And I’m back …
Thought this was a really interesting comment from ESPN’s Ryen Russillo during the Grantland Basketball Hour in December. He was talking about the moves by Sacramento Kings owner Vivek Ranadivé (also known for Gladwell’s writeup of his all press all the time approach to his daughter’s basketball team) and generally what it’s like for these guys who have made a lot of money in the business world coming into sports.
New owners can’t help themselves because you think about how successful these guys are at amassing their wealth. They go, “I’m the man, and now I’ll just buy a team, I’ll apply the same analytics, the same principles … I’ll just go win.” But the model in business allows many companies to be successful, the model in sports only allows one.
I never really thought about it like that, but it’s true. Although many think of business as being zero sum, it isn’t really, especially in the world of technology where people are bound to use multiple devices and applications (that’s not to say within a specific category it can’t be zero sum). Sports is different in that there is only one winner. Of course the counter-argument here is that something can’t really be zero sum when everyone gets rich, but it’s interesting to consider nonetheless.
This Tweet/post of mine really blew up and I thought I would share it here as well. When we first started Percolate I wanted to make sure that we didn’t become a company that became taken over by meetings as we grew. To that end I set a few simple rules in place, most important of which was that no phones or computers were allowed in meetings. Below are the rules or you can check out the whole post at the Percolate blog.
I’ve been experimenting with posting around the web lately. This weekend was a post about first principles thinking on Medium and today it’s a post about process on LinkedIn. It’s based on a quote I gave to Digiday about what big brands can learn from startups:
I’ve been reading “Creativity Inc.,” the Pixar book by Ed Catmull. In it, he realizes at some point the goal became the process — the goal was not making great movies. That’s what happens inside big companies: The process becomes so locked into place that you forget what your actual goal is. It’s not to follow the process, but it’s to create a great product or deliver a great service and do whatever the brand is there to do. Inside startups, because they’re so much smaller and younger and the process is much less fossilized, you don’t have the chance to do that. What I’m trying to do at Percolate is make sure we never do that. I want people to think the process can change. Because it should.
I was reading this speech from Andy Grove, Intel chairman, from 1998 and while the whole thing is a bit hard to read, this bit about strategic inflection points and competition was quite interesting:
Some key warning signs that hint that the change you are dealing with make a Strategic Inflection Point is when it is clear to you that all of a sudden the company or the entity that you worry about has shifted. You have dealt with one particular company or establishment as a competitor all your life and all of a sudden you don’t care about them, you care about what somebody else thinks. I have this mental silver bullet test. If you had one bullet, who would you shoot with it? If you change the direction of the gun, that is one of the signals that you may be dealing with something more than an ordinary shift in the competitive landscape.
Last weekend I, like many others, read the New York Times story about the troubles with Healthcare.gov with great interest. The project was marred with things that any of us who have developed on the web have experienced working on a digital project with a launch date: Moving deadlines, late specs, different parties with different interests, and an ever-expanding scope.
The thing that was most surprising wasn’t that any of these things are at all odd, it was in fact how familiar they all sound. Take this, for instance:
Deadline after deadline was missed. The biggest contractor, CGI Federal, was awarded its $94 million contract in December 2011. But the government was so slow in issuing specifications that the firm did not start writing software code until this spring, according to people familiar with the process. As late as the last week of September, officials were still changing features of the Web site, HealthCare.gov, and debating whether consumers should be required to register and create password-protected accounts before they could shop for health plans.
As I was walking down Broadway a few days later I had a conversation with another Percolator
about why it was taking so long to finish construction on the street. If you’ve spent any time in New York (or just about anywhere else) you’ve wondered how a public works project could drag on for the seemingly endless amount of time it does. But then I started to think about Healthcare.gov and how easy it is, relatively, to build digital things instead of physical things. Assuming those same issues happen on the group (scope creep, competing interest groups, etc.), for the first time I felt like I could understand what was going on. Then when you start to layer on physical accessibility laws (ramps, etc.) and the fact that you can’t launch an alpha staircase (three stairs instead of ten), it all became pretty clear.
