All New Horsemen

Erik Schmidt got some attention at the All Things Digital conference naming new horsemen in the tech industry.  The old horsemen were commonly listed as Microsoft, Intel, Cisco, Dell.  Schmidt rather self congratulatorily named Google,  Amazon, Facebook and Apple as the new four.  Sure things are changing, but a completely new field of horsemen, really? 

What is it with the horsemen anyway?  One must wonder how we got onto the horsemen thing in tech, it seems like we would want to stay as far away as possible from an allegory rooted in conquest, war, famine and death.  If you have some time to kill, check out the Wikipedia entry for the Four Horsemen of the Apocalypse, for a not so brief introduction to the idea of horsemen.

Is there a new reality in tech and if so is this it?

With the possible exception of Dell, which specialized in advanced supply chain management, the old four developed technology and sold it to individuals and businesses and those customers employed the technology to achieve their ends.  The old horsemen are in fact still in business, and will be for some time.  IBM may not have liked being left off of the old list, but they have done pretty well for themselves in the last decade with their stock up 50% in the last decade compared to losses for the others.

With the possible exception of Apple, the new four don’t sell technology at all.  I suspect they are often thought of as technology companies because of their use of the Internet in their business models.  The wholesale switch is notable, and mostly for Microsoft.  Indeed, Microsoft has not been performing well on the stock market over the last decade with a drop of over 50% while all of the others are up and Apple is up a whole bunch.

These new horsemen are going to drive the delivery of a new kind of computing services. Even if this shift only turns out to be half as big as Mr. Schmidt predicts, it is going to have a profound impact on how technology is sold.  This is commonly referred to today as the migration to the cloud, and is so overhyped that often we forget to stop and think about what that actually means. 

First a review, technology resellers used to make money marking up hardware and shrink wrapped software.  Then they made money adding integration and support services to the sale of hardware and software, and next they will make money delivering innovation.  Here are some examples of this phenomenon:

• DropBox (www.dropbox.com) is a file system in the cloud.  You can get to your files from any device.  It is Amazon’s infrastructure on the back end, but no one has to know that.
• WordPress or SquareSpace (www.wordpress.com; www.squarespace.com ) are content management systems in the cloud.  Anyone can publish a website or blog on these sites and all of the hosing is handled.  Although one step removed, these companies rely on Google for indexing and discovery.  Google is also seeding the next wave of these companies with Picasa and Google voice. These may seem like birds of a different feather, but before you say so think about searching images or audio files.  Google’s partners make money by helping their clients manage content and show up online in the right places.
• Security is making sure content does not show up in the wrong places like when credit card information is stolen, or weapons system blueprints land in Peking.  Facebook has designs on knowing who you are and where you are and (soon) what you buy and what you have access to.  Making sure the keys to the kingdom, your keys that is, remain in your own control is important and will be big business.  Emerging in this field are upstarts like Reputation.com and Klout.com, and established firms like Symantec.

Before you think that this blog post has gone off of the rails, let me state plainly that I am not proposing DropBox, WordPress, SquareSpace, Reputation.com, and Klout.com as services that partners can mark up and resell.  I am proposing that these are the new channel partners and that they exist in a sympathetic ecosystem with the new horsemen.

These forward thinking channel partners do not think of themselves as channel partners.  They think of themselves as the inventors of a new wave of services.  Nevertheless, they are channel partners because they make money packaging new technology into services that add value to consumers and business.

Arrange Your Performance Measures in a Stack

Just as all sales teams have top performers, all channel partner programs have top performing partners.  Every sales manager and channel chief strives to figure out what the top performers are doing and how those practices can be shared with others.  The top 20 are already producing 80 percent of the results – so helping the next 10 perform like the top 20 will move the revenue needle – and helping the bottom 10?  Wow!  Transferring best practices is tricky business however, so I propose that first the marketing performance measures should be arranged in a three layer stack.  This methodology borrows some terminology from the OSI Model in computer science and delivers many of the benefits of the divide and conquer mindset of engineers. By breaking down the most effective marketing initiatives into these three layers, the learning can be more easily packaged and transferred.  With a little effort we could probably expand this to seven layers, but we would not want to threaten the CS types!

In addition, this methodology can also be applied to figure out underperforming campaigns.  All three of the layers must function properly in order for the campaign to work.  It is important to remember that a failing campaign can have properly functioning lower levels, and may not need to be discarded entirely.  This approach can also be used to refine cost optimizations.  Changes to reduce budget can sometimes dramatically impact performance and cause an entire marketing effort’s value to be challenged.  By evaluating the performance on each layer of the stack the impact of such adjustments can be truly understood. 

Like the OSI Model, our stack is oriented hierarchically with the most fundamental layer at the bottom. 

Application Layer: Message Effectiveness

Understanding the impact of the message or the campaign can only be accomplished after knowing that the first two layers have been satisfied.  The effectiveness should be measured against landed messages, not the overall population or even the targeted and prioritized population.  Once we are confident that the first two layers are functioning properly, we can swap out messages to test for better performance.

Transport Layer: Landing the Message

Delivering the message is difficult and time consuming.  Sometimes good targeting can raise the level of difficulty.  Being able to measure how many times the message landed is essential and must be separated from measuring the impact of the message.  This can be meetings, conversations, or even click throughs.  The investment in each message is critical and by properly targeting, the investment – which should also mean quality -- can be increased.  Higher quality delivery should increase performance.

