10 examples of fabulously flawed product-first thinking

November 5, 2013 by 9 Comments

In talking about jobs-to-be-done here, I sometimes think that all I’m doing is stating the obvious. I mean, isn’t it obvious that you’d create something that helped fulfill a need or desire? What else would you do?

But I’ve seen in my own work experience, and across a multitude of initiatives in other industries, cases where that’s not necessarily the case. Invention was the thing. I mean that in this sense:

Invention creates. Innovation changes.

Exercising creative chops was the focus, with a thought that customers would have to take up this amazing thing invented. But unfortunately, that’s not generally the case. The invention is not adopted, and thus nothing changes for the target market. Innovation does not occur. The invention either does not address a job-to-be-done or the proposed solution was nowhere near satisfying the specific outcomes of an applicable job-to-be-done.

To illuminate how this “product-first” dynamic is a pervasive dynamic, I’ve collected ten examples of it. While the plural of anecdote is not data, see if you recognize similar examples in your own experience.

1. Because Apple, Microsoft, Google did it!

Context

Kareem Mayan wrote a great post Why only fools write code first. In it, he stated, “I have a confession to make: I’m 35, and until last year, I started building companies by creating a product.” The post describes on his evolution in thinking, focusing first on customer needs before building anything.

Product-first thinking

In the comments, someone wrote:

“Almost all of the successful startups I know of built a product first, simply because the founder wanted. Apple, Microsoft, Google, Dropbox — some of these are famous even today for never doing user surveys.”

This argument expressed skepticism about Kareem’s point.

Analysis

A good example of the ongoing pervasiveness of product-first thinking. It really is everywhere. Here, the commenter displays a classic example of the survivor bias. A focus on only those companies that made it, and what they do. Ignoring that perhaps dozens of competitors also charged ahead with their own product-first approaches. And were nowhere near as successful.

It’s like looking at the ways lottery winners live, and saying that’s the way you should live too. They’re not connected.

Of course, it’s also possible the commenter actually has no idea what those companies do in terms of understanding customer needs…

2. The “what you can do for us” attitude

Yahoo home page 2002, via All Things D

Context

Way before Marissa Mayer joined Yahoo, the company was a case study in mediocrity. From its glory days in the 90s, it had managed to become a bloated collection of media properties, without a coherent strategy due to a succession of changing executives and business models.

Product-first thinking

As reported by Kara Swisher on All Things D, Yahoo’s home page became increasingly overrun with links. To cram more stuff above-the-fold, font sizes shrunk. It became a nasty hodge podge of links that no longer related to what users wanted.

As Yahoo’s Tapan Bhat, SVP of Integrated Consumer Experiences noted,  “It had nothing to do with the user, but what Yahoo wanted the user to do.”

Analysis

What Yahoo wanted the user to. What a wonderful expression of the approach. It’s such a pernicious mode, where the needs of the company eclipse those of the customers. Call it inside-out thinking. When the company’s, not the customers’, needs drive product and service decisions, it’s a good bet customers will turn elsewhere. It’s a great opportunity for competitors.

3. Dazzled by the invention

Source: NBC Bay Area

Context

Anyone remember the hype over Dean Kamen’s project code named Ginger back in 2001? Turned out to be the Segway, that amazing triumph of technology that allowed people to travel on a motorized two-wheel scooter. It really is amazing, with its self-balancing mechanism, easy navigation and smooth ride.

Product-first thinking

It was hailed as the next coming of great technology. No really, it was. Here are quotes by both Steve Jobs and Jeff Bezos prior to its launch:

Jobs: “If enough people see this machine, you won’t have to convince them to architect cities around it; it’ll just happen.” (#)

Bezos: “You have a product so revolutionary, you’ll have no problem selling it.” (#)

Wow! So what happened? Well, have you taken your Segway out for a spin today? It  missed the mark in terms of how frequent the job-to-be-done was. For me, Segways are what tourists rent to travel around Golden Gate Park in San Francisco.

Analysis

My own perspective is that Segway is an optimum mode of transport for journeys where walking would take more than 10 minutes and less than 30. And where you don’t need to carry anything heavy or bulky. And where weather would be OK for the journey. Steve Jobs, who did heap praise on it, was prescient about what needs it didn’t fill.

“Jobs said he lived seven minutes from a grocery and wasn’t sure he would use Ginger to get there. Bezos agreed.” (#)

So Jobs and Bezos were full of praise, but in a hard analysis couldn’t quite say what mass job-to-be-done the Segway fulfilled. And it turns out most of the market couldn’t either. Sometimes the invention is so dazzling, we’re blinded to understanding what need it actually fulfills. Invention first thinking.

4. Same template, different market

Via Bloomberg Business Week

Context

Ron Johnson did a fantastic job of creating the Apple stores. They’re enjoyable to visit, full of all the latest in cool technology Apple has to offer. The clean vibe, the on-the-spot purchasing, the Genius Bar. Clearly he brought some of the experience from his Target (aka “Tar-jay“) days to the job.

Based on this, the Board of JC Penney installed him as CEO to restore a retailer that had lost its luster.

Product-first thinking

Johnson put in place a number of changes to reinvigorate the retailer. He stopped the discounting, going for a low price everyday approach (like Target). He developed brands that would be exclusive to JC Penney (like Target). Trained employees to help people shopping (like Apple).

Ultimately, however, his changes didn’t take. Perhaps the most telling insight came from another executive:

Ron’s response at the time was, just like at Apple, customers don’t always know what they want,” said an executive who advocated testing. “We’re not going to test it — we’re going to roll it out.”

There it is, product-first — or maybe vision-first — thinking.

Analysis

It’s tempting to look at this as the hubris of being smarter than customers. But I don’t think that’s the lesson to draw. Rather, this is a case of previous success with a format in other markets (Target, Apple), and applying it to a new market. Without understanding the customers in the new market. The fact that Johnson didn’t feel the need to run the new strategies by JC Penney’s customer base was due to his success with the template previously. Why test? You know what customers want.

But in this case, it led to overlooking existing customers and what they outcomes were being fulfilled by JC Penney. This alienates the core customer base, while potential new customers ponder why they’d switch from Target to JC Penney. Unsurprisingly, the stock dropped 55% during his tenure, with a horrendous 32% drop in same-store sales in the critical holiday 4th quarter of 2012.

5. Blaze a new trail

Context

Tired of people saying you should listen to the marketplace, Dan Waldschmidt advocates something different. He argues that most of the time, people don’t know what they want. In making his argument, he references both American slavery and Martin Luther’s religious reformation.

Product-first thinking

Here is how Dan puts it:

One of the things business experts tell you when you are considering changes to your sales strategy is the idea that you need to “listen to your marketplace”. That you need to take your idea and run it by the people around you to get some feedback. Instead, blaze a new trail. Think about where you want to lead your market.

