I’m a little late getting this post up here — we recorded the session a little over a week ago — but better late than never. And for the second time in a row, snow interrupted our plans so instead of recording with a live audience at the Stamford Innovation Center, we participated remotely (using Google+ hangouts). I do need to work on my video skills. Despite having two lamps just out of camera range, my lighting is suboptimal. Then again, my pretty face is never going to carry the day… :)
For those of you who want to watch the full video (an hour), you can find it here. This month, we talked about:
- Yahoo and Marissa Mayer’s work-from-the-office edict
- Groupon’s CEO resignation
- The new Facebook feed
- Microsoft’s EU fine
- iWatch (we didn’t really talk about this in the video here but I’ve got a few observations)
Yahoo and Working from Home
This is odd, coming from someone who has spent large portions of the last 20 years working from home and who is such a big believer in collaborative technologies, but I totally understand and support Marissa Mayer’s decision to require Yahoo employees to work from the office. Fundamentally, she inherited a broken company. I’m a member of a group called the Internet Oldtimers and one of the group’s members described the scenario perfectly. He said that good people in a bad system become bad people whereas bad people in a good system become immediately evident. Yahoo had a bad system which encouraged even the best of people to perform at substandard levels. How do we know Yahoo had a bad system? Mayer came from Google, as data-driven an organization as I’ve ever encountered, and simply, she went to the data. It would be one thing if people were working diligently from home but the data just showed another story. Mayer looked at the VPN logins and quickly discovered that people weren’t connecting to the company’s internal network. It’s one thing to say collaborative tools enable remote working. It’s a whole other scenario when your workers aren’t using the collaborative tools! They didn’t even bother to fake working very well. Yes, the system was broken. You could argue that this is a draconian step and that it will cost Yahoo in terms of current employees and ability to recruit new staff. That may be true but the bigger challenge is reorienting the organization and bold, decisive moves are required. I don’t expect this to be a permanent work condition but until and unless Mayer showed her commitment to a new Yahoo, she would have been merely rearranging deck chairs on the old Yahoo. I applaud and support the move.
Groupon’s CEO Resigns
Too much of this story has been about Groupon’s ex-CEO Andrew Mason and his polarizing style, his company accounting challenges and his flamboyant resignation (refreshing in its candor). I actually wrote about Groupon over two years ago, questioning their business, and in the intervening time, I think their challenges have only grown larger. Here are the fundamental problems for their business (and not just theirs, but LivingSocial and many other daily deals purveyors):
- The deals are not great for merchants. They’re indiscriminate, send a bad message, encourage “bad” business, don’t help the merchant’s information-gathering and give the merchant almost no control. Other than that, they’re great. LOL
- The wrong party is in control. Deals should be structured, offered and managed by the merchant itself. You should be able to offer deals whenever you want to whomever you want. My favorite talking point here is to use the example of a donut shop. Let’s say you’ve had a slow day and it’s looking like you’re going to have to throw out a bunch of donuts. Wouldn’t you want to run a deal at the last minute, just in time for the evening rush hour, offering a special? You could make this look like a customer incentive for your best customers instead of the existing model where you’re discounting products/services that your loyal customers have been paying full price for. You could make this decision at 4 p.m., instead of weeks or months in advance. You could do this every time your inventory is high instead of once every few months. This is a fundamental problem of approach for Groupon and its ilk, and not one a new CEO is going to solve.
- To feed the public market appetite for growth, Groupon moved from daily deals into an adjacent market, Groupon Goods. I’ll never understand why companies move into businesses that jettison much of what’s attractive in their legacy business. The great thing about the daily deal business is that you have no inventory. Your only three cost buckets are technology, marketing, and your sales commissions. This is a business with minimal risk as you can align costs relatively easily to revenues. With Groupon Goods, you’re now taking possession of inventory. If you don’t sell it, you’re stuck with it…or you have to lower prices, cutting your margins. Before this, Groupon could have been run out of a phone booth. Your servers were in the cloud, your salespeople were on the phone or on the road, your inventory was totally digital. Instead of pushing, and fixing, the core business, Groupon went broader. Big mistake in my mind.
