Online forums around brands (aka fan sites) - everything from Tyra Banks to Bratz are big business. Anyone that has searched for information on google or yahoo will realize that forums represents a disproportionate portion of the search results due to the large amount of dynamic & fresh content generated. All if not most are moneitzed through YPN or Adsense - Google ’s Adsense is generating around $4B a year for Google and probably $8-$12B in total for millions of webmasters. To realize how big this “digital underground” is all we need to do is to take a stroll on sitepoint or webmasterworld. (Monetizing the longtail of websites if you well!)

Foremanski has some good comments from the business perspective.

There is, however, something more going on here from search marketing perspective. . .

1. Yahoo can give preferential treatment to these sites over independent fan sites and forums. Try a Maria Carey search on Yahoo and you will notice the Yahoo Artist page as the top result. This will happen to a lot of top search terms going forward.

2. Even Google will give these sites higher rank compared to independent sites because they are hosted on a yahoo domain which has high PageRank (wii.yahoo.com for example)

3. Having the search term in the subdomain (wii.yahoo.com) could potentially increase search ranking as well (somewhat debatable)

4. Conversely, this could be considered a form of cyber squatting (a subset of the copyright issue widely mentioned) given the brand name in the subdomain

5. Yahoo will for sure expand this down its list of search terms and eventually extract more and more value and advertising dollars from webmasters who runs these fan sites and forums.

Time will tell but this could be a turning point for the large community of niche sites having their way until recently on drawing internet traffic away from larger commercial website. . . Yahoo is fighting back and so are other media companies (note the recent spat of “social networking” initiatives from media companies)

Yesterday, Amazon launched endless.com (coverage at techcrunch and techbeat). Obstensibly its an obvious response to the $1B that Zappos.com is taking in a year (close to 35% of the total shoe market) . But even more strategically, its an increasing sign that the first generation internet giants has reached some sort maturity and limits to scale that traditional marketing techniques like brand extensions (ie, Coke -> Diet Coke) are beginning to become popular if not standard strategic growth options.

Furthermore, as much as the web 2.0 crowd (we? me?) would like to believe, mashups are not invented by the internet generation. Using internal assets and re-aligning them to create new products our services was invented when Henry Ford (finally) launched Model A.. And continutes today, the Chrysler Crossfire uses the same chasis as the Mercedes SLK, another example. (What is interesting is that mashups has moved form assembling internal assets to mixing external and internal assets through loose couplings and arms length relationships). For endless and ebayexpress, the main assets that are being leveraged are the inventory (both share a subset of inventory from the mother site).

I blogged about this a few month back and it appears to me that Amazon is hitting the same scalability issues.

For giants like eBay, Yahoo, Google, and even Facebook and Myspace (today). . . the MARKETING FACT OF LIFE - SEGMENTATION has slowly reduced the value of network effects. By definition, network effects is a mass market play. It is in opposition to the concept of niche marketing, niche product, for niche segments - ie the better you can target your product or service to a particular niche the more likely he or her will chose your product over a competing generic solution. These giants cant no longer band-aide new site wide features and functionalities hoping to attract new segments to their website as USAGE TIME, SCREEN REAL-ESTATE, USABILITY limits the feature creep. This admission that network effects is no longer the dominant driver of their business - that segmentation is - is widely seen but rarely discussed . .

It further amazes me how the mentalities of a startup can blind someone from making the right business decisions (better, faster, cheaper /= better for the customer). For some reason, the “why’s” of endless and ebayexpress were not obvious to the pundits of the tech world. . . but for someone that works at Gap, P&G, or a HomeDepot it must seem very obvious.

Every brand has its limits, even Amazon and ebay. Ofcourse, Amazon decided to completely remove itself from the endless brand while ebay tried an extension to target new segments of users.

One size fits all is only true for baseball caps (and even that is questionable). Beyond the brand, the flexibility to create custom search/discovery experience within a category can create a significantly better conversion rate AS WELL AS re-enforce the brand itself. In the physical world, the Apple Stores and its shopping experience are a clear extention of the Apple brand.

“Enhancements” are not always better. Ajax might be cool, you might love all the drag and drop functionality of the latest website profiled on TechCrunch. But you and I are a sample size of one. For incumbent companies, by definition through the size of its userbase, late adoptors are the largest segment. In the end, the feature needs to be rigorously tested with a large enough sample size to really know if “enhancements” are good for the bottom line. . . not just kinda cool.

