The Top 10 Reasons I’m NOT Going to SXSW

In my Tweetstream today, I noticed a post from Lisa Dilg of Perkett PR about how she won’t be writing her Top 10 list this year since she’s going to SXSW (South by Southwest for those of you who aren’t hip enough to speak in acronymese).  I may be perhaps the last remaining holdout from the “social community” who either hasn’t been to Austin for this lovefest or isn’t going this year.  I volunteered to guest blog for her but while she’s working on her reasons she is going, I thought I’d go ahead and list my reasons for not going.

  1. At this late date, I couldn’t get a good hotel reservation anyhow.  And I’m not going to sleep on your couch.
  2. I’m too  old to drive with seven other people in a VW van.
  3. I gave up going to events where the “community” decides the agenda based on popular vote back in 3rd grade.  I accept the fact that I’m terminally unhip and in fact I’m proud of that fact.
  4. I prefer spending my time at events where there are actual potential clients.
  5. I prefer spending my time at events where my thinking will be challenged.
  6. And for me to be sober enough to remember how it was my thinking was challenged the next morning.
  7. I’d kinda miss the winter we’re having here in the northeast.
  8. Charlie Sheen’s not going to Austin.
  9. If I hear one more person say “you’ve got to be part of the conversation,” I will become physically ill and may resort to violence.
  10. While you’re all down there partying, I’ll be up here actually delivering value to real clients.

Social Ennui: Presaging the Real Revolution

A friend this morning did it.  He set me off.  His offense:  calling social media “old wine in new bottles.”  (And why is this a pejorative anyhow?  Isn’t old wine better??  At least for my readership.)  I couldn’t disagree more violently.

Before, however, I get into the heart of my rant, let me observe that it’s going to be harder to prove that in 2011 than even in 2010.  Why?  Because I think a state of “social ennui” is setting in.  For those of you who are unilingual, ennui is French for “boredom.”  Gartner would call this phenomenon the “trough of disillusionment.”  Everyone’s on the social media bandwagon now.  You’ve got 1,000 Facebook friends, you’re a social media consultant.  Social media will solve disease, global warming, make us all happier, richer and more content.  Better looking, too.  People are way overpromising and underdelivering.  But, as I’ve observed earlier in this blog, that’s the nature of technological change.  We overstate the impact and benefits in the short-term.  God, is that going on here!  But interestingly, we understate the impact and change in the medium-term.  And I again fully expect that to be the case with “social media.”

Social media is in the still very early stages of something that’s going to end up flipping relationships and changing others.  No, we’re not going to throw out everything we know.  The new rarely ever does that.  Yes, we still ride horses.  But the advent of the automobile changed what and how we use horses.  The most earnest horse supporter would point out “but the Amish still live without the car” or “well, I could use the horse if I wanted to.”  Meanwhile, the rest of us would just humor, or ignore, them.  More importantly, though, the car didn’t just change the way we use horses.  It changed the way we live and work.  Distances were expanded.  And gaps were closed.  The suburbs were created.  At first, people probably observed “now I can get from point A to point B faster.”  That’s the stage we’re in with social media.  Only later did people say “or for the same amount of time, I can now go a lot further which changes where I can live.”  And the really smart people said “this is going to change the nature of our society and I can build products and solutions that capitalize on this newfound mobility.”

So, what is “social” going to change?  PR is in the early stages of changing radically.  I have made the argument for over a decade now that while we called the discipline P-as-in-public-R, it had largely become M-as-in-media-R as the pathway to the public was through the media.  PR firms were evaluated based on their friendships with key reporters and their ability to secure covers on Forbes and Fortune.  The Internet was already in the process of changing public relations (if not the PR industry).  What is a press release, anyhow?  The idea was to tell your story to intrigue a reporter who would write about it and tell the public.  But Google indexes press releases.  The public is seeing that release.  Don’t write for the reporter, who’s overwhelmed by these outreaches anyhow.  Write for the public.  (No, most aren’t even doing that.)

But there’s more.  Social media changes “public relations” in profound fashion.  Not only do you have a direct path to the public, and your customers and competitors also have those same direct paths, your paths to the “influencers” have been augmented in significant ways, and new influencers have emerged who influence both traditional influencers and your buying public.  Yeah, that’s a lot of change.  I won’t get into the whole social media “you’ve got to be part of the conversation” discussion here.  First, that’s a whole other post.  Second, if I hear one more person say “you’ve got to be part of the conversation,” I’m going to slap them.  That’s exactly why we’re suffering from social ennui.  Lastly, the whole discussion is already over-discussed.  You don’t need yet another perspective, however nuanced, from me.

But we still haven’t scratched the surface of the change to come.  Longer term, I am fiercely interested in the emerging discipline known as VRM.  Vendor relationship management.  Its most powerful advocate is Doc Searls, he of the Cluetrain Manifesto (can you believe that was almost 12 years ago?!).  I actually arrived at the concept independently.  I was asked a few years ago to do a presentation on Social CRM.  I talked a little about how “social” provides new insights into the customer relationship equation, providing new insights previously unavailable.  I went on that putting “social” in front of everything reminded me of Internet 1.0 when we put an “e” in front of everything.  eBusiness.  eMarketing.  eThis.  eThat. Until we realize the distinction was no longer differentiating and in fact no longer valid.  (It’s interesting.  Even my spell-checker wants to flag eBusiness as a typo.)  It was business.  It was marketing.  And so ultimately SCRM is just the next iteration of CRM.  But, I hypothesized, the big change came when users flipped the relationship and started managing their vendor relationships the same way the vendors manage their relationships with us.  SCRM leads to VRM.  When after the presentation, someone told me about existing early thinking about VRM, I was both disappointed (I thought I was about to invent my first category) and thrilled (there’s momentum!!).  As an analyst, this is an important moment.  We can do all the theorizing we want but unless someone’s actually building this stuff, it’s not terribly interesting.

