The Future of Media

The future of media isn’t about technology or channels, it’s about delivering an experience.

As I was sitting eating a couple of slices of authentically good mushroom pizza in New York, and reflecting on the panel discussion I heard earlier that morning at Ad Week on the “The Future of Media” (thanks for the invite Jon @Mediapost) I realized that content and technology are the wrong things to pay attention to – the future of media isn't technology or advertising, it's bringing exceptional experiences closer to normal people.

It wasn’t just the endorphins released by the pizza, but the things going on at the same time. In my quest for good Italian pizza, I just happened to wander past Grand Central to 3rd Avenue where there was a throng of cops, FBI agents and other protectors of the commonwealth ensuring stability, as the UN and Obama met to hash out the same old things. I wandering into a throng of Iranian demonstrators on the side sidewalk chanting “Hey, Ho, Ahmadinejad has to go!” and a small collection of Tibetans holding polite signs telling China to leave their country. They were eating pizza, too.

But it was actually seeing a picture of Neda, the woman who was shot and killed while peacefully protesting in Tehran, on one of their signs that jolted me – the media, including new technologies and crowd reporting, brought these people around a central topic of interest and made them closer to it - almost part of it. And when I say media, its TV, radio, print, Twitter, YouTube and every other technology and distribution channel.

The disruption that’s happening to ‘big media’ isn’t on content, it’s on speed of delivery. It’s not about print v. video, it's about personal experiences. It's not about any one technology, it's about how technology is becoming immersive and personal and connects people directly. It's still broadcast, but it's not mass market. Monetizing a special experience will continue to drive media, just as it's driven entertainment.

On the prestigious panel were Mark Cuban, Martha Stewart, Reid Hoffman and Judy McGrath the CEO of MTV. McGrath explained how they leveraged technology the MTV video music awards this year to actually increase their audience size as the program went on, due to the now famous Kanye incident. She saw people in the audience like Pink start Tweeting as soon as it happened. Videos were posted to YouTube immediately. New technologies have enabled the speed of the message (experiences happen in real time), and provided the appearance one-to-one personalization (individuals are now empowered to be their own broadcasters every media - text, video and audio).

Separately, Mark Cuban spoke about how the Internet and social media are mature from a platform perspective and there is nothing new going on. While that’s true technically, the adoption of technology across the mass market is different. He's kind of right, the Internet and social media were here a long time ago, but it's not connecting to the masses yet. But what he actually focused on is how cool the new Dallas Cowboys stadium's massive video screen is, and how that is the next platform that media companies should be looking at to deliver their content. That's super for the 10 $40M screens in the next 10 years, but isn't the near future. What he didn’t say explicitly, but described nonetheless, is that the immersive experience that the display creates / provides is a huge differentiator.

People want to be a part of experiences that don’t directly involve or even pertain to them. In another great presentation I saw at the IAB / MIXX conference by MeVIO, its founder Adam Curry, former MTV vee-jay, described the growth and success of MTV as bringing people closer to icons and rock stars (and brands). Commentary and interviews and simply video of stars performing, rather than just audio, was a new experience that fundamentally changed music. This is a diferent spin on the same thing - immersion and connection through media. You could even argue that the Beatles and Elvis on Ed Sullivan was the start of this connection, but MTV brought it to the masses 24 hour as day.

Not to say that the paparazzi and glamorization of celebrities is a ubiquitous goal, but sharing an experience in a way that enables us to have a deeper understanding and deeper comprehension of what it's like to be there is the key. Entertainment understands this, the challenge is for non-entertainment media to provide deep connections while being neutral, and monetizing their unique, special experience.

The more senses we immerse, the more we feel like we know it. It’s escapism just as much as it’s realism. We can’t be everywhere, we can’t be part of everything, but media will continue to get us closer and closer. If media can embrace this and deliver it better than individuals, people will pay for it. Bring them into a conflict, be part of a demonstration, eat lunch with a movie star. And that, delivered in an easy-to-consume format, is worth paying for, regardless of the technology or platform.

The Future of Media?
Maybe the world timeline of media looks like this, where media is both the creation / editing / delivery of content, entertainment, rumors, and news. Taking a look at the world, you can see different groups aspiring to move from one level to the next, and the historic events that shaped each step like the 1st amendment and the fall of the Berlin Wall.

1. No information
2. Word of mouth information
3. Single source “official” information
4. Multiple source “official” information
5. Approved information
6. Multi source, multi-channel information
7. Too much information!
8. Information I want to see only
9. Recommended information
   
10. Becoming part of the events that drive the information

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If the Web is Now Real-Time, Where are the Real-Time Analytics?

If the web is going real-time (seems that way according to all the recent hype) why are marketers and Internet companies still using old, slow data warehouse technology to analyze interactions?

If Web 1.0 means replicating "old" systems online - a push of information from originator to consumer, then Web 2.0 is the next step - a back and forth discussion between originator and recipient.

Web 3.0 is here, and it's subtly different on the outside (which is why there's no fanfare), but it's impact on Internet infrastructure is massive - the conversation goes from originator to user, to groups completely outside of the originator's understanding, intent or control. Conversations are completely decentralized, and rise and fall based on networks, not the source. Twitter, re-tweets, and completely asynchronous, unorganized group messaging is a new paradigm and makes interactions hard to follow, and the data they generate much more difficult to capture and understand at a high level.