Now this isn’t to say there’s an excuse and we shouldn’t be able to complete these projects more efficiently, but at least I could see where the time goes (and feel grateful that I a) don’t make things that involve digging up the street and b) work in a world where we don’t have to deal with the nonsense).
Matthew Yglesias has a short little article about how J.C. Penny is killing wifi in their stores, one of the things Ron Johnson put in place during his very short tenure:
I can think of no better example of how Ron Johnson destroyed J.C. Penney than the company’s slightly ridiculous plan to offer free Wi-Fi in all its stores. That this was a bad idea is not the reason the store’s been struggling. But the fact that Johnson couldn’t see that this simply isn’t something his customers would have any real desire to take advantage of spoke volumes about the strategic errors happening in Penneyland.
I’m not sure this was such a stupid move by Johnson. Speaking to a guy at the American Marketing Association conference in New Orleans last week, he made the point that in many of these giant stores (he used to work at Target), the cell coverage is so bad that wifi is the only way to get coverage and potentially do something interesting with customers’ mobile phones in store. If we assume that mobile research will be an important part of buying in the future then it might turn out they’ll just have to go back and reinstall all that wifi anyway.
I’m incredibly proud of this blog post by James OB, one of the engineers at Percolate, about why he likes the engineering culture at the company. The whole thing is well worth a read, but I especially liked this bit:
The autonomy to solve a problem with the best technology available is a luxury for programmers. Most organizations I’ve been exposed to are encumbered, in varying degrees, by institutional favorites or “safe” bets without regard for the problem to be solved. Engineering at Percolate has so far been free of that trap, which results in a constantly engaging, productive mode of work.
I spend a lot of time thinking about building products (and, more specifically, building teams to build products). With that in mind I really enjoyed this rc3.org post about the seven signs of a dysfunctional engineering team, especially this bit about building tools instead of process:
Preference for process over tools. As engineering teams grow, there are many approaches to coordinating people’s work. Most of them are some combination of process and tools. Git is a tool that enables multiple people to work on the same code base efficiently (most of the time). A team may also design a process around Git — avoiding the use of remote branches, only pushing code that’s ready to deploy to the master branch, or requiring people to use local branches for all of their development. Healthy teams generally try to address their scaling problems with tools, not additional process. Processes are hard to turn into habits, hard to teach to new team members, and often evolve too slowly to keep pace with changing circumstances. Ask your interviewers what their release cycle is like. Ask them how many standing meetings they attend. Look at the company’s job listings, are they hiring a scrum master?
One of the thing I try to communicate to the whole company is that it’s everyone’s responsibility to build products. Products are reusable and scalable assets. While process is a product, tools are (almost always) better. I am working on a long and sprawling explanation of all my product thinking stuff, but that will have to wait for another day.
I wrote a post over at 99U about the levels of designers and how I think you build a great design team. You can read the whole thing there, but here’s a snippet about states:
If level two comes naturally to most designers who have grown up in a digital world, level three most definitely does not. States are about understanding all the different possible outcomes of a given task within a product and being able to design for all of them. Things like errors are obvious, albeit often forgotten, while actions like escapes and backs are much less frequently planned for.
To draw a parallel, a great engineer thinks in states. Before they write a line of code they have come to understand all the different outcomes and use that understanding to design a fault-resistant system. One of my favorite lines from one of our engineers recently was, “when I start typing the work’s done.”
I really liked one of the comments in this NYTimes interview with Roman Stanek, the CEO of GoodData. In response to “Anything you have a particularly low tolerance for in your organization?” Stanek answered, “I have a really low tolerance for people making comments, especially managers, without actually positioning them.” When asked to explain he said:
Somebody might say, for example, that our competition has a new product. But is it good news or bad news? Should we do something about it? I always expect my managers to have an opinion and they should not be just messengers. A manager is not a messenger. I don’t like my managers essentially talking to their people without being able to express their opinion and position what they’re discussing.
This is perfectly articulated and drives me crazy as well. It’s so easy to send emails that people have a tendency to just shoot things off with comment or context. I don’t want to know the news, I want to know what you think about the news and why you decided to send it to me.
