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Are you racing on skis or in a car? May 29, 2010

Posted by bernardlunn in Uncategorized.
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One of my ski racing heroes retired from skiing to try car racing. The theory was that he understood speed and how to compete.

The other race car competitors asked him to stop. “You are dangerous” they told him.

The problem was he was taking what had made him a great ski racer and applied that to car racing.

In a ski race, when he approached a turn going too fast, he could make the turn by a huge exercise of will and determination. Straining every muscle to the limit, he usually found that there was just a little bit more when needed.

That is what made him a great ski racer.

But when he applied that lesson to car racing, the tyres did not obey his will. They had limits of adhesion. And there was nothing he could do about it.

Crash!!

How does this apply to startup life?

A wise investor said about somebody, “he is a classic entrepreneur. He thinks he can walk through walls. That is great, but I hope he will listen”.

There are times when you can walk through walls. The wall is thin and you are tough. “Where there is will there is a way”.

There are other walls that will never yield and just give you bruises
and a headache.

Enterprise markets are like ski racing. The sales guys can walk through most walls. Consumer markets and SaaS are like car racing. No exercise of will can counteract wrong pricing or lousy user experience.

The great car racers know they are part of a team, like a surgeon in the operating room. “I need to go a bit quicker into that last S bend. What can we do?” The team looks at changes to tyres, steering or
whatever.

Facebook Could Still Pull A Great Result Out Of This Mess May 26, 2010

Posted by bernardlunn in Uncategorized.
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The commentary that Facebook is in a deep mess gets increasingly intense. Harvard Business Review knows a thing or two about business strategy. Whether or not you agree with Bruce Nussbaum’s opinion, you can be sure that it is influential. We also see somebody like Stowe Boyd, a social media pioneer and hitherto Facebook fan agreeing with Nussbaum. His line:

“strip-mining user’s social relationships will not work. Users will reject this as an affront.”

I am sure that Zuckerberg and team have a ton of unsolicited advice. Here is mine to add to the pile. Hopefully this is more than “you messed up!” I am offering a way out of the mess.

3 basic steps:

1. Understand the strategic error that got you into this mess. Stop looking for minor, incremental fixes. Or, as the old saying goes, “when you are in a hole, stop digging”.

2. Come up with a new strategy that aligns with user needs and a big untapped revenue opportunity.

3. Execute on the new strategy

The strategic error? It is an old one. Copying a competitor is usually a bad move. Twitter envy got Facebook into this mess. Facebook had a huge asset – the trust of millions. They blew that trust to chase a pipedream from a competitor that was a tiny fraction of their size and that is not even making money!

Facebook should have stuck with privacy. This is not complicated. Facebook is a new form of communication. It adds to existing forms such as ‘phone, email and texting. Those are all private by default (let’s leave hackers and snoopers out of this for now). By default, people expect communication to be private. When they want to go public they go to media. Blogging and tweeting make us all into micro-media-moguls. But that is media and that is different.

Why did Facebook dump privacy? Because they could not see how to monetize it. You cannot sell ads to people on a private phone call or when they are on email (sure Google does this in Gmail, but it is not effective). The only way to do it is by “strip-mining user’s social relationships” and that gets backlash.

But that is DRIVING WITH YOUR EYE IN THE REAR VIEW MIRROR. Pushing stuff to consumers is the old Madison Avenue game. Sophisticated push marketing is still push marketing. The Internet is moving us to to a pull model.

FACEBOOK COULD TOTALLY DOMINATE PULL MARKETING AND MAKE $ BILLIONS.

They have 500 million people who trust them. Err, strikethrough. They HAD 500 million people who trusted them. But they can get that trust back if they make three statements:

1. Sorry. No, really sorry. No clever PR fluff. Really, really sorry. Any crisis manager knows it has to be sincere and simple.

2. We are now 100% private by default. Anything you want to make public you OPT IN to do that. How hard is that?

3. Here is how you get to benefit by making some stuff public. This is where it gets interesting. Facebook has been saying “live in public, because that is what makes us social, blah, blah and oh by the way that will make me insanely rich, thanks suckers”. Now they say “here is our public option. Use it to become rich and famous. Use it to save money”.

In other words – GET REAL AND SHOW ME THE MONEY.

As an intermediary you have to represent one side or the other. And a media firm is an intermediary. Traditionally, media firms have represented the seller – that is called advertising.

Why have they not represented the buyer? Because sellers were concentrated and buyers were dispersed. You could not get the buyers together to take an action. But the Internet changed that. In fact Facebook did more than any other firm to change that.

Sounds radical? Maybe. But ask this simple question. If you could represent 500 million people or 5,000 vendors, which would you do? The 500 million have way more clout.

Nor is this an academic exercise. Just ask the ecommerce firms that are raking it in by aggregating consumers for flash sales or coupons.

But it is not just about group buying. Almost all those 500 million also want to get rich and famous. Particularly when they leave college with huge debts. Give them a way to sell music or code or designs or jewelry or expertise or resumes or whatever. Yep, do some good for the world and economic justice at the same time. Zuckerberg could be not just insanely rich but also revered/respected by millions of people that have made money through Facebook.

Why I Don’t Like Facebook May 22, 2010

Posted by bernardlunn in social networks.
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The media frenzy about Facebook privacy has reached a ridiculous stage. It started with a backlash against Facebook. Then just this week we see tech blog A-listers start the backlash against the backlash. I have even seen a backlash against the backlash against the backlash (which means “Facebook messed up”).

I have never been a Facebook fan. My writing has been consistent for years on this score. So now that it is a headline story, I needed to think more deeply why I don’t like Facebook. There are three things that bug me at at visceral level.

1. Facebook represents a really old-fashioned and cynical Madison Avenue view that you can never underestimate the stupidity of consumers. This is such a wrong view and so totally counter to the Internet which empowers everybody in deep and meaningful ways. What upsets me about the Silicon Valley consensus is that this view seems to go deep. That is so far from the what has made Silicon Valley so great. The view seems to be that “we are smart enough to figure out Facebook privacy settings but the masses don’t care, this will blow over, the 500 million plus users will be oblivious”. That is just yech! It is Brave New World come to life. Except that it won’t come to life. People are NOT sheep. Pre-Internet, people might not have had access to the data to be informed. All the elites need to understand this: the toothpaste is out of the tube. Or, as the Who sang “won’t get fooled again“.

2. If you preach living in public, you need to live in public. The stories about Mark Zuckerberg and ConnectU as well as old text messages indicating a lack of respect for users are “yellow press journalism”. But the Valley elite who say “that is not fair” miss the point. The old standard that many people grew up with was, “before taking this action, would you be happy to have this story on the front page of the Times?”. That is a higher standard than a legal standard. Many people may say “that is unreasonable, I am a private person”. OK, but if you say “live in public, so I can make money from that” you need to live by that standard.

3. Their mission is so far-reaching that their leaders need to work to a different standard. Think about the generational missions:

a) Microsoft: a PC in every home/office

b) Google: organizing the world’s information

c) Facebook: owning your personal communication.

That needs leadership that everybody can trust in the deepest sense. It is unclear who can provide that leadership. But Facebook has clearly not lived up to that standard.

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