Physical Layer: Picking the Targets

Since we spend our time managing channel partner relationships for our clients, we see the value of heavy investment in proper targeting first hand every day.  Time spent managing the wrong relationships is time (and money) not spent on the right ones, so we advocate for taking the time to target properly before launching a partner marketing effort.  Even after rigorous work narrowing the target population, prioritization should be applied so the highest value targets are pursued first.

Some would argue that proven marketing programs do not require this layered approach to measurement and they do have a point.  There are many demands on a channel partner marketing team and spending time fixing things that are not broken may not be the best investment of resources.  However, a great deal can be learned when dissecting effective campaigns and that learning can be applied to fix other campaigns, or to make it easier to bring new campaigns to life.  And having a clearer understanding the underperforming campaigns has obvious benefits.  We all spend a good deal of energy thinking about how well our partner marketing efforts are performing.  By deploying a layered measurement strategy we can capture best practices in a repeatable context and dig into the root causes for underperforming campaigns.

The Third Wave of Partnering

Thirty years ago the PC revolution spawned a significant number of companies that today we call “the channel”.  These companies resold computers, parts and pieces, software, and expertise.  Since no company could reach the entire market with an internal sales staff, the millions of people in the channel built the big technology companies like Microsoft, Intel, HP, and Cisco.   These companies have experienced extraordinary change as the decades have passed. 

The first wave of the channel was driven by the mark up associated with selling retail, and it ended about fifteen years ago.  It was replaced by the opportunity to sell services.  This second wave started with simple network administration services and grew to the full complement of services we have today.  The big vendors then got into the game.  Lead by IBM as it recreated itself as a services company in the ‘90s and now generates over half of its revenue from services.  In the last few years, HP bought EDS for $14 billion in 2008, Dell bought Perot Systems for $4 billion in 2009, and Xerox bought ACS for $6 billion in 2010 making the services business – very big business indeed. 

The service offerings of these large firms include everything imaginable and are sometimes easy to visualize: Xerox for example sells document management services instead of copy machines.  And other times incredibly complex: like EMC’s high availability enterprise network attached storage in the cloud.  We are watching big iron make its comeback as each of these big companies builds monstrous data centers and offers a cloud solution for everything.  Wasted processor cycles and storage capacity are being wrung out of these systems and IT labor is being used more efficiently driving down the incremental cost of computing quite rapidly.  Enterprise computing budget line items that used to be over $1 million now seem to cost $50,000 and those that used to cost $10,000 now start at $15 per month per user.  All of this disruption will present many opportunities for add on services – which is the hallmark of the second wave – so the companies in the channel will thrive in the cloud.

If that is not enough excitement for you, the third wave is forming.  At the risk of using another already overused word, let’s call this the platform wave.  There may or may not be a better word, but at least we are not calling it the “Cloud Wave”. To review, in the first wave channel partners marked up hardware or software products, in the second wave channel partners charged for their time/expertise (still a big business), and in the third wave channel partners are part of a platform ecosystem.  Sure, this has been part of the Microsoft strategy for 30 years. Microsoft pioneered the transition from big proprietary platform systems offered by IBM, HP, and DEC in mainframes, to their own small proprietary platform system:  Windows.  Along the way, Microsoft has grown its partner ecosystem to over 600,000 partner companies that have millions of employees worldwide implementing, customizing and maintaining solutions built on the Microsoft platform.  So it is tempting to say that there is nothing new here.  However, one dominant platform is one thing, a dozen is something different all together.

The new platform builders look different because their consumer focus can obscure the view.  Is Google search or a platform, is Facebook social or a platform, is Apple a shiny device maker or a platform, is Amazon a giant online department store or a platform?  They are all of the above, and even if there is a small chance search, social, devices, and shopping could coexist; there is no chance all of these platforms can.  Both Facebook and Amazon made significant announcements last week with the Open Compute Project and Amazon Cloud Drive respectively.  Google, with Docs and Gmail have been in this space for a while, as has Apple with Mobile me, and Microsoft with their rebranded Office Live services and Azure.  Salesforce.com, Oracle, SAP, HP, and Dell are also developing cloud solutions.    

As stated above, the second wave (services) is likely to get bigger as these platforms deploy because companies are going to need more help than ever to take advantage of all of the new offerings.  So what exactly is the third "platform" wave? 

Wikipedia defines a computing platform as:  some sort of hardware architecture and software framework (including application frameworks) that allows software to run.

The third wave is the new products built on top of the platforms. There have always been products built on platforms (think MS Office on Windows, or Garage Band on OS X), but this era is different because the platforms are not machine dependent (i.e. are accessed by devices ranging from smart phones to set top boxes), and there are so many products.  If you still think this is the same old thing, consider Dropbox, Evernote, Zotero, or SpotCloud, or even a Wordpress server running on Amazon’s EC2. These new applications run on the platforms, and also enable other new applications – Zotero can be made more portable by storing files in Dropbox. 

At present there are over 380,000 active apps in the Apple App Store and over 250,000 in the Android Market.  Amazon does not publish numbers, but the growth of its EC2 and other cloud offerings is pervasive.  The opportunity to carve off a small specialized piece of this new marketplace is attracting many new entrants to the channel – and converting a sizable number of existing channel partners.