The New Facebook Feed
Facebook is rolling out a new look and feel. Again. I wrote about this challenge even longer ago, almost four years back now. Back then, the challenge was competing with Twitter and its real-time impact. That challenge remains to this day and we’re now hearing of Facebook’s plans to incorporate hashtags, mimicking yet another Twitter feature. Facebook is now fighting battles on multiple fronts. In addition to Twitter, there’s now a battle for approach and design with Pinterest and Instagram. Yes, I know Facebook now owns Instagram but if you look at Instagram, Pinterest and even Microsoft’s new platforms, you’ll see a more richly graphical approach. I won’t get into this approach…well, maybe I will, briefly. I think much of this is eye candy at the cost of value, information and time. A picture may be worth a thousand words in some contexts, but in a lot of these instances, I’d rather see the thousand words or at least something that conveys greater value than just an image and a text headline. I think a lot of the motivation behind this approach is to get people to actually click through on something. More clicks = more opportunities to display ads or at least pump up your metrics. For the user — at least for me — more clicks = more time to get to value. I really don’t like the approach. But Facebook seems to be embracing the approach, whether it’s to increase its advertising footprint or contain Pinterest. There are laudable goals in the redesign — more easily connect users with the information they want to connect with — but I’m not convinced this is the real motivation or, if it is, that this redesign accomplishes that goal. But as always, we’re stuck with it. Expect to see tons of posts from your friends decrying the new approach…until we accept that this is the way it’s going to be. Oh well. At least maybe they’ll fix the multi-columnar approach, the logic of which I still can’t figure out.
Microsoft’s EU Fine
Microsoft was fined $731 million by the European Union. Why? Because it didn’t fully implement its deal to open up the browser market to competition, a deal struck in 2009. At that time, Microsoft had a near-dominant share of almost 80% of the desktop market. We all know what’s happened since then. Despite not keeping up its bargain, Microsoft’s share has steadily decreased and it now represents only about half of the desktop market and, if you factor in mobile, considerably less than half. In fast-moving markets like technology, somehow markets do a better job of adapting to competitive situations than governmental remedies. I’m not saying that the EU’s fine was misguided — they have to enforce their agreements — I’m just saying that the EU sanctions were, and continue to be, largely ineffective. Fining someone for four year old behavior (several generations in Internet time) while failing to act on current issues is, unfortunately, what we’ve come to expect from governmental bodies. I’m not advocating that they go sue Google but if they’re genuinely concerned with fostering real competition, going against emerging and existing monopolists with sanctions with real teeth would be much more impressive than what amounts to a (soft) slap on the wrist to a former monopolist. If anything, this action would encourage me if I were considering a current offense. If this is the timeframe and scale over which remedies will be extracted, it’s no deterrent at all.
Somehow I can’t get excited about this one. Perhaps Apple’s going to surprise me. Again. But I just don’t see an iWatch as the product which is going to reinvigorate Apple’s prospects. Back at the beginning of the year, I said their big opportunity is the digital home, and I stand by that belief. Yeah, yeah, the watch market is a $60 billion market. But if you’re under about 28, you probably don’t wear a watch. Can Apple make it cool? Probably. But the trend is to bigger screens, not smaller, and I’m just not convinced that anyone can make a watch a compelling companion to my smartphone, and make no mistake about it, this will be a companion product. I feel bad enough when I have to shell out $100 with every new phone for screen protectors, batteries and the like. Is it that much more powerful to have reminders on my wrist instead of in my pocket? Perhaps it could be a little more interesting if it incorporates the emerging niche category of activity monitors like Jawbone’s Up. We’ll just have to wait and see.
What’s perhaps most problematic for Apple is that their time to market advantage may be non-existent. Apple has had huge market advantages when it has launched its category-defining products, with competitive responses often lagging by a year or more. Not so with the watch. In fact, while the Apple iWatch remains merely a rumor, Samsung has come public with its intention to do one, and its indication that it has been working on it for a long time. While I question how genuine that effort was prior to the Apple rumors, it’s clearly a different world when a rumored Apple product introduction is met by immediate competitive responses, not stunned gasps of “they did it again.”
In addition to these timely news items, we talked about a couple of larger thematic subjects:
- The “IT-ization of consumers”
- What’s next, after social, mobile and cloud
I’m not going to get into these here and now — this blog post is already long enough — but i’m going to write at greater length about these topics in the coming weeks. I identified social, mobile and cloud as my three disruptive trends, over five years ago. As they begin to coalesce as I predicted, people started to ask me “so what’s next?” For a long time, I answered that with “more commercialization and better integration of those pillars.” We still have a long way to go there. But I already see the seeds of the next big transformation which will, once again, change the face of technology and business. I just love that about this business; it’s never static…even while we all struggle to keep up with the pace of change and have to fight to incorporate new technologies and approaches. But the next change is coming and I’ll start surfacing that soon. (If you want a head start on your competition, you know where to find me.)