Analysis

Perhaps the key phrase is lead your market. That, in and of itself, is fine. Lead your market in sales. In profits. In innovations that resonate. But in the context of (i) ignoring the marketplace; and (ii) blazing a new trail, it comes across as advice to tell the market where it needs to go. Which actually is nice if you can accomplish it. Alas, the business landscape is littered with folks who tried to tell the market where to go. The market can be fickle that way.

To be fair, it is important to separate the jobs-to-be-done from the potential solutions. That’s a better way to think about Dan’s advice.

6. What Steve Jobs said

Via Inc. Magazine, 1989

Context

Perhaps you have seen this quote by Steve Jobs:

“You can’t just ask customers what they want and then try to give that to them.”

Run a search on that exact phrase, and 687,000 results are returned. It’s a sentiment from one of the all-time greats that clearly has caught on.

Product-first thinking

Interpretation is important here. When you read a number of articles that reference the quote, the context is one of divining products that no one in the market would come up with. Use your inner genius to do this. As written about Jobs  in Fast Company:

He is a focus group of one, the ideal Apple customer, two years out.

And he was quite good.

Analysis

But for most of us, we’re not an ideal focus group of one. That’d be the dangerous lesson to draw from his quote. If every corporate product person, or innovator, or strategist decided to channel his inner focus group of one, there’d be a lot of  wasted resources. Actually, there are a lot of wasted resources

The other thing to note is the quote in its fuller context. Here’s more from Jobs in the 1989 interview with Steve Jobs where he first said that quote:

“You can get into just as much trouble by going into the technology lab and asking your engineers, “OK, what can you do for me today?” That rarely leads to a product that customers want or to one that you’re very proud of building when you get done. You have to merge these points of view, and you have to do it in an interactive way over a period of time—which doesn’t mean a week. It takes a long time to pull out of customers what they really want, and it takes a long time to pull out of technology what it can really give.”

Sound like he’s advocating to ignore your customers?

7. My business model demands your attention

Facebook Home user ratings

Facebook Home user ratings

Context

A few months ago, Facebook introduced Facebook Home. This app for Android became the user interface of the phone. In so doing, it dominates the experience on the device:

Designed to be a drop-in replacement for the existing home screen (“launcher”) on an Android device, the software provides a replacement home screen that allows users to easily view and post content on Facebook along with launching apps, a replacement lock screen that displays notifications from Facebook and other apps, and an overlay which allows users to chat via Facebook messages or SMS from any app.

Note that the existing Facebook app was still available, allowing you to get your Facebook updates via the phone.

Product-first thinking

What Facebook Home does is elevate Facebook above all others on the phone. It was a play to get Facebook front and center in your daily experience. There would be access to all your other apps, but the path to them would go through Facebook each and every time.

Globally, the average smartphone user has 26 apps on their phone. For Facebook Home to be popular, the typical user would rank Facebook above all other apps. The games. Email. Twitter. Instagram. And on…

Analysis

Ultimately, Facebook Home withered in the market. I can understand why. In 2012, mobile time spent on Facebook surpassed time on the Facebook website. From a user experience perspective, Facebook wanted to make mobile even easier. From an advertising perspective, Facebook needed to establish a way to present more mobile ads. Imagine serving up an ad every time someone turned on their Android phone.

But the problem is that Facebook was solving a job that most users were already satisfied with. The Facebook App works well for its purpose. It also imposed new friction on using one’s mobile device. The burden of navigating through Facebook to get to your other 25 apps. As Joseph Farrell, EVP Operations at BiTE interactive, said:

“Facebook Home solves Facebook’s needs for more user data, but what does it solve for its users?”

8. Solution in search of a problem

Context

In a post, entrepreneur Ramli John talked about lessons he’s learned from failed startup efforts. Specifically, the experience gained with Lesson Sensei. Lesson Sensei didn’t make it.

Product-first thinking

Ramli states plainly the trap he fell into:

“Don’t lose focus of the problem. That was one of the biggest mistake I made in my previous failed startup, Lesson Sensei. About a few weeks in, we realized that we really don’t have a problem to solve. But, we had this awesome solution. So we started pivoting on possible problems we can solve with our solution. Each week, we tried a new problem to solve. Each time, we found a flaw with our assumption. Then, we started losing steam. Always start with validating a problem before you validate the solution. The other way around just takes up too much time and energy.”

Analysis

This is a classic issue. There’s a hazy sense of what an idea could address. It’s not nailed down yet, but there’s the rush of starting on the solution anyway. To be fair, there is some merit in this. You could be 50% there in terms of product-market fit, and the initial product can help elicit the right iterations. But as Ramli notes, that can be an expensive approach. It burns time, energy and money. And depending on how hazy that view is of the actual job-to-be-done and its attendant outcomes, you may be entirely off track.

9. We’ll get to those customers at some point

Context

Robin Chase is the founder and former CEO of Zipcar (acquired by Avis in 2013). After Zipcar, she founded GoLoco, a carpooling app. Unlike Zipcar, GoLoco didn’t make it. She is now leading Buzzcar, a peer-to-peer car sharing service.

Product-first thinking

Robin is open about the failure of GoLoco:

“With my second company, GoLoco – social online ridesharing – we spent too much money on the website and software before engaging with our first customers.”

Analysis

In some ways, this is a similar situation to Ron Johnson at JC Penney. Having been successful in getting Zipcar going, Robin had a confident attitude about her new endeavor. That confidence led her to develop first, worry about customers later. As she notes, this was backwards. The spade work of understanding customers’ needs is a critical first step.

10. Dazzled by the innovator and the hot trends

Color website is deadContext

Remember Color? This app would let you take pictures. These pictures were then visible to anyone with the Color app within 100 feet of you. It was a way for friends or strangers to participate together in some close proximity.

Color is no more. It didn’t fare well.

Product-first thinking

It was a can’t-miss app. It was started by an energetic, persuasive entrepreneur whose previous company was bought by Apple. It was SOcial. It was LOcation-based. It was MObile. It was SoLoMo!

With that combination, Sequoia Capital and Bain Capital felt confident investing $41 million. Product-first thinking.

Analysis

Presumably, the entrepreneur’s previous success was a good-enough proxy for understanding the target market’s jobs-to-be-done and attendant outcomes. However, as seen with GoLoco above, previous success doesn’t automatically grant the ability to divine customer needs. There’s still the work of understanding the market you intend to tackle.

GigaOm’s Darrell Etherington gets props for identifying the flaws of Color right at its launch:

“But I think it’s more likely this is a prime example of how, when it comes to apps, 1+1+1 does not always equal 3. An app can’t just hope to profit by being at the intersection of a number of promising mobile trends. Developers still have to think intelligently about how those trends integrate, and remember that user experience, especially the one following first launch, is still the key to wide app adoption.”

