The Network Garden - Mark Sigal's Blog

Decomposing Google News and Making it Social

In my daily online travels, Google News is a regular, recurring destination.  Here’s a thought about how Google could make the news aggregation site even better, and in the process, make it more indelibly social.

Step One: Formally containerize story ‘buckets’ and expose (make visible) handles like tags, categories, view count data, ratings and like minds (people who liked this story, also liked that story). 

Some of this data Google captures today, some it requires Google either adding UI controls within Google News pages or creating IFrames so that Google can persist a meta-layer around the destination new page (for tagging, rating, categorizing).

Step Two: Integrate this functionality with Google Reader, which probably touches Web history and Bookmarks functions, and invariably gets Google down the path of a deeper, more unified user profile model. The key point here is that while Google does a reasonable job of tracking pieces of this data already, it is overly silo’d and simplistic when it could be integrated in a much more high-value fashion beyond just a consolidated view. 

A best practices way of doing this would be to work backwards from what YouTube does with providing filtered views of video data, personalization and social linkage options to consumers, and apply a similar model to third party news sources.

Step Three: Expose APIs to these functions so that third parties, including news publishers, can create applications and web services that leverage the goodness of Google’s depth and breadth. 

Clearly, not all news sources would opt to participate in all elements of this offering but so long as Google offered an opt-in/opt-out path for publishers, this feels like a natural way to turn consumers into information miners and reward them for their efforts (since they get better visibility to related stories and a path to connect with like minds). 

For publishers, it becomes part of a continuing breadcrumb strategy to increase the reach and engagement level that consumers have with their content.  Plus, if Google provides access to the underlying APIs that they are using, for smaller publishers at a minimum, it gives them pluggable, scalable tools to make the news content on their home web site both social and transparent.

Arguably, such a model could then be scaled out to Pictures, Documents and other like Google services.

Related Links:

1. Social Media - it's about Breadcrumbs and Conversations: a construct for thinking about how social media models work.
2. Googling Innovation - Seed, Select & Amplify: on Google's R&D culture.
3. The Chess Masters - Google vs. Apple: why Google and Apple are without peers, and destined for a market collision.

All In: On Getting Rich

I am reading an immensely enjoyable book called, “How to Get Rich,” by Felix Dennis, Chairman of Maxim. 

Sharing sage but simple truths and applying them to archetypes like ‘Young, Penniless & Inexperienced,’ ‘Slightly Better Off and On the Way Up’ and ‘Senior Manager or Professional,’ Dennis speaks clearly to the pursuit of tangible rewards, staring risk in the face, having chutzpah, the goodness of experience, the importance of team-building, having a plan, executing on it and gaining the confidence to overcome fears of failure.

As an entrepreneur, this is a timely topic for me.  I have won (Tribe Communications – sold to Zoom; Whistle Communications – sold to IBM; Rapid Logic – sold to Wind River; Me.com – sold to Apple), lost (UXComm, Kenamea), had noble pursuits that did not achieve market success (CafeNet, Verdada) and still have two stories in progress (Snapp Networks, vSocial).

In the past, I have written about wanting to work with Pigs over Chickens, Keys to Success, Paradoxes on the Path to Winning in the Market and How to Change Your Life.

Today, I want to talk about the importance of embracing mental toughness in learning to cope with people (customers, co-workers, partners, investors, etc.) whose paths you invariably cross in the pursuit of success.

Trust in this.  The minute you commit to being a member of the “A” Team, a Winner and a Do-er, the bullshit of others ceases to be a valid excuse for failure.

To be clear, failure happens when it happens but there ceases to be a moral basis for failure.  Winners fight until they cease to believe or when the last bit of oxygen has been stamped out.

To steal a gambling analogy, think of this as being ‘All In.’

But there is one critical caveat, a moment when all bets are off.  I am not talking about blind faith or stupid risk taking, to be sure.  In fact, if I could not answer a strong yes to ANY of the four questions below, I wouldn’t be doing what I am doing:

1. Do I believe in what we are doing in terms of our value proposition for customers?
2. Do I think that we are going to deliver what we have promised?
3. Do I feel that this is a worthwhile, compelling use of my time?
4. Do I feel that I am continuing to get better and gain skills that I will be able to carry forward?