I read the crazy Wired essay/Kindle Single John McAfee’s Last Stand about how the guy who made antivirus software famous ended up wanted by the government in Belize. It’s a wild, but not all that interesting, tale, however, I found this snippet about how he started selling his software very interesting:
He started McAfee Associates out of his 700-square-foot home in Santa Clara. As a hobby, he had been running an electronic bulletin board out of a corner of his living room. He had four phone lines patched to a computer that anybody could dial in to and upload or download comments and software. His business plan: create an antivirus program and give it away on his bulletin board. McAfee didn’t expect users to pay for it. His real aim was to get them to think the software was so necessary that they would install it on their computers at work. They did. Within five years, half the Fortune 100 companies were running it, and they felt compelled to pay the licensing fees. By 1990 McAfee was making $5 million a year with very little overhead or investment.
Company’s like Yammer have been celebrated in the software industry for introducing a new, and very interesting, model wherein you sell to individuals first and then get enterprises to buy once there’s scale. Cool to see this has actually been around for awhile.
I’ve written in the past about what market leaders do to build categories, and frequently I cite Google as the best example of these strategies. Their approach with laying down fiber and providing really cheap, super fast internet in Kansas City is no exception. Like it did with Chrome (at least at the beginning), Google is trying to jumpstart a stagnant market:
If you are one of the lucky few Kansas City natives to have already signed up for Google Fiber, I don’t begrudge you one megabit; your ancestors had to deal with the Dust Bowl, you deserve a little extra bandwidth. But at its heart, Google’s attempt at being its own ISP is much more about forcing the entrenched service providers — the Verizon’s and Time Warner’s and AT&T’s of this world — to step up their games than it is about making this particular business a raving financial success. When I asked the Google spokeswoman what the ultimate goal of all this was, she replied that Google wants “to make the web better and faster for all users.” The implication is that they don’t necessarily want to do it all by themselves.
Excuse this bit of bragging, but this makes me incredibly proud. Today, Christa Carone, CMO of Xerox, wrote this about Percolate on Forbes.com:
As an active Twitter user and scanner, I’m constantly prowling for Tweet-worthy articles and insights to share with my followers. But, like every multi-tasker, over-committed, “not-enough-time-in-the-day” person I know, there are always competing demands for time that keep me from heeding the call of the little blue bird.
Thank goodness for Percolate, a small but fast-growing company that recognizes that marketing on the “social scale” requires content, content and more content, but only if it passes the relevancy test. Through algorithms, filters and other tools, Percolate scours the web and serves up content tailored to my specific areas of focus that I can review and easily share.
I’m grateful for and a tiny bit envious of this start-up. I marvel at how its founders quickly spotted a need and last year created a company that has scored a slew of clients and, in November, $9 million in funding. Besides that, everything this company does is on-brand, from its business cards and its Daily Brew email to the—yes–perkiness of its staffers.
One of my resolutions for 2013 is to spend more time learning from small companies like Percolate. Big organizations can be great marketers but often find it hard to act fast. Frankly, “seize” isn’t something that is easily said or done. But there are lessons that Goliaths like Xerox can learn from more nimble David-sized enterprises.
Beyond it being incredibly flattering, there are two things that make me especially happy reading this: First, it’s just the recognition around the brand. I spent a lot of time working with large companies with unbelievable brands and its fun to get a shot at building your own. I still believe deeply that there’s an opportunity within tech, especially on the enterprise side, to take advantage of the lack of thoughtful brands in the space. Second, and more importantly, it’s the recognition of people as part of the brand. When I worked for Naked Communications the tagline (or whatever you want to call it) was “everything communicates.” Brands aren’t built with collateral and style guides, they’re built through interactions and, for us and many other companies, those interactions are with people just as much as they’re with software. Your brand is the total of all those parts and interactions and the responsibility for it sits with everyone in the organization, whether they’re on the front lines dealing with clients or they’re just out at a bar talking about their jobs.
It makes me incredibly proud to read something like this.