Remember this next time you see another startup in an overhyped space, say Big Data. What job-to-be-done does it fulfill?

Wrap-up

Perhaps not surprisingly given my work experience and interests, these examples have a heavy technology orientation.  One can imagine similar cases in financial services, apparel, consumer product goods, etc. Hopefully the examples here will be useful as you look at your own world. And in your own work. I’ll admit to being guilty of product-first thinking. The creative muse is a strong human characteristic. But recognize when that muse is taking you down a path you shouldn’t go.

I’m @bhc3 on Twitter.

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Three Reasons Google Should Acquire Delicious from Yahoo

December 17, 2010 by 10 Comments

[tweetmeme source=”bhc3″]

So the news is out. Yahoo plans to shutter Delicious, the largest social bookmarking site. Which is shocking, particularly among the tech savvy and socially oriented. Delicious is iconic for its application of social sharing and collective intelligence. Hard to believe Yahoo wants to shut it down.

But wait…this doesn’t have to be the end. Why not seek alternatives to shutting down the service? Might there be a logical company to take on Delicious, and all the value it holds? Why yes, one company comes to mind.

Google.

Delicious fits Google’s mission

Hmmm…what is it Google wants to do? What defines their corporate philosophy? Ah yes, here’s Google’s mission:


“Organize the world’s information.” Now, doesn’t that sound like the kind of thing that applies to Delicious? Millions of people organizing the world’s information, according to their own tags. Which makes it easier to find for others. Crowdsourced curation.

For that reason alone, Google would be wise to take on Delicious.

Glean new insights about what people value

Google’s pagerank is amazing. It’s incredibly good at finding nuggets. But it’s not perfect, as anyone who regularly use it knows. The use of links is powerful, but is a limited basis for identifying valuable web pages.

What people elect to bookmark is a different sort of valuation. Which is important, because not everyone blogs, or creates web pages with links to their favorite sites. But there is a distributed effort of indicating value via bookmarking.

This activity would be a valuable addition to Google’s search results. Take a look at this thread on Hacker News (a bunch of tech savvy types) about Delicious:

I added that highlighting. And here’s what Michael Arrington said when Yahoo experimented with adding Delicious bookmarks to its search results:

I have previously written that Delicious search is one of the best ways of searching for things when a standard search doesn’t pull up what you are looking for. After Google, it is my favorite “search engine.” Adding this information into Yahoo search is a great idea.

Google could leverage the activity of Delicious users to improve its search results, or at least give users an additional place to find content. Mine the tags to provide more context and connections among pages.

Note that Google, and Bing, are exploring different ways to apply social signals from Twitter and Facebook. Inclusion of Delicious in the search process would be consistent with that.

And Google would still benefit from its Adwords program here. Which would be a monetization strategy for Delicious, which has no ads.

Great PR move with the tech community

Google finds itself in a fight with Facebook for employees. Google is public, Facebook is pre-IPO. Social is hot, and Facebook is dominant in that. Google isn’t.

But as Allen Stern notes, Google does have a special appeal to the tech crowd for its developer-friendly moves. Stepping in and taking over a legendary Web 2.0 site like Delicious would be a good fit with that reputation. Enhance the usage of the data and make it easy for developers to access.

More importantly, Delicious holds a special appeal among the geekier set. Many of us are still active bookmarkers, and use the service. Google is known for being a geek-centric paradise, with a bunch of high-GPA, advanced degree types on its campuses.

What do you think it costs to run Delicious “as is”? I’d hazard a guess that it’s not too much. And Google is throwing off some serious cash ($10 billion in last 12 months):

So they do have some capacity, but obviously need to invest it wisely.

For a relatively low cost, they gain a treasure trove of data on relevance and value, and a solid boost to their PR. Seems like a big win to me. How about it Google? Why not step in and take over Delicious?

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Google, Yahoo, Microsoft Want to Legalize For-Money Prediction Markets

May 8, 2009 by 2 Comments

$500 on the U.S. economy turning positive in the first quarter of 2010!

Wouldn’t it be great if you could put money down on your predictions of future events? If Google, Yahoo and Microsoft get their way, you just might be able to do that.

Money $20sBack in September 2008, Google and Yahoo, united under an organization called Coalition for Internal Markets (CIM), wrote a 28-page letter articulating their support for the legalization of small stakes prediction markets. On April 9, 2009, Microsoft added its support to Google and Yahoo’s letter. Here’s an excerpt from the CIM letter:

CIM believes that small-stakes event markets of the kind first developed by the Iowa Electronic Markets have the potential to provide significant public benefits and recommends that the Commodity Futures Trading Commission propose regulations under which such markets may operate, both as internal markets or as public markets.

I learned of all this through Oddhead, Midas Oracle and Bo Cowgill’s blogs. This has the potential to be quite powerful as a forecasting tool, and a way for people to profit from their prediction acumen.

Just how did this come about?

Commodity Futures Trading Commission Wants Input

The Commodity Futures Trading Commission (CFTC) is the government body that regulates the sale of commodity and financial futures and options.

In May last year, the CFTC put out a public notice that it was soliciting comments on the regulatory treatment of financial agreements offered by prediction markets. So apparently the idea of legalization is on the Commission’s mind. The CFTC distinguishes prediction markets as not including financial agreements on market prices (stocks, cotton, etc.) or broad-based measures of economic or commercial activity. Rather, they define them as:

Event contracts may be based on eventualities and measures as varied as the world’s population in the year2050, the results of political elections, or the outcome of particular entertainment events.

“Entertainment events.” Think American Idol, and putting your money down on who you predict will win. That Adam Lambert?

The CFTC notes that its staff has received “a substantial number of requests for guidance” on the propriety of prediction markets’ use. Sounds like a pretty healthy interest in this sort of thing.

Getting Ahead of the Regulatory Curve

In the CIM letter, Google’s Hal Varian and Yahoo’s Preston McAfee develop three themes:

  • CFTC has the right to regulate these markets
  • Prediction markets provide substantial benefits
  • Propose a set of sensible rules for regulation

Google states that it started operating internal prediction markets in April 2005, and that now it runs 25-30 prediction markets per quarter. The purposes of the markets include forecasts of product demand, internal performance (e.g. product release dates), company news and external business environment factors. Google also uses the prediction markets to assess the strength of relationships between different teams.

Yahoo operates internal prediction markets. It also operates public events, such as the Yahoo!-O’Reilly Tech Buzz Game, in which participants predict which technologies will be popular, and which ones lack merit.

The two primary benefits discussed in the letter for predictions markets are: (i) Generation of useful information by aggregating the opinions of individual participants; and (ii) Hedging exposure by making predictions related to some position an individual holds.