Web marketers, online advertisers, and content distributors can't rely on data warehouses to provide analysis of these conversations - they are very complex and unbounded events. Business intelligence systems were designed as back-office applications and meant for data mining well-known data well after the fact. They are completely unsuited for this role. But we're using 'em because "that's what we got and that's what we know."

When you think about it, it's silly that you can have a million users visit your website in a day, but you have no idea what happened until a day later.

Business intelligence is much different from "Internet intelligence" or "social web intelligence" (you heard it here first). On the now social Internet, you need to know what's happening now to make an impact, optimize, or re-target based on activities. The next day, when a data warehouse could deliver that insight, is far too late.

Open-source projects like Hadoop and MapReduce that eschew relational database storage techniques are a different way to tackle the problem. They break data up into manageable chunks that distribute and speed processing. But the basic idea that data must be pulled out of production systems to process and analyze across dozens or hundreds of servers - then re-centralized and shoved back in - still doesn't fit with the need to process data as it's generated. These systems still have significant lag times (hours or days), and are really complicated to manage. Internet intelligence requires analysis within the production environment, in real time - whether or not action is actually taken in real time.

There are a lot of smart people out there, so why hasn't anyone been able to solve this problem? Well, to be fair, it's only gotten to be a real problem in the last few years. Before that, in Web 1.0 and 2.0, the volume of data being generated was manageable and understanding interactions could wait until tomorrow.

Today, many well-funded vendors are trying to solve this problem (getting immediate analysis from massive amounts of data in a cost-effective manner), but it's a very hard problem to solve. Some Internet companies are building their own stuff (Facebook, Google, YouTube, Yahoo!), some are leveraging the fastest third party data warehouse products (Teradata, Netezza, even Oracle). But, whether it's all based on the idea of batch processing, and whether it's being built in-house, or it's one of the super-scale data warehouse vendors, it's REALLY expensive ($2 - $10m just to start off with a Teradata system), and it goes up the more data and the faster you want results.

I found one company, Truviso, that stands out from these other vendors - they are actually able to deliver real-time data analysis in a production environment in a cost-effective manner. They haven't figured out how to make a data warehouse faster, but instead they process data in a different way.Truviso's Continuous Analytics software processes data in real time before it's stored in a database, so it completely eliminates the lag time in batching and loading and indexing, or chunking and distributing data across clusters. Analysis is done on the fly, decisions based on data can be automated, and people can actually see what's happening on their websites - and across conversations - at any time.

Truviso has created a scalable data analytics system for Internet production environments with real-time data analysis problems. Online ad networks, CDN's, social networks, and online video companies are producing massive amounts of data that they need to analyze to deliver better experiences for their users or customers. Their business depends on the analysis of this data for revenue generation - it's vitally important to them. If they can make a change today instead of tomorrow, that could result in tens or hundreds of thousands of dollars in additional revenue.

This type of Internet intelligence analysis is going to change the status quo. Once companies realize they don't have to wait for analysis anymore, there will be no going back. They'll expect it. They'll want it all the time. And that's the right way to go, especially since the group-discussion that defines Web 3.0 aren't going to go away.

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Die IE6, Die. Everyone's Got To Go Sometime...Your Time Was 2 Years Ago.

Dealing with people still using Internet Explorer 6 is a nightmare - so much extra coding and QA to get even basic webpages produced. I can't agree enough with Ben on his recent Mashable post.

Engineering productivity levels wouldn't double but it would probably go up by 35% - 45% to accommodate these 20% of Internet users who just won't upgrade. There are much faster ways of coding, doing quality checking, and assurance that teams can't use because of IE6.

The lowest common denominator of IE6 users is hurting progress in developing great, useful, fast and high-interaction AJAX pages. Maybe the seeming immortality of IE6 is one of the reasons we're still looking at pageviews and CPM for measurement in advertising. Everyone knows that with AJAX and FLASH, pageviews become meaningless since a page can be refreshed over and over, and a user can be shows dozens of ads without actually changing the URL of the page. So, a single pageview, but a complete user experience. But AJAX is very very slow and doesn't work a lot of the time on IE6, so as the browser that just won't go away, IE6 keeps development and user experience restricted.

Web developers - stop building for IE6, and throw up a huge note to tell users to upgrade. If content disappears, IE6 users won't have any options.

A call to all IE6 users - UPGRADE! IE8 is out now, nevermind the fact that IE7 is actually OK. Or use Mozilla Firefox or Google Chrome. They're both better than IE anyway.

You were great at one time, but please go away IE6, it's time.

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Goodbye Geocities, cu l8tr

Sorry To See You Go, Free Personal Website

All good free things come to an end, and Geocities (part of whatever the hell Yahoo360 was supposed to be) is next on the list. I've had my Geocities site up since 1998 or so. It first held my first website ever, all about my wedding, and had tons of great pictures of guests wearing funny hats.

I used it to learn the basics of HTML and creating beveled, multi-state buttons in Photoshop, as much an exercise in fun and learning as it was about making my wedding viewable by all (can you remember when Flickr and the Kodak Gallery didn't exist?).