Bill Simmons has a good article about Bill Russell, Kobe Bryant and leadership. I found the first paragraph especially interesting:
I spent five hours with Bill Russell last week and thought of Kobe Bryant twice and only twice. One time, we were discussing a revelation from Russell’s extraordinary biography, Second Wind, that Russell scouted the Celtics after joining them in 1956. Why would you scout your own teammates? What does that even mean? Russell wanted to play to their strengths and cover their weaknesses, which you can’t do without figuring out exactly what those strengths and weaknesses were. So he studied them. He studied them during practices, shooting drills, scrimmages, even those rare moments when Red Auerbach rested him during games. He built a mental filing cabinet that stored everything they could and couldn’t do, then determined how to boost them accordingly. It was HIS job to make THEM better. That’s what he believed.
The idea of scouting your own teammates is really interesting and clearly has business implications. We tend to spend a lot of time looking at the landscape and understanding our customers, but there’s always an opportunity to better understand the people around us. We sort of do it with reviews and goals inside organizations, but this seems like a different lens on the idea of management and leadership. Instead of just trying to look at people and understand how to help them grow, you look at how competition would exploit your team and use that to try to identity your blind spots.
Fortune posted this 1992 article about the Hells Angels. In general it’s a bit of a boring factual account of how the group came to be and how it makes money, but I really liked the fact they used to call them the one-percenters:
What makes the Angels and the lesser outlaws so distinctive among criminal enterprises — and adds to the frustration of law enforcement officials — is that many Americans celebrate them and identify with them. Back in the 1950s, the American Motorcyclist Association, the voice of legitimate riders, pronounced that ”only 1%” of all riders were troublemakers. The outlaws gleefully accepted the label, and many still call themselves one-percenters. (The actual percentage is much smaller — counting the hangers-on police call associates, only about 0.2% of the estimated nine million motorcyclists in the U.S.) And plenty of people — including many who have never even sat on a motorcycle — like their style and applaud them for defying convention and authority.
Can’t imaging they’re still calling themselves that …
For whatever reason I’ve been listening to a lot of podcasts lately. One of my favorites is Planet Money from NPR. Their latest episode is a really interesting look at why Coca-Cola stayed 5 cents for 70 years. Turns out there are two primary reasons: First, the company got into a crazy deal with the bottlers where it was selling syrup at a fixed price of 90 cents a gallon. Because it was a dumb deal and Coke knew it they realized they needed a way to keep the price from spiraling out of control. Their solution was advertising. Because they couldn’t control the sale price they just went out to the market and told everyone it was 5 cents a bottle, meaning retailers were left with no choice but to sell it for the price consumers expected. The second reason is a little less exciting, but still interesting. Apparently Coca-Cola had an insane amount of vending machines around and they were all 5 cents. After getting out of their contract they could raise the price, but they didn’t want to double it and the machine couldn’t take anything but nickels. They tried (and failed) to lobby the government for a 7.5 cent coin, but eventually just kept the price as it was (with a brief period of giving every eighth consumer an empty bottle to artificially raise the price in a crazy way).
Go check out the whole thing.
I know I post these every so often, but today we announced that we’ve raised a $9 million Series A. This is a big number and what it means most is that Percolate is very much hiring. We’re pretty much hiring across the board, but here’s a quick rundown of the current open positions on the site:
- Account Executive: This is the title we have for our more senior sellers. The job is about getting in front of Fortune 500 brands and helping them understand the value of Percolate.
- Engineer: We’re hiring for both Jr. & Sr. engineers (as well as frontend). We are a technology company first-and-foremost and hiring the best engineers is part of what we need to do to succeed.
- Designer: We have a top-notch design team here and really believe that the product is dependent on keeping that quality as high as possible.
We’re hiring for some other positions as well and you should check out the whole list, but those are some of the more pressing ones. If you know someone who would be awesome please send them our way.