In the months ahead, channel partners will be spending considerable energy evaluating the merits of the platforms offered by these and other companies and success or failure will ride where they choose to make their investments.  

The Phone is Dead... Again

Last month there was this interesting article in the New York Times about how we are using the telephone differently now.  For those of us in the business to business marketing industry there are several choice one liners in the article including "The telephone has a very rude propensity to interrupt people." and “I remember when I was growing up, the rule was, ‘Don’t call anyone after 10 p.m.,’ ” Mr. Adler said. “Now the rule is, ‘Don’t call anyone. Ever.’ ”

This is particularly interesting to us at CSG because a very big part of what we do is talk to our client's channel partners: on the phone.  As the article points out, people are more sensitive to the interrupting nature of the phone call, so we do this with ever increasing number of our calls scheduled in advance through other means.

Now in our 14th year of doing a majority of our business over the telephone, we have seen the predictions of the end of the telephone before.  Here are a few of them:

• The email killed the phone
• The web killed the phone
• Cell Phones killed the phone (AT&T’s service is so bad that people just stopped calling)
• Skype killed the phone (Skype is pretty cool and will continue to take over)
• Social Media killed the phone (Really? I don't buy it)

The way we use the phone is indeed changing. However, I spend more time on the phone now than ever before.  Just about all of the calls are scheduled on my calendar as meetings for a specific time and duration. In many cases the phone calls include more than one other party, and often are aided by shared online workspaces or presentations.  These calls are much more productive than the old calls, and even when all of the participants live in my city they consume much less time than in person meetings.  

There are many reasons this is happening.  Here are a few examples:

• People are more sensitive to interruptions 
• People seem less likely to meet face to face
• The conference bridge brings in multiple people
• Desktop sharing creates a rich experience

In the middle of all of this is the phone.  I guess the reports of the phone's death have been somewhat exaggerated.

The New Microsoft

The departures at Microsoft have hit a point where local journalists are starting to produce lists.  Nick Eaton at the PI has this great list with dozens of links, and Sharon Pian Chan at the Times has another one here.  Whether or not there is a wizard behind the curtain with some kind of a grand plan, change is on its way.  This kind of turnover guarantees that a new Microsoft is being formed.  A company with 90,000 employees will never be a blank canvas, but new ideas must be working their way into places that have not seen new ideas for a while.

Into this mix we add Paul Allen with his memoir out this week and a less than flattering account of early scheming by Bill Gates.  This will keep Microsoft in the news for a while and start a whole new avalanche of What Microsoft Should Do articles.  This does not take much prodding however.  People have been telling Microsoft what to do for so long that advice sounds like the din of the cars going by on HWY 520.  People suggest that they bring back Bill Gates, fire Ballmer, and ask if Microsoft is still relevant so often that if you want to make a suggestion, just get in line.

In an attempt to avoid adding to the cast of advice noisemakers, I am going to make a prediction or three about Microsoft’s future.  Sure you could say that these predictions are thinly veiled suggestions – after all, the answers on Jeopardy are really the questions.  Either way here are three thoughts.

The Enterprise

Some think this is the name of the ship on Star Trek, but that would be the “Starship Enterprise”.  Others may think of the first nuclear powered aircraft carrier, but that would be the “USS Enterprise”.  Those of us in technology marketing think of the Enterprise as bigger businesses who still control 72% of all technology spending.  A very large part of that spending still goes to Microsoft.  Microsoft knows the Enterprise and even without much innovation - it will take decades to blow that lead.  They cannot coast forever, but I think it is a lot like the USS Enterprise which has to refuel its reactors every 20 years.

Partners

Most of Microsoft’s success in the Enterprise is a result of its ability to sell through channel partners.  No one has the partner reach that Microsoft has with its over 600,000 channel partners.  These companies, ranging from big consultancies like Accenture to Joe’s Computers next door, make their living selling Microsoft’s products and the services required to keep them going.  Salesforce.com has been spending 50% of its revenue for ten years trying to make a dent in Microsoft’s dominance in this area.  Admittedly Salesforce.com’s $1 billion in revenue is a dent.  But as soon as Salesforce.com stops spending over $700 million in sales and marketing every year – then what?

Security

Microsoft knows more about security than anyone.  Microsoft has legions of very smart people evaluating and responding to attacks on Windows and releasing patches every week.  Right now consumers willingly trade their privacy for “free” services.  Consumers don’t care if Google reads their emails and Facebook analyzes their relationships because there has not been security Pearl Harbor yet.  It is coming and when it does, consumers may reconsider.  The galvanizing event does not have to be a municipal power grid take over by terrorists.  It could easily be convictions for treason based on private emails and Facebook updates that consumers thought they deleted, but lived on in the cloud and were accessed by law enforcement and a Committee Against Un-American Activities.  Sound crazy? What about kidnappers, bounty hunters, stalkers, or even paparazzi accessing mobile carrier databases and hunting people by electronic data trail?

Change is on its way at Microsoft and I think many people are going to be surprised.