Next, I created an 'about me' site and learned advanced table syntax and even some Javascript. That pushed the boundaries of my scripting ability and reconfirmed that I was meant to market and find value in technology, not create technology. How can developers remember where everything is? Anyway, my personal profile site has been up for 9 years or so I think. Not sure what to do now, but I think I'll just copy my bio and published articles into a new blog post, take a few screenshots, and have a sorry and mournful goodbye.

What's Worse than Yahoo360? Well, the new Yahoo Profiles.
But, before I get the tissues, I wanted to heckle (scold?) Yahoo! for what could have been a great transition to get everyone to their 'new' preferred platform. They've failed miserably! Why would anyone commit to a platform that sucks all the way back to 2002?

This is is the hilarity, directly from their blog:

First you shut down Mash, now you shut down 360—why should I give profiles a shot?
We understand you might have doubts—in the past few years, you’ve seen a couple of social sites come and go, and it means a lot to us that you’ve stuck around while we’ve tweaked each experience. Know that we’re committed to having a universal profile across Yahoo!, and we’re committed to working with you to improve and evolve this profile to make sure it’s what YOU want to use. That doesn’t mean we can implement every piece of feedback you provide, but it does mean we’re listening, and we are going to do our best to make sure your interests are incorporated into future releases and versions of your profile.

What about customization and photos? On 360 I can change the look and feel and upload multiple photos—can I do this with profiles?
At this time, your new profile does not have all the features and functionality of your 360 profile. However, we are looking at incorporating new ways of expressing yourself through your profile.

In regards to uploading multiple photos, your profile on Yahoo! allows for only one primary photo for now. This is also something we’re looking at improving/expanding based on your feedback.

OK, you don't have nearly the same featureset, you can't upload multiple pictures, but we're working on it? You can do better than this, Melissa Daniels (and you NEED to do a lot better than this Carol Bartz)



So, after July 13, this blog is the new official freestylin' home of Tom Kuhr...until Google decides blogging shouldn't be free either...

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Good Feedback is a Product Managers Best Friend - UserVoice

I ran across a company called UserVoice today and it looks like they've got their act together. I don't know how long they've been in testing / beta but have done a great job with making their website clear and their customer validations prominent. Apart from website envy, the concept of the company is great and I hope they're able to monetize it and stay in business.

UserVoice makes it easy for companies to collect user feedback in an organized, social way. How many times have you received the same feature request over weeks or months, only to lose it in the feature prioritization shuffle?


UserVoice lets users discuss features and bugs but submit their own, and rate (vote for) features that others have suggested. It's leveraging the power of the crowd to do feature prioritization for the product. Of course, this is still customer feedback and needs to be evaluated alongside product portfolio and market strategy, but its certainly much better than anything else I've seen.

UserVoice started off selling its service to start-ups but has expanded to big clients such as Intuit Inc., the National Aeronautics and Space Administration, Facebook Inc., Nokia Corp., Nielsen Co., Genetech Inc., Blackbaud Inc. and University of Wisconsin. - WSJ Online

Generally the "developer tools" market isn't sexy or that profitable unless you're catering to large companies, but this seems targeted to organized marketing and products groups rather than small startup software development groups where the technology is the innovation. This is funded by the ubiquitous Dave McClure and the Founders Fund, who see this problem all the time from the boardroom - what do customers really want and how can we really be sure? Credible, first hand data would certainly help VC's call BS on those CEOs hiding behind the curtain of personal bias.

I'll use UserVoice on my next web project and see how we get on.

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Text Search v. Structured Search - The Difference Between Facebook and MySpace?

Talking through the current success of Facebook and the defection of users from MySpace, it occurred to me that the way users search on both sites has a lot to do with the changing of the guard. So here's a functionality view rather than a strategy view.

Facebook's structured search, with the ability to find different types of pages based on
1) auto-complete
2) form-field searching is designed to find and identify specific people
3) search results grouped by content type

When you type a name of a friend or a Page, you get an 'auto-complete' which gives you a list to choose from of all your relationships. This is a very structured search, pulling real (and guaranteed) results from the database. Having a real ID in Facebook helps this immensely - first, last and location are required, where on MySpace your real name is quite optional. Structured text search and structured results allows you to search for specific information in specific fields, and see the results in content-groups. Friends, Apps, Pages, Networks are all groupings of results by content type. So if you're looking for a Bob Marley Group, you don't have to look through Apps or Profiles to find it.

MySpace was designed to connect people with bands, and enable people to meet online and new friends. The Search function, for better or worse, leverages Google's free-text search to find people based on name, phone number or alias. I'm not sure the choice of Google was thought out from a product perspective, but it was definitely driven by a 3 year Google ad revenue deal.
Using Google's free-text searching finds results based on an entire page of text, so the search picks up main profile info and URL keywords, but also friends' names on the profile, comments, descriptions, etc. This leaves the user with a large, unstructured list of potential matches, which has to be picked through. There's no way to say "the name field is the most important." All results are weighted using Google weighting parameters - inbound links and keyword relevance, the same stuff that's tweaked in search engine optimization. For example, my name might be Tom Kuhr but if if my hero is James Bond and I write about James Bond all over my profile. When a user searches for James Bond - presumably intending to find a friend of that name - my profile will show up much higher in results than James Bonds just because of this keyword repetition, even though that's not the searcher's intent.

There is a Browse function on MySpace, which enables a structured search based on profile parameters, but you can't look for a specific person this way - it only allows browsing on attributes.