Jeff Weiner, CEO of LinkedIn, seems like a really smart guy. The NYTimes has a nice little interview with him that includes a couple really great nuggets about leadership. I especially liked his take on email, though:
Like any other tool, e-mail is what you make it . It’s an incredible tool of productivity, collaboration and knowledge-sharing for me. That’s not to say I haven’t struggled with it like everybody else. But one thing I realized is that if you want to reduce the amount of e-mail in your in-box, it’s actually very simple: you need to send fewer e-mails. I know it’s kind of a self-evident truth. Because every time you send an e-mail, what’s going to happen? It’s going to trigger a response, and then you’re going to have to respond to that response, and then they’re going to add some people on the “cc” line, and then those people are going to respond. You have to respond to those people, and someone’s going to misinterpret something. That’s going to start a telephone game, and then you’re going to have to clarify that stuff. Then you have someone in a time zone who didn’t get the clarification, so you’re going to have to clarify that clarification.
I don’t know what it says about me, but I’m a sucker for thousand-word stories on things like shipping pallets. Luckily for me, Slate has gone ahead and written one (or rather they wrote one back in August). Here’s a little taste:
Pallet history is both humble and dramatic. As Pallet Enterprise (“For 30 years the leading pallet and sawmill magazine”) recounts, pallets grew out of simple wooden “skids”, which had been used to help transport goods from shore to ship and were, essentially, pallets without a bottom set of boards, hand-loaded by longshoremen and then, typically, hoisted by winch into a ship’s cargo hold. Both skids and pallets allowed shippers to “unitize” goods, with clear efficiency benefits: “According to an article in a 1931 railway trade magazine, three days were required to unload a boxcar containing 13,000 cases of unpalletized canned goods. When the same amount of goods was loaded into the boxcar on pallets or skids, the identical task took only four hours.”
If that doesn’t make you want to read it, I don’t know what will.
I’m assuming you’ve heard this, but Microsoft announced a new tablet they’ve developed the other day and it has lots of people talking. Anyway, I had one thought I wanted to share, which is roughly based around this quote from The Verge:
There is a gray area that exists for me with the iPad. I love using it to read, to browse the web, to share content, to occasionally create content. But there is a moment when I have to put the iPad down and grab my laptop. I travel with both. I keep both nearby when I’m at home. And I think this is true for a lot of people (it’s certainly true for a lot of people I know in the tech press).
Basically what I find most interesting about Surface is that it seems to be a nothing-to-lost move and exactly the sort of thing Apple wouldn’t do. By that I mean Apple created a new computing category with the iPad: It put a computer in a place (bed or couch) that it never really existed before. This wasn’t a replacement device, it was additive. I, like many I know, use both an iPad and a laptop and Apple’s laptop business is doing pretty well for them. Surface tries to imagine a future where there is just one. It’s not to say it will happen, but it feels like something Apple wouldn’t do and for that I applaud them.
I haven’t written a ton about starting Percolate, partly because I don’t want this to become a place where I just promote what I’m up to and partly because I’ve been so busy I haven’t had a lot of time to write (as I’m guessing you’ve noticed).
Well, now I’m on a train and I forgot my Verizon card at my last meeting and I decided it would be a good chance to get some things down. These are a bunch of random thoughts, as much for my own safekeeping as sharing.
Before I start, a bit of an update on Percolate: We have 15 people, our own office and a healthy roster of Fortune 500 clients. James (my co-founder) and I started the company last January (2011). Alright, onto the thoughts …
One of the funny things about starting a company (and growing it) is the milestones you set for yourself (or discover as you go). There’s the obvious ones (first employee, first client, first check in the bank), but then there’s the less obvious ones like first office (alright, maybe that’s an obvious one) and first employee who relocated to come work for you (we passed that one recently). Every time we hit one of these it’s a moment to reflect and think about how crazy the whole process of starting a company really is.
I’ve written this before, but it bears repeating. I can’t imagine EVER starting a company without a co-founder. I can’t recommend it highly enough to anyone thinking about being an entrepreneur. As far as choosing your co-founder I think there are a bunch of factors that has led to a really strong relationship between James and myself, including: A lot of respect for each other, clear roles (but also enough respect that when we move outside those roles it’s accepted) and an ability to disagree and be stronger for it (I wrote a short post about this but I think it’s hugely important, if you can’t argue productively with your co-founder, you shouldn’t start a company with them). There are lots of others, but those top my list.