While VRM is far from mainstream now (for many, this will be the first time you’ve even heard of the notion), there’s an interesting community growing up around it and some large retailers are dabbling and monitoring.  The concept here is twofold.  One, the big vision for the field, is that tools will be developed that will enable customers to manage their relationships with vendors and that the relationship is ultimately owned by the customer, not the vendor.  CRM will never give a full view of the customer because the customer deals with multiple channels and providers.  VRM is the only way that picture can be developed…and customers will share that view with vendors who offer value in return.  At its most extreme, imagine an easy-to-create-and-manage iRFP (individual request-for-proposal) process.  Yes, it’s hard to imagine and even harder to do but if done, wildly powerful.  The more selfish view for retailers, as I heard another friend express to a major retailer, “what if you knew what a customer was looking for when they walked in your store.  What if you really knew?”  Today, at best you’re making a guess based on past purchase patterns, incentives you’ve provided, etc.  But if you know the totality of what they were looking for, you could sell solutions, not products.  You could upsell.  You could target.

You might argue this is hard and will never happen.  I won’t argue with the first part but I will argue with the second part.  On second thought, I will argue with the first part.  The pieces are all out there.  Assembling them isn’t very hard.  At its most basic level, Groupon and LivingSocial are VRM 1.0.  Assemble large numbers of customers and demand a deal.  That model has been proven reasonably successfully.

You might also argue that “this isn’t social media.”  I don’t want to get into the “this is or isn’t social media debate” but I would say that this is only possible with the existence of social media.  We’ve made it very easy for people to create, assemble and manage their buying preferences and signals.  Wish lists, tweets and Facebook statuses, GetGlue updates, FourSquare checkins and Quora questions can be combined to put together an interesting picture of what you’re doing/thinking.  When meta-tools evolve  to assemble these into coherent solutions, tying together product discovery, acquisition, utilization and support, we will be on to something exciting.

You might argue that consumers are lazy and that they don’t want to manage their relationships.  OK, you’ve got me there.  You’re right.  This is the real stumbling block.  The tools had better be REAL easy to use with REAL economic value in exchange for participation.  This will require serious software work that assembles what consumers are already doing with social media, parsing and assembling it and making reasonable suggestions and solutions out of our piecemeal, bottom’s-up approach to information sharing.

There are already real players in this space.  Look at Kynetx.  I pick them not because they’re totally on point with VRM, although they can and will get there.  I pick them not because they’re necessarily the best solution out there; I haven’t spent enough time looking at vendors to make a Magic Quadrant.  I pick them because my old friend and foil, Craig Burton (VP of Marketing for Novell, when Novell owned PC networking 23 years ago) told me about them a year ago and brought me in to meet them.  The problems they’re trying to solve are real and exciting, and great for us users.

VRM is the next big thing.  Even as social ennui sets in and we wonder what all the hype was about, there’s real change coming around the corner.  This isn’t old wine in new bottles, or at least it won’t be.  If I were a mainstream marketer, I might take the old wine position for now.  I wouldn’t want to try and sell my company on this from the inside right now.  They’d look at your strangely.  (Well, they probably already do that.)  But in my role, as outside provocateur, I’m going to yelling this one louder and louder.  A decade ago, we were yelling that the Internet was going to change everything. and Webvan died.  The naysayers snickered.  And then we went and changed everything.  We’re going to do it again.  Come along for the ride.

Live from NRF: The Dismal State of Retail Technology

I’ve spent the last day and a half at the big National Retail Federation’s 100th annual conference in New York.  (No, there is no truth to the rumor that I covered the technology at the first conference, although I did learn to type on a manual typewriter in 1971 or so.)  I was one of the people behind Gartner’s designation of companies as Type A (aggressive technology adopters), Type B and Type C and as I walked the floor of the trade show and listened in on keynotes and sessions, I’m struck by how hard it is to characterize retail and many retailers.  On the one hand, technology is ubiquitous and you can’t pretend to be a retailer of any scale without a massive IT investment.  On the other hand, the ability to invest, and even more to innovate, when dealing with such tight margins can be constrained.  Netting it all out, I’m struck by how far behind the technology curve the retail industry seems to be.

A few observations from the show:

  • Peter Sachse, the CEO of appeared on a panel run by Alison Paul, head of Deloitte’s Retail Practice.  (As an aside, this was a really well-done panel, which is all too rarely the case.  This wasn’t scripted and the panelists did an admirable job of refraining from the sales pitches that ruin so many panels.)  Sachse talked about how Macy’s is working hard to get a 360 degree view of the customer.  My take:  good luck with that.  The only person with a 360 degree view of the customer is the customer themselves.  No matter how you integrate the data you have and obtain, you will have at best an incomplete picture of the customer and at worst a misleading view.  I do, however, believe that’s a laudable goal but that retailers don’t have nearly enough vision nor understanding of the impact of social technologies to realize that vision in a meaningful way.  More on that in a bit.
  • Coming as it did a week after CES, where every gadget known to man (and lusted after by me), is shown, the show floor here is not nearly as exciting.  I mean how many booths can you see with barcode scanners or keyboards.  Yes, keyboards!  I understand they’re important to the speed of a retail transaction but somehow soft-configurable keyboards just don’t get my heart racing.  By far the most interesting booth to me was Intel’s, where they were demonstrating not some far-off fantasy retail environments but rather things that are possible today (and are already in limited deployment).   While Apple has virtually no presence at the show (they’re not here and I only saw one vendor who was hawking Mac solutions), their influence on retail interfaces is pervasive.  Everything looks like an iPhone/iPad, and that’s a good thing.  User familiarity with touch interfaces will likely lead to their much wider deployment in retail settings.
  • Everyone’s using iPads to demonstrate their wares.  It actually makes for an interesting conference experience, with the human interaction enhanced by technology rather than the somewhat sterile approach of presenters standing around their monitors and kiosks.
  • For an industry that just came through a lackluster holiday season and is facing more tough times ahead, the mood around is actually upbeat.  Whether they’re rearranging deck chairs on the Titanic or otherwise, high energy and increased attendance is actually refreshing.