The two companies then smartly propose some rules that would govern the small stakes prediction markets:

  • Total exposure per market of $2,000
  • Maximum loss at $2,000 over the course of a year
  • Non-intermediated, electronic markets
  • Trading could be matching bids and offers, or there could be an automated market maker
  • Program to monitor trading
  • Maintain trading histories for five years

Generally, the letter asks for a fairly flexible approach to the markets, with adherence to core operating principles to ensure fair, open trading.

An Inevitable Question: Gambling?

Perhaps as you’ve read this, the thought occurred to you…isn’t the same thing I can do in Las Vegas? Bet on sports teams? What distinguishes this from gambling? Indeed, in its solicitation for comments, the CFTC asks this:

What objective and readily identifiable factors, statutorily based or otherwise, could be used to distinguish event contracts that could appropriately be traded under Commission oversight from transactions that may be viewed as the functional equivalent of gambling?

The CIM letter notes that gambling is generally associated with sports events and games of chance. It recommends the CFTC develop a definition of permitted markets based on a set of examples, and expand the list on a case-by-case basis.

This question will likely receive the most attention from the public. What will be interesting is how Obama’s administration views this versus Bush’s.

Count Me In

Add my YES vote to this. I think it’d be great to buy and sell positions based on predicted event outcomes. The example I led this post off with, the economic rebound, is a great way to tap public sentiment about the economy. We’ll have to watch how this unfolds.

How about you? Do you favor small stakes prediction markets?

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My Ten Favorite Tweets – Week Ending 020609

February 8, 2009 by 3 Comments

From the home office in Victoria, Australia…

#1: Interesting convo w/ colleague. Is there any risk to tweeting that you’re traveling on vacation? Burglars searching for such tweets?

#2: Guy was turned down for a job because he switched majors his freshman year of college. Say what? Details: http://bit.ly/23yHBT

#3: FriendFeed continues to roll out the powerful features. Latest? Much more granular search options, very helpful: http://bit.ly/VNYX

#4: I’m impressed w/ Yammer’s hustle. If you’re doing an internal preso on it, they’ll help you with the preso. Smart. E.g.: http://bit.ly/PR1A

#5: RT @beccayoungs I really do think the Amazon Kindle will be a game-changer. Check this out – Kindle to be a $1B product http://tr.im/eflz

#6: RT @barconati Oh no! Yahoo briefcase is closing. Believe it or not I still use it. More out of habit than anything else http://tr.im/e88z

#7: Mike Gotta on the rise of employee social profiles inside companies: http://bit.ly/135Vz Benefits and advice w/ nice Connectbeam shout-out

#8: Check out http://www.socialwhois.com/ Lets you search for people on based on keywords in their lifestreams. Very cool.

#9: RT @lehawes w00t! I made the Wall St. Journal today! Page A11 in print edition or online at http://bit.ly/iRcH

#10: After the WSJ coverage…@lehawes blogs about being included in a recent WSJ article: Taken Out of Context http://bit.ly/17aRy

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My Ten Favorite Tweets – Week Ending 121908

December 20, 2008 by Leave a comment

From the home office in Short Pump, VA…

#1: “Each year there is more information created on the Web than in all the previous years combined. ” Jim Breyer of Accel http://bit.ly/12nH3

#2: Per a Yahoo product rep, the average search session lasts 15 minutes http://bit.ly/eSrr

#3: What a lovely bitchmeme we have this weekend…and in case you’re curious, here’s Dave Winer’s definition of a bitchmeme: http://bit.ly/MYJm

#4: It takes 6-9 months for a blog to get fully ramped up in terms of readership per @duncanriley http://bit.ly/W0LO

#5: Great story of a Best Buy meeting where a raging Twitter conversation happened while the room was respectfully quiet http://bit.ly/FkKM

#6: 60% of e2.0 vendors will be bought or go under in 2009, according to Gartner http://bit.ly/Acyg >> Oy!

#7: Today is my one-year anniversary of Twitter. First tweet? “Trying to get warm-n-fuzzy about Twitter…” http://bit.ly/fss2 Accomplished!

#8: Office 2007 – really, really confusing if you’re used to Office 2003 or prior versions.

#9: FriendFeed got a spammer attack, the team quickly took care of it. One thing I wonder: why do these spammers always have such bad grammar?

#10: My sister just earned her PhD in linguistics this morning from Georgetown. Way to go Helen!

*****

See this post on FriendFeed: http://friendfeed.com/search?q=%22My+Ten+Favorite+Tweets+-+Week+Ending+121908%22&who=everyone

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You Know, If Yahoo Could Actually Focus, They’d Be a Helluva Lifestreaming Service

October 20, 2008 by 2 Comments

Yahoo announced its latest effort around making itself more social.  And unlike previous efforts (Mash, Yahoo 360), this one has potential.

Yahoo beta released the “Universal Profile”. To be honest, the initial release is underwhelming. Here’s what mine looks like:

The profile includes the picture + bio + interests that we’ve come to expect. What else?

  • Status Update = Facebook status, Twitter
  • Guestbook = Facebook Wall
  • Connections = any social network
  • Updates = Facebook news feed, FriendFeed

A Compleat Social Profile. Well not really. But it has potential.

Interestingly, the Status Update is a 140-character field. Not 125 characters, not 150 characters. 140, like Twitter. That probably says something about future Twitter integration.

Lets focus on that Updates box there. Because that’s where maybe, maybe Yahoo can finally integrate its disparate Web 2.0 properties.

Facebook, FriendFeed Have Been Enjoying Yahoo’s Sites

FriendFeed nailed the idea of pulling updates from different services. 43 of them currently, including three Yahoo properties. Check ’em out on FriendFeed:

Facebook, seeing the possibilities in lifestreaming, added feeds into the news feed. So now friends can see your activities on external sites as well, including Del.icio.us and Upcoming.

Currently, Yahoo’s beta release doesn’t include updates from those services. What is included? Yahoo 360, Yahoo Buzz, Yahoo Avatars (huh?), Yahoo Shine. I tested the update timing. Yahoo Buzz updated quickly onto my profile. I created blogs on Yahoo 360 and Yahoo Shine (yes, the women’s site). Neither blog post ever showed up on my profile.

So the initial profile is a bit underwhelming, the sites that feed into the profile are limited and activities don’t update from the sites that are available. Wow.

OK, not the biggest endorsement so far, but read on…

The Yahoo Advantage

Yahoo has three distinct advantages in the lifestreaming race:

  1. Traffic
  2. A set of sites that lend themselves well to lifestreaming
  3. Email/IM social graphs

Traffic

Yahoo draws the second highest traffic in the United States. For reference, here are traffic stats for Yahoo, Facebook and FriendFeed:

Critical to these lifetreaming social networks is having a sufficient number of users. Twitter has maintained its dominance in microblogging despite the emergence of competitors. Biggest reason? Everybody’s already there.