There is a fundamental difference between being a person running a company and being an employee. As the one in charge your singular goal is to keep the company evolving (at least it’s true of a technology startup). Stasis equals death. You want your company to look totally different tomorrow than it does today. If you’re an emplooyee, you often want the opposite: You like where you came to work and you want that company to stay the same. I’m not sure how to resolve this disconnect and I never recognized it until starting Percolate.
Recruiting, Marketing & Press
All three of these happen all the time. They don’t ever stop and we’re going to make sure they remain that way even when the team performing these roles moves past just James and myself.
A Little Disagree Is a Good Thing
Teams shouldn’t always agree about everything. Having different perspectives is ultimately what’s going to force things to be stronger. Understanding the roles different folks on the team play (and helping them understand those roles) is really important.
I never did a whole lot of managing before I got to Percolate. I thought it was pretty fine to let people do their job and support them when they needed it. James introduced a bunch of ideas to me around being more active and it’s a strategy we’ve been trying to live as much as possible at Percolate. We set quarterly goals with each employee and meet at the end of the three months to grade them together. We have weekly meetings and do monthly surveys of employee satisfaction. None of this stuff is perfect and hopefully it will all evolve (especially as we continue to grow), but it has really helped me understand the value of a more active management approach.
I’m sure there’s lots more, but that’s what’s coming to mind right now. Hope this is somewhat helpful/interesting.
I’ve gotten in some conversations recently about whether you should outsource PR early in a company’s life. My take is no. We’ve kept PR in-house except for a bit of outside counsel from friends. (After all, what’s the point of having brilliant friends if you’re not going to ask them for advice?) I’m not really sure how to do it any other way, as the company and product are constantly shifting and the thought of having to keep someone else on top of that and expect them to be able to pitch it seems crazy. Anyway, seems as though Chris Dixon agrees:
A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things that you don’t. At an early-stage technology company this means you do in house: product design, software and/or hardware development, PR, recruiting, and customer relations/community management. Ideally, most of these activities are led by founders. You should outsource legal, accounting, website hosting, website analytics etc. (Unless you are starting a company where one of those activities can give you a competitive advantage, e.g. a securities trading startup would need to have in-house legal).
I thought this was a really interesting way to look at free agency in the NFL from Grantlant:
The bigger problem is the idea that upgrading at that position, or in that facet of the game, requires a team to throw money at acquiring a talented player, even if it means that the team overspends in the process. Teams approach the problem of having below-average output at a position by saying, “We need to upgrade to something better here, even if it costs us too much.” Instead, they should approach it from the equally compelling, alternative viewpoint of, “We’re already so bad here that we can’t be much worse next season, so upgrading to a superior player is incredibly easy!” Rather than seeing the free-agent pool as being full of players who would provide superior production to the guys on your roster, bad organizations insist on picking one player from that pool and spending more money than they should to obtain an upgrade they can get from just about anyone.
I know you’re not all football fans, but it’s an interesting way to think about how business is run generally (I’m sure there’s a behavioral economics fallacy for this).
I love this answer from Poke founder Nik Roope on what designers can bring to organizations:
Businesses are built on concepts. Ideas structured to extract or create value in some way. These ideas, famously penned on napkins (although more likely Evernote theses days) are by their nature abstract and intellectual. “Design” takes a central role in the step from the intellectual to the manifest and when the process is working this isn’t a verbatim translation, it’s an active process that structures, orders, tunes the components into a compelling working system. Broad-minded designers with solid structural sensibilities are thus critical for success.
The other day I wrote about what it likes to build Google Maps and this week I read that Foursquare has switched off Google’s map service (apparently they’re starting to charge businesses who use it). It’s interesting to think that just a few years ago there was no such thing as a map API service business and now Foursquare is writing this:
When we initially began looking around for other map providers, we found some incredibly strong alternatives. And while the new Google Maps API pricing was the reason we initially started looking into other solutions, we ultimately ended up switching because, after all our research and testing, OpenStreetMap and MapBox was simply the best fit for us.
