Illusions of Reality

I have been thinking a lot over a long time about the currently existing business models. The most common one that everyone talks about (probably because its so evident now and proven) is Google’s advertisement based model. But I have been thinking over and over again in this direction and today I hit a couple of very interesting articles that blew me away. A very very highly recommended reads from Kevin Kelly’s Technium Blog:

1. Better than Free (http://www.kk.org/thetechnium/archives/2008/01/better_than_fre.php)
2. Technology wants to be Free (http://www.kk.org/thetechnium/archives/2007/11/technology_want.php)

I reached the first post through Seth’s blog and I have a very strong feeling of what Kevin has put in these two posts to be of utter high importance in terms of the market dynamics in coming future. Infact, as the world keeps on growing faster, the importance keeps increasing. Folks trying to get their business plans in place - you would love reading this!

Clive Thompson recently wrote an interesting article (at http://www.fastcompany.com/magazine/122/is-the-tipping-point-toast.html) based on Duncan Watts theory that, in a way opposes Malcolm Gladwell’s Tipping Point theory. However, for me, more interestingly, I noticed a difference in opinion on this between what Seth Godin had to say and what Guy Kawasaki thought!

Seth notes on his blog post (at http://sethgodin.typepad.com/seths_blog/2008/01/the-hyping-poin.html) that Watts is effectively not conflicting Gladwell and what Gladwell says holds good. On the other hand, Guy, on his blogpost (at http://blog.guykawasaki.com/2008/01/forget-the-a-li.html) noted the statement "It [achieving marketing success through influentials] just doesn’t work. A rare bunch of cool people just don’t have that power. And when you test the way marketers say the world works, it falls apart. There’s no there there.” from the original Thompson article. Guy also says "My money is on Watts."

I beleive that Seth’s point that Watts is not conflicting Gladwell doesnt appear to be correct. The original statement noted by Guy also suggest Watts saying to be in conflict to Gladwell (and also what some of Seth stuff says). However, I would still stick and very strongly support Gladwell and Seth theory that key people matter more than herd followers.

However, quoting one of Seth’s statements in his post:

"Unleashing the Ideavirus didn’t spread because ‘important’ people endorsed and promoted it. It spread because passionate people did."

I beleive an important point to note is that many a times passionate people would be the important ones. Take, for example, Drucker for management, Steve Jobs for the interface or art in the look of the product or infact Seth himself for the marketing and startup stuff!

I came across a very interesting company today and then ended up reading a lot of stuff on this company. Jones Soda - it is. The company sells soda in United States - something that most companies would not even think of doing in presence of the giants Coke and Pepsi.

Jones Soda tries a very interesting contrast approach to sell its soda in American market:

1. It provides a personalization experience by labeling its bottles with pictures that are selected from those submitted by people on its website.
2. It also sells a kind of souvenir-personalized version where it makes bottles with pictures that you submit and order them to be on bottles sent back to you - again, part of the personalization feel.
3. It doesn’t use typical advertising approaches, probably since it realizes that it would never be able to win customers this way since both Coke and Pepsi put ample of money to obsess people through this approach.
4. It does funny things like April fool’s news of the company being acquired by a tractor company - free publicity.
5. It comes out with novel flavors that taste so bad that no one can actually drink. They know and agree to this - but they say its part of publicity or being talked about factor.

I also read an interesting interview of Jones Soda’s founder at http://www.fastcompany.com/magazine/92/open_jones-extra.html. The interview is dated March 2005 and these folks appear to have started somewhere in 90’s. Considering the approach for marketing that they took right from the beginning (over a decade ago), the approach appears more relevant today. Their approach agrees to Seth Godin’s theory that no one likes being forced to see the adverts - one needs to be novel or "Purple Cow" to grow in modern market. And for them, it certainly appears as so far, so good.

A quick glance at their income statement (http://finance.google.com/finance?fstype=bi&q=JSDA) certainly shows that they are growing and growing well.

