Lost in the hype that is Facebook platform launch seems to be the immense implication of the platform on the evolution of the “widget” economy/ecosystem. In the past, widgets are mostly written once, and deploy everywhere applications. They are simple applications which does little data sharing with the host system . . . the integration is mostly at the user interface level (and also defined by the end user). What this architecture lacks in sophistication it makes up in its openness and simplicity which inturn drives it proliferation.

The Facebook platform (I refuse to call it an OS) is only similar to the last generation of widgets in spirit but not in practice. In fact, it is really an entirely different animal. (It has its own markup & query language! ). What facebook has built is a somewhat closed a platform. (Yes, it is more open than other websites in that anyone can get access to the facebook user base, but from a platform perspective no one has every called Windows “open” for let allowing developers to write an app without getting their permission) Developers must now choose to develop for facebook consciously and allocate resources accordingly. (Not disimilar to developers choosing windows over mac, and game developers choosing PS2 over gamecube). Given the lock-in Facebook will likely create, other social networking ( I mean “utility” ) sites will be forced to walk down a similar path and create proprietary API’s for deeply integrating platform specific widgets onto their own website. . . . and thus the ecosystem will likely become closed and the battle for platform lock-in begins.

You can certainly infer from my tone that I’m somewhat ambivalent about the the Facebook platform. Deep integration is certainly good thing. Proprietary is not. If I were Facebook, this is exactly the path I would have taken. Cisco, MSFT, and most recently, Apple all created huge businesses executing toward this strategy. (and ofcourse enabled many beneficial applications for the end user.) I have incredible admiration for the facebook platform from a technological AND business perspective. But as an end user and sometimes participant in the ecosystem, I’m highly aware of the long term cost of facebook’s eventual (inevitible?) domination.

Do I see somesort of redemption? Of course! I would love to see Facebook open source the api’s and create an inclusive standards body to manage the canonicalization of how widgets can be deployed and integrated into a host application. BUT, I’m not naive. To gain competitive advantages, each social network WILL create additional proprietary API’s to leverage the uniqueness of its platform as well as create differentiated user experience. For very good business reasons, I would not expect them to do anything but exactly that. And thus, forking and divergence will be inevitable . . .

Edit: Actually found someone that somewhat agrees with me! scott heiferman and Ash (who BTW made a hugely precient call on aQuantive + MSFT)

Almost ten years ago, Amazon.com went public with a roadshow that emphasized the value of being virtual

- Amazon.com never closes
- build once and sell everywhere (compared to brick and mortar companies needing to roll out thousands of stores)
- unlimited inventory

Which all really come down to the fact that because of these structural advantages, Amazon.com’s (other online companies’) customer acquisitiom cost would be much much lower than the offline world.

That was true for a while until Google came along, inserted itself into 20%+ of the internet traffic, and forced companies to pay almost all their net margins into bidding for customers. Given that many of the online companies dont really have any expertise in offline acquisition or distribution strategies, they really dont know how to compare their customer acquisition cost to anything but other online channels. Without the proper yardstick, the cost of online customer acquisitino has met or exceeded offline acquisitino in many industries.

Recently, the increasing cost of online acquisition has forced many online companies to look to the offline world for distribution and customers. There are very very few companies that has nailed the the online/offline integrated distribution and usage model. . . (Green Dot, where I work, is close) but Webkinz (by Ganz) is by far the best and most well executed I’ve seen. (learn more about them here)

There are a few advantages to distributing an integrated virtual/physical service in the offline channel

- Acquisition cost can be significantly cheaper than online (cant emphasize this enough)

- Leverage existing store distribution channels and traffic (hallmarks, malls, gift shops etc)

- Allows for the creation of relationships with users ubiquitously and continuously . . . (I can hug my webkinz, but not my Penguin)

- Its the singularity advantage

- Payments, payments, payments . . . it so much easier for a kid to take their lunch money and buy a webkinz instead of trying to get a membership to habbo hotel

- Eventually, the physical good (like a webkinz) can become the main online interface, making the computer obsolete, in which case you’ve created a platform out of an application

- Many companies (such as Google) simply do not have the DNA (skills, knowledge, committment, patience) to compete with a company like webkinz in the offline world where the company have significant advantage. (manging logistics and contracts for tens of thousands of independent gift shops is not trivial)

Anyways, once in a while i get a man crush on a company, and my latest one is Ganz/Webkinz

A buddy emailed this link to me. If you are in your late 20’s / early 30’s . . . overly educated for your own good . . . trying to find meaning in life while seeing your profession as not just an extension but the main expression of that quest . . . this is for you.

A friend of mine recently met a young American woman who was studying on a Rhodes Scholarship at Oxford. She already had two degrees from top US universities, had worked as a lawyer and as a social worker in the US, and somewhere along the way had acquired a black belt in kung fu. Now, however, her course at Oxford was coming to an end and she was thoroughly angst-ridden about what to do next.

Her problem was no ordinary one.

