms versus applications. 
To an extent the Enterprise DNA problem for Web 2.0 companies may be a result of youth.  How much can you know about Enterprise software if you’ve never built any and never worked for an Enterprise?  In the case of CubeTree, they actually do have some good Enterprise experience on board, which is rare for this sort of company.
 
If you look at Enterprise software, there is a certain critical mass of features needed to get through the IT gatekeepers (if you view it cynically, or simply features needed to be effective in the Enterprise).  They’re obvious things that people working in the Enterprise world know about almost instinctively.  Things like how the security and permissions features have to work, for example.  A lot of Social software has extremely vestigal permissioning that most Enterprises will find unacceptible.  How many, as they review a promising new piece of Social software spend time to really understand permissions as opposed to the streaming or microblogging features?  Another big issue discussed among the Irregulars was data import and export.  The export, in particular, is a matter of particular concern regarding SaaS and Cloud applications. 
There is a lot else and most of these folks have never had an IT department conduct due diligence on their products.  They’re suprised to learn that consumer-grade LAMP stack software doesn’t impress IT. 
 
The application vs platform issue is another one.  For a long time I’ve made it a practice to always build a platform and not just an application.  Do this not because you want to go sell the platform, the market will decide whether you ever get the opportunity.  Rather, do it because it makes evolving the product dramatically faster and easier.  Plus, it is more likely to lead to real IP and the kinds of capabilities IT and the big accounts will insist on.
 
It is very hard to build platforms using LAMP as well.  LAMP is your platform.  The good news is your productivity is boosted through the simplicity of LAMP and the ready availability of lots of off-the-shelf components you can plug in.  But the bad news is you’re essentially trying to build something industrial grade with scripting software.  So we have PHP and PERL based Social software.  Java would have been preferred, with Ruby on Rails as a nice alternate.
This DNA goes well beyond just how the application is built, and into how it is sold and what it does.  The CubeTree video was way over the top and gushingly frothy.  But that’s been the rule for Enterprise 2.0.  The trouble is, except for those individuals in large corporations interested in self-promotion (and there are more than a few of those around), Enterprise is not gushingly frothy.  It speaks in sober terms of Business Process and Return on Investment.  It asks, in short, for you to demonstrate real value and not just enthusiasm. 
 
The ability to deliver that real value in the cold light that separates the hype from the reality is what the Enterprise craves for full adoption.  Anything else is just good fun and fashion.  The blogosphere is beginning to conclude it’s about time to separate ourselves from the seamier hype-laden side of the business.  I completely agree with that sentiment.  Various vendors are dealing with it in ways that range from getting less and less ink, to being in outright denial and attacking the Enterprise and established institutions like Business Process
 
At Helpstream, we’ve addressed both the issues of permissions and import/export with Enterprise-grade solutions (we have a lot of Enterprise DNA!) as well as a whole lot more.  We have a platform approach to architecture that has greatly assisted our ability to rapidly evolve the product over time.  We’re seeing firsthand the benefits of Enterprise thinking for the Cloud, SaaS, and Social Software.  But most importantly, we have a singular focus on creating a powerful alloy of tried and true Business Process with the new technology of Social Software to produce a combination that is more powerful than the sum of its parts.  We measure that power not with enthusiasm, but with ROI.  In fact our customers demand it.  Helpstream sells to Customer Service organizations.  If you’ve ever dealt with one you’ll know that Service professionals of all kinds (including Professional Services) are some of the most hardened skeptics out there.  They have heard it all.  They are extremely process and metrics focused, because that’s how you run a Call Center.  They’re unwilling to trust their business to enthusiasm for the most part.  Their thinking is along the lines of Robert Heinlein’s quote, “If it can’t be expressed in figures, it is not science; it is opinion.” 
Towards that end, analytics is the constant companion to Business Process, and another one of those things Enterprise DNA will insist you must have out of the box.  To satisfy our customer’s needs for metrics, we’ve built comprehensive analytics into the product, and we’ve thought hard about how to set up the analytics so any customer can see a real time view of their ROI.  This is more than just a sales gimmick.  Customers and Helpstream use these reports to tune up the performance of their Customer Service communities.  In fact we’ve been able to develop several innovations and measure their real impact since introducing the reports, and there are more on roadmap to come.
Depending on where the market really is on Geoffrey Moore’s Chasm-crossing Rubicon, CubeTree and it’s video may just be the Swan Song for how this software has been sold to date.  They’re totally horizontal, not focused on any particular business problem or business process, and they have plenty of gushing hype.  Nice product, but their tactics seem timed poorly versus where this world is relative to the Chasm. 
More Enterprise DNA, less hype needed.

