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Google & China: An Operator’s View

Google’s announcement Tuesday that it was mad as hell and not going to take it anymore was its second bombshell in a new 2010.  (I count the first being the announcement of the Nexus One, which I think is very possibly a hugely important step for Google as a company.)

Instapundits leapt on the announcement.  Some–TechCrunch notably–stating that it was all about Google finding a graceful exit.  Others—Robert Scoble, SearchEngine Land Sullivan, and others, defending the move as a principled stand.  As someone who’s worked internationally on building businesses, I’m firmly in the Scoble camp.

The idea that this is some cynical move to enable Google to exit China gracefully is ridiculous.  Google is a massive public company, seeking a growth trajectory that goes for decades.  Aside from all the great points Scoble makes on his post on this–which I agree with entirely–the simple math states that Google can’t not be in China long-term.  Later this year, China will become the world’s largest economy that is not the United States, etc.  Huge potential market. 

The second piece to this equation is that its not as though Google’s pouring so much money down a hole with China that earnings are hurting.  Indeed, Google’s trajectory on cash flow, earnings, etc., all are moving in the right direction.  Earnings calls don’t lead Google’s CFO to fend off nervous investors, anxious at the out of control spend in China.  Huge potential market without materially impactful investment—sounds like something Google would want to do. 

So that cost/benefit analysis is straightforward.  The other element to this though that’s been missed is simply that international business is hard.  In Silicon Valley, we like the narrative of overnight success.   And to be sure, Google has achieved unprecedented things in its 11-12 year existence.  Still, Google has been in China for 4 years.  The time between Olympics; the length of most people’s undergraduate career.  That Google has not convincingly “won” in that timeframe is not at all a sign that the race is over.  At least it wouldn’t be to anyone who’s ever built or worked on a business overseas.  With international businesses, you have a whole set of issues around who to hire, how to implement a culture that retains the specific elements to the native culture while still being connected to the headquarters, there’s often differences in business models or price sensitivities of customers, etc., etc., etc.  4 years is the blink of an eye for this type of thing.  The idea that Google’s crying uncle at the end of 4 years because China is just too hard a market to win is quite naive and nonsense to anyone who’s been a manager in an international business. 

Given that view, I’ve found Google’s stance really extraordinary.  It will be fascinating to watch the dialogue between China and Google as this conversation progreses. 


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DriverSavers & Its Awesome Customer Experience

This mail is a big shout out to the Incredible folks at DriverSavers, who saved over 20K of our photos from a HD and backup regimen that went horribly wrong.  I also think that there are some terrific lessons here that any company–large or small–can take in terms of delivering a great customer experience.

The background

My wife is a serious amateur photographer.  She takes a lot of pictures that are artistic, and as we have two young children, she also takes tons of pictures of our children.  Our approach to backing these up was to use an attached HD to her mac, with a backup HD that used Apple‘s Time Machine.

The problem we faced was that the HD failed slowly.  When my wife would look at photo thumbnails, they would appear to all be there.  When the HD finally failed, and we went to Time Machine, we weren’t able to find any archived copy that had the actual JPEGs of the 25K photos that it was supposed to be backing up.  Disaster time.

After a few trips to the Apple Store and elsewhere, we got pointed to DriveSavers.  DriveSavers is a data recovery service in Novato, California, that promises to deliver data from hard drives that have suffered massive failure.  They’ve apparently been involved in recovering data from drives damaged in 9/11, drives that have been in fires, underwater, etc.

From the beginning of this experience, DriveSavers approach impresses.

First call. Upon my first call to them, I was instantly connected with a real human being–no long number prompt trees.  Despite the fact that I was *desperate* to get a solution, my advisor at DriveSavers slowly and calmly asked me to walk through the situation in detail.  This works to his favor, as it lets me and my wife get out all the concern and anxiety around having lost all the photos our children.  He listened very patiently, would have let me go all afternoon, if that was going to be needed.  As he listened, he then started asking a few questions about what happened with the specific drive, how big it was, when it had failed, had we continued trying to use it after we had had it fail, etc.

After about 20 minutes, our Advisor suggested his path forward.  First off, as we only needed photos recovered, he thought we’d qualify for a price point that was roughly 40% less than their normal drive recovery.  This was a relief as this ain’t cheap.  Second, and frankly more important, he was confident that they could have excellent chances for successful retrieval.  This is what I wanted to hear.