As many people already know, one of the original bloggers in the tech blogosphere (no its not Arrington of Techcrunch . . . earlier by 2 years atleast ) Jeff Nolan has left SAP Ventures and joined Teqlo as the CEO. Jeff’s latest post is about honing the “positioning” statement for VC’s. The comment section is really interesting with everyone constructively helping to improve the statement.

Truth be told, it was quite ironic to see Jeff having to struggle through this having been on the other side for quite a while as a VC . . . ( one of my VC’s in fact) . . . This is a very hard task especially for Teqlo because they are not an application company, but a enabling infratructure with a end user utility (wow, a hybrid) . The so called “killer app” or killer mashup borne out of Teqlo is probably something that has yet to be imagined (but that too is the upside of the Teqlo, that its value proposition is only limited by the imagination of the community it builts). Jotspot (not competitive but structurally similar company) tried to solve this problem by building a few example applications along with the launch of its infrastructure . . . to not only stir the imagination but provide value at launch.

Zoli Erdos has very good advice . . .

Of course your statement about describes what Teqlo is … i.e the statement is true, it fits the business … but …. does it describe Teqlo specifically?

To paraphrase . . . start with the end user and the “why’s” and end with “how” the product can serve that end user UNIQUELY, SPECIFICALLY, and BETTER. (easier said than done ofcourse!)

A few other random things to think about when putting together the “positining statement”

1. Entrepreneurs and “intra-preneurs” faces similar hurdles in getting resources for a project/venture

2. First 3 minute of VC’s or a senior exec’s time (if you are pitching an internal project) is when you hook or fail to hook him/her. Make sure you have something catchy (and important) to say.

3. It is the external version of the internal mission statement (which aligns the company and helps with resources allocation . . . ROI Metrics + Strategy + Mission = prioritization)

4. VC’s are not as technical as they claim to be . . . dumb it down for the VC’s . . . if they like the pitch they will find a “venture partner” to do more DD . . . at which time you will have plenty of time to white board out EVERTHING . . .

5. Investments pan or dont pan out usually in 3-5 years. In the mean time, VC’s needs your help bragging his latest pet investment to his country club buddies . . . the positioning statement needs to be catchy enough to impress his foursome like a 325 yard drive off the first tee.

6. It serves as the first sentence of the boiler plate at the end of every press release. And believe me, most journalists will literally just copy and paste it into their writing. So this statement will end up EVERYWHERE.

7. Correlary to 6, many hyperlinks will be built off the words in the positioning statement from these articles to your website; as a result, these words will become your keywords for search engine ranking. If you want your website to surface when someone types in “best sausage in Indiana” in Google, make sure a variation of that appears in your positioning statement.

8. Its nice to have friends in high places that you can bounce the pitch too without worrying about an investment decision . . . (VC’s preferably) . . .

9. One of the hardest things about these statements is how to balance the short-term value proposition (we are a search engine) , long-term strategy (advertising is our business model), and vision (we want to organize the world’s information) . . .

10. personally, I miss working on things like this . . . .

Re-orgs can be fun. . . really they can be! . . . part II of the series.

1. China is the next big thing, talent level uneven, and everyone gets a title inflation. Plus, Baidu/Alibaba/QQ/Netease loves to hire people from their American competitors and give them a VP/CxO title.

2. Its about time you get a new powerpoint template that wasnt made by the founders 10 years ago

3. Cleaning cubes - finding cash hidden at back of drawers, throwing out useless decks, finding your long lost garage door opener . . .

4. Headhunter who call and forces you out of your inertia to explore opportunities

5. Rumors, rumors, rumors . . . talking about rumors, regurgiation rumors, even making up some of your own. What do you care? you have millions at the bank and on first name basis with David/Jerry/Larry/Sergei/Meg/Pierre.

6. Underground re-org betting pool - when, who, how

7. You love your boss, but its time to expand your sphere of influence. Re-orgs can be a good excuse to find a new position in a different part of the company without ruffling feathers.

