Design Simple, Part 1: Enterprise 2.0

A question I am constantly being asked by up and coming tech entrepreneurs: "How can we better leverage the web, and new web2.0 models to spark growth or create a new market segment or revenue channel altogether?" But now I being asked the same questions by serial entrepreneurs and seasoned fortune 1000 executives alike. The answer is not the same for all scenarios, but indeed there are some battle-tested rules that everyone should know. In a multi-part blog series, I will be addressing various aspects of this new era and the dilemmas that most companies, old and new, will come to face at some point in the not too distant future.

In my mind, this question can not be answered unless you've built online businesses in both web worlds, Web 1.0 and Web 2.0. I've sat on countless panel discussions and debated with a wide variety of journalists, analysts, bloggers, and 'pundits' whom all have their own 'unique' spin on the subject. Sideline referee versus quarterback perspective, I suppose. Mostly what you hear from this crowd are catch phrases like: the long tail, viral marketing, scalability, network effects, social mediums, participation age, the list goes on and on. Judging by the ever expanding definition for Web 2.0 at Wikipedia, it's no wonder that many joining the fray quickly become shrouded in the vagueness of their own Web 2.0 execution.

As you might expect, Tim O'Reilly presents a reasonably sound analysis of the web2.0 conceptual framework, and the new 'levers' that can influence the adoption of a web business, product, or service. A good primer to get you oriented before attempting the recommendations that follow. Bear in mind that there is a big difference between the conceptualization of web2 strategies and real world execution and producing tangible, measurable results. Don't be fooled into thinking there are shortcuts and quick hits by simply regurgitating what you've read online. The list here is by no means complete how-to, rather, it is dialed in to address the most common problems with executing the vision.

1. Get focused. Converge on single idea. Don't zoom out. Resist the temptation to lump 10 separate features, 5 unique value propositions, or even just 2 different products into something you defend as your sole mission.

2. Repeat step #1

3. Repeat step #2, this time have a colleague or customer test your focus for clarity.

Let the value proposition sell itself. Too often people equate Web 2.0 with Hype 2.0. A marketing blitz will only dilute the DNA of the product's key value to reach the user in a meaningful, sustainable way. You need to get the product right out in front of the audience. If you cannot articulate or demonstrate the core value proposition with one picture, or one sentence, all subsequent strategies to leverage the Web effect will be ineffective. I see this all the time with the companies I am advising today. Great products, great teams, great ideas, but all of the value creation gets buried behind logins, passwords, downloads, and other forms of "friction in the adoption curve", as I have coined it. This friction does nothing but keep the best assets and value from being discovered and adopted in market place. It's sort of like self-inflicted wounds that never heal quite right.

This is most prevalent with enterprise companies trying to become enterprise 2.0 companies overnight. I've watch Cisco try it, Sun try it, and hoards of other companies large and small. Each with varying (read: minimal) degrees of success thus far. And without some serious reprogramming, none will truly garner the uptake of the web2.0 pro's like Jot, (which at the moment is off line for new customers because of the recent acquisition).

What constitutes a good example? First, it is the company whose product or service is the website itself, and vice versa. Think about that for a moment. Second, the Web must be an integral part of the value proposition, and an integral growth driver. More on this topic in part 2 of the series to follow.

What constitutes a weak example? Brochureware is not 2.0. Demoware is not 2.0. Screenshots, Flash movies, and 30-day trials are so not 2.0.

The challenges most companies face with embracing the Web and '2.0' as a new market for growth can be complex and subtle. Conventional sales and marketing techniques only create surface-level awareness. They don't spark adoption and they don't promote viral uptake. Only an immediately recognizable value proposition and a legitimate social incentive will put 2.0 in motion. Instant gratification is vital. Without it, it's only a matter of time before you're back to the drawing board.