I wanted to hang up immediately and get myself up there to hand off the disk, but he then asked that I work with him to answer some more questions, as he walked through what they woudl do with the disk and how it would work.  This turned out to be awesome–he made me understand that they do this all the time, that the disk failure I experienced was very common, etc.  Now I was in the car and ready to run stop lights to get to him to save our photos.

DriveSavers Office.

DriveSavers office in Novato has its entry wall covered with photos of celebrities who have had their drives saved by them.  The Late President Gerald Ford, Bruce Willis, Brad Bird (writer/director of Pixar’s The Incredibles), Johnny Depp, etc.  That wall dropped my blood pressure even further.

The people in their offices had the same message as our initial advisor–they’d have the disk back to us in about 5 business days, all the content they could recover put onto a brand new drive we provided.  They also gave us a phone number to call anytime–24/7–in case we wanted to check in.

Very impressive.

5 days later.

5 days later, they called me to let me know that our engineering supervisor, Bohi Nadler, had successfully signed off on a saved data set that we could pick up at our convenience. My wife drove up to pick up the photos.  We have the business cards of the specific engineer who did the work, a set of new tips on how to manage data backup and recovery at home to a stronger degree than ever before.  (We now use 2 HD backups and have all our photos on Smugmug as well.)

I love these guys, and had to share the experience a bit.

Lessons on customer service

This experience really showed me how few companies really get on it regardign customer service.  Here are some of the key tips and techniques that I think are important:

  • Have someone answer the phone, and if not, then at least be super responsive.
  • Let your customers vent, listen, and guide them through your solution.  This both disarmed me and gave me a sense of hope.
  • Always offer a deal.  It was very smart of them to offer me 40% off for a Photos Only recovery.  I felt it was expensive, but at least not full price.  I was “saving” money.  Help your customers feel like they’re saving money, always.
  • Get every human at your company to have a consistent message to your custoemrs.  Having the receptionist have the same information as the sales advisor and the engineer made a difference, I felt as though they knew who I was and were willing to help me.
  • Humanize the service–they told me the name of the perrson who actually did the work.  Having a name behind the work made me feel even happier about hte experience.

I can hardly believe that a data recovery service can create such a positive feeling in their customers–part of it surely is the magic of finding what is lost that is valueable.  But I truly believe that their ability to think through the experience they want their customers to have is waht makes their business truly stnadout.  We can all learn from this, and I wanted to both share my tgratitude and my lessons.

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What I’ll watch for with MySpace: progress on bite-size chunks

Tech Crunch’s article, MySpace Is In Real Trouble If These Page View Declines Don’t Reverse, provides a sobering view of the challenge in front of MySpace CEO Owen Van Natta and his newly installed exec team.

I’m going to assume that TC’s numbers are accurate, and I’m in general agreement with the conclusion—momentum is not on MySpace’s side.   This is a big task, as TC asserts, never been done successfully. 

Still, as with any big task, its important to split it up into smaller, bite sized chunks.  There are ton of things that could be focused on to read the tea leaves as to whether MySpace is making progress or not.  To make things simple, here are the 3 key bite size chunks I’ll be watching for to assess whether MySpace is making progress:

  1. Execs speaking about and delivering on useful, concrete customer scenarios.  I remarked in a prior post how vague and nebulous an ex-MySpace Chairman’s Richard Rosenblatt advice was, compared with a much more concrete, user-focused entrepreneur like Joel Spolsky.  This was a bit unfair as Rosenblatt shouldn’t give concrete advice.  At the same time, when the exec team now speaks, I’ll compare their words with his.  If its as vague and general, and it doesn’t have specific concrete customer scenarios that appear appealing, then it’ll be more of the same.  Creating value for users is vital here, as with anywhere else.  Watch for this—I’d say within 45 days, there should be relatively clear statements on what customer scenarios excite the execs and what concretely they’re doing.  If its general “own the spaces MySpace can own,” blather, then I’d say that’s a big red flag.   
  2. Execution.  Mr. Van Natta has assembled a strong core group of execs around him.  This is a great start.  It’ll now be interesting to watch what they deliver in terms of features, in specific timelines, relative to update cycles from Facebook, Twitter and others.  Given the inherent pressure of lost momentum, with the pressure that must be coming from News, the MySpace execs will get pulled in many different directions.  I’ll watch for what they are able to ship in specific timeframes.  If there isn’t anything substantial product-wise done by time school starts up in the fall, I’d say that this is a sign of real trouble. 
  3. (Any) cultural phenomenon created, fueled and fanned on MySpace.  The page view and traffic numbers won’t turn overnight.  What does and can shift quickly is passion around some trend or phenomenon or whatever.  A band must break there, a movie must be discovered there—the thing we all are talking about must be found once on MySpace.  This has happened on MySpace in the past I think, but now, this discovery happens other places more often—FBK(the election or the 25 things phenomenon) or Twitter (Sully’s plane).  When MySpace gets mentioned at lal these days, its generally only as one of several social media services where stuff like this happens.  MySpace needs to be central to some of these experiences.  If in 6 months there hasn’t been one of these, then I’d say its a sign of continuing difficulties for MySpace. 