Yahoo ‘s lifestreaming starts with a critical mass of potential users.

Lifestreaming-Oriented Services

Yahoo has a number of sites that lend themselves well to lifestreaming, as mentioned above. The users of these sites are already putting things into the public domain, a psychological hurdle for many people in terms of social networks. While these sites aren’t available yet, Dan Farber reports that they will be soon.

Two services merit particular call-out here: Yahoo Buzz and Twitter.

Yahoo Buzz is Yahoo’s answer to Digg, Reddit, Mixx and other social news sites. Users submit stories, and other users can vote them up or down. Apparently, Yahoo Buzz delivers huge traffic. TechCrunch reported its single highest traffic day ever thanks to a link on Yahoo Buzz. And ReadWriteWeb reported that Yahoo Buzz had overtaken Digg in terms of visitors.

What I like about the integration of Yahoo Buzz into the Yahoo Universal Profile is that it becomes quite easy to see what users are interested in. It also becomes a great way to find stories via your social network.

Twitter is the best-known microblogging service, and competes quite well with Facebook’s status updates. Twitter is enjoying network effects allowing it to pull away from its competition. The 140-character Yahoo Universal Profile status updates are now available. I’d like to see how Yahoo either integrates Twitter into its experience, or creates a distinct microblogging experience built on Universal Profile status updates.

Email/IM Social Graphs

In the Yahoo Universal Profile, you are provided with a list of 10 connection recommendations. How are these recommendations generated? Check out what Yahoo says:

Now in a lot of ways, this is no different from uploading your email contacts to a social network and inviting people. The difference here is that these contacts are already using Yahoo. And Yahoo has the advantage of exposing lifestreaming via the email and IM that people use. Not as some third party social netowrk where a lot of people won’t bother to show up.

This goes back to the existing user base of Yahoo. If Yahoo can figure out how to put lifestreaming in-the-flow of its users’ daily interactions with the site’s properties, it’s got huge upside potential with this idea.

But Yahoo Is Always So Distracted

The latest distraction is the news that Yahoo will be laying off a lot of people. This follows the Microsoft acquisition attempt drama. And Yahoo has a history of acquiring sites, but not doing much with them. And many people question just what Yahoo is doing with this Universal Profile:

Don’t really see a point in setting up a profile on Yahoo!. I mean, I see the company’s goals here, but I do not see any user benefits. After all it’s just another Facebook, however tied to a dying Search Engine.

There is justifiable skepticism that Yahoo can actually pull off creating a vibrant, useful lifestreaming service. If Yahoo could pull it off, here’s what it gains:

  • Higher page views
  • Longer page views
  • Exposure and growth of its many sites via the lifestreams of a user’s social graph
  • A clear and distinct advantage over Google and Microsoft
  • An ability to lead the technology conversation again

I’m rooting for Yahoo from this corner. I would love to see Yahoo bring lifestreaming and social networks to the mainstream.

*****

See this post on FriendFeed: http://friendfeed.com/search?q=%22You+Know%2C+If+Yahoo+Could+Actually+Focus%2C+They%E2%80%99d+Be+a+Helluva+Lifestreaming+Service%22&who=everyone

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Made the Switch: FriendFeed Now My Homepage

July 2, 2008 by Leave a comment

In recent weeks, I’ve noticed my behavior has changed when I fire up the PC in the morning. My Yahoo has been my home page forever. I love the portal approach, with everything I like easily visible and accessible with a click.

But as soon as My Yahoo loaded, I quickly clicked over to FriendFeed. I really didn’t read much of what was displayed on My Yahoo.

I can be pretty loyal to apps and companies I like. I was doing this with Yahoo, despite the change in my behavior. Finally though, I realized that staying loyal and delivering a page view to Yahoo wasn’t really getting me anything.

I switched to FriendFeed.

My Top 5 Reasons for Making the Switch:

  1. Content that is filtered by my network on FriendFeed has more value to me than what I see on My Yahoo
  2. My interest in all the content I see on My Yahoo is only fleeting, but a portal demands that it’s always there (e.g. stock quotes)
  3. Hitting Refresh on My Yahoo only brings up the same stories. FriendFeed has the most amazing river of new stuff.
  4. My Yahoo doesn’t provide some of the content I find most interesting = tweets, blog posts, articles directly posted, comments, Flickr Favorites by people I trust (note the Flickr irony…)
  5. My Yahoo takes too long to load

I know I can control the portal experience by adding/deleting content. But that’s a pretty heavy process to me. And it doesn’t really come close to the constant stream of interesting new content that FriendFeed delivers.

I don’t mind the ads so much, but that big fat Classmates.com ad sure does take up a lot of real estate. I expect when Friendfeed includes ads, they’ll be more subtle like Google AdWords.

Biggest concern? I’ll fail to check my Yahoo Mail without the link I have on the My Yahoo page. A number of people still use that email to stay in touch.

If Yahoo can get clever and revive itself, I might make it my home page again. But for now, it’s FriendFeed.

*****

See this post on FriendFeed: http://friendfeed.com/search?q=%22Made+the+Switch%3A+FriendFeed+Now+My+Homepage%22&public=1

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Hey Yahoo! Forget MSFT, GOOG. Change the Search Rules.

May 19, 2008 by 6 Comments

These I wish I knew the moment I was turned off on Yahoo and what the root cause may be, but I no longer use anything Yahoo (except my Flickr account if you want to count that).

Vince DeGeorge, on FriendFeed

I was doing the same thing until I started using delicious as a search tool. Finally realized how powerful it was, and have been using it since.

Shaun McLane, on FriendFeed

I have previously written that Delicious search is one of the best ways of searching for things when a standard search doesn’t pull up what you are looking for. After Google, it is my favorite “search engine.”

Michael Arrington, TechCrunch, Delicious Integrated Into Yahoo Search Results

The latest news is that Microsoft is reaching out to Yahoo again. In fact, a couple reports (here, here) say that Microsoft wants to buy Yahoo’s search business.

Before any such transaction occurs, it seems worthwhile to think about what Yahoo could do with its existing assets. The three comments above are insightful. Yahoo is slowly losing share of mind, although it’s existing base of users will be around for a while. At the same time, there are nuggets in the Yahoo empire.

Search via del.icio.us ranks as one of those nuggets. Another nugget? Yahoo! Buzz. According to ReadWriteWeb, Yahoo! Buzz has surpassed Digg in terms of traffic, and its demographics better reflect web users.

Yet, Yahoo struggles against Google in the highly lucrative search market. Google increased to 67.9% of searches in April 2008, compared to Yahoo’s decline to 20.3% of searches.