Enterprise companies today have tremendous potential for growth in a 2.0 world because of the vast asset bases they are sitting on. Unlocking new potential and new markets for these assets can conceivable give them a tremendous unfair advantage. Though it is indeed an art and a science to getting it right; and producing tangible, scalable results doesn't come easy. What's more, the process can easily backfire without a qualified team in place to execute. Brands, credibility, and market share can easily be swept away with ill-fated attempts to join the "in" crowd on whim. Same can be said for start-ups. Though the assets are not necessarily vast, they are potent, high-value, fresh concepts that risk becoming the greatest technical innovation that never took off. 2.0 is a powerful concept that when used responsibility, can make reaching critical mass, a closer reality. More to come. Stay tuned.

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Joost Releases 0.8.0 Update

Joost updated its 'wares this weekend with version 0.8.0, which includes the first version now available for Intel-based Mac OS X. One of the few products I've seen released lately that was not Universal Binary right from Beta. I suspect it has to do with the new CoreAVC Video decoder, which significantly improves the quality of Joost video. That said, Joost appears to be loosely promising a Universal Binary for RC1.

As for the product itself, the Mac OS X Intel installs and runs pretty smoothly for a 0.8 revision. The UI is sleek, but takes a little getting used to, and lacks logical flow (read: arbitrary). The My Channels browser element is a rather bland one column scrolling list which is rather inefficient and unimaginative for browsing loads of channels. I am certain they can do better with search, browse, and navigate. The stock channels are fun and the episodes launch immediately, giving you an experience quite similar to flipping through channels on a real TV. Quite natural in that regard. Perhaps their strongest achievement indeed. But is this enough to establish a sustainable advantage that is strong enough to garner real market share in this already crowded sector? I'm most interested to see how this will stack up against Apple TV, and a slew of existing competitors like BitTorrent, and Google/YouTube.

Joost can deliver higher resolution video than most consumer offerings today, and fast. No need to deal with downloading torrent files, then switching to a content viewer, and then back to torrent download for each video. Very cumbersome compared to Joost. However, this is still just a well executed feature-- not a product, nor a business...yet. Functionality must yield social incentive, which then follows content as king in this business. After Joost'ing just about all the channels in the Beta, I'm still left wondering what will be the "hook" with Joost that will keep me coming back for more. If the service backbone can scale to the likes of BitTorrent's mesh, they've got to then differentiate themselves with more clever social experience (read: incentives) to drive adoption and contribution to the Joost channel line-up, while beating everyone else to the best quasi-commercial content available. Tall order indeed.

And let us not forget what happened when Microsoft, at arms length, launched Wallop.

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Yahoo's Declaration of Dependence

As Mike puts it today on TechCrunch, a lot of peanut butter bein' spread around Yahoo again with Sue Decker's email sent out company-wide this morning. I had dinner with Sue a couple years ago, and ultimately completed a few strategic deals between Yahoo and Groxis, the company I co-founded and ran for the past five or so years. What I can tell you is this. Sue is a smart, driven executive. No doubt she'll get the operational job done better than anyone at Yahoo today. However, I question a few of the organizational moves she's outlined in this 2007 manifesto. Perhaps the most glaring and most critical to Yahoo is where their core search group gets parked inside the organization. According to the email, core search is now part of "Marketing Products" which I find rather curious.

The three most important rules for any startup company in the Valley are: focus, focus, focus.

The good news is that Tim Cadogan has been tapped and promoted to head up the core search organization. Tim is a very smart, capable, and cool guy, with whom I structured our 'landmark' deal with Yahoo. Landmark in the sense that we were one of the first search companies to get Yahoo and Google to play nice in the same small sandbox that was my startup. Anyway, Tim is unquestionably the right guy for the job, and needs his group to be elevated to have a greater effect on how the core search is being leveraged not as a marketing product, but as a supply-side horizontal revenue generator across the company. The new structure could put the company at risk by layering it vertically into the organization. If you look at Google, core search is far bigger, and far more horizontally aligned across the company. And for good reason. It (along with AdWords) is their bread and butter. It used to be Yahoo's bread and butter too.