Posted in strategy, venture, Web 2.0 | 3 Comments »

The Tactics of Twitter for Marketing and Competition

Posted by Bob Warfield on May 12, 2009

Everyone wants to be seen and heard on Twitter and to have a lot of followers. From NASA, to 10 great brands that some say are creating a worse impression of their brand because of the way they are using Twitter, there are few who aren’t yet signed up. Google stands off to the side, trying to remind everyone that they could build Twitter too if they really wanted to. When Twitter goes down, there is absolute panic among the ranks of the Digerati who can’t figure out what else to do with their time. Heaven forbid FriendFeed going down at exactly the same time!

Forrester’s George Colony warns CEOs that Twitter and other Social Media are just like sex: It’s fun to talk about them, but you’ll never understand until you dive in and use them yourself (hat tip to Sarah Perez for putting me on to that post!). But use Twitter for what? What value can business really get out of Twitter other than buzz?

First thing is first — Colony is right. To understand completely, you have to Tweet. But here is another equally important point: There are two Webs out there. There is the conventional Web 1.0, and there is the Social Web. Companies that think putting up a corporate Web site and dealing with email is all that’s needed are assuming the conventional Web 1.0 experience will carry them. Guess what? Web 1.0 has likely peaked and is now over.

Take a look at the stats for creation of new Web sites and you’ll clearly see that peak. Some say that means the growth of the Web is slowing down, but I look at it differently. It means that pretty much everyone is across the chasm with respect to whether they need a Web presence. The last few late to the party got it done in a big gushing burst even though the economy was terrible (we went up this time on creation instead of down as happened right after the Dot Com bust).

That game is done. Having a corporate Web site is just table stakes and earns you no advantage whatsoever. Now the question changes from whether to be on the Web to, “How do we gain the most advantage from the web?” To maximize that advantage, your organization will have to kick up your Web presence a notch or two by embracing Social Media. You have to deal with what Steve Rubel calls the end of the Destination Web Era.

One problem with this is that a lot of Social Media has been way oversold on the hype value. “Just try it, you’ll be amazed at how well it works, you’ll see!” We’re rapidly getting to the end of that phase too. Twitter is particularly problematic. It has so much hype, so many people are trying it, but most apparently don’t find it compelling on first glance. A whopping 60% of new Twitter users don’t return againafter trying it for one month, or as the WSJ cleverly quips, “Most Twitterers are Quitters.” Obviously, it is important to go into Twitter with a game plan for how you’re going to get value from it.

 At my day job, running the products group for Helpstream, we take cutting edge Community technology and combine it with Business Process to solve known Business Problems and return a real ROI. We do that pretty well there. In fact, it is our distinctive market competency. Rather than just claiming that Community is a Silver Bullet that solves every problem and replaces every process, we try to plug it in harmoniously where it can deliver the most good. Helpstream wisely limits itself to a Customer Service focus where we can really excel, although there is a lot of value to be had for the various other business functions.

