Social Media Group Maggie Fox:
“I’m going to cut straight to the chase on this one. There are, of
course, thousands of different shapes and forms that communities can
take, so making blanket statements is (as with most things) not
advisable. However there is one primary ROI that all firms who do this
well experience, regardless of whether they are leveraging the
collective knowledge of their loyalists, users, vendors or employees: competitive advantage through accelerated innovation.”

Hat Tip: Paul Dunay

Here are 3 artifacts:
1. Joel on Hello from Seattle (Microsoft Zune)
2. Apple Ipod in flames
3. Video ad bashing Microsoft

Use any search engine
with the exact phrase: Why I hate ___________ (fill in the blank with a least
or most favorite software
development company) and you find hundreds, even thousands of passionate
detractors in the results. 

Do it again substituting
love for hate in the search phrase. Guess what? You get hundreds, even
thousands of SERPs of passionate evangelists for the same product.

It’s like hating the Yankees
because they’re good. Or loving them because they’re good. Either way, people
will generally identify with a brand positively or negatively. It’s a way of
bolstering personal identity. How can something be good if there isn’t
something bad to compare with it? 

The Big Dogs seem to be
easy targets, and there’s natural tendency to root for the Underdog. But these
are purely emotional responses. Often the reality is the reverse of popular
perception. Here’s an enlightening example in a Wired
commentary about Gates vs. Jobs. Things may have changed since this post,
but you get the point.

Compare products too.
Both companies have created market winners and losers. Apple has the iPhone,
which is an exceptional hand-held device. They also created  Apple TV. There’s Windows Vista, and there’s Halo3.

Ultimately, the consumer
will determine the success of the product regardless of hype, or attempts to
predict future behavior. It’s like baseball players batting averages. Success
can be measured against perfection as a concept, even though it’s unattainable. 

What’s really
interesting is that the crossover between competing industry giants is blurring
the lines between their differences. For example:

·        
Do you charge
your iPod with a Windows-based machine?

·        
Do you use Word
on your MacBook Pro to create documents?

      .    Are you running
dual operating systems with a Parallels desktop on a Mac Pro with Intel Xeon
processors? 

Many do. It just makes
good business sense to use what is available with proven tools that work best,
and most everyone uses a Microsoft product daily, whether they love it or hate
it.

I have friends and
acquaintances at most of the major software development companies. They are
smart, well
intentioned and focused on doing the best for their product. And that’s the
bottom line.

I love Paul Graham’sessays. Although longer than my usual reading allows the best way to read them is to star them on my google reader and read them later on the plane when I have downtime. He’s got a latest piece on the future of web startups. Dave’s got a summary but I think the main point is the “barrier to entry” is so much lower (costs, risk, etc.) that there will be a lot more startups than before. I have 3 important but different points than the ones either Dave or HipMojomake.

1. When I was at Cisco (1995+) we used to joke that Cisco purchased companies more often than we went grocery shopping. The times were good. You could buy companies with stock (Cisco’s stock was a huge premium then) and not have to worry about it. Not so any more. More companies are acquiring in mostly cash and some stock. Why? Accounting rules. Its just not possible for a lot of companies (save Google and a few others) to acquire companies for cash consistently. FAS 128 makes it difficult.

Previously, companies were required to amortize
goodwill over a long time (40 years), and this non-cash expense reduced
reported (GAAP) EPS. FAS 142 eliminates amortization and institutes an
annual impairment test. This article will briefly review the potential
impact of these changes on reported earnings. We expect the changes to
start impacting earnings by the end of 2001. 

2. The BIGGEST hurdle in doing acquisitions is the “integration” the day after. If as Paul suggests lot more companies get acquired, this creates a HUGE strain on the acquiring company. Regardless of whether you are acquiring 2 person startup or a 2000 person organization, the integration is tedious, complex and often time consuming.

3. Sourcing and having a acquisition “champion and owner“. The real power of the acquisition is after the combined entity has something valuable together (as in 1+1=10). Even at Mercury we did about 7+ (2 were extremely successful) acquisitions in 3 years and getting an executive to “own and champion” the acquisition is difficult. Not because they don’t want to do it, but more because they have a day job. Keeping the role of champion outside of the organization that wants this acquisition done is also a problem.

