Category Archives: social media

Twitter’s Platform Mojo

Betaworks’ John Borthwick recently posted the informative Ongoing tracking of the real time web…  Combined with Fred Wilson’s AVC post Twitter v. the Twitter Ecosystem, these two posts illustrate and highlight important learnings for startups and entrepreneurs everywhere.  Those learnings are the subject of this post. 

The key points of this post are: (1) Twitter is indeed a platform; and (2) platforms’ own profitability are related not a little bit to the revenue driving capabilities of those partners that build on the platform.  Twitter has clearly enabled other applications to create and build innovative services, a la Tweetdeck, Seesmic, Bit.ly, etc.  These are great as they extend Twitter’s value even further.   Over time, we should expect that the traffic through the platform will dwarf the traffic of the application/web site called Twitter.  This is a useful illustration for web- internet-based entrepreneurs on the value of platform building in a business.  Here’s what I mean…

I give a talk called Revenue: Of Moats & Models in Silicon Valley.  The purpose of this talk is to help the very early stage startup—ideally the 1-2 founder team in the garage—frame quickly and easily how to think about revenue and building their business.  One of the things that I talk about a lot is thinking through how to build a fly-wheel in your business.  Some people call this a “platform play,” but I tend to prefer a more crisp illustration of a positive feedback loop.  The steps that I illustrate and walk through with founders is one that is simple and seems to resonate with most founders.  The steps are:

  1. Create something users want.  (Smart, effective founders recognize this as the Paul Graham [YC] mantra.  It totally makes sense—this is step 1, without this you’ve got nothing.)
  2. Build user base and share leadership.  (This is just about extending step 1 into momentum.)
  3. Create a extension that attracts and enables a second stakeholder group.  E.g., application developers who want to access your users; teachers who want to access your students; advertisers who want to sell stuff, etc., etc.
  4. Empower that second stakeholder group to reinforce and extend the value to the core users who you started with in step 1.

Wash, Rinse, Repeat. 

This is a very basic description of the positive feedback loop that the vast majority of massive tech companies have used to achieve their dominance—Microsoft, Google, Facebook, Apple Iphone, etc.   Sometimes tech folks will look all dreamy eyed and say the words “platform play,” and this is probably what they mean (or should be).  Specifically, the platform means that there is a second stakeholder group that is specifically betting on you to make money, gain share, whatever for themselves. 

In the talk I give, I suggest or recommend that the founding team spend an hour or two trying to think about building that precise feedback loop around their idea.  I contend that this can be a useful exercise, one more should do.

Part of the reason this exercise is so useful is now highlighted with the blog posts that I started this off with.   What Borthwick and Wilson are both highlighting is something that has been obvious to me for months: namely that the power of Twitter is as a Platform, not as an Application.  Others – bit.ly, tweetdeck, tweetfeed, etc. – are now investing their R&D budgets, engineering talent, marketing efforts towards extending brands that build on Twitter.  Twitter as the platform enables this, and Twitter gets some benefit by having these partners do this work.  This is all great, and it reinforces arguments I’ve made before on this blog about why skeptics focusing on Twitter traffic or retention, while important, is probably less important than the health of its ecosystem. 

The second thing that I’d illustrate on Twitter as a Platform is a point that’s common to most platforms but not well understood.  Namely, while platforms on their own can be massive from a revenue and profitability standpoint, over time, healthy platforms can pale in comparison to the revenue pool created for the partners betting on the platform.

Microsoft’s Windows business is a great example.  According to MSFT’s Annual Report, the Windows division pulls in roughly $16B in revenue, and makes >$12B in operating income.  (What a machine!)  This is awesome.  What is also awesome though, is that you are probably talking about an order of magnitude in terms of the amount of revenue that the partner ecosystem makes. 

Same thing with Google.  Massive revenue, massive margins.  But the amount of money that advertisers are making through getting direct contact with users, massive.  Facebook, starting to show the same thing.  Its an awesome thing on its own, but as Zynga, Playdom and others are showing, they are making massive amounts of money on the Facebook platform.  As Facebook extends, I expect to see even more companies making more money off of them.

This brings us back to Twitter.  As I’ve said before, its easy to think that Twitter is too simple to be a viable business.  That’s wrong-headed.  Twitter is en route to becoming the platform for the real-time web.  As I’ve said, it will create massive value for its users, employees, founders, and investors.   To me, the key quesiton with Twitter is not whether it will continue to thrive in users and traffic (it will), or whether it will make money (it will).  The question for me is whether its ecosystem will find ways to make real money, as this is ultimately a partner ecosystem’s profitability is ultimately the best way for a platform to ensure its long-term viability.