What should Yahoo do? Stop playing Google’s game. Rewrite the search rules by embracing the social web fully, leveraging the social media assets it has.

And in doing so, demonstrate an aggressive path to make Yahoo a social media titan.

A Proposal for “Socializing” Yahoo Search

In January 2008, TechCrunch ran a post with a preview of del.icio.us integrated with regular Yahoo search results. Included in the search result links would be stats that tell a user:

  • Number of del.icio.us users who bookmarked the page
  • The top tags they used on the page

Both of those stats appear to be clickable. By clicking on the number of users stat, I assume a user would be taken to the del.icio.us page showing the users who bookmarked the page. If one clicked a tag, you’d land on the del.icio.us page for all web pages with that tag.

That’s a good start. But Yahoo can do better. Below is a diagram that shows how Yahoo can use its existing assets, combined with a good dose of the new social media experience, to radically change search:

Here’s a breakdown of what’s going on with the proposal.

Search Rankings

From what I’ve read, Yahoo has pretty much caught up to Google in terms of search performance. That means the use of links and clicks to rank websites is pretty common across the two search engines. However, Google does have the advantage of three times the traffic, which makes its insight into what’s relevant better than Yahoo.

But Yahoo has its own in-house advantages: del.icio.us and Yahoo! Buzz. Both address shortcomings in the links and clicks rankings for search engines:

  • Links require a media site or blogger to take the time to link. These links are insightful, but lack the broader reach of what Web users find relevant.
  • Clicks occur before a searcher knows whether the landing site is valuable. They don’t describe its usefulness after someone has clicked onto the site.

With del.icio.us and Yahoo! Buzz, Yahoo can tap into users sentiments about websites in a way that Google cannot. These insights can be used to influence the ranking of search results.

Search Results – Your Friends or Everyone

Here’s where it can really interesting. Notice I keep the general search results outside the influence of what your friends think. I think that’s important. A person should see results outside their own social circle. Otherwise, it will be hard to find new content.

But there is real power in seeing what your friends find valuable (e.g. see FriendFeed). So Yahoo should let you easily subscribe to other people for content discovery. Yahoo already has a head start on letting you set up your subscriptions:

  • Yahoo Mail
  • Yahoo Instant Messenger

In addition to that, you should be able to easily subscribe to anyone who publicly shares content they find interesting. Both del.icio.us and Yahoo! Buzz have public-facing lists for every user of what they bookmark or ‘buzz’. After viewing those lists, I should be able to easily subscribe to these users.

Once your network is developed, it becomes a powerful basis for improving information discovery.

Search Results – Associated Tags

Whenever tags are available from del.icio.us, they should be visible for each web site shown in the search results. This is what TechCrunch previewed. What do tags tell a user?

  • A way to discover other sites that might be relevant
  • Context for the web site
  • That someone thought enough of the web page to actually tag it

Tags should come in two flavors: everyone and your network. Clicking on a tag should display the top 10 associated sites right on the search results page. For more sites associated to the tag, the user is taken to del.icio.us.

Keeping the top sites on the search results page is important to make people use the functionality. Leaving the search results page just to see the sites associated to a tag will cause adoption to drop signficantly.

Search Results – Associated People

Each web page in the search results will show the number of people who have (i) bookmarked the site; or (ii) Yahoo! Buzzed the site. These numbers give a direct indication of how many people, not websites, found the web page valuable.

Clicking these numbers displays a list of the people, along with their most recent activity. This gives users a sense of whether they want to subscribe to a given user or not.

Search Agent

Once users perform a search, they will be able to subscribe to new content matching their search results. These subscriptions can be based on different criteria:

  • Any new content matching the search term (Google does this via Google Alerts) or a tag
  • Any new content matching the search term/tag and bookmarked by someone to whom the user subscribes
  • Any new content matching the search term/tag and Yahoo! Buzzed by someone to whom the user subscribes
  • Any new bookmarks or Yahoo! Buzzes by someone to whom the user subscribes

New content notifications occur via email or RSS. RSS can be anywhere, including on the user’s My Yahoo page. Again, FriendFeed has shown the power of these content streams.

Final Thoughts

My little post here isn’t the only idea someone could float. But it does at least address taking Yahoo much more deeply into the social media world, where users drive the value.

Yahoo revealed details of a proposed del.icio.us integration back in mid-January. And then nothing. Yahoo previewed Yahoo Mash, a new social network in September 2007. And then…nothing. The last post on the Yahoo Mash blog was January 11, 2008.

Yahoo has so many amazing assets. Search, email, portal home page. Several beloved social media apps (Flickr, del.icio.us, Upcoming). Yet they have not put them together into a cohesive strategy and experience.

And now, talk of selling the search business? C’mon Yahoo. You’ve got too much going on to give up yet. Stop playing by others’ rules. Make your own rules with the amazing assets you have.

*****

See this item on FriendFeed: http://friendfeed.com/e/1b07226a-b51b-f386-fbb8-bdaece83e9fe

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Imagining an Email Social Network

April 9, 2008 by 2 Comments

Email has been proposed as a nearly ready-to-go social network. Just how would that work?

In September 2007, Om Malik asked Is Email The Ultimate Social Environment? And in November, Saul Hansell wrote, Inbox 2.0: Yahoo and Google to Turn E-Mail Into a Social Network. Both looked at the idea that email providers have most of what was needed to build their own social networks. There is potential there, but it’s not a slam dunk.

The Social Network Stack

If an email system is to become social, it needs to address the social network stack. To keep things simple, let’s assume there are three parts to the social network stack:

  1. Self-Expression = who you are, what you like, what you’re doing
  2. Relationships = people connections, of all different types
  3. Interactions = how you engage your network

Within each part, there are components that define the experience of the social network. This diagram describes those:

Self Expression: Email Needs a Profile Page

There isn’t a profile page in email systems. You log in, and you see your email. Adding a profile page really shouldn’t be too hard for Google or Yahoo. Even issues of privacy for the profile page are quite manageable for the two Web giants.

Apps on the profile page? Google’s got iGoogle widgets and OpenSocial. Not a problem.

Yahoo has demonstrated with its durable portal that it can pull together information from different sources. Wouldn’t be too much of an issue for them either. According to the New York Times’ article, Yahoo’s Brad Garlinghouse already has an idea for the profile page:

In this vision, people have two pages: a profile they show to others and a personal page on which they see information from their friends as well as anything else they want, like weather or headlines.

Relationships: They’re in the Emails, But Handle with Care

This is the biggest advantage the email providers have: they know your relationships. They’re sitting on a mountain of information about people’s connections to others. As the New York Times’ Saul Hansell wrote:

Web-based e-mail systems already contain much of what Facebook calls the social graph – the connections between people.

This is the killer advantage Yahoo and Google have over other social networks. They know your connections right off the bat. And that’s not all. They know how often you email those contacts.