Would you?  Seems obvious.  Less obvious is why people make themselves unhappy when the answers to the above questions are all YES.

Related Links:

1. Are you working with Chickens or Pigs? Hint your want to work with Pigs. 
2. The Five Keys to Business Success: Some pattern recognition on lessons learned.
3. "Strategic" vs. "Win-able": Early customers and The 1.0 /3.0 Paradox.
4. Metamorphosis - Change your Life: Real life change in 12 months.

Threading the Needle: Essential Truths for Early-Stage Entrepreneurs

I talk to a lot of entrepreneurs in my daily travels.  This can take the form of informal guidance, formal advisory/board roles, writing a check as an angel investor or plugging-in operationally in a ‘permanent’ interim capacity.

Those who know me will tell you that beyond the pattern recognition that comes from doing seven start-ups, part of the goodness that I bring to the table is a clear, intellectually honest perspective that is actionable.  While I may not always be right, at least I am not confused. ;-)

So, with that as a precursor, let me share some 'Essential Truths for Early-Stage Entrepreneurs.'

Execution, Not Ideas, Are What Matter
First and foremost is the truism that ideas are cheap.  Trust that no matter how inspired and brilliant your idea is that another entrepreneur is within striking distance of essentially the same idea or addressing the same customer need via a different approach.

This should keep you focused on defining and documenting milestones and metrics that formally prove out the core assertions of your business or customer proposition.  Always strive to know what has to go right for you to succeed and in what order, and track your progress methodically and diligently.

Second, many entrepreneurs confuse the big picture with the little picture.  Specifically, they confuse macro industry trends and abstract customer pain points with there being an indelible need for your specific offering. 

This is a by-product of confusing vision and strategy with tactical execution.  This confusion can lead you to think that you are farther down the road than you really are, inasmuch as it sidesteps difficult questions of whether you have the technical know how to deliver your product or service, whether you have documented a clear product plan, built a working prototype, codified a financial plan, tested the water with prospective customers and the like.

90% of the entrepreneurs that I speak to fall prey to this one, and the body blow is palpable when I have to calibrate for them where they are actually at in terms of progress (i.e., pretty close to the starting line).

Third, an explicit part of your early stage planning should be to minimize the number of milestones you need to answer the above questions, as this has the effect of compacting the timeline and dollars needed to mitigate some piece of the risk equation, and success is all about risk mitigation.

The 1.0/3.0 Paradox
An essential truth here is that you cannot be all things to all people, especially when you roll out the first version of your product. 

I call this truism ‘The 1.0/3.0 Paradox’ and it goes like this.  Every start-up is born of their 3.0 vision of what their business looks like when their products are mature, their business is generating positive cash flow and they have fully penetrated the marketplace. 

Unfortunately, start-ups can only initially deliver 1.0 functionality, and customers have repeatedly proven that they buy exclusively based on their 1.0 needs (relative to your actual 1.0 deliverables). 

Thus, many a company dies because they fail to thread this particular needle.  No less paradoxical, he who wins the customer at the 1.0 stage of the market is usually ‘good enough’ to not get dislodged in 2.0 and by then, it is game over for the competition so the paradox is solving a 1.0 problem that gets you into the game to become legacy in 2.0 while you execute on your 3.0 ambitions.

Fund Raising Realities
Similar to the above truths, you need to understand how investors think and their motivations.  Save for your friends and family, investors invest to make money and preserve capital.  Period.

It seems obvious, but many an entrepreneur forgets this essential truth, and the related truth that investors gravitate between fear and greed. 

The more they have to speculate about the technical or market risk associated with your venture, the more they are going to default to fear mode, and pass on investing in your business. 

By contrast, the more you can show how you have addressed and checked off the individual risk items relative to your stated business objectives, the more likely greed will prevail, and you will get a check.

I should caveat the above with the following.  Many would-be entrepreneurs see comparable stage financings occurring based on less tangible goodness (from the just-funded start-up), and wonder, “What’s the Magic Key?” 

