Facebook, Youth, and the Ad Gutter

February 2, 2011 § 3 Comments

Advertisers love banner ads, and oddly, pay a premium for them – despite the .1% click-through rate.  But the undesirable (and inevitable) effect of banner ads is the ad gutter – the space around the ad that the user learns to ignore.  Banner ads always create an ad gutter – even with savvy placement – and train users to look elsewhere for useful content.

This is one of the reasons advertisers are excited about Facebook – it enables them to target ads to their prime demographic, lessening the need for flashy, and annoying ads that twirl and bounce.  Unfortunately for these advertisers Facebook created its own ad gutter instead of attempting to integrate ads with content.

 

Facebook ad performance is deplorable – despite the higher cost, Facebook ads actually get about half the clickthroughs of banner ads.  Even more interesting: younger audiences don’t seem to interact with these ads at all.  I would guess that young people, more familiar with internet browsing are sensitive to the ad gutter.  They have intrinsic understanding of how website content is structured – just like their parents intrinsically understand how newspaper content is structured.  It comes down to this:  I don’t know if Facebook’s ads are relevant to me, because I never look on the right hand side of the page.

What should Facebook do?  Online, there is obviously a tradeoff between showing ads (to make revenue), and keeping users happy.  The advertiser and the user are diametrically opposed, with the website (in this case, Facebook) stuck in the middle trying to compromise.  No wonder banner ad clickthroughs are abysmally low – why would a user want to interact with something annoying?  Advertisers should engage with potential customers, not annoy them.  By creating an ad gutter, Facebook is trying to minimize the damage to users, while paying lip service to advertisers. 

Creating engaging advertising content is costly, and doesn’t scale to multiple websites the way banner ads do.  But Facebook seems like a great place for experimenting with new advertising methods – Facebook doesn’t support standard ads anyway, and the audience is big enough to justify the cost.  More importantly, if ads are well developed why should they be resigned to the ad gutter?  I’m sure plenty of advertisers are interested in more revolutionary ideas, so the question is – why isn’t Facebook?  If there is any site that could bridge the gap between content and advertising, it is Facebook (…or Twitter).

Fashion and the Commoditization of Devices

January 26, 2011 § Leave a comment

 

The Versace phone is old news –a $7,000 phone is bound to make the twitter rounds.  Dolce & Gabbana, Prada, Armani, and Dior weren’t long to follow the unsuccessful bandwagon of electronic endorsements. As one of the 10 people on earth actually interested in both technology and fashion, I’m surprised a designer mobile device came so soon, but I guarantee it is the face of things to come.

Before I get into predicting the future, I’d like to discuss why these devices (and in particular the Versace phone) failed. 

Wrong market!

At the $7,000 price point this phone wants to compete with luxury watch makers.  Watches are timeless, ageless, and last a hundred years.  They maintain value.  Phones get tossed about every two years.  Instead of looking at watchmakers as competition, Versace should target the luxury handbag market.  Priced between $1,500 and $2,000, these devices would be much more accessible to people with interest in (or a weakness for) fashion credibility.  Send them down the runway with other accessories targeted for mass appeal. 

Design

I’m not going to debate the merits of the form factor – I think the phone is tacky, but I’m not a huge Versace fan.  HP recently partnered with a few designers to give their laptops shiny designer-emblazoned cases.  What did they create?  A line of crappy, ugly laptops with designer logos.  High end designers (in general) are to clothing, what Aston Martin is to cars – they obsess over every detail and the result is a work of art.  You can’t take a Honda, add an Aston Martin logo, and expect people to buy it for markup.

But if you could take the experience of purchasing an article of designer clothing – the smell, the feel, the stitching, the way it fell on a body, the colors, the contrast and applied it to electronics you’d have a hell of a business.  If holding, talking, and internet browsing were fundamentally different, more visceral, the device would sell. 

User experience

It isn’t just the form factor that sells phones!  It’s the UX!  It’s the app story!  It’s the battery life!  And the stability!  I could go on.  Until these things are so commonplace we take them for granted, a device will never be able to survive on designer-branding alone.

