If you follow SaaS software and are interested in getting a great summary of the NetSuite S-1 filing without reading it, Jason Wood has a nice dissection of it at NetSuite IPO…Another SaaS horseman braves the public markets.
Once again, David Cohen has “encouraged” (euphamism for “hey Brad, c’mon and write that post already”) me to respond to his post titled Big or Bullshit – Vertical Social Networks. David called bullshit – he thinks “the aggregators and toolsets that emerge around identity” will be big.
I’m a horizontal guy. When I look at where I’ve made money as an investor, it’s mostly in things that cut horizontally across a domain, rather than a narrowly targeted vertical activity. That’s where my bias lies.
But I also like to think that I’m a flexible thinker that is always willing to learn. I only really learn by doing, so I’ve made a few angel investments in vertical stuff, including Wallstrip (bought by CBS), Dogster (dogs and cats), Shelfari (book lovers), New West (online magazine about the New West), and The Enthusiast Group (for – er – enthusiasts – stuff like YourRunning and YourMTB.)
I’ve learned a lot. Dogster has blown me away with their success – who would have thought dogs would have more friends than a typical MySpace or Facebook dude. Some of this is Ted Rheingold and his teams obsessive focus on their business while some of it is the amazing power of a compelling vertical network. But the real magic is the traffic numbers and the corresponding revenue generated by escalating traffic and a high eCPM due to tight targeting.
Not surprisingly, generating organic traffic is the biggest challenge for a vertical social network. The second biggest challenge is stickiness – once you get the user, what do you do for the user to keep her using the site. Primary content generators – like Wallstrip and New West – aren’t really social networks – yet. But you can see how they could evolve toward that with a little elbow grease (and a squint.) The others rely on regular usage – and this is where the concept of vertical social network starts to stall.
I woke up one day and had 2,741 logins to different social networks where I had “friends.” That’s 2,740 too many (some of you might argue that it’s 2,741 too many.) I’ve got the same friends on multiple services, but there is no integration between them. Aha – the need for a social operating system, ala what Facebook announced with the Facebook Platform.
But living in a single platform doesn’t work, unless it does everything I want and Facebook has a very long way to go. I doubt I’ll shift my various blogs to Facebook (even if I republish them there) so suddenly I have my own Vertical Social Network – people that read my blog (and the blogs in my blogroll.) We are right back to horizontal land – ala Lijit, MyBlogLog, and Me.dium.
I have three conclusions from all of this.
I don’t know whether Vertical Social Networks are going to be big or bullshit. However, I do know that I’m going to continue to hang out in horizontal land.
I officially have an iBrick (an iPhone that does not appear to be able to be activated by normal human means.)
I’ve had an entertaining series of problems. I’m still amused, but getting closer to annoyed.
I picked up my phone last night at the Flatiron Apple Store on the way home from the airport. It took me 45 seconds to purchase it (no line.) I tried to activate it when I got home. iTunes went through its upgrade cycle to 7.3 and then gave me errors that I didn’t have the right version to work with the iPhone so I had to deinstall / install iTunes 7.3. I did that and tried to activate. It got hung up trying to check my credit and told me I had to go to an AT&T store to get a pre-authorization code.
I went to sleep, woke up, took care of the puppy, did email, went running, and ended up at the AT&T store at 11:30. By 12:30 I had a pre-approved credit code – it appears that the Lifelock service I use on my credit reports broke AT&T’s algorithm.
I had lunch at the Rio, sat down in my new office, and tried again. Now the iTunes store “may be busy.” Apparently “The Apple” is unhappy with me. The iBrick sure is pretty (useless) so far. I guess – per iTunes recommendation – I’ll try again later.
Well – I couldn’t help myself. I’m sure this has made the rounds already and I missed it in all the hype, but this video basically sums it up.
This is the best product launch I have ever seen in my 41 years on this planet. Just unreal. Thanks Kimbal for the link.
It’s the end of the quarter again – do you know where your VP of Sales is? I bet he’s standing in line in front of an Apple Store waiting for his new iPhone. Amy got so tired of the iPhone noise that she went to Paris (maybe she thinks the lines are shorter there.) You could just follow along from home and read Scoble’s Palo Alto line experience. Or you could just wait in a virtual line with Fred and get an unlocked iPhone.
I’m been cuddling my Dash all morning telling it that all will be ok in the world. And the noise about the iPhone is so loud that no one in the blogosphere seems to have noticed that Facebook has been down since I woke up this morning (or maybe they’ve just banned me.)
You find ads for RSS feeds and podcasts in the most interesting places. Today, it’s the Wall Street Journal Online. I wonder how many commodities traders woke up this morning and said “yeah – I need to get news, commentary, and special offers via RSS.”
I’ve had an account on Facebook for a while. Until a month ago – around the time of the F8 Platform launch – I checked it once a month.
In the last 30 days, I’ve been checking it once a day. My friends list has exploded, I’ve added a bunch of apps (just to play around – hint – important reference to a note below), and exercised most of the features that I could find. VCs and entrepreneurs have “discovered Facebook” – everyone is talking about it on blogs and in pitches (as in “we are going to build a Facebook app for X.”)