While I am certainly impressed by their approach, especially considering the fact that they started attempting this in late 90’s, I wonder - why soda? Can’t all the above "coolness factors" be associated with other products that may have a larger differentiation aspect on the product itself as well? In that case, wouldn’t it be easier to gain market share quicker? That’s because Coke and Pepsi have dominated this arena so much that a thought of soda probably reminds most of us taste of one of our favorite Coke or Pepsi product (for me - Coke Classic). At the same time, I remember what GM was once for the car markets or what Hotmail was for user emails - perhaps that’s why I am not the founder of Toyota or Yahoo Mail!

Okay. Now I know that its been ages since Kindle is out but I’ve been lazy over putting this one down. But frankly speaking, first time I saw that Kindle thing on Amazon’s pages, I was like - why is Amazon doing that? I thought so because I have always been over-whelmingly impressed about Amazon does on its website. But as time passed by and as I looked through deeper, I felt so much Ipodish about Kindle. And now it really feels that this is Amazon’s iPod for readers.

So, what’s the best about Kindle:

Direct download of books via mobile network with no additional cost and hecks for the reader, I beleive, is the real killer here. This single feature will truly rock kindle version of book sales on Amazon - just because of the ease of getting stuff on your reader. That, integrated with Amazon website’s large collection (currently approx 90,000 titles on Kindle version) appears to be a perfect win-win. Infact, this one feature appears so interesting to me that I would say iPod folks can look into it for sure. Currently, I dont buy a lot of stuff from iTunes stores even at $ 0.99 but if they’d offer me to get any song anywhere, I am sure I’d end up buying so many just to avoid the trouble of connecting iPod to my PC and then all those hecks! I know mobile networks in past have tried delivering content through their networks, but I think - a content provider doing this is way better an idea since users are acquainted with their content. Users know iTunes stores, users know amazon store - users dont know Nokia music library downloads!

And whats not so great about Kindle?

Well, ofcourse the look, which everyone agrees sucks. But, apart from this aspect, I beleive no support for PDF eBooks reading is a major drawback. Now, I agree that Amazon would love to keep its books sales up by not allowing those geeky folks to read pirated eBook copies on their latest fantastic reader. But, the point is, Amazon is no one to act as DRM-nanny out here. Perhaps, this is where it needs to learn from iPod. And also from all those sinking companies who have tried to sell DRM music or tried their own ways to sell music in different ways. iTunes sells stuff for sure even when pirated MP3’s are a click away. That’s because there is perhaps a large population who are ready to buy rather than going through that pain. And ofcourse, there is other segment of population who are ready to get pirated stuff working howsoever painful it may be! So, even if Amazon tries to fight it, those geeky mongers are going to hack the features out and get it to work the way they want. So, then, why not have that hot feature in? Having observed Jeff Bezos, I beleive Kindle would have this feature soon.

So, with whom is this magic device competing?

Sony reader, perhaps, has been there even before Kindle. But, I beleive Amazon’s reach due to its website is going to be a single strength that will easily lead its victory over the reader. Ofcourse, Sony does not provide the download via mobile network feature. But, Amazon’s deep reach in the book reader’s community is going to nail it. Amazon is also selling the Kindle version of its books way cheaper and is constantly increasing the size of Kindle version selection.

I recently read a very interesting post on how marketing folks can use a theory of exclusion to attract people. The post (by Seth Godin on his blog) is at http://sethgodin.typepad.com/seths_blog/2007/12/exclusion.html

Incidentally, just a few days ago when I was thinking about different perspectives of business, I started to realize that a lot of nearly every direction or aspect of business can be directed to human psychology. Seth’s post is an example of applying this to marketing, but same goes in stock markets, economics, finance management, leading teams and so on. Infact, wherever you have human interaction, you have the psychology in play. Infact, on this realization, I have been keen to study some material on applied psychology - not the typical dry-bone psychology theories (I dont dis-respect those but just that they are not my cup of tea!) - but the pieces like above are very interesting and are of great importance in getting insights to how situations can be dealt with in business.

I’m fond of Google - no doubts - I hit that search page more often than I hit the applications on which I am working.