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Channel marketing: What all marketing people can learn from social media

Founder’s Fund’s, Internet Mastermind, and friend, Dave McClure posted one of his periodic rants over on his blog.  Good read, great font colors. 😉

When I read it, it got me reflecting on the value I’ve seen as a marketing professional around social media, though not in the manner that most people talk about this. 

Here’s what I mean.  Many people who talk about social media will talk kind of breathlessly about all the channels that are out there, how to do things like SEO, etc.  These tools are out there and free.  The tools and concepts like SEO are easy to figure out.  And these are all new, lower cost media channels: ones in which marketing people really need to embrace and understand in order to be on top of their jobs, really in almost any industry. 

And this is all spot on—as a marketer anywhere, understanding blogging, twittering, youtubeing, facebooking, blah de blah de blah is IMHO vitally important.  Some though will sort of hesitate and say this is all too egocentric, with too little privacy, and with too high a techy dork quotient to be that important.  Or they’ll just say they’re too busy and blow it off.

My counter to that is to frame these social media outlets in a more traditional context.  A marketer’s job is to figure out how to frame a winning value proposition and to get the word out in order that sales people’s jobs become very very easy.  Social media—broadly—is a free, experimental petri dish that any marketing person can use to learn about this exact process.  All sorts of channels exist in the social media realm, with more coming all the time.  What makes this stuff both fun and useful for marketing people is that now there are free channels for you to try stuff out to see what draws and engages and audience.  Indeed, with nothing more than having something useful to say (your product) and with experimenting in where you say it (your channel), you can create a community.  For a marketer, what could be more golden? 

Dave’s rant goes off principally on VCs who don’t understand design, user experience and internet marketing.  And right on, Dave.  I would extend the points on internet marketing, and specifically social media marketing, to anyone who calls themself a marketer.  This stuff is out there and free.  Use it.  It’ll sharpen your skills for free.

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Shortening Shorteners

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URL Shortening services like bit.ly, ow.ly, and others have exploded recently (shortly) onto the social internet’s stage.  What seemed to start as way to get links small enough to fit into a tweet or to make it easier to paste into a mail, Shorteners are responsible for a flood of link sharing with literally billions of links getting shortened and sent around.

Last week, TechCrunch‘s Erick Schonfeld wrote a two interesting articles: “What Happened to Bit.Ly’s Market Share,” and “Lies, Damn Lies, and How to Get Under John Borthwick’s Skin,” In these, Schonfeld discusses the discrepancies in market share statistics for bit.ly, and whether it was truly as dominating as it had seemed to be.

Here’s my read of bit.ly and the Shorteners business overall based on these articles.  First off, the most interesting part of the pie chart Schonfeld showed was the “Other” category–apparently now 26.19% of Shortener traffic is coming from this category.  Look for this Other number to grow.  And look for big names, particularly in the social media space, to show up as players here–think Facebook, Google, even groups like WSJ, LinkedIn, etc.  As a result, to net/net things out, I don’t foresee one dominant, winner takes all default URL shortener.

Here’s basically why.  First off the task of shortening is not all that challenging a thing to do.  Second, media (social or otherwise) brands will quickly realize that there’s gold in them thar links, and they’ll want to have a handle on the link flow within and beyond their purview.  So this business is not necessarily hard to create a good customer experience for and it can drive value in broad media channels.  I’d say expect lots of entrants.

I tend to use Bit.ly, and I tend to like their analytics view of things.  That said, I also expect that in 10 years, we’ll look back on the Shortener business as this quaint inter-regnum period in the evolution of the social web, after which point, any link I want to shorten is easily saved, shortened and shared with open analytics, etc., etc.

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What I learned teaching myself SEO

I wrote last summer about my quest to teach myself SEO in 2 weeks.  At the time, the key task was simple: get the NYT wedding announcement proclaiming my wife, Aimee Jamison (nee Aimee Vincent), and me as married to show up on the first page of search results to anyone who typed “Aimee Jamison” into Google. 

At the time I started, this announcement showed up as #48 in the search results on Aimee Jamison, at the bottom of the 5th page.  As of today, going to Google and typing “Aimee Jamison,” returns Aimee’s LinkedIn Profile, Aimee’s Twitter Stream, and then the NYT Wedding Announcement.  So we moved her desired result up 45 spots!  Nice!