Now, however, for the zinger.  If I hear one more retailer talk about “listening to the customer,” I’m going to puke.  What’s worse, generally when they say that, they mean “I’m listening for the customer to express even the slightest receptivity to getting a marketing message so that I can blast them with my multichannel outreach program.”  I have found the discussions around social media and mobility to be horribly shallow and maybe even misguided.

On the mobility front, there were actually people debating whether customer-accessible WiFi was a good idea in retail environments.  There’s a legitimate question there but the tone of the discussion was more like “do we want to enable customers to price shop while they’re in our store?”  Let me introduce you to these things called SmartPhones, 3G and 4G.  The genie is out of that bottle.  Customers do have access to competitive pricing and thus the question must become “how can we leverage consumer technologies to increase the likelihood of a purchase” or even “how can I use the consumer’s expressions of interest to sell them more stuff.”    You have to assume radical transparency and that an increasing percentage of your retail traffic is going to have good information, maybe better than the retailer has and certainly better than is known on the front lines.

And then there’s social media.  I really fear that too many — dare I say most — retailers still think of social media as a vehicle to dump messaging to customers who are eager for that messaging and have in fact invited it.  Exhibit #1:  just look at the Tweetstream for the event: .  Maybe I’m spoiled by tech events where attendees use Twitter as a vehicle to discuss issues raised in sessions or the news of the day, but this is appalling.  The stream is dominated by vendors screaming “come to my booth,” “win an iPad.”  Sure, @Teradata has generated a lot of retweets.  Do you think any of those people are actually interested in hearing anything from Teradata other than “you’ve won”?  I keep saying I’ll be writing about it, and I promise I will soon, but I think social media in its full expression inverts the relationship between retailer/brand and customer.  It isn’t about a 360 degree view of the customer; rather, it’s about my expressing my needs, interests and criteria, enabling people and companies to deliver solutions to me.  If you think social media is just another channel to enable you to dump marketing messages onto willing potential customers, you’ve got it way wrong.

Quora: The Winning Formula for Knowledge Management?

However it has happened, interested in Quora has spiked in the last week.  I’ve gotten more “follow” notifications in the week than I have in the preceding year or however long I’ve been on the platform.  (Not coincidentally, I’ve answered more questions in the last week — five or so — than I have in the preceding year — one.)  I’ m really torn when it comes to thinking whether Quora’s onto something really big here, or is just a flash in the pan that we’ll forget in another week.

First, let me say what I like about Quora, and there’s a lot to like.  For starters, it’s not Facebook Questions, which I really hate.  What I hate most about Facebook Questions is that it doesn’t even pretend to be a knowledge management solution.  (Hold on KM aficionados, I’ll come back to you in a moment.)  Questions is a great example of a feature that exists because someone thought it was neat to do without it meeting any real user need.  If you’re the type of person that blurts out random questions to your friends and their friends at parties, then maybe Facebook Questions is for you.  If, however, you want reasoned answers to important questions, I wouldn’t be going to Facebook Questions.  Quora, however, follows what I believe to be a really successful model.  You look at categories that have failed (and knowledge management is certainly one of them), scale back your expectations considerably but in so doing enable the category to be accessible to orders of magnitude more people.  Then you scramble like hell to fill in the architecture so that it delivers as robust a solution as the failed category actually delivered in the first place.  This was actually the success model of the Internet itself in the first place.  We were trying all these complicated networking solutions that delivered robust client-server and other advanced functionality.  When that largely failed or proved to complex or expensive, we stepped back and said “what if we can just connect these things and do little more than exchange files or a few screens of information.”  Having done that, and gotten millions of computers into the network and having generated momentum, only then did we go back and say “now how to we layer on top all of those things we were trying to do in the first place.”

There’s room for this kind of approach in knowledge management.  The top-down initiatives have largely failed because there was little incentive for participation (in fact, there was often disincentive) and the benefits of participation were inconsistent at best and elusive at worst.  So, instead, Quora starts from a bottoms-up perspective.  Let’s not try to build a knowledge management “system.”  Instead, let’s just ask questions.  And instead of asking questions on behalf of some nameless, faceless organization, let’s ask on behalf of your friends.  You’ll answer their questions because you’re wanting to help them, not because you’re trying to fill up a knowledge management system.

Having started down this path, of course, what we really want is a knowledge management system.  Something that brings together related questions, imposes structure and hierarchy, weeds out the bad answers (and answerers) and otherwise adds coherence from the chaos that a random socially-oriented question platform would produce.  Facebook Questions hasn’t gone down that path yet and, given their friend- and activity-oriented focus probably never will.  Quora is already walking down that path, allowing for the organization of topics, collaborative editing and other organizational functions.

At some level, what’s really going on is the intersection of three or four, or more, major platforms.  We’ve got Facebook, the repository of social connections.  We’ve got Twitter, the repository for ad-hoc questions and answers.  We’ve got Wikipedia, the repository for structured answers.  And now, we’ve got Quora, the repository for structured questions (and their answers).  Even as I write this post, I get more and more excited about Quora’s position and opportunity.  Questions are perhaps more contextually relevant and valuable than answers and so maybe Quora’s position in search rankings supersedes Wikipedia’s (and when was the last time you did a Google search where there wasn’t a Wikipedia answer in the top five).