 Along the same lines of trying to use social media harmoniously with existing business processes, I thought I’d write a few notes about some ideas and practices I’ve seen involving Twitter in the areas of Marketing Lead Generation and Competitive Analysis. Twitter turns out to be an excellent vehicle for this sort of thing. Where else can you actively engage in so many interesting conversations with so little effort? Where else can you find those most willing to talk and participate in experiments as early adopters?

 Let’s start off with the competitive angle. Twitter is a wonderful information-gathering device. Set up a Twitter searchto track each of your competitors by name. You’ll notice you can get an RSS feed for the search. Plug that feed into your RSS reader, and then read what it has to say about each of your competitor’s every day. Some of it will be good, some of it will be bad, all of it will be useful. Some of it is the competitor talking about itself, but a lot of it is the competitor’s customers talking about their experience with the product. The latter is solid gold. Every now and again, you’ll also come across the odd note where some other market player is trying to interact with the conversation around your competitor. Take careful notes:

 - What are they trying to accomplish with that Tweet?

- Are they doing something you’d like to do?

- Is it working?

 In one fell swoop, you have gained access to:

 - Knowledge from customers about the customer experience associated with a competitive product, both good and bad.

- Knowledge of who the active Twitterers are in that customer base.

- Knowledge of how others are trying to join and leverage the conversation.

- Knowledge of how the competitor is promoting itself to that audience.

 Cool beans!

 Now, let’s take the next step. Besides understanding competitors and winning against them, marketing has a couple of key issues it has to solve. First, it needs an effective message to deliver. Second, it needs a list of people to deliver the message to and a means by which to get it there. Marketers try to build up their house list, typically using marketing automation software from companies like Eloqua, Marketo, or Infusionsoft (some of whom are Helpstream’s customers, BTW). How can we leverage Twitter for these goals?

 First, I hope you have a corporate Twitter account like Helpstream. Now, while you’re reading those RSS feeds associated with your competition, go follow every single person who Tweets about them. If you’re picky about not having the competitor follow you, that’s fine, don’t follow them, but trust me, they’re gonna catch on so it is a wasted effort. Information on the Web is frictionless. A good tool to help with all this following is Twittermass. Twittermass lets you set up Twitter searches, and automatically follow anyone whose Tweets are picked up by your searches. Even better, it has an option to stop following anyone who doesn’t follow you back after a few days.

 Now you are following a lot of the competitor’s customers. Plus, you’re Tweeting about your own products, and folks following you are hearing your messages now too. Pretty cool. But that’s just the competition, and they may not be the most important thing to worry about. Perhaps it’s more about the market or type of product. Whatever the issues are, make up a list of appropriate Twitter searches and follow the same strategies. You’re trying to build a network of influencers, evaluators, and potential customers.  This is a new source of leads for your house mailing list. Be sure to Tweet any webinars, white papers, blog posts, or other messaging.

Remember one absolutely critical thing: don’t view your Twitter account as yet another place to Spam. Deliver meaningful content, and make sure it isn’t just your own content. Do a good editorial job of finding content that people in your industry would be interested in and Tweeting about it. 72% of Twitter users are coming to Twitter for more than just your normal product and service blurbs.  Give them more value.  Provide content anyone in your industry can benefit from.

 Next time you’re in a meeting of any kind, ask yourself whether it would be interesting and appropriate to Tweet about it. Create some ambient intimacy around your organization. Let people see some of the inner workings. That familiarity is beneficial. It feeds the conversation and leads to new conversations. Recently, I Tweeted about a meeting we had to discuss marketing strategy with Geoffrey Moore. I had several notes come back to me wanting to know more. Likewise, I was in a meeting with one of the analyst firms and they were Tweeting sound bytes they liked from us in real time during the meeting. That’s the sort of stuff the Twitter audience thrives on. It’s the sort of thing you have to do to keep it fresh and authentic. Always give value before expecting to receive value on the Social Web.

It’s straightforward to get very systematic with Twitter, and it produces very tangible results!

Posted in Marketing, Web 2.0 | Leave a Comment »

 
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