In my prior blog posting, I’d talked about taking 2 weeks to work on this.  In fact, it was much shorter.  Here were the key things I did:

  • We filled out a Google Profile for Aimee Jamison, which linked to the NYT article.
  • In Aimee’s LinkedIn Profile, we added a Personal Link, which in turn linked to the article.
  • We got her a posterous page, which linked to the article, as a backgrounder on her. 
  • Finally, when you sign in to Google, Google puts little Up and Down arrows that you can use to move around the search results.  It presumably saves results for you, so that when you type common searches, you get the custom results you want.  I assume that Google takes input from what things people move around here, though I’m not certain that this is true. 

In any case, what I learned here was pretty simple—if you want to get that certain link to show up higher in the page rank, there are a lot of routes that you can use to help yourself.  Now obviously, we’re not trying to compete with others on Aimee’s name, so this was an easier task.  Still, if you’ve never done SEO, I’d recommend this, as it was a pretty useful, straightforward exercise, and it definitely got results.

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Good, if painful, signal from New MySpace Leadership

Today announcements of sharp people cuts at MySpace hit and hit hard.  This is a painful step, and my sympathies go out to any employee impacted.  I take no pleasure or glee in poking fun at this.  I’m sure that in the coming days, plenty of press will focus on more salacious elements of the moves, the pain inside MySpace, whether offices are remaining open, etc.  The story of growing so quickly, getting bought by News Corporation, followed by the rapid flattening of growth–all within the span of a few years–is just too much of a story to pass up for many.

That’s not my focus.  Instead, I’d like to write and applaud Owen Van Natta and his exec team for moving quickly to cut down while they try to figure out what to do.  In a post I wrote upon the announcement of Mr. Van Natta’s appointment to the role, I suggested that I’d be watching for 3 things–(1) a focus on scenarios, (2) execution, and (3) any cultural phenomenon starting in MySpace versus the other tools (Twit, FBK, etc.).  Given that it’s been less than one month, I’d say that taking the step of cutting back this fast and this hard is an example of execution.  It’s a painful sign, but a good one. I’d not expected such decisiveness here to be honest.

I think this is a good move, not just because it helps signal an execution focus.  I think it also helps the team that remains get hunkered down to figure out what the heck they’re actually going to go do.  The features and scenarios that might help them get ahead are not ones that should take tons of people.  Instead, they need a tight focus with highly motivated superstars–hard to do that when you’ve got wave after wave of layoffs.  Better to just get the cut done big and fast.  So kudos to the leaders of MySpace for having the courage to get after this fast.

MySpace still has miles to go before it sleeps.  But I’d say that this is on the whole a good sign, and I’ll be interested to see what’s next with them.

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I’d listen to Jon Stewart before Chris Anderson on fixing media’s business model

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TechCrunch summarizes Wired Editor-in-Chief Chris Anderson’s rules for pricing on online media by calling them “counterintuitive.”  Author Erick Schoenfeld, writes that Mr. Anderson “articulated something that is now increasingly becoming obvious: As products go digital, their marginal cost goes to zero.”

“This is the law of gravity online,” says Anderson. “Everything that becomes digital will become free. There will be a free version, either you will be competing with free or giving it away for free and selling something else. If it is not zero today, it will be zero tomorrow.”

He then goes on to summarize Anderson’s new “rules”, which appear to be:

  1. The best model is a mix of free and paid
  2. You can’t charge for an exclusive that will be repeated elsewhere,
  3. Don’t charge for the most popular content on your site,
  4. Content behind a pay wall should appeal to niches, the narrower the niche the better

I’m scratching my head a bit here, and I’d love to have read more evidence of this actually working at mass scale. There are a bunch of counter-examples that a hard-headed business guy like me might push back on here with a hearty WTF.   First off, some counterexamples.

The best model is a mix of 100% pay / 0% free, like World of Warcraft.  It’s media IMHO, you want onto their servers, you pay to be there.

Any packaged software (or pharmaceutical for that matter) has a marginal cost of zero, it is still for pay.  I reject the idea that media–becuase its marginal cost is zero–cannot be for pay.  Plenty of other high-value products have zero marginal costs and extract high prices.  Linux and Windows have been two versions of digital OSs for more than 10 years.  Windows still has the vast, vast majority of revenue and unit share.

Plenty of authors are finding opportunities to charge for their content–especially in the financial sector. Jeremy Siegel for example.