Network hassle

This is really US specific, but I’m pretty sure that very few people with the inclination to purchase a designer phone could actually get it up and running on a network.  You need physical hand-holding for even the most vaguely technical situations (especially with fashion people).

So with the laundry list of problems, why do I think this market has a future?  The smartphone industry is still so new — these designer-y gadgets are before their time.  As the features that differentiate the iPhone become commonplace, there will be more opportunity for fashion to differentiate the players – and make a huge profit in a saturated market.

What *should* a Product Manager do?

January 20, 2011 § 5 Comments

Once upon a time, developers and marketers were making software. Developers had all of these ideas about how the product should work, marketers had all of these ideas about what should be said about the product, what it should cost, and how it should be sold. Developers spoke the language of architecture and code, marketers spoke the language of focus groups, and messaging. They existed on completely different levels, (best illustrated in this mid-90’s Orson Scott Card essay). But then, someone else came along –someone who understood software development fundamentals, but also product strategy and vision. This person was the first product manager – a jack of all trades who identified with the customer, understood the vision, and could make fantastic, sell-able software happen.

These days Product Management is a vaguely defined role – different in every organization. But what is the standard? What makes a Product Manager great?

Focus on the product, not the process
A great PM is not glorified project manager or an administrative assistant. He understands the strategy of the product, and has a vision for the product’s future. He knows what the customers want, and what the customers don’t know that they want. He specs, he develops user experience, he knows what he wants built. He is not a meddlesome micro-manager, keeping devs on task. But a visionary with a 10,000 foot view of the product, leaving engineering process and schedule to engineering management.

Someone remarked to me recently that “PMs love process”. They should’ve said “bad PMs love process”. Bad PMs flock to process to demonstrate value with tangible deliverables (e.g. red/yellow/green status reports, update e-mails, checklists of all sorts). Great PMs don’t have the time or inclination for process.

Major grassroots impact
A great PM knows how to sell his product and ideas. He doesn’t wait around for top-down management. He influences direction and strategy. He regularly chats with customers and influencers. He blogs, he tweets, he understands the competitive landscape. He is the unofficial CEO of the product – no power, but all of the responsibility. He coordinates his peers — keeping devs honest, and ensuring that marketing doesn’t screw up the launch plans.

Authority on design, and development
The platonic PM ideal has the perfect combination of common sense, business understanding, and technical prowess. He is broadly technical, understanding the development team’s plans and feature costs. He has design savvy and user experience intuition. He ensures that product-killing compromises are not made. With his broad scope and proven skills, the team trusts him to make hard decisions.

Part of a strategic organization
The PM organization must be configured to attract and retain these great PMs. The number one organizational barometer of the product management discipline’s success is the scarcity of product managers. More than any other discipline PMs (in excess) dramatically decrease your product team’s execution ability. Think about it this way: in moderation eggs are really good for you – Omega-3s prevent cancer and depression. In excess the cholesterol will give you heart disease. PMs are similar – in small doses they can make your product great, and create harmony in your organization. In large doses, they will drown you in process, fill your inbox, and have meetings for other meetings.

I’m interested – what do you think a PM should do? What makes a PM great?

Coincidentally, my friend Alex Weinstein wrote a post on the very subject today – be sure and check it out.

SecondMarket, WikiLeaks, and Institutional Innovation

December 13, 2010 § Leave a comment

Institutional innovation sounds like a contradiction in terms. How do you take a clunky, bureaucratic organization/process/thing and transform it into something modern, efficient, and useful? In my experience the only way to innovate institutions is to force their hand – by creating fundamental change they can’t ignore.

Take SecondMarket, a company that (among other things) helps privately held companies postpone the hassle of an IPO while gaining some much-needed liquidity. The internet is filled with tales of VCs pushing for the first Microsoft/Google/Amazon buyout offer. SecondMarket provides startups with an alternative to dealing with jumpy VCs or angel investors – leveraging a controlled private market for transaction of private stock. It’s totally legitimate: Facebook employees have already used SecondMarket to cash out millions of dollars of options pre-IPO.

Start-up employees: there are now fewer institutional barriers separating you from your cash. Start-ups: you now face less pressure to sell out, and less pressure to go public.