Here are some things I find good and bad about Google:

1. Google’s current integrator strategy rocks. Bringing out OpenSocial rather than another SN. Bringing out Adroid rather than another iPhone clone. With all of this, Google proves that it is working to genuinely solve problems. This also gives Google a long-term advantage of being the controller of things. Might not be lucerative in short term but is a genuine long term game winner for me.

2. Google’s advertising model and the way it has revolutionanized online advertising is great. It has taken advertising to a new level in common man’s hand and nothing else but Google’s revenues speak of this the most!

3. Google’s reliance on a single revenue source always makes me nervous. Google empire has a variety of applications and is always trying to solve newer problems but as far as revenue generation is concerned, entire empire stands on a single stem. Dont like it at all!

4. Existence of a large number of Google’s applications such as Google earth, Google Mars, Web Accelerator and so on is wierd. While these applications may be useful to some and Google’s deep pockets can afford this luxury I wonder what was the business plan for these apps looking like when these apps were proposed. Or if, there was any business plan here? Remember, its Google.COM and not Google.ORG that we are talking about.

This post was actually supposed to just talk about Joost features - a video on demand service that I like watching. I’ve been onto Joost since it was in beta. But as I was thinking more and more about Joost - another thought process kicked in and as you’ll read ahead, I kind of derived interesting things that Joost can seriously think to incorporate as they move ahead.

So, all impressed with Joost - I was thinking out what keeps me stuck to Joost. Ofcourse the VOD model offers me flexibility to watch what I want and when I want. Joost also has a large number of shows to pick from - thanks to its long list of ever-growing content partners including Viacom, Warner Bros, Sony Pictures, Turner Broadcasting and even Eros International (for Bollywood stuff!), NHL and so on! Joost’s excellent video quality with not a hefty streaming-bandwidth requirements is a great addition too. The fact that its a P2P service also ensures that extra load on Joost servers would not keep one waiting for watching a show. The advertising in between is not that annoying too given that Joost is free!

But then, an important point is - with whom does Joost compete? It competes with numerous video sharing websites in addition to some Joost clones for now. As far as Joost’s differentiation factors are concerned - its long list of content partners and high quality videos are two factors that are certainly keeping it at top of the list for now. But arent these factors achievable at ease by others? Infact, flash players with high-quality shows and movies would infact be an edge over Joost, which requires separate client software. And none of the content partners have exclusive deals with Joost (to the best of my knowledge - correct me if this is not the case). So, soon this content would float over other sites.

But then, the above factors and risks apply to virtually every second video sharing or video service company on the internet today. A new video service site can float out any day with professional or non-professional and legal or illegal content floating in days - either provided by the site or be user-shared - since the point is, end viewers dont care! So, my point of thought was - what are the real differentiation factors for Joost (or for that matter, any video service portal) in such a dynamic and competitive market?

And I beleive, in such a fast-changing market, the only way to lock down users is - have more users! True answer to competition on collaborative environments is - collaboration. Perhaps, having more and more users collaborate and interact would bring an edge that other sites/ applications may not just be able to plug in like any other feature. And perhaps, the best way for Joost to achieve this is to build socializing features around its application. But then, I have been a firm beleiver that in today’s jungle of SNs having SN applications for numerous features is way better than building separate SNs around different interests. In such a view, perhaps a partnership between Joost and one of the big SNs in the arena wont harm at all. I mean, imagine friends being able to share, rate, suggest and discuss Joost videos. This would also be great for the collaborating SN - so all-in-all a real win-win in my view. Further, with the valuable detailed user-base data that SNs hold, this would unveil a powerful edge fo targetted marketing too.

Perhaps, this model of collaboration with SNs can be generally applied for many other types of utility web portals to enable SN features.

Techcrunch has posted about an interesting report from IBM on how advertising is radically changing. For me, the juice out of the entire post and report are the following changes in modern day advertising market, which I would like to call as a 10x Change in Andy Grove’s terminology:

1. Consumers (viewers) now have greater control through option to filter, interact or consume advertisements
2. Sponsors demand different ways to measure effectiveness of advertisement and different payment models exist
3. Online advertising is a low-cost game thus new professionals competing with agencies
4. Smaller publishers and broadcasters are also trying to earn their bread from this model

I beleive a few years down the line and we would look at the current (or rather already past!) advertising scene and think of it as primitive age advertising!