Finding a friend becomes immensely easier and faster on Facebook. When I sign up as a new user, I'm able to quickly identify friends and build my lists. On MySpace, I can hunt around in Search, but the experience is challenging and slow and I need to page through results, constantly refine my search, and my network grows much less quickly. I think the use of Google for search on MySpace has contributed to the company's inability to maintain the leadership position as a social network, and is further driving its move to become an "interactive" entertainment company rather than a network.

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Don't be Dogmative - Be a Great Listener

I've identified a characteristic of managers that has been discussed many times before, but I don't know if it has a name so I'll just make one up: dogmative. A dogmative person that only cares about their black and white view of the world, their dogma. (As an aside, it sure is hard to come up with a good domain name nowadays!).

You know these people. It could be the CEO, a product manager, the VP of marketing or director of engineering. A dogmative person forms opinions very quickly and does not want to discuss, debate or understand different viewpoints. However, they're not confrontational about it. In fact, unless you think about it, you might not even notice that they're so set in their thinking, because they are always asking others what they think!

This ingenious strategy (I think most do it without thinking about it this way, so its more of a personality trait than a strategy) let's them seem like the best team players. They form an opinion, and go around and ask everyone what they think. Rather than looking for consensus or new ideas, they are only looking for someone to validate them. They will hunt far and wide for one other person who agrees, and they'll use that validation to continue to perpetuate their own thinking. It's certainly easy in a company surrounded by Yes Men, but should be a lot harder to get away with it a meritocracy like an early stage tech company. I still see it more that I'd like.

I worked with a CEO once who is the very definition of dogmative. He has no real basis for UI design or functional requirements, and could barely read a spec. But, he wanted to be involved in just about every UI, navigation and screen design. He would pay consultants, contractors, and design firms to come in and do (expensive) work. Experts in their field. But, when they differed in opinion, he'd find a new one. We churned through contractors and burned through money. Smlarly, he listened to new employees for a week, maybe two, and after that started ignoring their input, as if they didn't actually have the expertise they were hired for. Like they just lost it somewhere. It was a very frustrating and pointless work environment, devoid of any delegation. Every decision rested with the CEO; morale was horrible; the company burned through about 3x the money it should have. Most dogmative managers aren't this bad, but in the extreme, this behavior is poisonous like a hemlock shake.

In product management, dogmative behavior wastes time and leads to products that don't solve problems. Thinking that you know what an end user is going to think or want without asking them is a huge mistake. No matter how much you talk to users, the very moment you stepped into a role as a product manager, you separated yourself from a real user. Be humble. Don't pretend you know the answers. Don't let your ego get in the way of gleanng customer insight by listening to real customers.

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Social Media is Based on the Real World - MySpace is Starting to Get It

The Future of Social Advertising? MySpace and Citysearch jointly announce "MySpace Local"

Social media, especially social networing sites like MySpace, started as an deluxe online forum or bulletin board and just took those concepts to the next level. They are based on the concept that people went online with aliases and met and interacted with other people online. It was all about the cyber-world, not about the real world.

While MySpace has been trying to become the social entertainment capital of the net, Facebook (and now Twitter) has seen lightening growth based on a different model - the real world. People of an older generation, more practical people, and teens (it seems like just about everyone who's not a geek) have embraced the concept of using their real name and their real connections to real friends, real networks, real businesses, real schools and are voting with their mice and signing up in droves. It's the online version of you, rather than an online avatar or what you wish you were.

MySpace, because you don't have to be you, is anchored in a previous era (6 years is an era?) and just wasn't built on that real-world network of connections...of course you can add friends, of course you can indicate your hobbies, of course you can use your real name, but you can also be friends with pretenders, rockers, and movie stars and parts of cyberspace groups. The premise of Facebook is you are somehow validated as really being who you say you are. It's not a virtual world or bazaar, it's a representation of a person's real life, something that I daresay more people are comfortable with.

Where am I going? I think MySpace has made a move in the right direction - to the real world. They just announced a partnership and integration with CitySearch to enable the combination of social commentary on the real world listings and information of a very comprehensive contained in the CitySearch yellow pages. And your interaction with these listings will show up in your activity feed - letting others know immediately what you like, what you don't, what you recommend. It's a pre-cataloged slice of Twitter - talking about your preferences when it comes to activities, restaurants, hotels - without the inundating stream of consciousness of Twitter. A practical application - and what could be a model for social advertising. This isn't what page I joined or whom I'm a fan of, this is me and my experience recorded around a real thing, a real place, a real preference.

I really like the concept - I hope it's one of many steps in this direction that MySpace takes to become relevant again.

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What Kills Site Conversion? Focus on Content, Usability and Empathy

I wrote a few thoughts on what kills website conversion for Patrick Neeman on his great blog Usability Counts. Patrick used LinkedIn to solicit answers from his network, which I thought was a great idea to come up with blog material.