With liquidity out of the picture, there are plenty of reasons to avoid an IPO (beyond the paperwork). Public corporations are forced into a weird sort of transparency. Yes they must publish a set of public financial reports, but this blog for the Harvard Business Review argues that the quarterly reports public corporations publish are meaningless in the modern world. Further, it argues that the fundamental volatility of the stock market is based on infrequent access to meaningful information. This thirst for information is what made the WikiLeaks scandal possible, and is the reason WikiLeaks will have copy-cats. Sure, real-time cooperate reporting sounds scary, but in our information-addicted world, privileged information isn’t sacrosanct – for public or private entities.

To me, SecondMarket and WikiLeaks sound like the beginning of an important (and inevitably profitable) trend. Transforming outdated institutions for the modern world could be the next big opportunity. WikiLeaks will inevitably force some hands, and it will be interesting to watch SecondMarket’s impact on the (?) First Market.

Behind the Scenes of a Microsoft Keynote

December 4, 2010 § Leave a comment

When I worked in Live Labs, our schedule centered around launching at big conferences to generate publicity. It is a very Steve Jobs strategy – create a highly publicized event and show off your coolest stuff to maximum impact. I was surprised to learn that Microsoft’s developer division also relies on these conferences. On stage coding in Visual Studio lacks the impact of a Steve Jobs iPhone demo. But the Silverlight FireStarter 2010 conference’s success was crucial in light of Microsoft’s general shift towards HTML5 and Bob Muglia’s comments at PDC. After a series of mishaps and bad press, the pressure was on the Silverlight marketing team to prove that Silverlight is a relevant developer platform, with richness that HTML5 can’t match.

Normally, I’d be interested in talking business strategy. But I had a closer-than-normal look at this conference (I was thrust into the keynote last-minute), and I was really amazed at how much orchestration goes into one of these events. You have:

• A set of feature teams responsible for building technology (normally, this is where I’d come in)
• A set of vendors responsible for building the “wow factor” demos of the technology (I’m frequently pulled into this stuff too)
• Demoers and presenters – called “talent” backstage (um, seriously?)
• A bunch of marketing people ensuring that presenters are hitting the talking points
• People who coordinate events like this for a living – helping with timing and slides
• PR people running about, doing who-knows-what
• Various event people: video, sound, lights, logistics
• Security – I mean, actual guards – one up front, and one backstage
• Hair and makeup (?!?!)

All of these people running around, everything coming in at the last minute, things being added and removed from the keynote on a minute-by-minute basis. Crazy, but exciting.

The full keynote was practiced the night before to give as much time for polishing demos as possible. I hung around all night, waiting to demo PivotViewer – knowing that there was a good chance it wouldn’t fit. But, once everyone saw the demo, PivotViewer was in. The big surprise: I was asked to demo. So I had about 12 hours (minus whatever sleep I wanted to get) to tighten up the script I’d written for someone else, and perfect Gary’s magic of talking and Pivoting (as evidenced here). But I think it went well in the end, and it was a unique and fascinating experience. You can check out the recording here: http://www.silverlight.net/news/events/firestarter/.

The PivotViewer demo starts at the 1:19 mark of the keynote, and it is one of the most compelling demos of the day. In the future, it will be easy to generate PivotViewer collections (with visuals!) dynamically, client side. This is exciting, because it means real websites can embed PV controls to browse whatever data they have lying about – no matter how often that data updates. And wouldn’t most websites be better Pivotized? I certainly think so.

Why Win7Phone is a mistake

November 12, 2010 § Leave a comment

While Microsoft has a long history of dabbling in mobile, and tons of infrastructure for creating mobile developer ecosystems, it never really had a mobile strategy.  I’d argue that it doesn’t really have a mobile strategy now.  Apple’s strategy is to make the prettiest consumer-focused phones on the market, Google’s strategy is to make mobile ad revenue (of which they’re already pulling in $1 billion a year), RIM’s is to appeal to the e-mail heavy business user.  But is Microsoft just trying to look relevant?