On the Origin of Marketing Initiatives by Budget Allocation

Marketing is getting better at measuring itself.  The switch from broadcasting messages one to many, to one to one messaging we are often capable now of has made possible granularity we never even dreamed of ten years ago.  At CSG, we have been willing participants in this march and continue to measure everything we can.  We collect dozens of data points on each individual interaction with customers and partners, aggregate the data into campaigns, roll up campaigns into initiatives, and slice and dice and evaluate with the best of them.  However, it is probably a good idea to back away from this mountain of measurement every so often to gain a little bit of perspective. 

We should be asking: What impact does an obsession with measurement have on creativity and new initiatives?  At its root, measuring enables decision making.  The decisions made are usually about budget.  Marketing efforts that turn in good numbers get more budget, and those that do not get killed off.  Every large company marketing department has become an evolutionary machine.  Today’s Darwin would write a book about it and the title would be On the Origin of Marketing Initiatives by Budget Allocation.

In the wrong hands, this trend is more about cost reduction than about innovation.  Lowering costs and increasing efficiency are good things in any part of a business including sales and marketing.  Taking the idea to the extreme however is disastrous.  A company with no marketing would be infinitely efficient – for a quarter or two.  And then dead.  So what can marketing decision makers do to both embrace marketing measurement but avoid the trap of cutting too much?   Here are three ideas:

1. Big Picture Gut Check:  A regular high level review schedule where marketing decisions are evaluated in the context of the overall good of the brand and the enterprise is critical.  These sessions have to be rigorous, but also free flowing enough to allow the introduction of new ideas.  It would be at these sessions where someone should ask – are the good numbers over here the result of moving revenue measurement from over there – or are they actually good numbers?
2. Think Like a Portfolio Manager:  Portfolio theory in financial management balances risk and reward by looking at investments both individually and as a diverse pool of performance metrics.  Removing the lowest return investments and doubling down on the highest performing investments will increase the risk profile and may not even improve the results.  Just like in marketing, the past performance of an investment does not guarantee future results. 
3. KPI Free Zone:  Some CMOs have established KPI Free Zones where experimentation is encouraged and measurement of new initiatives is not tied so dramatically to budget allocation.  This practice reminds me of the Google 20% time – do whatever you want – but be prepared to talk about it at your review.  A healthy competitive culture doesn’t hurt either.

Top performing marketing organizations must use tactics like these to ensure that they are getting the benefit of measuring without going too far and undermining their creative engine.   Clearly our industry has embraced the movement started by Edwards Deming to “expect what you inspect” but we should also be vigilant to ensure that we are not losing in the highly creative part of marketing.  

Who is Hiring the Black Hats?

Ever since David Segal wrote his great piece in the NY Times last month about JC Penney’s black hat antics of SEO, I have been thinking – really?  JC Penney intentionally gaming Google!  There has got to be more to this story.  Danny Sullivan followed up with an insider’s take on it – but I still thought – where is the rest of the story?  The web lit up with all kinds of commentary including this from SearchEngineWatch, and this from SearchMarketingWisdom, who also posted this response from JC Penney with an enthusiastic corporate speak counter argument to the New York Times. 

All of this has contributed immensely to the celebrity status of Matt Cutts, the guy at Google who fights search spam and swiftly pounded JC Penney’s search results into the ground.  The story continued with this good piece on NPR’s On the Media show with Bob Garfield last week.

I think we live in a country where the good guys, the white hats, win in the end.  Who knows, if Libya’s citizens prevail, maybe we live in a world where the bad guys, the black hats, are more readily punished.  In following this saga however, I have still not encountered what I have been looking for as the rest of the story;  who is hiring the black hats?  So I am going to propose this hypothesis:  the black hats exist because the white hats hire them.  It is the laundering of bad behavior through the presumed respectability of the good guys. After all, the US military hires Blackwater (now Xe Services because their reputation got so black they had to abandon their old brand) to do it’s black hat stuff.

We see this from time in our industry.  In the marketing services business we have encountered competitors who produce false reporting – and amazingly they don’t get fired by their clients.  They don’t get fired as long as the reports continue because the good people who hired them need the “results” to keep their budget or their jobs. 

It is a competitive world out there and marketing is getting more and more focussed on measurable results.  It is not hard to imagine a good, well intentioned, marketing services firm getting desperate and going to the bad guys -- just to boost the number -- just this one time.  Then, well, you know the rest of that story.

Maybe our industry needs a black hat amnesty day.  A day that all performance expectations can be re-set so our industry can purge the black hats and get back to doing the work of the good guys.

Loyalty and Achieving X Ray Vision

There is a scene in Daniel Suarez’s book Daemon where one of the main characters hacks into a security network for the video feed and puts it up on his heads up display glasses.  The result is the equivalent of X-Ray vision.  In fact in some ways the result is better than the X-Ray vision we have dreamed of since Superman Comic Books because the feed from the security system may provide better view angles and could include sound.  Technology often produces the futuristic things we imagine in ways we never could have imagined.

We can now deposit checks into our checking accounts by taking pictures of them with our phones.  Our phones can translate for us, navigate for us, and perform many other tasks that not long ago were only comic book dreams.  The pace of this innovation is accelerating with incredible new tools introduced every day.  We have been dreaming about time saving tools that free us from mundane tasks ever since the first home of the future exhibit at the world’s fair. 