So, what can keep Quora from achieving such a lofty position?  That transition from bottoms-up approach to tops-down is fraught with danger.  Right now, we’re using Quora to some extent as a social platform:  we’re conversing with our friends.  As it scales out and more and more of the answers I see are from not even friends of friends but from strangers (i.e., untrusted sources), will I value the feedback from a broader audience or will it diminish the platform’s value.  I’ll assume that they’ll get to some kind of rating structure for people who answer questions.  Unlike on eBay, however, where it’s pretty clear who’s a good seller and who’s not, it’s going to be much muddier here.  And the moment you lose trust in the people answering the questions, the fundamental value proposition of the platform is lost.  Forever.

How are they going to integrate with Twitter?  For some questions right now, I go to Twitter largely because of its immediate response.  At some level, I may actually want to “escalate” a Twitter exchange into a Quora solution.  Doing that systematically would be hugely powerful and ultimately essential.  If Quora is the question platform of last resort, it risks being left out of the knowledge creation loop.  How will they get higher up on our priority list or is it just one more platform I’ve got to invest time in?  Its integration with more immediate and frequent platforms (e.g., Twitter and Facebook) are likely to be key success criteria for how much value they can ultimately collect and deliver.

Almost three years ago, I declared Twitter “the most important platform you’ve never heard of.”  People have been asking me ever since “so what do you think the next one is.”  Foursquare was the one most often mentioned by others but I have steadfastly said no, that’s not it.  (And it’s not because I don’t believe location-based solutions aren’t important.  They are.  Just not the way Foursquare does it.)  Quora is the first thing I’ve even considered anointing with that lofty status.  Their challenges are considerable, however.  Unlike Twitter, where growth just makes the platform better and better (other than platform stability issues), for Quora it’s a double-edged sword.  There’s value to its growth but considerably added complexity.  What’s the right mix of friends and open community?  Can you add sufficient structure to a bottoms-up approach or does it have to be designed in from the beginning?  How good are the answers you get, how timely, how predictable and how reliable?  My early experience is a real mixed bag.  I’ve seen some good answers and seen some interesting discussions.  I’ve also seen some things where I think the answers are just bad and/or wrong.  Keep track in your own mind as you look around Quora and see what the good:bad ratio is.

I gave a speech a year ago where I made a Freudian slip and talked about the “wisdom of clowns” and not the “wisdom of crowds.”  Idiots in large number does not a solution make.  If that’s what Quora becomes, obviously kiss it goodbye.  If, however, they can make it the repository for structured questions and reliable answers, then they really do have the potential to be the next big platform.

Facebook’s $50 Billion Valuation: That Sounds Reasonable, Even Cheap

2011 has begun with news that Facebook has secured a new round of funding which values the company at $50 billion.  I actually think that’s a reasonable valuation (although in another post later today or tomorrow, I’ll talk about my expectations of a social ennui in 2011, as we come to realize the fundamentally flawed approaches most brands are taking towards the notion of social engagement; yes, I know, a provocative statement).  In fact, I believe there’s still room for growth in Facebook’s valuation nor do I expect this valuation will cool the private trade in Facebook shares.  Many early commentators seem to the valuation is insanely high.  I actually engaged in a Twitter exchange with two analysts I hold in the highest esteem — Sameer Patel and Esteban Kolsky — around 2:30 this morning on this very subject.

My points:

  • Google’s market cap is nearly $200 billion.  Is Google really four times more valuable than Facebook?
  • Users now spend more time on Facebook than they do on Google, Yahoo…or any other web property.  Somewhere that’s monetizable (although that’s a post for another day soon).
  • Users are not only exchanging information about where and what they eat, social platforms are becoming an increasingly important way of discovering information, augmenting and, yes, replacing search in that regard.  (Where did you find out about this blog post?)
  • It is much easier to for a user to replace Google than it is to replace Facebook.  If you want to replace Google, you go to Bing.  Period.  You might even find the experience better.  OK, it’s a little tougher than that.  You might have to exchange tool bars, change a couple of preference settings on your computer and update a few links and passwords.  Those of you reading this blog are probably more sophisticated than most so you have a few more things to change but also the technical wherewithal to do so.  You could do it today and wouldn’t miss a thing.  I’ve even seen a few friends announce their New Year’s resolutions as going Google-free this year.  (Well, some of them said Google- and Facebook-free although ironically they made this proclamation on Facebook.)  Anyhow, you could reasonably go Google-free and have a completely adequate replacement by the end of the day.  How would you replace Facebook, however?  This assumes, of course, that you think there’s any value in a social platform, and I’m not going to try to defend against the argument that you don’t need to replace Facebook.  Facebook is so much more than a listing of who’s doing what but also categorizes my relationships (business and professional), captures activities (and serves as the log-in) to/from many third-party web sites and has otherwise become an important piece of the connective tissue.  Replacing Facebook means rebuilding your social connections, likely across multiple platforms involving multiple acts of outreach to friends on the disparate platforms.  Rebuilding your social graph is time-consuming and likely to be incomplete.  “Substitutability” is one component of the economic definition of a commodity.  Google is highly substitutable, Facebook is not.

Sameer and Esteban also suggest that Facebook is just the flavor du jour and that they’re due for a fall.  I do not believe this is an issue in the horizon over which this valuation must be justified.  Yes, in the early days of key technology platforms, we burn rapidly through a number of them before sticking on one for a variety of complex reasons, usually beyond the control of the platform owner itself.  How many search engines were your favorite/default?  I count Yahoo, Excite, Ask Jeeves and Alta Vista as past favorites before sticking on Google.  Similarly, I used several social platforms before Facebook achieved its prominent and dominant state.  500 million users gives you a pretty strong base from which to retain market leadership and even competitors are now being forced to embrace Facebook’s role in the “ownership” of the social graph (witness MySpace’s recent concession; TechCrunch has a particularly amusing take on it).