MS was early to the mobile game – they had an entire mobile-app developer experience while Apple was charging $500 for iPods.  But Microsoft saw a smartphone as a tiny PC – a large clunky form factor with a shrunken Windows XP user experience.  Going after the same business market RIM and Palm owned, Microsoft lead the mobile smartphone charge by clumsily adapting the Office suite to mobile.  They focused on the unsexy information worker –that’s where the market was – and despite their expertise in this area (and heavy investment), couldn’t really get it right.

Apple then swooped in and proved a viable consumer smartphone market, and the sexiness of the consumer device seeped into the business world.  Google came in, and sorta copied Apple but with a different business plan.  Microsoft quickly learned a valuable lesson about the consumerization of business technology.

And they went in a radical new direction.  They’re first attempt at a smartphone in the new world was the Kin.  Instead of the business-focus, it was tween-hipster-social-networking focused.  Despite the massive failures in marketing, and device sales (Microsoft doesn’t have a lot of experience selling things to “the kids”), the Kin showed some promise as a device:  it was the first to seamlessly connect mobile with the cloud – obviously the near-future of all mobile devices.  

So, now we’re at Windows 7 Phone, and I think we missed a huge opportunity.  Kin had technological benefits, but not near enough cool factor to tackle Apple in the consumer space.  Windows 7 has a few user experience improvements over the competition, but in general a pretty run-of-the-mill device.  There’s a lot of noise about how Win7Phone will get market share via Xbox, or whatever (certainly not Zune), but I don’t buy it.

Instead of tackling the Apple/Google model head on, why didn’t we go after RIM?  Our original Windows Mobile devices failed because they were the phone equivalent of a beige-tower PC, but with Microsoft’s hegemony in the IW worker, e-mail, productivity area why couldn’t we make a perfect e-mail, productivity device if we really tried?  It could be just as pretty as an iPhone, but serious about being a business device – a keypad for typing on the go, awesome mobile-y tailored Office apps, seamless Exchange and SharePoint integration that backs up to the cloud.  Basically, a better, more directed, sexier version of what we’ve been doing all along.

Then, after making a business phone we could sell to enterprise (the way we sell everything else), and creating some real market share (taking RIM down in the process).  Then we could sit down and intelligently decide if Microsoft has a reasonable possibility of a future manufacturing consumer phones.  Right now, it doesn’t.

Women in Innovation and Tech

November 5, 2010 § Leave a comment

I attended Dow Jones’ FASTech conference this week to accept a runner up 2010 Technology Innovation Award.  I’ve been to a few tech conferences, but this was unique – a small amalgamation of technical innovators, venture capitalists, and WSJ tech-section journalists.  There was so much interesting discourse throughout the conference, and I found it incredibly inspiring to be among such a distinguished set of people.

But there was one problem, and while I didn’t intend to write about it (in fact I have a notepad next to me filled with great ideas for blog posts that I scribbled while attending sessions about doing business in Asia, liquidity, and executive Q&As).  But it struck me at the conference before anything else, and I left the conference without feeling terribly comfortable about it. 

There were so few women in attendance.  It sounds trite – I mean, I’ve been in tech long enough to know what to expect.  But this conference wasn’t terribly technical.  There was a smaller percentage of women attendees and speakers than the more technical conferences I’ve attended.  So, what gives?  Are women even more scarce in high end innovation and the business side of technology than they are in technology development?

The conference organizers tried.  The keynote speaker was Judy Estrin – who built networking technology in the 70’s, and used to be the CTO of Cisco.  Impressive credentials, though her speech about innovation was more confusing than inspiring.  The only other woman speaker was a WSJ journalist focused on internet privacy.  I was even mistaken for a journalist more than once (right, because I couldn’t possibly be a technical innovator).  The other women I met were PR, or BizDev, working the conference to create good press and form connections.  These women weren’t the radical innovators, or the people funding and cultivating innovation.  Of all the CEOs that demo’ed at the VC showcase, not one was a woman.   None of the VCs were women.  It was unfortunate, and depressing.  So while I found the conference material fascinating, this disparity stuck with me.  And I can’t seem to shake it.

You can read about the 2010 Technology Innovation Award and the winners here.  I highly recommend checking it out.  The big winners – a Taiwanese research lab created a super thin flexible display that is sooo cool.