I can't help but think that Yahoo's acquisition spree has precipitated this latest move. With so many seemingly random acquisitions to keep pace with competition, the company has had to react vs. act. This leads to a contrived strategy based on the new assets they have to deal with and leverage effectively to please Wall Street (read: justify the acquisitions). Whereas you'll notice Google to be slightly more proactive, with a seemingly tight-lipped strategically planned growth strategy. We'll be watching closing to see how this new plan plays out for Yahoo. Don't lose sight of the importance of core search, Sue, Yahoo depends on it. And remember, it's never too late to focus, focus, focus.
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Get a (Second) Life!

Walking to my office this morning, I caught today's SF Chronicle headline at a newsstand outside Whole Foods: "Love 2.0" I thought to myself, hmmm...fitting for Valentine's Day in Silicon Valley I suppose. Perhaps even more fitting is the latest target market for online matchmaking, it's the "I sold my company for $80m, and Vegas is getting too expensive to find a 'girlfriend,'"crowd. Or it's the: "MySpace? Who wants to wind up on 'To Catch a Predator'?" crowd.

As Min Jung Kim so eloquently put it in today's festive piece: "They are using the actual tools of Web 2.0 to find more effective ways to get laid." Hey, whatever works. Happy Valentine's Day everyone. Here's my suggestion for Valentine’s Day: It is time for these peeps to get a Second Life™.

Why not? This virtual world is almost better than reality at times. As I mentioned in my opening blog, Second Life is a big deal. Bigger than most people realize or have taken the time to contemplate properly.

Quick Disclaimer: Remember what this blog is all about: separating the truth from the naïve, and from those that write before they think.

I was saving my Second Life thoughts for a later blog, until I read this Second Life story posted today over at IT Business Edge. So here we go...
The author attempts to question the business value inside Second Life’s virtual world. The piece lacks teeth, substance, and interest. Check out the author’s bio on this blog:

“Ann was a leading media authority on automated teller machines before coming to IT Business Edge to cover tech alignment and business value.”

Did she say ATM machines? This is exactly the type of journalistic wisdom that needs a healthy challenge, especially if we are talking about something as disruptive as Second Life. Why waste the net bandwidth and disk space necessary to carry that story at all? I’m at a loss on that one. The author even falls on the sword at the end of her own story, stopping just short of throwing in the towel on the whole piece:

“When in doubt, we go back to the advice of a Booz Allen Hamilton associate that appeared in a recent article on Second Life: Companies need to ask, “What can we do better in Second Life than the other ways we’re already doing them?”

Booz Allen Hamilton? The next time I am in doubt about the future of innovation and Silicon Valley startups, the only “Booz” I’ll be deferring to is Don Julio down at Tres Agaves. Is that not the most naïve question on this subject? If they were clever, they would have pushed that question to the very beginning of the article, to invite a insightful debate of just what does work better, worse, or just differently in the virtual world.

I personally wouldn’t comment on Second Life, or any topic for that matter, unless I understood (not just heard about) the subject for real. At the very least one should have gotten off Orientation Island before saying boo. Then again, for many of these folks it's more about placing catchy brands in the title of a boring blog to spark readership.

Anyway, since I’ve had the good fortune of getting the latest and greatest straight from the Second Life’s fearless leader and others, let’s get real. Second Life isn’t going to be huge. It already is. The reason Second Life can scale so wonderfully is because it in itself is not a web service, not a b2c business, not anything in the typical business sense. Rather, it is what I call a platform service. Not an enterprise software platform that you download, install, and customize, a service. Like grid computing with a purpose. A platform with the flexibility to enable everyone else: people, companies, and marketplaces develop on their own terms inside the world. Some have said that Second Life is like eBay, an intermediary. In truth it’s actually one level of abstraction beyond this. An intermediary of intermediaries. Virtual “eBays” and just about any other type of business models are possible within the world.

Second Life has attracted the interest of some serious players in the industry looking to do much more than kick the tires on this virtual trend. I’ve talked to execs at Cisco, Sun, and Amazon, and they all get it. The value lies with the residents- what companies like these and communities like ours will make of it. Don’t ask Philip or Ramzi at Linden what the value is going to be to residents, ask the residents. That is the whole point of Second Life. Imagine setting up an economic infrastructure of your own design, as if the United States or the rest of the world had yet to be incorporated. New and innovative business and economic models could never be instituted nor tested with such immediacy and precise feedback analysis in the real world as we know it. What can be done in Second Life that can’t be done in the real world? We decide.