    I hasten to acknowledge that Google has done a much better job of monetizing its position and that in fact is the enduring genius of Google.  As I and others have often observed, Google may really be just a one-trick pony…but it’s a damn good trick.  Facebook is nowhere near as mature as Google when it comes to understanding, or inventing, how it’s going to monetize its commanding position.  I think, however, that represents as much a failing of brands and consumers as it does of Facebook.  Maybe if they hadn’t handle the whole Beacon initiative in such ham-handed fashion, we’d be much further along…but there’s no turning back that clock and besides, Facebook has continued to make boneheaded moves in maintaining the critical user trust although, critically, I do not believe it has even approached the status of irreparably damaging that trust.  People just haven’t abandoned the platform despite all the posturing and hand-wringing.

    Anyhow, I believe profoundly in the ability to monetize social platforms and their tremendous power in transforming the relationships between brands and customers, customers and customers and among brands themselves.  Today’s blather about “being part of the conversation” is most assuredly not the answer.  A few years from now we’ll look back on today’s efforts and laugh at just how immature, ineffective and ultimately misguided they were.  In fact, I think this will lead to a bit of what I call social ennui (that’s French for “boredom”), which I actually believe will be a dominant theme in social media in 2011.  Again, I’ll write about that today or tomorrow in my look-ahead blog piece.  For now, I’ll just leave it that a $50 billion valuation for Facebook sounds actually quite reasonable and that it’s not evidence of a bubble (although Groupon’s walking away from $6 billion may be).

    Happy 2011, friends.

    Groupon: TFM

    Groupon has apparently turned down as much as a $6 billion acquisition offer from Google.  They’re thinking that if they grow their business out a little more, an IPO or subsequent acquisition could bring them as much as twice as much.  I have three letters for them:  TFM!!!

    What, you say, is TFM?  Some of you may remember Pointcast.  It was a darling of the very early Internet days.  In fact, it was a pre-Internet company, providing dial-up access to its information resource.  I actually was a delighted user of their screen-saver product (and still wish I had something like it).  Rumors had it that Rupert Murdoch and News Corp. had made a $450 million offer to acquire the company.  I was on the advisory board of ad-tech at that time and we had Chris Hassett, Pointcast’s CEO, on stage and asked him about the rumors.  He wouldn’t confirm them nor deny them, indicating that there was a lot of discussion about how best to maximize their value and saying that he believed it would be best maximized via an IPO.  “IPO?,” someone in the audience called out, “TFM!!”  “TFM?,” Hassett replied.  “Take the f***ing money.”

    Two-and-a-half years later, Pointcast sold the company.  For $7 million.

    Do you really believe that Groupon’s position is so unassailable and their approach so unrepeatable that there’s no risk to their future opportunity?  Would you turn down $6 billion??

    Groupon, TFM!!!

    UPDATE 1/14/2011

    It boggles my mind but maybe it was a good idea to turn down the $6 billion.  If, that is, you believe these rumors of a $15 billion IPO.  I admit to not having looked at any financial models but my sense of this valuation is that it’s totally insane.  On the one hand, you’d think that there’s some barrier to entry in this space, with the requirement to build out a local salesforce.  On the other hand, I already get at least five or six discount offer emails a day, some with a local focus (e.g., LivingSocial), some with a national focus (e.g., Woot) and some (e.g., Thrillist) which bridge the two.  And the people who do those mailers (e.g., Valpak) are getting into that business as well.

    There’s a lot of competition from entrenched players already.  There’s going to be growing competition from big players (e.g., Google, Facebook).  Pretty soon, everyone is going to be playing this game.  Is Groupon really the killer implementation?  Or are they getting out just in time?  Again, I’m no valuation expert but I think these numbers are just wild.

    UPDATE 2 1/14/2011

    Interesting take from Greylock, one of the VCs investing in Groupon.  They say two things for why they invested in Groupon:

    1. The power of data.  I’m not convinced Groupon has any inherent advantages or different slants on this subject to merit a stratospheric valuation.
    2. This is a winner-takes-most kind of market.  I see no justification for that assertion.  On any given day, I’ll peruse a few of these offers and purchase based on what’s most interesting to me, not the source which originates them.  I don’t think they have any inherent advantages in offer acquisition that make their offerings any better than anyone else’s.  There are so many local merchants that consolidation in merchant acquisition is unlikely to occur.  I can think of no example where there has been this consolidation other than maybe Craigslist and eBay, and their approaches (zillions of items) are different than Groupon’s and others’, where they offer one or several deals a day.  I think there’s room for many players and that you will actually see aggregators step in and consolidate multiple offers from multiple sources in a single email.  (Come to think of it, I should start that business.)

    Facebook Messages: Why This Could be Even Bigger than Anyone Thinks

    It’s hard to imagine that anything Facebook does, let alone something on the scale of Facebook Messages, could be underappreciated, but I believe that’s the case here.  Facebook Messages could be “the next big thing.”  I’m not prepared to anoint Messages as such, yet; I haven’t even been blessed with being one of the platform’s first users and thus haven’t had the opportunity to see if the reality is remotely in the league of the promise.  But the promise is huge.  Facebook has an enormous opportunity to capitalize on several intertwining trends.