8. Tides turn, you were “one of the ten” left in the last re-org, but this time, you all of sudden get your own team

9. Touching or funny farewell emails

10. New asses to kiss

Re-orgs can be good. But I dont care. The topic of the post is why re-orgs suck. (next one will be why re-org is cool but thats later). Anyways, The last week has been a banner week for re-orgs. Couple of very important companies went through reorgs - one very publicly and the other more privately . . . (one starting with Y and the other starting with e). Speaks volumes about the number of mercaneries in these companies on the way these re-orgs are handled so differently.

So, here we go, why re-orgs suck:

1. just when you finally learn how to kiss your manager’s ass, he/she gets re-assigned to China for an ultra “secret project” to take on Baidu/Alibaba/QQ/NetEase etc (aka career suicide)

2. just when you are finally ready to present your “strategy” deck, the new presentation template got re-vamped too (to web friendly colors)

3. packing cubes

4. headhunters who call and offer you your last job (from 3 years ago)

5. Make executives feel useful (and consulting firms paid), but the TPS reports stays

6. You spent the last few ounces of your political capital re-aligning yourself with the “hot new” VP just to have him be left with 10 reports after the re-org. (you are one of the ten)

7. Newly re-orged VP takes over your project and declares himself (and the project) the savior - while you are left packing your cube

8. Farewell emails

9. Techcrunch didnt publish your memo . . . and no one gave it a cool nickname. In fact, people just called it an email . . . it never reached the status of a “memo”, much less one with a cool nickname.

10. New asses to kiss

From Searchblog on Google A/B testing:

The ideal number of results on the first page was an area where self-reported user interests were at odds with their ultimate desires. Though they did want more results, they weren’t willing to pay the price for the trade, the extra time in receiving and reviewing the data. In experiments, each run for about 8 weeks, results pages with 30 (rather than 10) results lowered search traffic (and proportionally ad revenues) by 20 percent.

This is actually a major point of contention for designing webpages & managing conversion . . . the # of results per page . I would caution against applying this globally to all websites though. Users tend to get anchored to thier prior experience with that particular website, so the drop in conversion could simply be caused by the fact that its a different experience than before. In fact, I’ve seen opposite results before. Anyways, data like these should be shared more globally, kudos to Google for being open.

Wouldnt it be nice to join Google in 00, eBay in 98, Yahoo in 95, Dell in 92, or even Myspace in 2003? Not having to deal with the startup risk while gaining all the upside is one of the best bets you can make in your career - monetarily but even more so, for career progression (everyone loves a winner). Joining a startup with only 10 people is way too risky if you dont have over 5% of the equity. Joining big company after the hypergrowth means that you are stuck in a Corolla while everyone else at work has a M5 at home (and a Prius at work). My advise is to be like a VC and do due diligence on the new prospect like they do. Investing in your career is actually a bigger bet than the $4-5M in investment the average VC’s make in any round. This is not as hard as seed stage investing cause you dont want to be betting on a idea. This is much more similar to late stage investing where the financials/metrics can tell 70% of the story.

Not trying to say its a fool proof (or even a good way . . . time will tell) methodology or that its the only way. . . this is the process I came up with and went through as I hunted for my next adventure.

The key is to understand if COMPOUNDED growth can take place in the company and how close the company/startup is to reaching that stage. Geoffery Moore calls it the tornado, bankers call it hockey stick, VC’s call it traction, I just call it 100%+ growth year over year in REVENUE with a customer base over 500K. (law of small numbers can fool people into thinking the growth is large when its not sustainable).

1) First, I try to understand the buinses model well enough that I can identify the main levers that moves the business. The key is to have a water fall of metrics that starts at acquisition (or awareness) and all the way to revenue (profit is even better but too hard to measure in a startup cause you are sacrifising profitablility for growth)

Example here might be eBay in 1999

- new registration per month
- active customers per new registration
- # purchases per month per active customer
- average purchases per active customer

2) The basic requirement is that atleast one or two of these metrics has to ALREADY be growing at 15% - 30% year over year

3) Understand what needs to happen to make the other metrics grow 15% - 20% as well. Has anyone been trying to move these metrics? what tactics/programs/strategies has been tried? The answer I want to hear is actually that no one has been looking at it too carefully because the other metrics are already driving enough growth for the company. (And I think these needles can be moved)

4) #2 gives me proof of success, #3 shows me potential for even faster growth.