You can read my thoughts here.

http://www.usabilitycounts.com/2009/01/29/the-linkedin-edition-what-kills-site-conversion-2/

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Use Cases: A MUST HAVE for any internet or software company

"Everything for Everyone" = Nothing

Use Cases seem so obvious to me but are commonly overlooked by so many technologists, entrepreneurs, and even VC's. A few companies I've worked with recently have built products without any clear picture of who the buyer is or who will actually use the product. Sure, they want all IT directors, or all marketing managers to jump at it, but these are market segments, not users. Use cases are built from personas, and personas are built from market and user research, and are VERY specific. (If you haven't read this book on personas and use cases, you simply must.) Without both an understanding of one or more users and the specific detail on what they need to do / what they want to do, products end up doing "everything for everyone", rather than solving specific problems (with actual value) for certain types of people under certain conditions.

Use cases aren't easy to come up with, and they can be very narrow. They require someone to sit down with 5-20 people that match the persona, and understand how those people are solving their problem today - what steps do they take inside software, on the internet - but most importantly what steps do they take outside of technology to solve their problem. Technology is best applied when it can automate or assume the duties of haphazard or time consuming offline tasks. Understanding all the choices, decisions, variables and time frames that go into problem solving or goal achievement is the only way to develop a clear picture of how a technology can fit into those peoples' lives in a meaningful way. People don't like to change, and making the product or service"fit" better by describing a single use case will focus the development team on a path of least resistance for adoption, regular use and word of mouth marketing.

But, "everything for everyone" sounds great on the surface. Why wouldn't we want to build it for as big a market as possible? Why would you want to limit the number of potential buyers? I had a (insane) CEO tell me his product WILL be designed for ALL people in every country around the world - as if each citizen, as if each language, as if each culture were exactly the same. Those coarse gradations are obviously different, but even people in the same community, the same company, the same department are different - personas and use cases must be very specific to build a great product.

The R&D group typically loves "everything for everyone" because the product will be a big hit, and any features that they think up will only make the product better. Investors love looking at the huge market segments that the product will appeal to. Upper management thinks that with 'all my friends' and family validation they're on the right track ("Sure, sounds like I'd use that" couldn't be more different than "Yes, that would solve a problem I have right now and I'd pay $XXX for it because my alternative would cost 5x times that much"). But, in reality a broad product scope and an "everything for everyone" mentality translates to nothing quite right for anyone. In essence, zero mindshare and market share.

If a product only 1/2 solves a problem for a specific type of person, or 1/4 or even 7/8ths, it's not a complete solution. It might as well be labeled incomplete and not come out of alpha. If it can't take the place of an entire problem set, or at least specific section of a linear problem set, solving A to C or F to M rather than the full A to Z, it just isn't going to see the adoption that the company expects. It won't succeed if it solves A, D, and G. In the eyes of the intended user, which are the only eyes a company should use to evaluate its products, it doesn't solve a problem. I, as a user, am not going to mess with something, and especially won't pay for something, that doesn't meet my needs.

How do you change this? Usecases. Develop personas for the people you expect to seek to and the people you expect to use the product. Outline in detail what they do, what their challenges are, what makes them tick, how much time and patience they have, how much technology skill they have - everything that would influence their ability to use a product in a real situation. Frame the persona so well that the development team understands them to be a real person, NOT a demographic. Building for a demographic, or target market, leads directly to "everything for everyone". Here's the hard part - the thing CEO's and VC's hate to think about, and don't ever want to embrace: focus on one persona and don't worry about the rest of the market.

That is a huge step for anyone - an entrepreneur with dreams, a CEO with ambitions, a VC with committed funds. It makes sense because once you fine-tune the product to solve a complete problem for a specific type of user, you'll see the target adopt extremely rapidly and tell their friends. There will be incredible overlap with other types of users that haven't been considered. Those users will adopt too. They'll also need slight changes, additions, and new functions. That's OK - they're using it! And, you'll be selling so well to the original target, you'll have time to build the additional things to appeal even better to your additional (prioritized) personas. The fear of not being appealing to an entire, diverse market segment at launch has been the downfall of countless companies. This is really product focus - ensuring that the personas and use cases you start with are well thought out in the beginning, and the product meets those expectations and guidelines at launch.

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Valuation Lessons: Market Makers v Product Sellers

I attended a fantastic presentation at an Access Executive Network event last night. This is a great group of technology leaders who want to better themselves and also give back to the Southern California tech community. The speaker was a former Clearstone VC partner, Phil Ressler, who is now the CEO of BigStage Entertainment, a pretty cool personal avatar company just starting to get some market traction. Phil, as it turns out, is one of the only VC's (or former VC's in this case) that I've had the privilege to meet who understands software company operations, but more importantly understands how to find and appeal to a buyer.

I wrote about buyer personas last week and how I thought most VC's just didn't do enough homework before investing to determine if a company's product is sellable, and if so, who exactly they'd be selling it.

Phil Ressler, in his talk entitled "Communications are Strategic", went into quite a bit of detail about his personal experiences at three different software companies (Nantucket, Gupta and Callidus) and how he was able to transform these companies at a very early stage by changing their focus in the buying process, and using clear messaging and communications to creating a market need. He explained that at all three companies, the founders and early exec teams were very technology focused and understood marketing to be product marketing - talking about products, performance, and features. He was able to add a messaging layer on top focused on creating a bond with a buyer. These communications described the brand and tied prospective buyers to the company emotionally, rather than descriptively. It gave them the 'big picture' of the company.