Imagine how this could work:

  • Email frequency is used to set your initial relationship level with someone else. Lots of recent back-n-forth means strong bond. Lots of one-way emails to you means it’s a company. Few two-way emails means you have a weak relationship.
  • Your address book categories – personal, work – can become relationship definition metadata.
  • If you don’t have your email address book organized by relationship types, the email provider analyzes the words to categorize the relationship. Romantic, friendship, professional. Yes, this is Big Brother scary, but Gmail already does this to display ads. Still, if not done right, this might backfire big time.

I do wonder how much value this really has though. Email address books are used to kick start your enrollment into social networks like Facebook. It’s not hard to import these.

The assessment of your email connections – strength and type of relationship – is cool, but don’t you know that already? Arguably, such analysis really is a way to save time on making your own decisions about these relationships. But if you’re engaged with your network, you’re probably going to take control of this.

Subscribe or Dual Opt-In: Twitter or Facebook? FriendFeed or LinkedIn? The recent stars on the social apps scene have a subscribe model. Your can read the updates of people on Twitter and FriendFeed, just by declaring that you want to. Pretty wide open. But a key factor here: when you join Twitter or FriendFeed, you do so knowing that anyone can read your updates. People with whom you email never had that expectation. So every user either needs to opt-in to having their updates read by their email contacts, or you must send a friend request to whomever you want in your social network.

Type of Relationship: Friend, common interest, professional? This is another one that requires thought. I’ve argued previously that different social networks are good for different types of relationships. Being a one size-fits-all is not easy. It requires a decent amount of management for the user: do I share my kids’ pictures with my colleagues and the people in my Barack Obama 08 group? Dedicated purpose social networks make managing the different aspects of your life easier. Otherwise, all your co-workers will know your political preferences, party pictures and relationship status. Email providers have all of your email contacts; they need to either pick a focus for their social networks or let users create their own types.

Interactions: Watch Those Activity Streams

Most of the Interaction stack is well within the range of Google and Yahoo. Yahoo’s been in the groups business for a long time. Google relaunched the JotSpot wiki as Google Sites. A wiki can be a good group site.

Apps were already discussed under self-expression. Messages? Of course – this is email.

Activity updates are an interesting concept. The biggest current activity in email apps is…email. But I’m not sure those qualify as updates you want broadcasted:

Should emails be shared?

Emails are pretty private, aren’t they? Not really something people will want to broadcast out to their social network…

Google and Yahoo could integrate activity streams from other parts of their social networks pretty easily.

So What Are Email’s Advantages as a Social Network?

I’m not sure there are intrinsic advantages email enjoys that make it superior as a potential social network. Rather, it has these two user-oriented advantages:

  • People wouldn’t have to go to a lot of trouble to set them up. Just present them with the opportunity when they log in to their, with very few clicks or decisions initially.
  • We tend to check our email daily, hourly. So recurring engagement with your social network is a lot easier than with destination social networks.

That being said, Facebook, MySpace, LinkedIn, Bebo, Ning and FriendFeed have a tremendous head start and brand. They also have clearly defined, different experiences.

If they choose to roll out their own social networks, Google and Yahoo will start ahead of the game. But success won’t be because of the email. It’ll require a differentiated social network experience. Just like anyone else entering the space.

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Improving Search and Discovery: My Explicit Is Your Implicit

March 24, 2008 by 1 Comment

Two recent posts on the implicit web provide two different takes. They provide good context for the implicit web.Richard MacManus of ReadWriteWeb asks, Aggregate Knowledge’s Content Discovery – How Good is it, Really? Aggregate Knowledge runs a large-scale wisdom of crowds application, suggesting content for readers of a given article based on what others also viewed. For instance, on the Business Week site, you might be reading an article about the Apple iPod. Next to the article are the articles that readers of the Apple iPod article also viewed. MacManus finds the Aggregate Knowledge recommendations to be not very relevant. The recommended articles had no relationship to Apple or the iPod.

Over at CenterNetworks, Allen Stern writes that Toluu Helps You Like What Your Friends Like. Toluu lets you import your RSS feeds and friends who have also uploaded their RSS feeds. It applies some secret sauce to analyze your friends’ feeds and create recommendations for you. Stern finds the service a bit boring, as all the recommendations based on his friends’ feeds were the same.

In the case of Aggregate Knowledge, the recommendations were based on too wide a pipe. The implicit actions – clicks by everybody – led to irrelevant results because you essentially the most popular items. In the case Toluu, the recommendations were based on too narrow a pipe. The common perspectives of like-minded friends meant the recommendations were too homogeneous.

Both of these companies leverage the activities of others to deliver recommendations. The actions of others are the implicit activities used to improve search and discovery. A great, familiar example of applying implicit activities is Google search. Google analyzes links among websites and clicks in response to search results. Those links and clicks are the implicit actions that fuel its search relevance.

Which leads to an important consideration about implicit activities. You need a lot of explicit activity to have implicit activity.

Huh?

That’s right. Implicit activities don’t exist in a vacuum. They start life as the explicit actions of somebody. This is a point that Harvard’s Andrew McAfee makes in a recent post.

Let’s take this thought a step further. Not all explicit actions are created equal. There are those that occur “in-the-flow” and those that occur “above-the-flow”, a smart concept described by Michael Idinopulos. In-the-flow are those actions that are part of the normal course of consumer activities, while above-the-flow takes an extra step by the user. A couple examples describe this further:

  • In-the-flow: clicks, purchases, bookmarks
  • Above-the-flow: tags, links, import of friends

Above-the-flow actions are hard to elicit from consumers. There needs to be something in it for them. Websites that require a majority of above-the-flow actions will find themselves challenged to grow quickly. They better have something really good to offer (such as Amazon.com’s purchase experience). Otherwise, the website should be able to survive on the participation of just a few users to provide value to the majority (e.g. YouTube).

So with all that in mind, let’s look at a few companies with actual or potential uses of the explicit-implicit duality:

Google Search

In an interview with VentureBeat, Google VP Marissa Mayer talks about two different forms of social search:

  1. Users label search results and share labels with friends. This labeling becomes the implicit activity that helps improve search results for others. This model is way too above-the-flow. Labeling? Sharing with friends? After experimenting with this, Mayer states that “overall the annotation model needs to evolve.” Not surprising.
  2. Google looks at your in-the-flow activity of emailing friends (via Gmail). It then marries the search histories of your most frequent email contacts to subtly alter the search result rankings. All of this implicit activity is derived from in-the-flow activities. For searches on specific topics, the more narrow implicit activity pipe of just your Gmail contacts is an interesting idea.

ThisNext

ThisNext is a platform for users to build out their own product recommendations. They find products on the web, grab an image, and rate and write about the product. Power users emerge as style mavens. The site is open to non-members for searching and browsing of products.