Techcrunch post is at http://www.techcrunch.com/2007/11/10/ibm-the-end-of-advertising-as-we-know-it/

IBM report is at http://www-03.ibm.com/industries/media/doc/content/bin/media_ibv_advertisingv2.pdf.

Okay - now I know that entire blogosphere has been talking about the Google’s OpenSocial but I still wont mind adding my two cents to this one.

First up, as I have said in previous posts - social networking does require a lot more to reach to its full potential. Though it is reaching new heights every day - there is no doubt that the extent to which SN can be useful is way more than where it stands today.

Google’s OpenSocial is very certainly a step forward. Like most times - Google have certainly got it right by not trying to create another SN but rather create an integrator - something thats very much required. Social networking has a peculiar usage pattern and an important factor that a user typically prefers to enroll into an SN where his or her buddies hang out. So - porting of users is not very simple - thus just another new SN would have hardly done this world any good. But, OpenSocial - as a common API across multiple existing SN’s is a charm for sure.

But wait - here’s an important factor to consider. Tim O’Reilly’s post (at http://radar.oreilly.com/archives/2007/11/opensocial_social_mashups.html) very correctly talks about something of extreme importance. If the data between different SN providers wont be shareable, than all we have from OpenSocial is a comfort for developers to use same language and syntax for developing those SN applications. Though this is certainly an advantage, a bigger leap and a genuine step forward would be when these developers can build SN applications that aggregate data from multiple SNs or use capabilities of multiple SNs. I would say, as of now it is not very clear if OpenSocial supports this.

I also feel that it wont be supporting this for now since if this would have been the case, Google would have gone ga ga about this by now. Also, this capability involves user privacy issues and many other factors to consider. On the other side OpenSocial Developer’s Guide has an API called People Data API that would allow developer to extract user information - this API, though, is not yet released.

Well, I would say, lets keep our fingers crossed till the initial excitement settles down and it becomes clearer if we would see - cross SN applications coming our way - that, for me, would be the real meat!

In recent times, I have been watching the kind of companies being floating in the Web 2.0 space. While this cannot be a complete representation of current Web 2.0 scene, a lot of them  do not seem very impressive:

1. WooMe.com - This website is all about online speed dating. Like the normal in-person speed dating, users can group and speed-date. Later, they can exchange contact information online and take it further - the website charges you only when you are exchanging contact information. Now, I cannot see a reason for this being an absolute success. Users on social networks and chat messengers are already weary of meeting wierd and unpredictable people online - cant imagine people taking this up. Interestingly, this company was selected to feature on the 2007 TechCrunch40.

2. Faroo.com - A German company providing peer to peer search. Hereby, users would be the search engine crawlers as web pages they visit will be indexed on their systems. Other users performing search would retrieve resutls based on these indexes. Ranking of the pages will be performed by something they call "PeerRank". Hereby, user’s behavior when visiting that page will be observed and rank value for that indexing will be determined based on this. While this distributed search offers a great advantage of no hardware cost - no crawlers, it appears to be leaving just too much to users, especially when the only reason users are going to subscribe to Faroo is for this P2P search.  It intends to share revenue with users to get them in - but we’ve seen shared advertisement short-cut to success fail too many times in past. Again - this one was featured on TechCrunch40 2007.

No qualms with TechCrunch40 2007. And I completely realize that it a fertile environment - 1 out of 1000 innovative ideas succeed - and for that one successful innovation, it is important to have the rest 1000 innovations - but the fact that these  are the kind of products exhibited on TechCrunch40 gives a representation of where we are heading. From what I know, a lot of products do not even get chance to be featured on TechCrunch blog - so many more would have been rejected from being featured on this demo - just to get an idea what those rejected ones would be upto!

I’ve been a big beleiver that a lot of Web 2.0 stuff has been important and valuable advancement - rich interfaces (AJAX), tagging, collaborative environments, social networks, better advertisement models, exposed interfaces for cross-application integration and so on. But, often a bad use of these Wonders of Web disappoints in a big way.