Phil outlined very eloquently what I've always described as the promise to the customer. When you take away the debate about product features, speeds and feeds, and instead focus on understanding a customer's real problems, you position yourself as a trusted partner to help them solve them. That promise to the customer is something that most tech companies don't have, and can't possibly think of because they haven't identified the real buyer of their product or their motivations for buying. The promise is the 'big' vision that the company has, and it's also usually the most simple and clearest elevator pitch - it's not too detailed and conveys the end benefit to just about everyone.

Ressler provided 14 separate tips to help the audience understand how to become a 'market maker' and create demand, rather than remain a product-centric company selling into an existing, well defined space. A few things really stood out for me:

1. First, startup success isn't about selling a product really well, it's about creating market value. I've not heard it phrased quite so simply, but companies that have more buzz, more market presence, more mindshare, and more vocal customers get sold for a much higher valuations than companies with great technology or who are building a solid business quietly. That means creating company value, not just product value. It means providing solutions to solve a problem, including product, services, support, and a partner ecosystem. It means keeping that promise to the customer and exceeding expectations.
   
   
2. Next, successful market makers invest about 10% of their resources in engineering and technology and 90% into making the market - public relations, market education, public speaking, business development, awareness and becoming the perceived market leader. Market makers build the perception that their company is much larger than it really is, and talk about a problem as if everyone needs to solve it. If prospects think their peers are working on something, they won't want to be left behind. Creating a market need will drive business to come to you, rather than you having to seek the business.
   
   
3. Companies that are focused on creating value also understand that value has a time limit, and value actually goes down at some point. I think that inflection point is when buzz and mindshare about the company is at its highest. Its at the time of the greatest percentage in growth, rather than greatest real-dollar growth. The growth trajectory is the most important - it will level out at some point, but the most value is right before that when the company is 'hot' and seemingly unstoppable. At that time it becomes an emotional sale for the buyer - they've got to have it - and there's less attention paid to revenue, customers, and products due to this intangible aura of success. Companies who know their end-game is an acquisition must sell at this point and not continue to build an empire in the hopes of getting sold for more. Founders who think they will get more money later because they will have more revenue do an extreme disservice to shareholders.
   
   
4. Lastly, companies that build value offer multiple products. Even if the different products are varieties of the same core product, cutting out features is a great way to create an instant product portfolio and multiple price points. This is interesting because it does a few things: It gives customers a choice, it enables the maximization of revenue , it allows the sales team to close more deals that would have been lost due to price points (improving that growth trajectory), and it makes the company seem bigger than it is. Companies with one product can't go it alone at some point, especially in enterprise software - it becomes to hard and expensive to scale. Companies that have multiple products become a) more appealing to potential buyers b) have a greater chance of stand-alone success which in turn c) makes them even more appealing and valuable to potential buyers. Companies who have the choice to continue stand alone become more coveted, increasing their value in the eyes of a buyer.
   

Thanks for a great talk Phil, I hope I captured your thoughts accurately!

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Advertising Growth Challenged Because of Social Networks? Rubbish.

If this is a problem we're all in real trouble. I read this article in the Financial Times yesterday with disbelief and awe that someone could draw such a ridiculous conclusion. The report seems to be asking the wrong questions to come to this statement.

The Institute of Practitioners in Advertising, which will publish the “Social Media Futures” report compiled by Future Foundation next week, has warned that advertising agencies face growth of just 1.2 per cent a year by 2016 if the industry fails to tackle the changes to the media created by sites such as Facebook, YouTube and Twitter.

Of course the landscape is changing! Social networking and personal recommendation for products is ensuring that word of mouth "advertising" is becoming a much much larger factor in product evaluation and decision making. That does NOT mean that less money will be spend on brand promotion, but it does mean that agencies that don't know how to market in the new world will get much less of it. Darwin's law will prevail again - there are agencies that have/will adapt and they will thrive and grow on that same hoard of cash. Industry growth will not be hampered, but wealth will be redistributed.

Movie studios have known about word of mouth and its direct influence on product success for years. That's why there is so much drama about release dates, pre-release advertising, pre-release availability, limited distribution, press screenings, etc. If your movie is going to suck, you want as many people as possible to pay and find that out first-hand rather than hear it from another source.

Online, personal recommendations are nothing new either. It started with eBay's seller ratings, CNET's gadget reviews by customers, and Amazon's comment system. It's been going this way for years. Just because social media has accelerated it and made buyer recommendations more trusted and more personal doesn't mean that word of mouth hasn't been influential, it just means that ad agencies are in denial and too comfortable to do anything about it.

Agencies who can't adapt or haven't started to adapt to this should go out of business. Advertisers that think creating a 'brand' is about commercials, imagery, spokespeople, graphics and point of sale communications are done. Even in Marketing 101 they teach you that a brand is the whole product experience, but in so many companies, this is completely forgotten. Branding means spending advertising dollars the "right" way to gloss over any product deficiencies, to ensure that products that are just OK have equal time in the eyes of potential buyers. In the 1960's (or maybe I've watched too many episodes of Mad Men) this worked - products relied on awareness and distribution to be successful. Today, distribution is free and awareness through traditional channels isn't the same - there's too much noise, too much hype, too many Tivo's, and people have become cynical about the promise of a brand. Rarely does a product or brand live up to it's billing, so everything is taken in with filters. And when a brand does keep it's promise, you want to tell everyone you know about it - it's that exceptional!