Steve Jobs was an asshole. That seems to be the overwhelming conclusion of anyone who read the biography. Genius for sure, but also not very nice and a fairly tortured soul. I used to worry that people’s takeaway from the Jobs era was that managing by being a massive jerk was the way to go, but I actually think we are past that … Anyway, that’s all a long-winded intro to this paragraph about Jobs that I would have agreed with 8 months ago (but still think is well said):
The biggest thing that bothers me about the “Cult of Jobs” is that people often seem to mistake the unfortunate, frequently counterproductive, side effects of the personality that made him great for the very cause of his greatness. Steve has long been, and always will be, one of my heroes, but I really worry that an entire generation of entrepreneurs is learning the folkloric lesson that the secret to success is to be a mercurial asshole who abuses everyone and listens to no one. There’s a reason people like Steve start successful companies: because they believe in themselves, envision their success unwaveringly, and don’t compromise. But there can be a dark side to that fanatical self belief: a disdain for the ideas of others. I think there are a lot of reasons for Steve’s late-in-life success at Apple, but I suspect one of the biggest is that he finally managed to surround himself with brilliant people (like Chiat Day’s Lee Clow) who knew how to handle him, curb his worst tendencies, and present important ideas to him in a way that he would accept.
Good Hacker News thread about what Web 1.0 businesses still make money. One of the answers is affiliate, but even better than the answer is this explanation of the complicated relationship between Google and affiliates: “Big Daddy G basically sees most affiliates as bugs which, if fixed, would entitle them to an extra 100%+ on the purchase at issue over what they’re getting currently. This results in a frenemy dynamic because affiliates also spend $$$$$$$$ on AdWords.” That’s the trouble with Google, whether they like to admit it or not, they’re in competition with many of their biggest customers and like to pretend they’re not.
It’s hard to get a clear picture of how startups are doing because so much of success depends on perception and founders do anything they can to keep that perception up. For all the talk about failing and it’s value (something I don’t necessarily agree with), it’s rare to hear real stories from real entrepreneurs whose companies didn’t turn out exactly as they might have expected. 37 Signals has a nice wrap up of quotes from folks who had to shut down a product, service or company. Here’s a good one from the creator of Wesabe (a competitor to Mint):
Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could; we completely sucked at all of that…I was focused on trying to make the usability of editing data as easy and functional as it could be; Mint was focused on making it so you never had to do that at all. Their approach completely kicked our approach’s ass.
The last year has been totally insane. Right around this time in 2010 I left my job at Barbarian Group and gave myself two weeks before getting started on building a company for the first time. To say building a company is different than building a product is an understatement for which I can’t find the appropriate analogy. It’s been crazy and amazing and scary.
Over the last twelve months we’ve started to build a brand I believe stands for something in the industry, created a product some of the best brands in the world pay for and built an amazing team that all came over to my apartment the other night for the first Percolate holiday dinner.
Last week we got through a big milestone and pushed our 2.0 release. Iterating is the thing everyone talks about when they discuss product development and that’s what we did: Looked at the data and built a better product for our core use case (brands publishing content across social channels and their .coms).
Yesterday we announced that along with that release we also raised a round of funding to support the Percolate mission of helping brands create content at social scale. On Tumblr someone asked why we raised money if we were profitable (this is our first round of investment) and the answer is simple: We feel like we’ve found a big opportunity for brands and we’re going to run at it hard. That means hiring good people to both help us build the product (designers, product people, developers) and also to help us bring the product to brands (sales, project management). (Obviously if you do any of those things and are interested in working with us hit me up.)
Just in case you thought running and airline was a good business, the FT puts that to rest:
Warren Buffett’s quip about how shooting down the Wright brothers would have been a great service to capitalism is backed up by ugly numbers. In the entire recorded history of the US airline industry, cumulative earnings have been negative $33bn.