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HPs bet on touchscreens–forgot to tell us why a customer will care

I saw this article in the WSJ, talking about HP‘s bet on touchscreen technology to review PC sales.  They are apparently getting these things solds in to things like airports and luxury boxes, etc., and that’s great.   We will need this technology to be mainstream and everywhere, so I’m thrilled that HP’s doing this work.  We will all want this stuff someday– I want my bathroom mirror or my desk surface to someday be a touchscreen PC that can let me scroll through email, tracking key news or whatever.  Seems a reasonable and easy thing to foresee.

The thing that this article didn’t have and what I think is limiting this technology today is  this: a scenario that a user would care about.  This was a miss in the article, from a PR point, or whatever, it’s notable that there’s not a single mention of what a customer might actually care about using the technology for.  Lesson for any marketer here–make sure taht you are pitching very hard this statement whenever you’re gettin gan article written: “here’s why a customer will care…”

It’s an interesting contrast to look at the side project that TechCrunch has been putting together on their little touchscreen web appliance thingy.  They ooze passion about the user scenario they care about–I’m sitting on a sofa and I want to surf the web with a screen.  Easy to grok, clear why customers would want it.  I’d argue strongly that this is a more approporiate use of the opportunity for press than the HP WSJ article.

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Those iPhone App Store Revenue Numbers

TechCrunch and Lightspeed Venture Partners this week worked on estimating Apple’s revenue gained from the iPhone App Store. 

The discussion struck an odd note with me for several reasons.   A far more useful analysis would be what percent of mobile (and other) application developers are building for Iphones, to the exclusion of others.  Understanding this will say a lot about APple’s continuing momentum in this space.  I am willing to bet that Apple likely has a huge number of mobile developers building for the Iphone, and where they need to make a choice, I expect they’ll likely fall in with Apple.  This is a way more important discussion than Apples’s revenue of the App Store for a few key reasons. 

First off, I’d view the strategic importance of the iPhone App platform as far higher priority to Apple than the revenue.  Don’t get me wrong, the revenue is great, but its way way way more important that Apple gets the share of the smart phone market (or whatever we’re calling it these days).  Having app developers building for your platform, because (1) lots of users use your device and (2) the developers themselves can make money will help ensure the Iphone stays competitive.  So far, Apple is basically crushing this, leaving all other mobile “app stores” in the dust. 

Second, the Lightspeed Venture post and TC’s reporting on it took an admittedly shallow view of revenue.  Lookingat pay versus free apps only on the Iphone App Store is a good proxy for now of where revenue is.  I expect it misses however the virtual currency buys that are able to be sold downstream (e.g., Zynga NLHE).   Point here is that the revenue and profit pool in the ecosystem as a whole is likely quite a bit higher than jsut the free/paid app numbers that Liew estimates. 

Third, if you buy into the first two arguments I’m making, then I think the interesting discussion here is how many developers are targeting Iphones versus other platforms?  My suspicion is that as the Iphone apps are presenting a clear route to revenue and profits for small teams of great developers, that this is ramping up quickly.  If this fact brought *zero* revenue through an app store to Apple, it would be worth it to Apple—to quote SteveB “developers, developers, developers.”  That Apple is making high margin revenue off of these Apps is of course awesome for Apple, kudos too them. 

The iPhone App numbers whatever they are, are awesome.  I’m hopeful though that we’ll soon receive good data indicating the mindshare and actions that great developers are taking in terms of which device/platforms they’re spending time writing for, as that’s the discussion that to me is most interesing



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Quick take on Microsoft’s Bond Offering


Image by Getty Images via Daylife

Yesterday saw Microsoft making a historic first time bond offering.  While a first for the company, the $3.75B issue is relatively small.  Indeed, it’s not like they’ll buy Yahoo or SAP with that money. 