Where'd the FT dig up this guy? He's clearly clinging on tightly to his pension, and should be canned immediately:

“I don’t think [social media] is a replacement for paid-for media, it is just going to be a challenger for [consumers’] time and attention.” - Moray MacLennan, IPA president and chief executive of M&C Saatchi Worldwide.

Social media is not going to compete with anything - everything online (and soon on TV) will BE social media. There will be no alternative, it will be pervasive - it's already starting. And it will cost just as much to market successfully - but the spend will be on skilled people and interaction, not on broad media buys.

Advertising (promotion of a product) isn't going to stop, it's not going to decrease, but its going to change. Promotional dollars will move out of 'traditional' advertisers hands and to ad agencies that 'get it'. Ad placement is definitely going to go down online, and probably offline - it will hurt both publishers and agencies that make significant income on media buying.

Agencies that "get it" understand that they need to become the first-person voice of the brand, not the third-person. They know they need to become a partner with the company they represent and actually contribute to closed-loop product improvement. Interactions with customers are centered around building trust - building web presences that provide authority and interest beyond the product, that create discussions about the high-level problem with transparency and authority.

Successful brands will become trusted advisers for their domain. Consumers will turn to brands for answers that are honest, even if they means that the brand calls out deficiencies or weaknesses in their product, or actually admits they have competition. This is the transparency that consumers crave, and agencies that can drive companies towards this will be hugely successful. Marketers will get honed feedback about their products that they can then incorporate into the next product version and improve their market share. Customer feedback and iteration will happen much much faster than it does now with CPG brands, much more like the software that makes rapid networked communication possible.

I see a bright future for agencies that understand things are quickly moving toward a "personal" trusted relationship with a brand. Projects will be different (the report the article quotes points to consulting services, creating new forms of web content, and analysing data). Social marketing won't look like display advertising. It won't be interruptive. It will be communicative and transparent, and results will make for better products and more loyal customers. This will in turn lower marketing and promotion cost by reducing brand 'switchers', and make forward-thinking agencies tomorrow's heroes.

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Imaginary VC Investment Criteria: People, Market Growth, and Technology

One of out three is the best you're going to get.

After rummaging through quite a few business plans lately, looking at new startup ideas, and chatting with investors about what they're looking for in this crazy market, it became pretty apparent that VC's aren't telling the truth about their investment criteria. They say one thing, but it always turns out differently.

The thing startup executives hear over and over again is that VC's invest in:

1. The Management Team (first and foremost)
2. The market and market growth
   
3. The technology or product

I hear quotes like:
"If the management team is solid, they can innovate through anything"
"The first version of the product is rarely the version that sells"
"The technology has to be just 'good enough' if the market is the right size"

When is someone going to call BS on VC's when they spew this stuff? Venture capital investors understand financials, leverage, and some even understand technology. Most do not understand how to interview or hire good people, and most (using extreme blog liberty to make sweeping generalizations) don't understand operations or how to launch a new product successfully. How can I say this with so many successful investments? Precisely because there are so many more unsuccessful investments. VCs say they look at people, market and lastly technology - but it's really the other way around. It's apparent as evidenced by their investment criteria and their investment track record.

Market Size
Vetting a typical deal involves market sizing and potential growth - calling on industry analysts, market leaders, and other investors to determine whether they think there's a market and how big they expect it to be in 3 years. 19 times out of 20 these numbers are optimistic (at best) or just plain egregious. The accurate representation of market size or growth for a new technology or new or nascent market is virtually impossible. But having analyst or expert validation somehow makes it all OK.

Speaking with initial customers / reference customers / prospects is also a common evaluation exercise. This is better as a determinant of a company's success, but it's much more complicated than that. VC's call their friends, CTO's they've developed relationships with, and people at big consulting companies to talk about the validity and usefulness of the product. Good investors get some pretty good information. But, calling on these people can also be misleading, since they might not be representative of the market as a whole. Calling on a company's early customers is a problem as well. Any founder worth his salt can sell a product to a friend or colleague or two. Almost anyone can sell one product to an enterprise for less than $50k - under the budget approval radar - and that's the sweetheart deal that so many technologies get 'proven' at.

VC's go back to their board rooms and say "Yes, people will pay for this" because Joe at Fortune 500 bought it, so others will too. This unfortunately doesn't lead to any understanding of whether the sale is repeatable by a non-technical (scalable) sales team.

If investors REALLY and truly cared about the market or market potential, they'd do a ton more work here. Work that takes more than a few phone calls and a few days to complete. They'd have the company do real market research, prospect calls and focus groups, and they'd demand that the company put a product marketing pro in place as part of the executive team.

Understanding a Market
In doing what I call a "360 Degree Analysis" you can really determine whether the market is ready for a new technology, who the buyer is and what their motivation is, what the use case is, and what budgets they can pull from. This analysis is a rigorous, scientific assessment that combine qualitative and quantitative data from surveys, interviews, and focus groups. Without in-depth understanding of potential customers and potential buyers in different departments of target companies - across industries - market readiness will just be a guess.

The most important result of a 360 Degree Analysis is a Buyer Persona. A buyer persona is different than a User Persona, but similarly it's a picture of a "real" person and all the influences on that person. It will answer questions like: Who is the buyer? What do they look like, who do they work for, what problems are they trying to solve? How do they get budget, how big is the problem, and how visible is it inside and outside the organization? How much budget is currently allocated, and where is the project on the year's list of things to do? Most importantly, what are the buyer's motivations?