    • Email ceased being a productivity tool a decade ago or more.  We are overwhelmed by the volume of email and have few good tools for harnessing it.  My friend and former colleague Bill Kirwin, the godfather of TCO, has spent good portions of the last few years focused on this issue alone.
    • Email has become the bearer of malicious payloads as much or more than it has been the source of valuable information.  Simply put, without email, viruses, phishing and spam are much less prevalent.
    • At the same time, a new generation of users views email as the platform of last resort.  If you ask a teenager today what they use email for (and I have a focus group of two of my own), if you really parse through the answer, they use email to communicate with old people.  The new generation uses Facebook, IM, Skype, Twitter (maybe) and texting as more immediate, personal and relevant forms of communication.  Email has been forced upon them.
    • The prominence of email has made us slaves to Outlook and the inbox.  We have the appearance of productivity without really being productive.  We have the appearance of communications without really sharing anything valuable.  We have the appearance of progress but that progress is fragile and is broken the moment the next person in the thread doesn’t click reply.
    • Email is directed to people, not communities of interest.  The maintenance of email communities (groups or mailing lists) is slow if not glacial, incomplete and organizationally driven, not user-driven.
    • As we move to increasingly mobile platforms, we need a communications system that blends both the comprehensiveness of email with the urgency of texting.  Today they co-exist uncomfortably on the device.  Unifying them is an opportunity, if not an imperative.

    For all these reasons and more, a replacement for the email platform is necessary.  It’s not like there haven’t been attempts.  Ray Ozzie spent much of his pre-Microsoft career trying to introduce new platforms (including Notes and Groove).  He was met with limited success at best and his tenure at Microsoft will not be remembered by progress on this front.  Google with great fanfare introduced Wave, only to abandon the platform, retreat and introduce Buzz, whose market impact has been approximately zero.  When Google, Microsoft and Lotus/IBM fail at something, you realize the enormity of the challenge.

    So why might Facebook succeed where these others have failed?

    • Taking a page from the Microsoft playbook, Facebook is adopting an “embrace and extend” solution to the problem.  Rather than introducing an entirely new platform and hoping to migrate its users to the new approach, over time, Facebook instead has taken the email metaphor — the installed base, if you will — and has added capabilities that bring the new forms of communication under the email umbrella.  If you’re an email user, you’ll find the approach familiar.  And if you’re a next-generation “Facebook communicator,” you’ll find the new platform is familiar and extends your capabilities in interesting ways.  If Facebook can truly blend the email world and the IM/text world to the benefit of both, this is a massive accomplishment.  I still say “if” because the requirements of the two environments don’t lend themselves obviously to a merging but if Facebook has done a good enough job here, then they are well-poised to realize the kind of success I’m positing here.  Note, “good enough” is usually the market requirement for massive success.  In fact, in a Gresham’s Law-like way (I have to leverage my college economics major every once in a while), good enough has usually been better than great in the technology space so in fact some of Messages’ shortcomings can and should be overlooked.  View someone saying “Messages, while interesting, is not as good as ‘x'” as a success indicator, not a shortcoming.
    • With over 500 million users (probably 600 million by now), Facebook is one of the rare platforms that has bridged the two user groups with their distinct communications styles.  Email is an activity of the old (get over it, friends!), texting is an activity of the young.  But Facebook is actively used by nearly half of all Americans (and even greater percentages of people in other countries).  This gives them a bully pulpit from which to reach both categories with neutral footing.
    • Facebook itself has been responsible for a change in the way we communicate.  No, they didn’t invent the status update but they’ve certainly been the largest beneficiary of it and have evolved it in meaningful ways.  And this is not just a consumer-driven phenomenon.  Hardly a day goes by when I don’t have a conversation about what I’d loosely call “Facebook for the enterprise.”  They’ve already evolved the way we communicate which gives them a great opportunity to continue to evolve it while subsuming existing forms of communications.
    • It’s frequently the case in the technology industry that a successful platform follows a platform that failed by overreaching.  Windows 3.x was a step back from OS/2.  The Internet was actually a step back from many more specialized platforms that sought to do so much more than “just” hyperlink.  Thus, Messages, following a litany of failed “groupware” approaches and major platform initiatives (Sharepoint, Wave) has the requisite market conditioning and, perhaps this time, the market timing.  (I don’t want to hear from you that Sharepoint isn’t a failed platform.  It has certainly achieved some degree of ubiquity but that’s more a testament to Microsoft’s tenacity and doesn’t really reflect its market impact or certainly its leadership.)
    • It’s the subject for another upcoming blog post but I don’t think social capabilities have been understood and embraced nearly as much as they’re going to be.  “Social” is more than status updates and tweets.  It transforms application categories and the way users relate to each other, and the communities, companies, suppliers and friends with whom they interact.  Adding social capabilities to the communication platform in a fundamental way is going to happen, and Facebook has as good a vision as anyone and is better-positioned than anyone to make that happen.

    For all these reasons, I’m excited by Facebook Messages.  We need a new platform that blends the urgency of texting and IM with the familiarity and functionality of email.  Messages is the leading contender to do just that.  Can they fail?  They certainly have ample opportunity, and track record to do that.  Their last attempt at a “game changer” — Beacon — didn’t end well.  Because I correctly identified Twitter in a February 2008 research note (“Twitter:  The Most Important Platform You’ve Never Heard Of), I’m often asked “what’s the next big thing.”  Wave, no.  Foursquare, no.  FriendFeed, no.  We don’t have one of these a year.  Messages?  I’m not prepared to declare it “the next big thing,” but it’s the first thing in years that I think has that potential.

    Technology Change: Slower than I Think but Faster than You Think

    Last week, I gave a presentation to a “traditional” publisher on the impact of new technologies on their business.  This is someone who has a very successful and profitable “dead trees” business and my mandate was to come in and challenge their thinking with regards to the impact of technology on their business.  Their managers feel no sense of urgency to do anything about new technology now because the existing business continues to thrive and despite the prognostications of industry pundits, they have yet to feel an impact on their current business and thus are in no rush to actually invest in new approaches (even while it’s fun to think and talk about them).