A week ago, I started thinking that there was a key problem with Facebook. This problem is directly linked to the absolute strategic brilliance of the Facebook folks around the launch of the Facebook platform. This problem is clearly articulated in in the post “I have 250,000 users, now what?”
Be patient – you get to hear the problem in two paragraphs. Last week, I started saying to people “Facebook is a substitute for television.” I don’t think I made this up (I’m sure someone else said it first), but for the last decade many people involved in the Internet have been searching for the pure substitute for TV – what will you spend your online time playing with instead of sitting and passively watching TV. Facebook finally seems to be the tipping point for this.
Granted – Facebook is active, not passive, so it’s theoretically better for the human brain. However, in my interaction with Facebook, I’m still in “complete playing around mode” – I haven’t been able to derive any real discernible value from any of the hundreds of ancillary applications that are appearing. Some are just plain silly (but often clever) time wasters; others are just republishing of content or reorganizing capability that I have through some other application. None of this is the “problem” – but it’s the root cause of it.
The Problem: As of today, Facebook is deriving massive benefit in all the application development that they’ve enabled. They’ve brilliantly created an open community that allows developers to quickly create applications that can rapidly acquire hundreds of thousands of users. This dramatically extends the functionality of Facebook by offloading the R&D and feature development to the apps developers. (How about all of them there adverbs – I sound like a press release.) However, as far as I can tell, none of these Facebook apps developers are deriving any real benefits (if you are a Facebook apps developer and ARE deriving a tangible benefit, other than customer acquisition within the Facebook infrastructure, please weigh in.) In addition, Facebook has shifted all of the infrastructure costs to these apps developers, creating the “I have 250,000 users, now what?” problem.
It seems like Facebook could easily turn on CPM based ads on all of the Facebook apps pages and do a revenue share with the application developer. Suddenly, the application developer would get paid for the massive new page views they are getting (as would Facebook), and Facebook would create a real incentive for the publishers to stay with their apps and grow them.
In the absence of this, Facebook is going to need to address the “value to the apps developer” quickly, before some of the larger apps vaporize due to the developer saying “I’m not willing to keep paying for servers and bandwidth.” I can think of a couple of other approaches here, including Facebook building an in-the-cloud infrastructure for their developers that they make available to one’s that reach a certain level of popularity. But – the straight “we’ll make more money and share it with you” seems the most logical approach to me.
I am regularly amazed at the amount of money consumer electronics, mobile device, and cell phone companies spend on “stupid customer service tricks.” I got the following note from a friend that has a Sony Reader.
My screen cracked for some reason. Probably got hit in my bag somehow. I sent it in to Sony for service and they offered to fix it for $272; a new unit is $299. I declined. I sent a letter to the Sony USA VP marketing. I pointed out that when my ipod broke, I got a new one in 20 minutes at the store, no questions asked. And the contrast in experiences is why my family of 4 has 8 ipods but is only likely to have 1 reader. I got a nice phone call last night and a new reader is on its way!
I am a consumer electronics junkie – you name it, I probably have (or have had) it. My best two customer experiences to date have been the Sonos (truly amazing) and Slingbox (we are investors so I’m glad it’s amazing.) Apple has also been a happy place to be, as long as I walk into the store and give them my sad puppy dog look. Most everything else sucks. When something breaks (like my Sony DVD player did last month), I just buy another one to replace it rather than struggle through the six week “send it in and then pay us almost as much as another one to get it fixed” routine.)
The Sony Reader example above is completely consistent with my reality. It’d be so easy for Sony to start by sending out another one and have a delighted customer. The result would be worth much more than the cost of incremental customer acquisition and the customer destruction support function. The strategy of “send me your broken thing and I’ll replace it” seems so logical today in a world where people shout from the rooftops about the great experiences – buying much more goodwill than a million banner ads.
At least the Sony USA VP Marketing has a clue. Maybe Sony should put her in charge of customer care!
Unless you’ve been on vacation and off the grid for the last two months, you’ve probably noticed the explosive growth with Facebook with a new and exciting demographic – all the web / tech nerds that previously weren’t using Facebook. I went to my Facebook account this morning to try to figure out when I originally created an account and can’t remember, but there’s been a rapid growth in my friends since the Facebook F8 platform launch.
I’ve gone from checking my Facebook account once a week to once a day. I still haven’t clicked on any of the ads, but I’ll assume that a lot of the advertising is CPM-based instead of CPC-based which means they are making more money off of me at this point.
In addition to my account (feel free to friend me if you are a Feld Thoughts reader), please join the Feld Thoughts group. If you read AsktheVC, please join the AsktheVC group. And – if you are interested in the Implicit Web and/or the upcoming Defrag conference, join the Implicit Web group.
As a special bonus feature, I’ve been twittering for a while as part of my socialogical experiment to see how much boring content I can generate for The Internets. I’m now looking for a crack programmer to write a quick script that generates random twitters off of a pre-canned database of commentary that I create.
Yes – it’s all fascinating, at least to me.