My own take is that there’s not much to see here—rational, low-risk, imminently sensible.  (Which no matter what else anyone might say about Microsoft, it has *always* managed its finances extremely well.)  From Microsoft’s point of view, it’s cheap money, about as cheap as they can get (aside of course from continuing to pull in free cashflow at $1B/month).  With the equity markets still poor, MSFT is under $20 currently, its blue chip stock doesn’t have the same power it did.  Might as well take their long-term debt: equity ratio to roughly 0.1, roughly a quarter of ORCLs. 

I’d not be at all surprised to see MSFT announce a non-trivial buyback of stock, particularly post Office 2010 beta, and as W7 launch nears.  The message will likely be to the market and to enterprise customers that a new wave of the desktop / netbook is upon us with high quality, on time releases from Microsoft.

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Week of 5/8/09 Tech Roundup in 15 minutes

I’m going to try something new this Friday–a mini-blog post where I time bound to 15 minutes observations, etc. on the week in tech.  Feedback welcome on whether useful. 

What a week, just to cover a few of the high points that I thought were interesting in 15 minutes:

  • Amazon launched a new Kindle.  Here’s what I find so amazing, having been in software platforms for 10 years—basically everyone had declared hardware to be dead.  Now if you look at two of the 800# gorillas of technology, Apple and Amazon, the wind is at their back precisely because they built dedicated, innovative hardware.  Lesson for entrepreneurs—ignore people who pronounce stuff dead, unless their an MD.  Awesome.
  • Twitter rumors hit pretty strong peak, now looks like no sale.  I admire Twitter’s approach and have come to really enjoy their product.  I love that they’re in no hurry to sell, and I’d say rightly so.  The wind is at their back and will continue to be so.
  • Speaking of which, I heard someone today talk about Twitter’s 40% account drop off cliff after a month.  My answer: who cares! ?!  The glass is more than half-full—60% of their accounts stay on for more than a month.  That’s goodness!  In all seriousness, the increasingly powerful thing that Twitter does is it creates a real-time web.  Just like YouTube with user videos or with blog platforms, whatever, you have some number of creators and some number of consumers.  In Twitters case, they’ll quickly have the biggest number of creators worldwide, for a scenarios that’s useful—real-time information.  I predict that in short order we will use Twitter as a search front-end for real-time events—this applies whether I”m a Twitter account holder or not.  In this future, you don’t need everyone sticking around with their accounts.  And of course,once ore and more people use the network the draw will get increasingly strong to draw people back.
  • Microsoft Windows 7 RC release, and it looks like its going to be a hit.  I predict MSFT gets a strong step forward in its momentum with the release of Windows 7.  There is enough hardware innovation in the ecosystem and the power of the software is looking great.  The public download experience was clean and simple—note there was no real outcry about this.  The buzz from even MS haters is that W7 is looking pretty good—here me now and believe me later, W7 is going to be a hit.  This will provide good wind at the back of MSFT as they take next steps on Silverlight, Azure, etc. 
  • Wolfram Alpha ran the gauntlet in the press.  Geesh, you’d think that Google wasn’t just destroying the news, but that they actually at this point owned it all too.  WA did a public talk-through of their product, which got lambasted for not first showing screenshots.  Then folks reviewed it in comparison with Google a product that’s been in market for 10 years.  I’m glad RWW at least was willing to admit that WA looked like it had some benefit to real academics and so on.  This is a completely legitimate starting place, which I recall was how Google got started.  Of course, that was before they owned the news….
  • The Founder’s Institute closes applications for summer session and gets a bumper crop of Mentors (present company excluded) :).   Caveat: I’m involved with this, and I’m super excited about the opportunity to work with the great bunch of new founders and existing mentors to create great companies and great entrepreneurs. 
  • Seesmic releases new update.  I’m running out of time.  I’d still review Tweetdeck ahead, given that I like its white text on black background more.  but I do think Seesmic does a nice job with search.  I have no idea how either plans to make any money but hey, I”m glad I got them. 
  • Final thought/ Post of the week: be sure to read Seth Godin’s thoughtful post Too Much Free.  It takes 30 seconds, and its useful to any entrepreneur.  My quick input—don’t be too lazy on thinking about business model and say ‘free and we’ll figure it out later.’ I can count on 2 hands the number of companies that have succeeded in building a great company built around charging no money to anyone.  If you’re clear on two things when building a business, be clear on what problem you’re solving and be clear on how you’ll pay the bills. 

I’m out.  15 minutes. 

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