Anything helping us buy stuff has to be on the top of the list because commerce is driving this innovation.  Here in the US, we spend $450 billion a year on groceries at 65,000 grocery stores – so I am guessing that even though we are all tired of predictions of refrigerators that make our shopping lists for us – I bet there are many people out there working to build tools to take the pain out of the weekly trip to the grocery store.  Just like with the X-Ray vision in the book, I am guessing the solution will not come from the place we expect.  In fact, I think all of the parts are in place for system that would build my grocery list for me and at the same time increase my loyalty to a brand by 10x.  Very simply it would mine my supermarket loyalty card database and:

1. Suggest my shopping list for me
2. Organize the list by store lay out
3. Suggest things that I don’t usually buy
4. Suggest recipes from the ingredients I usually buy
5. Offer savings…

It is the home of the future system without having to have a PC in my refrigerator and scan every item in my pantry.  Properly executed, I would never shop at another store. 

This same scenario exists in just about every business.  I have to think that the businesses that give back data to their customers and give them the tools to manage that data more effectively will break out of the pack because their customers will be more loyal and they will get a dramatically increased share of their customer’s business.

The Pursuit of Customer Loyalty

I love speaking to groups so yesterday was a great day for me.  The setting was an internal planning meeting for one of our clients, the subject was creating customer loyalty, and the context was customer service.  I speak in front of groups fairly often and this one turned out to be particularly fun because the people were clearly passionate about the subject and were eager to jump into the conversation.  The title of my presentation was Five Assumptions that Drive Loyalty, and when I say assumptions I am talking about assumptions we need to make about the customer.  They are:

• The Customer is Smart
• The Customer is Well Intentioned
• The Customer Values Their Time
• The Customer Has Friends (power)
• The Customer Will Share With Them (will use it)

These assumptions are so obvious that they really don’t need much explaining.  However, they are not that easy to accomplish.  Making your customers wait in line is a clear way to tell them that you think your time is more valuable than theirs – and we all hate waiting in line.  Despite this, no one has figured out how to get hundreds of people onto an airplane without making them wait in line.

During the presentation I was also able to squeeze in two other of my favorite points:

• Customer / vendor relationships can only be in one of two categories (buckets):  “Unbelievably Great” or “There Has To Be A Better Way”.  There is no middle ground.  Any company that accepts the middle ground of “Good Enough” is only deceiving themselves – because their customers are absolutely in the “There Has To Be A Better Way” bucket.
• Companies must find structures for their businesses that naturally promote positive relationships.  Blockbuster’s late fees cause everyone to look for an alternate solution.  It is not that Blockbuster is unjustified in charging the late fees, because clearly they have to get their movies back.  It is that the late fees drive the customers away.  Netflix found a way to build a movie rental business without late fees – and their customers are very loyal as a result.  I suppose their amazing execution also helps.

In the discussion a number of very interesting ideas surfaced.  This of course is the most fun part about getting 150 smart and energetic people into a room – ideas just appear and there is a pretty good chance that no one might have come up such great thoughts sitting alone in a room.  Here are the three ideas I like the most in our conversation:

• Customers are loyal to companies that manage their information well.  In its simplest form this means not making the customer give basic information over and over, but rapidly accelerates to using customer history to improve the experience.  Log on to Amazon.com and you can easily see your entire purchase history, and Amazon.com is also using that data to make recommendations to you about what you might like to purchase next.
• Customers are loyal to companies that trust them.  If you lose one of Netflix’s DVDs, just tell them, and it is no big deal.  I bet many customers find the lost DVDs later and actually return them – even though they do not have to.
• Customers will pay.  Customers are exhausted by poor quality free things and are ready, willing, and able to pay for quality.

We ended the hour talking about the companies that do a great job creating loyalty in their customers.  The list included:  Zappos.com, Netflix, Apple, Amazon.com, and Starbucks.  Don’t be shy about adding to the list.

Matchmakers You Can Trust

Just about any 17 year old American male will tell you that finding a date to the prom is a difficult and humbling experience.  Similarly, employers will tell you that finding a good employee is nearly impossible.  Buyers of IT products and services will echo the sentiment:  It is much harder than one would think to find and procure the technology a business needs to remain competitive.  Ironically, if you talk to the other half of each of these matches you will find quite a different perspective.  The Difference is enough to make you wonder if your grasp on reality is starting to slip away. 

Girls start planning on being asked to the prom 6 months before it even enters the consciousness of boys.  Even in this down economy, four million jobs change hand in the US – every month.  And companies spend millions of dollars trying to find their next customer.  For the past fifteen years the most successful companies on the web have aimed to do the matchmaking in these examples.  Online dating sites like match.com, eharmony.com, and some would say the entire porn industry have set out to capitalize on the first matching challenge.  Monster.com was one of the first Internet companies to buy a Superbowl ad, and Google, Bing, eBay, Amazon.com and now Groupon get paid quite well to connect would be buyers with would be sellers right at the very time the buyer wants to buy.

So successful internet business equals:  find an area where matchmaking needs to be done and have at it.  If you think you are late to the game, think again.  This internet thing is just getting started and there are many more untapped opportunities than tapped ones.  Yes indeed, Classmates.com, Facebook, and Yelp have all been invented already.  However, no one has even started to work to match enterprise technology buyers to enterprise technology sellers.  We all have lists of markets we would like to see better matchmaking tools on the internet.  Doctors to patients, kids to educational tools, scientists to research subjects, and even people to movies as the million dollar Netflix challenge demonstrated are all up for grabs.  For now, let’s focus on enterprise IT match making.