5) If EACH of these metrics can grow independently @ 20% a Year over Year, you have a blockbuster on your hand . . .

No company can grow at 80-100% year over year without multiple underlying factors growing at a reasonable 20% a year. It is often not sustainable if only one metric is growing at an incredible rate while the rest is stagnating. (quick example, retail companies relying soley on store expansion to drive growth . . . ie GAP in 2000)

So there you go, happy hunting . . .

Companies are the stewards of the community NOT the manager . . . it was something that was deeply ingrained into every single employee’s psyche at eBay. (eventhough it may not seem like it from the outside ) Apparently that lesson is being learned everywhere these days : youTube, eachnet, myspace, digg . . . the latest is that of facebook.

There are a lot of random posts on the controversy but only two actually offered some solutions and suggestions from the company/product management angle : Ed Sim & Ken Norton . . .

I wrote about it before on so called Web 2.0 Community Management but I think Stewardship is probably a better word for it. . .

A/B testing of new features is actually really really hard (like Ken said). You have a few options (not mutually exclusive)

1) Blind A/B
2) Opt-Out A/B
3) Opt-In A/B

None of them are perfect and in the end the community might still scream and yell . . . .

1) Blind A/B
This just doesnt really work for community centric businesses . . . peoeple are just so attached and familiar to the site you need to be extremely transparent, otherwise you are going to get support calls (people think the site is broken) or another riot on your hand. Google/Yahoo/Amazon can do this because they have huge amount of “blind” traffic coming through the site. . . Google especially is already a black box so people dont expect it to be transparent in the first place. For eBay and, my guess, social networking sites; it will not work.

2) Opt-Out A/B
This is a little better in preventing a riot but you better make sure the A(control group) portion is siginifcantly bigger. Even so, you are going to get huge self selection issue because people will notice the “opt out message” and act very differently (such as clicking around a lot more and become a lot less task oriented). The portion that got sent there by default might still cause a rukus because they believe these features have a huge sunk cost so they will be released eventually anyways - perhaps with tweaks - and you know what. . . he/she is probably right . . .

3) Opt-In A/B
This will get you more input and participation from the community but in the end, the results are not going to be high fidelity. . . or even directionally correct. Those who opt-in either are early adoptors, have an ax to grind, or explorers. Furthermore, whatever metric you are testing for, selection bias will make it almost irrelevant. In many ways, this is the ONLY option community based sites have to be partipatory in releasing new features . . . another thing to do to reduce bias is to run the A/B for LONG time so that you at the very least filter out the riff-raffs who are digging around for dirt (reporters?) and see if your community either adopts its slowly but surely or segments significantly. (or never at all!).

For companies without conversion metrics (like facebook) the above tests are even harder . . . you can survey people at the end of the new experience but expressed and behaviorial feedback is very different. Furthermore, not until they have explore the majority of their OWN use cases for the site, their opinion might change if the feature is rollout permenantly. Retention/repeat visit/page view metrics are not linearly correlated to “satisfaction”, thus the effect of these features might be delayed or compounded negatively by some other factor down the road. And ofcourse relying soley on “feedback” creates self-selection bias on top of self-selection bias.

For companies with conversion metrics (eBay) the sampling bias is a huge issue for opt-in/opt-on. Furthermore what do you do if 5% of the population is hugely against the new feature but the silent majority (based on metrics) seems to be inconclusive or positive?

Llastly, as Adam Nash likes to say to me. . . what IF your most vocal community is the dying majority (as in The Innovator’s Dilemma - also brilliantly point out by Ken Norton). What IF you end up beholden to a segment of the customer base indefinitely and if that segment for some reason slowly shrinks? You do not have the strategic alternative of serving a new segment and grow for the fear of losing your current customer/user base. Many industry giants have died off this way . . .

(Side note, if facebook rolls back this feed feature, some startup should build a social network purely on the idea of broadcasted status . . . they will attract/self select those who dont mind and they will also know that the incumbents will not encroach. And as I suspect, as the web matures evenmore, the who idea of realtime updates will become more common place/desirable).

There are 20+ variables to evaluate when trying to roll out a new feature smartly to a community of users, there is no right answer for all cases, this is what makes this whole web 2.0 thing harder than people think . . .