    This caused me to reflect on the technological change I have seen in my lifetime.  I have spent 31 years focused on “disruptive technologies.”  I started working on PCs in 1979 — two years before IBM launched its PC — and I’ve witnessed some amazing technological change in those 31 years.  As an observer of, and advocate for, those changes, I’ve come to an interesting and important realization.  As optimistic as I am about the pace and depth of technological change, I’m usually over-optimistic about the time frames in which it happens.  This was the case in the early Internet days and I believe is once again the case with regards to a new set of disruptive technologies.

    While I was never a wild-eyed proponent of or Webvan, I am certainly guilty of feeding into the hype that led to their elevation.

    So, we technology pundits are overly optimistic.  No big news there.  However, there is big news:  while we may be overly optimistic in the short-term, we’re actually overly conservative in the medium-term!  Ten years ago, the Internet bubble was about to burst.  All those wildly optimistic claims about how the Internet was about to change everything were going to be laid to waste.  Yet here we are, ten years later, and the truth is that the Internet has changed everything.  It has reached a point where, if you lose your Internet connection at work, you just go home or go somewhere where you can get that Internet connection because without it, well, you just can’t do your job.  And it’s not much different at home.  When I lose my cable TV connection, well, there are lots of other ways to entertain myself and, short of a major sporting event (on the level of the World Series), I feel no obligation to leave the house.  Lose my Internet connection?  I may wait around an hour to see if it comes back but anything longer than that and I’m contemplating a run to Starbucks or Borders or somewhere else where I can grab a Wifi connection.

    The truth is that the Internet revolution is more profound than even we wild-eyed optimists thought it might be a decade ago.  We had the timing wrong but, even more significantly, we had the impact wrong, and weren’t wild-eyed enough.  And guess what?  We’re doing it again.  And this time again, it is going to happen more quickly than you think…and more quickly than the Internet took.

    So, what is “it”?  Regular followers know that I have been talking about the “perfect storm” of disruptive technologies — social, mobile and cloud — for over three years now.  My premise is that each of these, while an interesting phenomenon in their own right, actually serve to amplify each other such that the overall market impact is greater than if any one of these phenomena were occurring in isolation.  That amplification effect is one reason why I think that the medium-term impacts of these technologies tend to get understated.

    There are two other unique characteristics of these new technologies that I think will cause their impact to be so significant more quickly:

    • Pace of change
    • Economics

    With regards to pace of change, the fact that we’re heavily Internet-connected enables us to embrace new capabilities much more quickly.  In the early Internet days, we were faced with the daunting challenge of upgrading connectivity models from dial-up to broadband and to deploying new software (the browser) on a large number of machines.  Having done that now, we’re in a position to embrace new Internet models of distribution (e.g., cloud computing) with very little friction.

    Mobile also has some radically different market dynamics than the desktop that enables, and leads to, a faster pace of change.  First of all, we’re embracing the mobile Internet even faster than we did the desktop Internet, as famously called out in a Morgan Stanly report.  In fact, they project that the number of mobile Internet users will pass the number of desktop users in the next 3-4 years.  The dynamics of the mobile market are also very different than those of the desktop, enabling more rapid change.  First of all, this is a much larger market.  Cell phones of all kinds (not just Smartphones) are shipping approximately 1 billion units per year, or about 4x that of the desktop market.  These will rapidly shift to Smartphones across the entirety of the market as prices plummet (in Moore’s Law fashion).  Even more striking, the average lifespan of a desktop or laptop computer is in the 3-5 years range whereas the average lifespan of a mobile device is 21 months.  That means we are changing over the installed base of a multi-billion unit market every two years or so.  There is very little installed base drag in the mobile marketplace!  And this perhaps understates the pace of change.  Granted, we’re in a period of software immaturity but the leading mobile software platform providers (e.g., Apple, Google, RIM) are upgrading their software platforms with significant new capabilities (both software and form factor) every 3-6 months.  That contrasts sharply with the desktop, where software advances are measured in 3-7 year cycles and are often met with significant market resistance because of the cost and disruption of upgrades.

    Bigger market, faster turnover, greater pace of change.  Yes, the impact is going to be felt faster than you think.

    Economics are also contributing to a faster-than-you-think impact of new technologies.  I refer particularly here to the impact of cloud computing.  In the past, for businesses to embrace this kind of technological change would have required massive capital investments on their part to deploy infrastructure to exploit the new platforms.  Cloud computing now enables companies to embrace new technologies in a much more flexible fashion, requiring little to no capital investment and as a result, much faster and more scalable implementations.

    I don’t want to get into an argument here about cloud computing.  That’s a discussion for another day.  Security?  Red herring.  In fact, I posit that over time you’ll find cloud computing solutions will have better security than on-premises solutions because the cloud computing providers have greater incentive to provide that security.  I have come across many CIOs who have an immediate negative reaction to the cloud.  I’ll ask them “if you were starting a business today…” and usually before I can complete the question, they’ll go “well, of course then I wouldn’t own infrastructure.”  The question therefore isn’t whether or not to do cloud but rather how and when.  But I digress.

    Bottom line, the flexible economics of cloud computing enable a more rapid embrace of new technologies than would be the case if companies had to make massive capital investments to support new software platforms like social and mobile.

    It’s easy to ignore we proponents of massive technological upheaval in the early days.  Yes, we’re probably overstating how impactful these technologies will be in 2010 and maybe even 2011.  However, ignore our forecasts for 2012 and beyond at your own peril.  And if you wait until then to start embracing the change, you will find the pace of the market change then to be so fast that you’re unable to keep up, let alone catch up.  My advice to that publisher was this is absolutely the best time to be embracing technological change, while you’ve still got a successful business to fund that change.  If you wait until your existing businesses start to feel the impact from technological upstarts, you might find yourself in a very uncomfortable position, akin to the way Barnes & Noble and Borders feel about Amazon.  It’s not inconceivable that one or both of them will be out of business within a year.  They didn’t feel the urgency to get involved early — and probably saw the demise of as validating their thinking — but when things happened faster than they thought, they had already lost the innovation edge and, more importantly, the customer.