There are many things that stand in the way of solving this problem, but none as big as the lack of trust.  Trust has been eroded between the buyers and sellers of enterprise technology through repeated over promising and under delivering of products and services to the point that even the historically accepted measure of ten times better is no longer sufficient to get a business buyer to make a change and buy something new.  In the technology industry this phenomenon is sometimes labeled vaporware – software that has been promised to customers that does not even exist.  The risks for the buyer are quite large and even larger without vendor trust – and this slows down the adoption of new technology significantly.

Adoption of new technology is the key to increases in productivity and increases in productivity drive our economy and increase our standard of living.  Therefore one of the things standing in the way of our economic recovery is trust.

Successful matchmakers employ three simple tactics to get right at the trust issue:

1. Make money on the success of the match:  A business model built on making the match between technology vendor and technology user, instead of making the sale of technology, aligns the interests of the parties and turns the matchmaker into a trusted advisor.
2. Be transparent about how money is made:  A matchmaker advocating for a particular solution will always be suspected of doing so selfishly.  Full disclosure of how the matchmaker gets paid will drain away this suspicion.
3. Demonstrate deep and wide knowledge:  It is natural to sell what you know and stay away from what you do not know.  Demonstrating a detailed understanding of all of the products in the category will validate the trusted advisor status.

The two most trusted matchmakers in business IT are Accenture and Deloitte.   IBM is a giant in the IT matchmaking business, but is also pushing its own technology.  At one time EDS, Perot Systems, and ACS were on this list -- until they were acquired by HP, Dell, and Xerox -- which changed their motivation from matchmaking to selling their own technology solutions. 

This will be a very interesting area to watch in the years ahead as new companies flood in to fill the trusted matchmaker void created by this consolidation.

Facebook's Deal with the Devil

The Economist last week recalled a vivid description by Rolling Stone of Goldman Sachs:  "a great vampire squid" that likes to stick its "blood funnel" into anything that can make it money.  So given all of the advantages that Facebook has, why would a smart guy like Mark Zuckerberg subject himself to a bleeding by the many tentacled machine of Wall Street?  

Maybe Zuckerberg knows that there are bad guys in the world and bringing in the firm that is the best at aggressively pursuing its own self interest will equip Facebook to fend off the other bad guys.  In essence, a deal with the devil.  Who are the these bad guys?  One of Facebook's biggest shareholders is Digital Sky Technologies (DST), the firm of Alisher Usmanov, a Russian oligarch with ties to Vladimir Putin and Dmitry Medvedev.  Even executives with ten times Zuckerberg's experience would be worried when considering how to control DST.  With Goldman at the table could the dynamics of the relationship between Zuck and the Russians be improved?

If that is not enough incentive, there could be a bigger one right here in the USA.  Goldman Sachs may be good at the things it talks about on its web site, but they really shine when it comes to manipulating our government.  And Facebook needs all the help they can get controlling the US government. Twitter disclosed last week that the government had requested access to data on Julian Assange and people associated with him.  To Twitter's credit they chose to disclose this request to the public.  We can be sure that similar letters were sent to Facebook, Google, and other service providers.  But we did not hear a word about those.

It is a little spooky thinking about government agencies combing through Facebook data, but we can be pretty sure that Facebook's nearly 600 million users, their relationships with other users, and all of the interactions between them must be irresistible to our many law enforcement and counter terrorism groups.   I know that if I had to figure out how to deal with the FBI or CIA, not to mention the SEC,  having Goldman's muscle to back me up would be quite welcome.  

Could Blackwater or Halliburton be next?

Post 272

Well it has been a year and this is my 272nd post.  I set out to write a blog entry every day and even though I came up a few short, I have enjoyed organizing my thoughts and working on my writing in 2010.  

Thinking about why I do what I do, or what I plan to do in the future is unavoidable (for me anyway) as the calendar changes to a new year.  The blog posts I wrote this year were adequate notes to myself about what I was thinking at the time, and the fact that 4,000 other people found my posts interesting enough to read is flattering.  

So what to do in 2011?  I have no plans to become a journalist, so I am not looking for a scoop or to break a story.  I do think I could put more effort into some bigger writing pieces that further organize my thinking into actual arguments.  So in the weeks ahead I am going to pick a few main themes and start to develop them into longer essays that argue a particular point.

Here are some possible subjects based on the number of entries I made this year organized into broad categories:

Tech Marketing (113 entries):  I write a lot about this because my company helps large tech companies with sales and marketing.  I think the changing role of the salesperson is worth spending time thinking about with Google and Facebook on one end of the spectrum because they really have no salespeople, and Salesforce.com on the other end spending 50% of revenue on salespeople.  I don't know how this is going to work out but it sure will be interesting to watch.

New Media (51 entries):  My second most written about topic is new media.  To me New Media is the decline of the newspaper, publishing, and TV we grew up with and the rise of blogging, micro blogging, social media, and streaming media over the Internet.  We live in a very interesting time and the creative destruction of this sector is one of the things that makes it so interesting.