Finally, nowhere do I hear that the core model of big media brand (e.g., WSJ) and all its writers are needed to do what they do.  I love the WSJ, and this stinks to write.  But the net net is that most news will be covered by more citizen-oriented news outlets by  citizen journalists and niches that are running around snapping Twitpics and posting to blogs.  This will mean that vastly smaller newsrooms are going to be needed to do what they do today.  Some will be needed and some are crucial.  But many will be continuing to compete with free.  Very hard to deal with.  This needs to get teed up and discussed.  Openly.

With that out of the way, now I want to explain why I think this talk is off base with respect to big media.  Brands such as the WSJ, Wired, Time, Newsweek do have a well-known problem–they’ve got a bunch of folks in a priesthood of journalism competing with their congregation of citizen bloggers, twitterers and so forth who are happily, ignobly disrupting the stuffing out of them.

Anderson’s prescription may work for them, but I’m extremely dubious.  I think that the congregation of citizens is going to disrupt all the slices of profit from the priesthood of jounralists.  While I might pay a few bucks for virtual currency on Zynga or a special hat on WeeWorld, I’m not going to pay $0.99 for an article that I can just read somewhere else.

I really think that we’re watching in journalism what we saw in the auto makers a few years ago.  We are looking at an industry that doesn’t realize its dead yet.   The business model needs far more dramatic reinvention in terms of what we’ll consume.  That debate ain’t happening though.  Instead, what we’re hearing is that the pricing model needs to go this long tail route, which is a baby step.  They’re using a pea shooter against an elephant on this.

As an example of how radical things need to get, here’s Jon Stewart talking to Katie Couric about what the TV news should do.  His ideas are closer to what I think needs to happen than working on a long-tail price model.

Jon Stewart Interviews Katie Couric

Here Stewart gives Couric all kinds of crazy suggestions–“free colonoscopy for viewers,” etc.  These get laughs, but he’s basically right.  Old media is going to need things like cage-matched talking heads debating health care pay-per-view, manage Wolf Blitzer’s as a multi-medai franchise similar to Tom Petty, and a bunch of other completely crazy ideas.

The idea that a pricing model as suggested is going to do the trick is in my mind, extremely short-sighted and likely to fail.  Media franchises will need to think radically about trying vastly new and different things, else they’ll be in the same spot GM / Chrysler are in now.

Jon Stewart’s become one of the most trusted ‘newsmen’ in the US, crazily.  His ideas on how to fix big media may make him the smartest business person too!

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Facebook’s Vanity URLs’ impact: web-based mail will be the big loser

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Like hundreds of thousands of others apparently, I grabbed a vanity URL On Facebook Friday night.  (I’m www.facebook.com/jay.jamison.) As it was all the rage in the geekosphere, I was aware it was happening.  As the Penguins had just won Game 7 and their 3rd Stanley Cup, I was at home, happy, and ready to jump onto Facebook and grab my URL.

The experience was no fuss and quick.  I was surprised in that sense, as I’d expected to have long queues as Facebooks servers melted with everyone trying to get their URL.  Didn’t happen–the whole thing took about 30 seconds.

So after grabbing my URL, I then finally gave some thought as to what was so important or not about these “Vanity URLs.”  Some, like Om Malik, speculate that it may take a bite out of Twitter’s growth.  I disagree with Om on this–I think the nature of the conversations and interaction in Twitter is fundamentally different than Facebook.  Having Vanity URLs might make groups of friends on FBK have more Twitter-y like conversations, I suppose.  But as a user of both services, I still see them as fundamentally different.  Facebook’s a place where I share with friends updates, thoughts, photos, etc. on a range of topics.  Twitter is in a sense more universal–it’s like a user-generated teletype news feed with people I know and those I don’t.  Vanity URLs don’t really change that for FBK, @replies won’t do all that much either, as my circle of friends already kind of do this in a klugey way in conversations on FBK.

So I don’t see this as a shot across Twitter’s bow, really.  Instead, I think this is more about making it easy for Facebook to grab and secure the next genertion of users.  What I mean here is that I expect that web-based email is going to feel the brunt of this move.  If you’re 13 say, and starting to use computers more deeply, why are you really going to need web mail now?  You aren’t.  You just grab your little Vanity URL, and you tell the world you’re http://www.facebook.com/your.name.  I’d think the groups more directly impacted in the short term are not Twitter, but gmail, hotmail, aol im, etc.

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