I got sucked in the by the title of this article (“Can ‘Serendipity’ Be a Business Model? Consider Twitter“), but I’m not sure it lives up. About a year ago I was doing a lot of research into serendipity, and most interestingly (to me at least) was that the definition is “the ability to find things you didn’t know you were looking for.” I do think Twitter is a pretty genius solution to this. By essentially allowing you to overhear conversations it exposes you to a kind of ambient data that is otherwise hard to come by. When it comes to their ad model, this will clearly be a big part of the value. But I think the way they’re positioning it (in this article at least) as being about intent is totally wrong. Twitter’s value is not about intent, in the classic funnel definition, it’s much more about awareness and interest: About exposing you to new products and services you didn’t know you were interested in. If Twitter can actually deliver this it has a truly differentiated ad product, but I worry they’re following the Google model too much and thinking too low in the funnel.
I’ve been waiting for something like this to happen:
In a Tuesday ruling, a federal judge in San Francisco refused to dismiss news site PhoneDog’s complaint which argued that a Twitter password and the identity of followers was a trade secret. PhoneDog claims that its former journalist, Noah Kravitz, failed to surrender the password to a Twitter account that was originally tied to the handle @phonedog_noah. Instead, says PhoneDog, he simply changed the name of the account to @noahkravitz and kept sending messages to the thousands of followers he had acquired while employed at the site.
I suspect we will see more and more of these disputes moving forward as we all deal with the rather blurry lines between our working and non-working selves. I’ve spoken to some folks at media companies who are becoming increasingly picky about how employees use social media and the connections there to their professional persona. It will be interesting to see how this plays out over the next few years.
There’s been some acceptance that Apple would get into the TV market for the last five years and the fires were only fanned with a quote from the new Steve Jobs biography about how he had “cracked” the problem. John Gruber and Jason Kottke think the Jobsian solution looks like apps, not channels:
Letting each TV network do their own app allows them the flexibility that writing software provides. News networks can combine their written and video news into an integrated layout. Networks with contractual obligations to cable operators, like HBO and ESPN, can write code that requires users to log in to verify their status as an eligible subscriber.
Over the last few weeks I’ve been singing the praises of the Watch ESPN app to anyone who will listen. With your cable credentials (well mine at least), you’re able to sign in and watch ESPN, ESPN2 and a whole bunch of other content that didn’t make it to a numbered channel. It’s a great and somewhat peculiar experience. After just a few minutes of watching SportsCenter you notice two big things. First, there are no commercials, they just say “commercial break” and show nothing. Second, there is no MLB content. When they went to baseball highlights (a big SportsCenter topic over the last few weeks), the screen went blank again just like it did during a commercia (sometimes it just showed the score or got blurry). I’m assuming because of MLB.com, Major League Baseball controls the exclusive internet streaming rights. It’s not a dealbreaker for me, as I’m a football/NASCAR man, but it does speak to the complications of the television industry, which Dan Frommer wraps up nicely in a response to Gruber’s post:
For the networks, not pissing off the cable guys means staying away from putting too much digital video on TV sets, especially for free. iPhone and iPad apps aren’t as bad. And yes, the geeks among us have been plugging their laptops into their TVs for years. But putting stuff on a TV set in a way that’s easy for normal people to access — and in a way that competes with traditional TV — is still a no-no for most networks. Especially the ones that are more dependent on affiliate fees, or hope to make the argument for higher affiliate fees in the future.This is one reason that TV networks have blocked Google TV from accessing their content. And why many iPad video apps don’t let you beam the video to your Apple TV via AirPlay.
I really like it when people lay out the realities of a business for the world. Often we hear about how broken the television industry is, but if you’re a cable company things are pretty peachy. Sure you are fighting against putting too much content on the web and pissing off the digirati by blocking your content from Google TV, but you don’t care much because you get paid truckloads of money for absolutely nothing. How many other businesses are there on the planet where you get paid regardless of whether someone has any interest in ever interacting with your product. Sure this will change, and no company has done a better job over the past 15 years at pushing industries with seemingly unbreakable business models into a new way of thinking (music and mobile), but television will be especially tough because of both the economics and Apple’s past success. Or, as Frommer puts it:
The people running TV networks are not dummies. They may be slow to adopt new technology, but they’re not stupid. They saw what “working with Apple” did to the music industry. And they are set on making sure that if Internet distribution and new technologies eventually redraw the entire TV distribution chain, it happens on their terms and on their schedule.
Okay, enough writing about Apple. Back to regularly scheduled internettery.