So, I agree the costs of starting a company are lower now, but also think if you do get a downturn the “opportunity costs” for any individual working for a $200K job at Google versus $60K + bread + water is too high. People will go back to the “safe bet” when the market does (and it will) turn for the worse.

I agree though that these are best times for entrepreneurs.

Happened to catch the front end of this program on way to lunch. Andy Carvin, NPR’s senior strategist for online communities, describes
how online social networking sites are taking off among adults.

He talks about Twitter, MySpace and Facebook.

Smaller niche networks are also discussed.

Worth a listen. (36:55 minutes).

If you ask most vendors of white label social networking products, about why they are getting so much interest from Fortune 1000 and several companies wanting to “build their own customer community” here’s the top 3 reasons I get:

1. There are board level discussions about how to tap into the “mojo” of Facebook and other networks. I know there are others that sayits because companies really want to have conversations with customers, but there are very few enlightened executives who really want to do that. Most of them really heard it from their kids and want to figure out how to leverage it.

2. There is fear of “being left out by the competition”. If our biggest competition is there, we should also be there.

3. Its become very EASY. Which is the biggest point I have to be very underwhelmed by Marc’s post on why Social Networking is not the Geocities of yesterday.

Please tell me that someone who is as visionary as Marc is NOT telling executives at large companies that a set of features separates the new thing from the old thing. That’s like saying cars are like horse carriages but with windshield, a steering wheel, etc.

a) It was extremely painful, cumbersome and boring to be “blogging” or updating your pages on Geocities. Not so with facebook.

b) My Geocities “page” was 90% text and 10% stolen (with attribution) images from the web. Facebook – photos, videos etc. – More entertaining and engaging with rich media and content.

c) Much as many people bemoan the state of broadband in US, you cannot argue that its been the main reason for the adoption of YouTube, Flickr, etc.

These are the reasons people like the new “social networks” to the old “communities”. Not a list of features that read like a speeds and feeds guide on the back of a router manual.

Techmeme posted a leaderboard of blogs that showup most frequently on it. Dave says that’s caused people to try and game it. Many people apparently agree with that point of view. Some disagree.

Most business communities that are good have a rewards system. There are very few “doing it for the good of the word” business communities. Regardless of what people say.

Rewards systems exist for a reason – to drive and incent behavior that the community owner perceives to be in their best interest. Not sure I can say the same of Gabe who did owns Techmeme. His reasons are explained here.

When you have a rewards systems you will find a few people try to game it. But the community (if its strong enough) realizes this and has enough checks and balances to neutralize those.

Sometimes the intention is not to game, but to introduce conversation that is controversial. That’s what Jason I think did. That’s a tactic  that generates interest and traffic. But does not mean you have to censor it. If you dont want to read it go elsewhere. Or start your own conversation.

There has been enough talkedabout eBay’s $1 Billion writedown of Skype. Multiple perspectives have been provided by various experts.

Here’s the top 3 things I took away from this:
1. Google has the patience for the business model to be formed Ebay DOES NOT. There is a possible business model for Skype (which BTW is making $300+ Million annually), beyond the simple Skype Out and Skype In. But, eBay’s management team is too short sighted (read quarterly numbers driven) to have the patience to focus enough energy, time and effort on it. While many analystsand every other so called expert has been clamouring on about  how Google’s YouTube acquisition is working out, there’s no sense of impatience from Google.

2. Google has time on its side, eBay does not. There’s a high growth business that’s rising all the other boats. eBay does not have that luxury. Its core business are in much lower growth modes.

3. The value of NOT providing wall street with guidance is more apparent here.
I was pleased to see both Google Transit’s graduation and YouTube’s announcement that U of Calwill be putting their lectures on the video site. As Google thinks – I have a new product.

How are you going to make money? Dont know and right now dont care. Maybe YouTube will start to charge users who want the lectures online and share 60% of that revenue with U of Cal (who are getting something for nothing at all. Or maybe the transit authorities will pay Google to put their routes by default and offer their users 20% off. Transit authorities get more passengers and Users benefit with the discount. Google makes money either ways.

Google does not care because they have no reason to worry about Q3 numbers or Q4 guidance. EBay does.

What do you think?