Politics (47 entries):  Next in line is politics - mostly in the US, but invariably overlapping with the rise of China as a world power.  The big question of course is whether or not the US will stay on top and how many wars will we start as we struggle with our identity.

Economics (44 entries): Finally economics.   In the world I want to live in, those that create the most value get the most rewards.  It does not take long to see that right now getting rewarded is often disconnected from value creation.  Will my pollyannaish view of the world find its way into reality, or will Goldman Sachs continue to gobble up everything for themselves?

There is one other subject that I find very interesting and that weaves throughout all of this: demographics.  We often define people in groups and evaluate the relationships between the groups based on our understanding of the average within that group.  This tendency prevents us from seeing the real picture.  The growth rate of a nation's GDP or even the GDP per capita does not tell us very much.  The unemployment rate in the US is around 10% -- but some sectors cannot find enough workers and others have 25% unemployment.  If you are interested in this subject, read this from Foreign Affairs.  Sure there are well over a billion people in China, but half of them are subsistence farmers who do not participate in the economy.  

I am looking forward to digging in on these topics during 2011.  As always, your comments and thoughts are appreciated.

Doctors of Selling

I have written several posts this year on the topic of selling and the future of salespeople.  A good many of the articles involve Google because I think one of the central themes in Google's business is to eliminate the inefficiency of the sales process in general and salespeople in particular.

Clearly the sales process and salespeople are vulnerable.  Salespeople strike out much more often than they make contact -- so much so that a part of sales training is to help salespeople handle the rejection.  If a salesperson only closes one out of ten deals -- the salesperson is not producing value ninety percent of time!  That is a pretty fat target.

On the other hand, if salespeople could close 100% of deals, they would be considered "order takers" and replaced by automation.

Salespeople are purveyors of information.  They help people with problems find the solutions.  Hey, that is the business Google is in - helping people find information.  Could it be that if Google did its job better, anyone looking to buy anything could find that thing without the aid of a salesperson?  For more on this see my post earlier in the year about the Changing Role of the Salesperson.

Enter the paid trusted advisor.  Some will say this is that consultative selling stuff all over again, and maybe so, but either way salespeople as we knew them are on their way out.  They will be replaced by consultants that get paid to advise.  Instead of thinking of this as consultative selling, I prefer to think of it as Doctors of Selling.  The salespeople that survive will be specialists -- just like doctors.  They will be paid for all of their time, and they will differentiate through reputation and brand association.  

Dave Winer and Steve Jobs

Yesterday I wrote about how much respect I had for Keith Richards regard for his heroes -- particularly once most of his contemporaries were worshiping themselves.  On the theme of heroes, and not on my being Keith Richards but rather following his example, here are two of mine:

Dave Winer:  A cantankerous techie who has returned to New York for yet another chapter of his career. If you are not already a follower, there is a pretty good page about him on Wikipedia here.  His blog Scripting, and his podcast Rebooting the News with Jay Rosen are two that I follow, but he has done/is doing so much (see the links on his Scripting blog).  I have never met him, but would thoroughly enjoy a beer and a lively discussion about tech -- particularly on his self removal from the middle of the circle in Silicon Valley to foster the growth of a new circle in NYC.  

Steve Jobs:  I am hardly the first guy to say that Steve Jobs is a hero.  His work over the past 14 years at Apple says alot of it.  Not that market cap is a true indicator of value, but here is a chart of the stock VS the NASDAQ since his return in 1997.

 

I imagine a moment when Steve is looking at prototypes of the iPod Touch, to this day I think it is the most amazing of his amazing machines, sometime in 2006 deciding on the size, what to have in or out, the fine points of the form factor...  Mine lasted for three years, the third of which I was often heard marveling about how I used it every day and the magic was still there.  The guy has a passion for what he does.  Unbelievable.

Upon meeting him I would ask:  have you ever hung out with Keith Richards?

Later:  Links added and if you want to hear one of the best podcasts ever, listen to yesterday's Rebooting the news with Dave Winer, Jay Rosen, and Doc Searls (guest).  There are some podcasts that I skim through at 2X, this one I am going to listen to twice.

Groupon - Another Advertising Company

I have said the Google and Facebook are advertising companies.  So is Groupon.  Sure they have smart engineers and they build internet enabled tools, but they get paid by their clients for delivering advertising that works.  They are advertising companies.  These companies are not internet companies any more than General Electric is an electricity company.  

Whether or not you think Andrew Mason was crazy for turning down six billion dollars (like I do) you have to respect the guy for building a business that is adding 3 million subscribers a week.  

Here is a great video of his interview last week with Charlie Rose.  Clearly a smart guy.  And also very funny.  Check it out here.

LeWeb 2010 - An Incredible Event

As you know I did not go to Paris.  I was here in Seattle with my team working to learn as much as we could about observing awesome events like LeWeb over the internet.  And learn we did.  

We have now watched the live stream or the video for 45 sessions, and we still have 16 to go.  We have provided notes on these sessions, links to the videos, and links to as many other blog posts as we could find.  

We are very interested to know if you think we are in fact making it easier to follow events on the web.  Please take a minute to check out our new web site and give us your feedback.