She couldn’t decide whether she should make a lot of money as a corporate lawyer/management consultant, devote herself to charity work helping battered wives in disadvantaged Communities, or go to Hollywood to work as a stunt double in kung fu films. What most struck my friend was not the disparity of this woman’s choices, but the earnestness and bad grace with which she ruminated on them. It was almost as though she begrudged her own talents, Opportunities and freedom - as though the world had treated her unkindly by forcing her to make such a hard choice.

Her case is symptomatic of our times. In recent years, there has grown up a culture of discontent among the highly educated young something that seems to flare up, especially, when people reach their late 20s and early 30s. It arises not from frustration caused by lack of opportunity, as may have been true in the past, but from an excess of possibilities.

Most theories of adult developmental psychology have a special category for those in their late 20s and early 30s.

Whereas the early to mid-20s are seen as a time to establish one’s mode of living, the late 20s to early 30s are often considered a period of reappraisal. In a society where people marry and have children young, where financial burdens accumulate early, and where job markets are inflexible, such appraisals may not last long. But when people manage to remain free of financial or family burdens, and where the perceived opportunities for alternative careers are many, the reappraisal is likely to be strong.

Among no social group is this more true than the modern, International, professional elite: that tribe of young bankers, lawyers, consultants and managers for whom financial, familial, personal, corporate and (increasingly) national ties have become irrelevant. Often they grew up in one country, were educated in another, and are now working in a third.

The article continues . . .

There is actually a really good article over at news.com over the usability testing travails of hotmail 2.0. . I can’t tell you how many times I’ve been in exactly the same situation . . . trying balance innovation, strategy, and immediate user feedback.

The program was too slow to load, too different and, well, just not like the old Hotmail it was intended to replace.

It was a painful realization for the more than 100 managers and developers on the project. In banking on a snazzy Web 2.0 application to try to catch up to rivals Yahoo and Google, Microsoft had dramatically overshot its audience.

Classic mode wasn’t the only bitter pill the development team had to swallow. Even in the full version, it turned out that many customers still wanted to select messages using check boxes rather than a mouse click or keyboard shortcut, much to the dismay of Microsoft’s programmers.

“They were digging in their heels,” Sim said.

In the end, users hates any types of change (good or bad) . . . they will eventually adopt changes that are clear improvements, but that will still take a while. . . there is no such thing as a magic switch in the first place.

People that believe being “customer focused” is the ONLY goal of any product manager doesnt really understand innovation and strategy (ie innovator’s dilemma). On the other hand, product managers that are married to pushing the envelope on innovation and un-reasonably attached to their frameworks (information architecture, product strategy etc) really belong on Sand Hill road instead. There is a middle ground but its a case by case basis . . . knowing when to turn back (like the hotmail team) is a good first step. For all of MSFT’s faults, I’m actually quite impressed by this story.

Another random note, M&A teams of major companies are usually completely clueless on stuff like this. They believe that 1+1 = 3 while in reality 1+1 = 1.5. For example, taking a popular rumor over the weekend, if Microsoft and Yahoo merged what would be the combined userbase of their instant messaging product in 12 month if they tried to merge the two clients into one product? It would for sure be less than the combined marketshare of the two clients currently. The disastrous Sprint + Nextel merger was another perfect case study . . .

Josh K. has an interesting post that contrasts the acquisition & retention model of social networks (and community sites) in general.

The winners have a “catch and keep” model where the site is “sticky” while the less succesful players have a “catch and release” model where repeat visits are low and value is garnered linearly.

Another way to put it . . . we should try to build a site with a set of functionalities which gives users incrementally more value on the second visit than the first visit . . . third visit more than the second vist . . . and so forth. In many ways, this is a practical intent of metcalfs law and perhaps much more actionable than simplying trying to build a large userbase and claiming to have reach critical mass and network effects. The goal for any website would be creating accretive value per incremental visit.

Another interesting interpretation of Josh’s post is that social networks that are augmenting/turbo charging offline & parallelsocial interactions seems to have higher value and relevancy to the user than ones which tries to be completely virtual. If a site has relevancy to the daily (and thus offline) lifes of its user (campus life for facebook users, professional & personal networking for meetup users etc) it will remain more sticky than a site which is simply trying to act as a bridge or replacement for physical interactions. (Yes, I believe the future lies in “singularity”)

Lastly, to the snarky title of this post. It wasnt long ago (12 month?) that the web is buzzing about “attention aggregators” which mostly became just “catch and release” websites. It is very possible to create a “edge” based site which has the “catch and keep” value proposition (google for one) . . . but in truth, the functionality and features required to provide accretive value per incremental visit can rarely be achieved by an aggregator unless aggregation can provide such a value (which only occurs very very rarely . .. such as in google’s case). In most cases, aggregation is not enough and product/feature based value can only be built and captured through a “walled garden” like website which nurtures and builds value within a tighly controlled environment. A potentially winning model (I have to think more about this) is a hybird site like digg which combines edge aggregation with wall-garden like product and features . . .