Update (9/6): Paul Monica discusses Google / YouTube a year later at CNNFN. Some relevant notes:

Despite YouTube’s formidable market share lead over other established
online video sites such as Metacafe, Break.com, Heavy and Dailymotion,
even more challengers have cropped up to battle YouTube, many focusing
on niche interests. Will Ferrell has contributed his talents to online
comedy site FunnyorDie.com while Harry Shearer of “This is Spinal Tap!” and “The Simpsons” fame is a main creative force behind MyDamnChannel. There’s even a YouTube-esque site for the more pious online video viewer called GodTube.

Online video advertising is still a tiny fraction of the overall ad market but it is expected to grow at a healthy clip the next few years.

Still, one problem for advertisers is that while the explosion of
online video has created a vast amount of content, much of it has
little, if any potential value to them.

“The business models in online video are currently
upside down. It’s a terrible business to be in right now,” said Ashwin
Navin, co-founder and president of BitTorrent, a company that runs a popular peer-to-peer file sharing service for videos and other content.

He said that unless more online video companies
adopt peer-to-peer networks like his to reduce bandwidth costs, online
video will be “unprofitable for many publishers.”

Opting out
of opting in. 

Vestigial email and alerts accumulating in a well organized
but completely ignored inbox hierarchy?

Time to walk-the-walk with some housecleaning, and put the
slow-to-adopt on notice. Things are reaching critical mass. Time to evolve or
move on down the road. 

·        
E-mail, Ezines, Newsletters & Alerts: Opt out.

1.   
Get a feed if still interested in the content.

2.   
No feed available. Goodbye. It’s tough love.

o  
Marketing Sherpa
stays.

o  
Surprisingly, Adobe Edge
Newsletter is going . . .(tough call)

o  
Absolute Write.
Adieu.

o  
Word of the
Day: Perdure.

o  
Goodbye Facebook alerts. Hello Facebook feed.

o  
Cricket
Highlights: It’s a bowler!

o  
Daily Gadget, where’d you come from? Welp, cya!

o  
Signature
Hardware: Gone down the drain. (Beyond spam, imagine all of the trees saved
by using online catalogs.)

Email is still a killer app., especially for personal and business communication, but
inboxes clogged with ancient opt-ins being redirected to the trash doesn’t do
anything to improve the situation.  

This is a very democratic process. By opting out, you are
voting on content you will receive, and sending a message to the content
provider that (if they’re paying attention) they are losing market share
delivering content this way.

The
Bottom Line: If it’s not in the feed reader, who has time for it?

Caught this one on Bill
Hartzer. According to a survey by Dow Jones VentureOne and Ernst &
Young LLP, venture capitalists are seeking to tap into new markets.

Global deals having to do with Web 2.0 / Social
Media are up a 14% in the first half of 2007. Other notable numbers and trends
for the 1^st half of 2007 include: 

·        
$465 Million invested in companies in the US

·        
New England may be emerging as the new Web 2.0 /
Social Media Hotspot

·        
$464.2 million into 101 deals worldwide in the
1st half of 2007
(highest 6 month total & more than 7% compared to 1^st half of
2006)

·        
Web 2.0/Social Media deals climbed 14% worldwide

·        
$52 million was used in 20 European deals

·        
Israeli companies raised US$15 million in five
deals

·        
United Kingdom had the most investor activity
with a seven deals accounting for US$22 million

·        
Most of Web 2.0 / Social Media deals focused on
“Enterprise 2.0″ using Web 2.0 technologies to improve business functions

·        
U.S. dominates the Web 2.0 market

        ·        
China posted just nine Web 2.0 deals, accounting
for US$41 million in investment 

The investment figures
reported are “based on aggregate findings of VentureOne’s proprietary research.
This data was collected by surveying professional venture capital firms,
through in-depth interviews with company CEOs and CFOs, and from secondary
sources.

The Bottom Line: Money Talks!

This
is exciting news! John Jantsch at Duct Tape Marketing is launching the Coaching
Excellence Series with Guy Kawasaki,
John Battelle and Michael Gerber.

These are live
telesessions about growing
a business, discovering dreams, creating rich customer experiences, Web 2.0
and more in a controlled Q&A interview. Archives will be available for
podcast. 

Future interviewees
include David Allen, Dr Ivan Misner, Tim Ferris and Seth Godin. I just signed up to join
in the conversation.