Cranky PM, my latest blog obsession (that VC secretary blogger slave girl was the last one . . . most of the time they dont last too long, but I do remain a reader), is so right . . . that these so called pundits/visionaries spend all day regurgitating analysis from someone less famous or have less friends and pretent to make it their own . . . (but its hard to say its not a symbiotic relationship). . . Back in the days when I was in the enterprise side of things I had a few meetings like the one she had . . . many of them we had to pay for (not directly of course!) by subscribing to their “research” . . . so I know exactly what Cranky was talking about . . . that both parties are equally guilty!

Of course, it worked as predicted (with 0.8 probability). The analysts / ho-bags — lazy if nothing else — faithfully republished the Cranky Product Manager’s slides, full of compelling graphs and thought provoking methodologies, as if they lovingly created them on their own instead of plagiarizing them from a vendor. Then, the IT departments of the world’s finest companies paid premium prices for this “unbiased” research and believed much of it. Hopefully, as a result, they will buy more of the Cranky Product Manager’s product.

There are other professions in the valley that is dependent on regurgitation as a source of differentiation . . .

1. investment banking research analysts - I dont want to say too much otherwise I might get subpoenaed, but read the footnote of these research reports carefully, if any chart is annotated as “source: company” beaware you are being spoon fed. Remember, there is a reason bankers spend collectively 500hours + to draft a red herring.

2. venture capitalists - ohh. .. this one is so juicy . . . VC’s seem so smart not because they are, its because they talk to smart people all day. There is increasing returns economics working here, that the more famous VC’s gets to talk to smarter entrepreneurs & researchers which in turn helps them sound smart and thus attract even smarter people to work with. Why do you think VC’s usually meet with EVERY companies in the space before making an investment? Why do you think sometimes they schedule it all in the same week? (so they can play off questions from one entrepreneur to another) The best VC’s can take all the data and all the perspectives they gather and formulate a unique perspective (I gotta give credit where its due). THAT is what I look for in a VC . . . plus someone that’ll give credit to how they sound so smart.

3. entrepreneurs/PM’s - . . . I have to fess up . . . no idea or product is genuingly unique. We all stand on the shoulder of giants. Thank god we get paid (equity or cash) for execution, otherwise all we do would be regurgitate, rinse, and repeat . . . plus the execution makes us feel superior to all other people we diss. (source of Cranky PM indignation?)

4. bloggers - I’m just regurgitating something Cranky PM brought up . . . the noise echo ratio of the blogosphere just went up another notch due to my regurgitation.

As much as everyone rags on Google for their shot gun approach to product development, Google is actually showing signs of growing up and building a much needed product development/maketing process & infrastructure. Business Week spend some time pointing out google’s questionable track record. John Battelle has also pointed out multiple times in the past that Google needs to do a better job of integrating product development, management, and marketing - or so he calls it “product marketing.”

Google circa 2000 approach - build it they will come . . . cause we are google and you love us not being evil . . . we in fact hate marketing
(I heard they let go an interim VP of Marketing back in the day for recommending a TV compaign)

Google circa 2003 approach - leverage the huge amount of search traffic to send traffic to new products . . . but I still wont pick up a phone call or answer an email to market the damn thing cause you come to me. . . I’m google

Google Checkout 2006 approach -

1) code complete doesnt mean time to launch, infact build some business momentum first before launching
2) get some named accounts to proof value propsition as well as write some marketing case studies before opening up the kimono
3) leverage google traffic, userbase, strategy etc
4) oh ya, make sure the damn thing scales first

In fact, it looked to me that Google Checkout was incredibly well coordinated from PR, branding, business development, release, strategy, and general marketing perspective. I think a few things has contributed to this. From what I know, the Google Checkout team is not just bunch of 20 some odd year olds, it is actually one of the older (read more experienced) team at Google with people who learned product management/marketing at a diverse set of companies before landing at google. Also, a friend told me that Google hired a consultant who used to be an executive at eBay to revamp it Product Development Life Cycle and model it similar to eBay’s clockwork like process. (Ironic isnt it? that as eBay tries to losen up its processes, Google is doing the opposite). If Google checkout becomes successful, it will be held up at Google as a best practice example of how to manage the PDLC. All the more headaches for the rest of the valley. . . smart, innovative, risk seeking, AND process driven . . . now they just have to work on that ego thing . . .