ThisNext probably relies a bit too heavily on above-the-flow activities. It takes a lot of work to find products, add them to your list of products and provide reviews. It also suffers from being a bit too wide a pipe in that there’s a lot of people whose recommendations I wouldn’t trust. How do I know who to trust on ThisNext?

Amazon Grapevine

Amazon, on the other hand, has a leg up in this sort of model. First, its recommendations are built on a high level of in-the-flow activities – users purchasing things they need. This is the “people who bought this also bought that” recommendation model. Rather than depend on the product whims of individuals, it uses good ol’ sales numbers (plus some secret sauce as well) for recommendations. This is a form of collaborative filtering.

Amazon Grapevine is a way of setting the pipe for implicit activities. The explicit activity is the review or rating. These activities are fed to your friends on Facebook. One possibility for Amazon down the road is to use the built-up reviews and ratings of your friends to influence the recommendations it provides on its website. Such a model would require some above-the-flow actions – add the Grapevine application, maintain your account and connections on Facebook. But these aren’t that onerous; the Facebook social network continues to be an explicit activity that has high value for individuals.

Yahoo Search

Yahoo bought the bookmarking and tag service del.icio.us back in 2005. It’s hard to know what, if anything, they’ve done with that service. But one intriguing possibility was hinted at in this TechCrunch post. The del.icio.us activity associated with a given web page is integrated into the search results. Yahoo search results would be ranked not just on links and previous clicks, but also on the number of times the web page had been bookmarked on del.icio.us. And, the tags associated to the website would be displayed, giving additional context to the site and enabling a user to click on the tags to see what other sites share similar characteristics.

This takes an above-the-flow activity performed by a relative few – bookmarking and tagging on del.icio.us – and turns it into implicit activity that helps a larger number of users. But with the Microsoft bid, who knows whether something like this could happen.

The use of implicit activity is a powerful basis to help users find content. Just don’t burden your users with too much of the wrong kind of explicit activity to get there. Two factors to consider in the use of implicit activity:

  1. How wide is the pipe of implicit activities?
  2. How much above-the-flow vs. in-the-flow activity is required?

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In Praise of Inertia: MyYahoo Still #1

February 25, 2008 by 2 Comments

Over at TechCrunch, they’ve got a post up discussing the top six personal homepages. #1? MyYahoo. MyYahoo has been around for quite a while. 6-7 years? It’s an oldie, but still a goodie. It’s my homepage.

There are others on the list. #2 iGoogle looms as the big scary challenger. Given Google’s success over the past several years in other arenas, it’s surprising they haven’t taken the #1 spot here as well.

It’s a testament to inertia. Not inertia in any negative sense, like laziness or user ignorance. Rather, inertia as a reflection of human sensibilities and value systems. Something called the “9X problem“.

Harvard professor John Gourville put forth the idea of the 9X problem. The gist of his thesis: “a mismatch of 9 to 1 between what innovators think consumers want and what consumers actually want.” The mathematical term “9X” actually does have a little math behind it. And that math is key to understanding the 9X issue.

First part of the 9X equation is based on our comfort with what we have. Things we already know, things that we have invested time in learning and using, have a high psychological value for us. They satisfy some need. We’ve learned their strengths, and live with their weaknesses. When we compare something new to something we already have, we tend to overweight the value of what we already have by 3X. It’s a little scary to give up what you know.

Second part of the 9X equation is based on our natural skepticism about claims made for new things. This probably resonates for most of us. I know I tend to dismiss most commercials and advertisements. This is a healthy trait of people – otherwise we’d all be getting duped left and right. But it also means that we underweight the value of features for something new by a factor of 3X.

Multiplied together, this gives us the 9X factor.

This is powerful stuff. It means new things really have to deliver healthy gains in benefits. Some examples of “9X masters” come to mind. Google was such a leap forward in search relative to its competitors: very relevant results, clean interface. Apple’s iPod just blew the doors off other music players in so many ways. Honda’s reliability and fuel efficiency were miles ahead of Detroit in the 1980s and 90s.

But there are plenty of other cases where good products failed to dislodge incumbents. Supposedly, many other search engines have attained search results parity with Google. I wouldn’t know…I still use Google exclusively. And so do many others.

So there’s the 9X problem. It’s actually a really interesting concept. If you’re doing a startup, can you do in it a way that does not force someone to give up an existing “thing” they like? That way, you only have to deal with the 3X new product benefits underweighting problem?

9X is really about inertia. MyYahoo fulfills a personalized homepage need: news, email, stocks, sports, weather, etc. iGoogle, Netvibes and others have really nifty options for their pages. But have they delivered 9X the value?

The key is to hook your users. Once you get them, it’s hard to lose them. On that note, how about adding my little blog to your RSS reader? You can remove it any time you want… 😉

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Pay By Touch and The Peanut Butter Manifesto

February 12, 2008 by 5 Comments

In November 2006, Yahoo executive Brad Garlinghouse’s email to senior management was leaked to the Wall Street Journal, and subsequently picked up by bloggers. In the so called “Peanut Butter Manifesto”, Garlinghouse decried the “lack a focused, cohesive vision for our company”. The email takes the company to task for having too many initiatives, and for failing to integrate various acquisitions. The money quote:

“I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.”

In light of Microsoft’s bid for Yahoo, the Peanut Butter Manifesto continues to resonate as an issue for the company. Which brings me to Pay By Touch.

Pay By touch raised a lot of money, a whole lot. And Pay By Touch went after “myriad opportunities”. Here’s a list that I am drawing from memory:

  1. Biometric authentication
  2. ACH payments
  3. Credit card processing
  4. Personalized marketing
  5. Healthcare
  6. Online authentication
  7. Online debit payment
  8. Loyalty card management
  9. Financial institutions
  10. Government
  11. Paycheck authentication

The above are verticals. There were also channel-specific efforts as well: multi-lane retail, single-lane retail, international. So there was a lot going on.

The problem with any Peanut Butter Manifesto company is that:

  • Engineering cannot satisfy all the requirements needed for the initiatives
  • The ability to focus on one area, try things out, make mistakes, correct and iterate is drastically diminished, which kills an emerging technology company
  • Senior management cannot focus attention on the various initiatives for funding, sales and strategic moves

One might wonder how Google pulls it off. They certainly are into a lot of things. Here’s the secret: they absolutely own a market (search & ads) that prints money for them. They then get the luxury of trying different things. Microsoft has the same thing with its Windows and Office franchises. GE owned…light bulbs? Well they owned something a long time ago.

So let’s look at these two Peanut Butter companies. Yahoo is subject to a hostile bid. Pay By Touch is in bankruptcy.

As Garlinghouse stated at the end of his email: “stop eating peanut butter.”

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