The growth in Second Life and at Linden Lab is staggering. And it is healthy growth, not dotcom bubble kind of growth. Second life is well positioned at the intersection of the new social computing society we live and the smart businesses that are shaping our economic and industrial future.

Expect Linden Lab and Second Life to surprise you, perhaps when you least expect it. Based on how this company is performing both financially and virally, it may soon run up against the problem Google faced earlier in its growth trajectory that forced it to have an IPO sooner than planned. However, I might also believe that they could achieve some pretty impressive results with less than 1000 employees. Way less. At least at this stage, the platform strategy enables greater scaling prospects than Google, simply because they only need to focus on building out the virtual world framework vs. business and consumer applications, tools, etc. In fact, by the time they reach 200 employees (probably as soon as this fall) they will be a venerable force. They’ve definitely got growing pains. Keeping up with the growth is today’s number one challenge at Linden Lab-- the classic “good problem to have” here in Silicon Valley. If they can continue to attract world-class talent, scale their network infrastructure intelligently and quickly, and stay focused on the platform, the world will no doubt be hearing much more from Linden Lab and Second Life. Stay tuned. I’ve got more to share in future posts.

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Tag, I'm It!

Well I can't think of a better catalyst to get my blog project off the ground, than receiving a Blog- Tag from Chris Shipley, of DEMO fame. I'm still waiting on the domain name of choice to come through, but I thought to myself, why wait? For those out of the know, the idea behind Pulver's Blog-Tag is pretty simple. When you get tagged, you have to share five things most people probably didn't know about you, on your blog of course (yes, must have blog to play), then tag five others. From the looks of it, I'm in good company with Chris, and her tagged five. Check 'em out yourself. In honor of the brand, I'm modifying the rules to share six little known facts about me to introduce Sixorg. Read on...

1. As for Sixorg, well its been a long time coming. After years of badgering from my friends like Ross Mayfield at Socialtext, Giovanni Rodriguez - PR dynamo-guru-extraordinaire, and Dave Sifry over at Technorati way back in 2004, I've finally pulled it together to get my vocals online. Mostly so these guys and the rest of my crew don't have to listen to me rant and rave about the tech industry in person. Now they can deal with me in doses, or avoid me all together.

Tag, tag, and tag, you three are it!

2. Watch this space for several interesting things to come. I'm particularly interested in challenging conventional wisdom and conventional commentary on a range of hardcore topics including web search, user experience, product design, startups, and the truths, lies, and videotapes of the venture capital game. When I say hardcore, I mean sans the fluff, hype, and Kool-Aid that inebriates even the highest profile industry websites and blogs in action today.

3. After building seven startups in the Valley, its time I join fray to separate the industry truths from the naive, the misinformed, and from those that haven't been there nor done that. Man, if those walls could only talk. There's a juicy best-seller in there just waiting to break free...someday.

I'm also inspired by those that have paved the way into this game, including John Battelle, good friend to Groxis back in the day, and Matt Marshall from the Merc and now VentureBeat.

John, Matt, tag, tag you're both it!

4. I am a closet architect (read: not licensed nor formally trained). I've designed 3 buildings that have actually gone into production as I like to say. One of which I live in today.

5. Huge fan of The Police. Reunited for a 30th anniversary tour in 2007. My Sting stories to follow, later in the year.

6. I had a really inspiring conversation today with the founder of Linden Lab, Philip Rosedale, aka Philip Linden in Second Life. There is definitely way more to this story, and to Philip, than most people realize. More on this later in Sixorg, once I turn up my Second Life account.

A real-time 'tag you're it' Philip!

So there you have it. Six little known facts, six tags, and Sixorg. Chris Shipley, I owe you next round at the pub, it's all your fault.

Welcome to the show, let's get on to the good stuff. Grok 'n roll.

Cheers,

-- R.J.

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