The Site:  www.shownotes.co

Twitter Feed: @show_notes

The Contra China Argument

There is an article in Fortune magazine this month about short seller James Chanos and his big bet against China.  I have written a fair amount about China, one of my first posts is still my favorite:  Do We Want China to Fail?

The competitor in all of us wants to win, and China failing would be one way to accomplish that.  Despite this, I still think a failure in China would be bad for everyone.  Certainly it would be bad for the Chinese, but here are a few reasons why it would be bad for those of us in the technology industry:

1. IP Theft.  The work that the Chinese government is just now starting to do on piracy and IP theft will be the first thing abandoned if things turn for the worst.
2. Aggressive Cyber Behavior:  The Chinese government is already allowing or maybe even sponsoring efforts to compromise computer networks in the US.  A stable and prosperous China will give us the chance to address this diplomatically.
3. Nationalization:  Fear of a Chinese economic collapse could drive nationalist factions inside China to take control of foreign investments in China with government support.
4. Loss of a Market:  While there is sufficient evidence that China wants the domestic consumer market to be served mostly by domestic companies, there will always be opportunities for US companies to benefit from a rising China.  A declining China would remove the opportunity for either domestic or foreign technology companies.

So we want China to continue to succeed in raising itself up in the world economy.  We absolutely want to stay ahead by making ourselves more competitive.  James Chanos has some good arguments about why China may be in trouble.  Let's hope he is wrong this time.

Missed It By That Much

Product designers live in a cruel world.  The distance between delightful and disaster is very small, but like an egg balanced on the peak of a roof, it only takes a fraction of an inch to be rolling the wrong way.  I have had a Droid X for a few months now and there is no doubt it is a well engineered device and that Android is a viable operating system.  Unfortunately for Google and Motorola, it is not a delight to use. 

I don’t have an iPhone, but I do have an iPod Touch and it is a delight to use.  I first got it in 2007 and it still just feels good when I pick it up.  I rarely ever find myself staring at it without knowing how to do what I want to do.  Even after three years I am still regularly amazed by the elegance of its design.

This is the mastery of Steve Jobs and he is so very far ahead of everyone else.  If you want to be inspired, read this great blog post about Steve Jobs and Edwin Land, the founder of Polaroid.

The idea is that great designs already exist in the universe and people like Steve Jobs and Edwin Land discover them.  

A Tale of Two Restores

About a week ago I had been playing with the passcode lock settings on my iPad -- and the thing stopped putting itself to sleep.  So if I left it overnight it would be 100% dead in the AM.  I worked to change the setting back, searched online, but could not figure out what to do about it.  

So I clicked restore and just like that, Apple rebuilt my iPad in about half an hour.  Asside from a few minor issues where I had to download apps over again -- it worked like a charm.  My email set up was undisturbed, my paid apps were all there.  

About every quarter or so I completely rebuild my Windows 7 machine.  I have set the machine up to make this as easy as possible -- with two partitions on the SSD drive, one for my data and one for the OS.  This way I can re-format the OS partition, reinstall Windows 7 and all of my programs (I keep an external hard drive with a folder I call program installers just for this purpose).  Each time I get 10 GB of disk space back -- and on a 36GB SSD that is a big deal.  Each time the machine runs like a dream afterwards.  The only problem is it takes me about 10 days to really get back to a place where everything I need is installed on the computer.  Not 10 days of non stop work, but 15 minutes here and there when I find a program that I need for the first time and have to find its installer, install it, update it...  I am sure you have been there too.

Luckily I have an older Vista machine that I can work on while the restore is going on.  Also luckily, more and more of my work is being done using online services like Socialtext, Evernote, Squarespace, LinkedIn, and Twitter -- so it doesn't matter all that much that my Windows 7 machine is sidelined for a while.

I suppose it should come as no surprise that each time I go through this, I have a reason to migrate more of my work to the cloud.  

I wonder if anyone at Microsoft is working on this problem.  I would love to have a restore button that works like the restore button on my iPad.

Wait!  Before you post a comment saying that Microsoft already has restore points built into Windows 7, here are a few questions:

• Has going back to a restore point ever actually worked for you?
• Did it give you back space on your hard drive?
• Did it accurately create restore points per its design (before each install or dll change)?

Unfortunately, like the comical troubleshoot window that offers to help fix problems but never can, Microsoft has over promised and under delivered in this area.

I will wait eagerly for someone to close the gap between these two restore experiences.

New Trade Routes

Every so often there is a big enough change in the way business is done to make evolution look like a revolution.  If we are not in one of those times, it is just around the corner.  

The process of evolution may seem slow and hard to follow.  The thing to remember is that no species actually changes during its lifetime.  The adaptation occurs when the combination of two different sets of DNA create a new set that just happens to be better equipped to compete.

The better equipped being lives to reproduce, the others do not, but a single being does not genetically "adapt".

There are many new companies starting right now that may represent a new way of doing business.  Some will create value and survive, others will not.  The result is surely to include new routes to market.  These new trade routes will illuminate the winners and the losers.

So just like the lost city of Petra pictured here, some once prosperous companies formerly on the main trade routes will be long forgotten.

If you want a quick look at a company that drives the point home -- check out Gnip, and Brad Feld's thoughts about Gnip.

Gnip is Twitter's first authorized reseller.  

This is going to be interesting.