    We overstated the timing but understated the impact before.  I think we’re doing it again, and this time the change is going to be even greater, and so should your urgency.

    The Twitter Generation: Coping with Information Overload

    People look at Twitter, Facebook and other social media and often observe “oh great, just what I need.  More distractions.”  Perhaps now more than ever, my learnings of over 20 years as an analyst are broadly useful.  As an analyst, I’ve been trained to look at the world through the lens of input, process and output.  You have to allocate your time among those three and also make sure that each is managed, typically in different fashions.


    In the good old days of “information is power,” we had a finite number of inputs, often giving us an incomplete picture of the situation.  Today, we still may have holes in the input but the bigger issue now is information overload, too much input.  Still, we must do two things.  First, make sure that among that choices of inputs that we have that we choose a balanced set of inputs to give the broadest possible picture.  Too many people on Twitter, for instance, follow people “just like them,” giving an echo chamber kind of effect.  Their thinking gets ratified because the only inputs they choose to select are those that confirm their position.  Bad situation in which to find yourself.  At the same time, it’s all too easy to conclude that because of the volume of inputs you’re receiving that you somehow must be seeing everything you need to see.  False.  It’s every bit as critical in this “too much information” world to identify the underlaps in your information flow as if you were in a “too little information” world.  So many post-disaster analyses demonstrate that the information to realize we were making a mistake existed, just that it hadn’t crossed the relevant person’s radar screen.  The old saying still applies:  “if you don’t know what you don’t know, you don’t know enough.”


    In the “good old days,” we’d actually spend time thinking about or debating things.  In today’s world, process consists of clicking “like” on Facebook or retweeting on Twitter.  Perhaps with the volume of data today, it’s easier to identify trends but then again, extrapolating straight line conditions was never a terribly valuable skill to possess.  In a data-rich world, every bit as much as in a data-poor one, identifying the non-intuitive conclusions is the real value contribution.  I suppose there’s a place in the world for the Scobles and Kawasakis – the broadcast media of social networks – but the real value I’ve found always comes from those who apply selection, judgment and insight to the data, not merely rebroadcast it.  This is one of the values of the Internet OldTimers Foundation network to me; my OT time is usually thought-provoking and insight-focused.  There is very little of the “see this, pass it on” and much more of the “so what does this really mean?”  And perhaps the biggest insight I’ve gathered over the years from focusing on process is to look for proof you’re wrong.  If you look for proof you’re right, you’ll almost always find it…even when everyone else long ago concluded you were wrong.  If on the other hand, you give your search for your errors a true and honest effort, only in the absence of information negating your position might you begin to feel comfortable in your correctness…subject of course to a full range of inputs as outlined above.  This search for wrongness makes me sometimes a difficult person to work (or live) with – I’m the one who, when everyone else is rushing to agree, stops to see what we’re missing.  On the other hand, that makes me a great consultant; I’ll see what those of you too close to the matter (whose inputs are biased in one direction) might miss.


    At the end of the day, what you do with your inputs and processes is what really matters.  Mental masturbation is a wonderful game in which to participate but if your inputs and processes don’t lead to substantive behavioral changes, it wasn’t necessarily time well spent.  Don’t spend a lot of time in maintenance of the status quo.  Instead, look for those outputs that call for a behavioral change.  That’s where you get the real return on your investments of time above.

    It’s real easy to lose track and get caught up in one of the above steps – the information junkie, the debater or the presenter.  I find great personal value in being aware of these processes and biases and actively managing them.

    Inauguration Day

    It almost seems trivial to note this on a day otherwise marked my tremendous symbolism and pomp but we now have our first technologically-savvy President.  From his attachment to his Blackberry to the campaign’s dramatic and powerful uses of social networking, this is the very first time the country has been led by someone who understands, embraces and even demands technology utilization.

    As far back as 1984, when I was working at General Instrument, I learned the power of a chief executive who understood the power of technology.  GI in those days had an email system, linking facilities around the world.  However, its utilization was spotty.  There were a not-inconsiderable number of tech junkies — this was a technology company, after all — who loved the immediacy that email offered.  There was, however, a much larger population of people involved in manufacturing and operations, disciplines that had largely been untouched by technology back in those days.  The higher up in the organization you went, the less likely they were to use the email system.  The net result was that for reliable communications, to update the “systems of record,” you had to use “traditional” forms of communications.  Fortunately, however, GI was led by a CEO (Frank Hickey) who understood the potential of electronic communications.  He decreed that certain of his key reports be submitted to him electronically.  As you might imagine, the trickle-down was almost immediate and within a matter of months, the number of users on the email system had grown several orders of magnitude and the number of messages grew even more so.  Being in charge of the PC implementation as I was, the number of PCs in the company grew in a year from under 100 to over 1,000.

    Clearly, there is power in a chief executive who understands, and demands, the use of technology.  Already this morning, I’ve seen stories on TV about how Obama is still fighting to retain his Blackberry and how his transition team has had to rely on Gmail prior to their .gov email addresses going live.  I hope this means that, much as my experience at GI, the country experiences a significant trickle-down effect, where we more effectively utilize technology to effectively communicate.  We have just scratched the surface of how social technologies are going to change the way we live and work.  I am optimistic that under our new President, we will embrace those changes in some profound ways not capable had another man been elected.

    Tomorrow, the reality of the economy and my personal situation may temper my enthusiasm (just a little), but for today, I’m hugely excited about the future and what this Presidency means for technology, business and people.