Market size isn't enough - to really understand whether a technology can be sold, a clear picture of the ideal customer and buyer, the sales cycle, buyer's needs and timeframes must be painted.

The bottom line: if more companies vetted their exact buyer persona BEFORE funding, I would bet a dollar that more than half wouldn't get funding at all. Probably more like 60%. They wouldn't find a repeatable buyer, they wouldn't find usable budget, or they wouldn't find the "problem" they're solving exists or is painful enough (yet) to do something about it.

CAVEAT: In the B2C web space, where there is very little buying cycle involved, its really really hard to do any sort of pre-market testing of an idea. Consumers can't typically understand or explain whether they like something or would pay for something without seeing it first, so the 360 Degree Analysis can only go so far without a Beta product. But for a B2B enterprise software or SaaS solution, there is no excuse.

Executive Team
The most likely reason this exercise isn't done before or during due diligence is the team. Although a strong executive management team is the first on the list of criteria most VC's will say they're looking for, it's almost always the last.

Most technologies are built by technologists who call on one reference point in building a product - their own personal experience or that of a family member. Some technologists have more connections and a broader understanding of users but in my experience there are very few that understand the motivations of buyers. Someone with product marketing or product management experience is required to do this type of extensive market research, and usually those people aren't sought until after an A round, or even after a B round. Many executives expect sales people to have the knowledge to hunt and find buyers armed with only a description of the technology and what it does. It takes a rare salesperson who used to be in a buyer role, or a very experienced (very expensive) salesperson to talk about buyer problems in such depth that they can glean motivations. Even more rare is a salesperson who can talk to 10 prospects and extrapolate commonalities about buying patterns and be able to communicate that back to the executive team, especially R&D.

Not having a strong, senior product marketing executive as part of the founding team adds directly (and significantly) to the time and cost of selling a new product - it takes between 6 months in the best case and 3 or more years of continuous funding in the worst case for some companies to a) find the right buyer and buying situation and b) be able to replicate that across multiple customers.

What about the CEO? you say. Typically a CEO comes with this type of understanding of a market and market motivations, but rarely does a CEO have time to do all the work required for a good 360 Degree Analysis, never mind document a persona and create all the collateral to train and arm a sales team. But, a great CEO will recognize this and will find someone quickly to get it done. Maybe that's what they mean about a "great executive team" - a group that understands what they don't know, rather than what they do.

Great Technology
So, where does that leave VC's? Investing in great technologies. Things that they think are cool, are game changing, market disrupting innovations but aren't necessarily products that can be sold for a reasonable amount of money. And some of them are successful...but not because anyone knows for sure before the investment, but because the VC "feels it" and can convince their partners it's a good bet.

Great technology is why most companies, especially B2B companies, get funded. VC's bet that someone somewhere will think it's as cool as they do, and be willing to pay for it. I'd like to think that the investors that want to build a more solid portfolio will realize this. 'Home runs' in this market just aren't possible anymore, so putting together a portfolio of 'singles' and 'doubles' is the real way to provide a solid return to limited partners. I see venture capital firms moving this way, and I predict that the best ones will start to bring product marketing expertise in house to do formal, rigorous, scientific analyses and create buyer personas to help them understand the real buying cycle before investing millions.

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Tom Kuhr in the News: Articles, Posts, Comments

Tom's quotes, comments and articles have appears in dozens of
publications worldwide. Below are a few samples.

Los Angeles Times OleOle! A Beverly Hills company helps you follow the Euro by Alana Semuels June 19, 2008 Marketingberater - Web 2.0 Podcast-Interview: OleOle - Das Social Network für Fussballfans Interview by Sebastian Voss October 10, 2008 TechZulu OleOle: Viva Futbol! Interview by Cristina Cinque August 27, 2008 Download Squad CircleUp Answers Your Questions By Brad Linder July 13, 2007 Sarbanes-Oxley Compliance Journal After the Auditors Leave: Demonstrating 404 Compliance On Demand By Tom Kuhr April 18, 2005 SC Magazine Debunking the Security Tool Myth By Tom Kuhr September 2004 New York Metro ISSA Enterprise Security: You Can't Fix What You Don't Know About (PDF) By Tom Kuhr December 2004 CNET The Internet as a corporate power tool? (PDF) By Tom Kuhr August 14, 2001 Integrated Solutions ECM: Enterprise Content Mania By Jay McCall April, 2002 Windows / .NET magazine Planning, Clear Thinking Important to Success of E-Commerce Initiatives Tom Kuhr - Interview May 19, 2002 US Tech Euro Launch Needed Special Web Attention: Launch of the European Central Bank's Euro Site By Tom Kuhr January, 2002 Transform "Content Goes Global" February 2002 Internet World Spotlight on Day Software January 22, 2001 ServerWorld & Unisys World "Key Points for Managing Content" By Tom Kuhr April, 2002 Content Wire "...Like Fishing in a Swimming Pool" By Tom Kuhr August, 2001 eCompany "[CIO's and Unified Business] Information als zentrale Aufgabe" von Martin Ardt und Tom Kuhr April 2002 Information Week "Click-And-Mail Services Cancel Post-Office Hassles" (Stamps.com competitive overview) July 24, 2000

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