The truth of the matter is that often the magic key is pedigree.  Investors are much more likely to write a check in the early stage to back someone who has played a key role at another successful start-up or at a gorilla company, like Google. 

‘Been there, done that’ is a form of risk mitigation, and a reasonable form at that.

If you don’t have pedigree, don’t bemoan it but do counter that essential truth by focusing on proprietary advantages, or more fundamentally, ‘proof’ in the form of having something built, and securing customer or partner traction. 

When to Start Selling
Finally, when is the right time to start testing the water with users, customers, partners, etc? 

Many entrepreneurs struggle with this one, fearing a wasted first impression and/or a fear of having their idea stolen. 

Two comments here.  One, in general you can not get out of the fishbowl quickly enough so long as you are not confusing having a PowerPoint with having a product. 

The reason is simple.  Often, what you think is the ‘dog’ (of your product) turns out to be the ‘tail,’ and vice versa, and the only way to discover this is by vetting your solution with customers. 

(The efficacy of this point is even more so in the consumer realm since consumers are a notoriously fickle bunch, making watching what they DO infinitely more important than listening to what they SAY.)

Also, not all customers are created equal so you always have the option of targeting ‘B’ and ‘C’ caliber prospects while you are perfecting your product and your pitch, and saving your outreach to the ‘A’ list once you have worked out the bugs with the B/C list.

Take heart.  Many a successful start-up turned tail early in the life of their venture to great success simply by virtue of being out their with a real product or prototype and actually listening and adjusting to the needs of the market.

Early stage is a scary, but exhilarating, place.  There are plenty of different ways to thread the needle but some essential truths that you need to keep front and center.

Are there other truths that come to mind?

Related Links:

1. "Strategic" vs. "Win-able": Early customers and The 1.0 /3.0 Paradox.
2. Metrics of Success: You can't improve what you don't measure.
3. Start in the Middle: Methodology for solving complex use cases.

George Michael Concert at HP Pavilion...awesome!

This blog doesn't usually try to cover the entertainment or the music scene, but last night's George Michael Concert at the HP Pavilion was such a joyous affair, and such a rare occurrence that I want to give a shout out to those who might still have a chance to catch him perform on what remains of his US Tour (here is a link to Ticketmaster for that).

When I say rare, I mean a few things.  One, this was his first US Tour in seventeen years.  Two, he says this is his last tour, and based on the 17 year touring gap, it would be unsurprising if his promise holds true.

Three, the show was easily the best light show that I have ever scene (with a background of three separate walls of video that was dazzling yet not overwhelming at the same time).  The U2 'blow out your senses' spectacles don't hold a candle to this one. 

Four, the performance was over two hours and 20 songs, and you could tell George Michael was really enjoying the moment.  Five, the crowd, while looking a bit out of the classic bar scene in Star Wars, was packed to the gills with dedicated, pumped fans, who knew every word and celebrated every moment.  Great, great energy. 

Six, he played a good cross between his dancy Wham stuff, his contemplative ballads and the jazzy/soul mixes, making for a really inspired, mixed set.

Disclaimer. I am not a huge George Michael fan.  I know a lot of his music but only own one CD (Older), and he played only one or two songs from that.  In any event, that's the bias, or lack of.  See the show if you have a chance.

Pattern Recognition: Assume Positive Intent

I read this quote today from Indra Nooyi, Chairman and CEO of Pepsico, and it really struck a chord:

".....I learned to always assume positive intent. Whatever anybody says or does, assume positive intent. You will be amazed at how your whole approach to a person or a problem becomes very different. When you assume negative intent, you're angry. If you take away that anger and assume positive intent, you will be amazed. You don't get defensive. You don't scream. You are trying to understand and listen..."

Think of the assumption of positive intent as a kind of 'pose,' and noodle for a moment on the ripple effect that it creates. 

For one, adopting this pose validates the general desire that others have to be perceived favorably.  It's a simple truth, but when your body language is favorable to others, they are more likely to ACT favorably to you.

Two, by adopting this pose, you soften your heart, relax your muscles and open your ears.  My experience is that greater outcomes tend to come from openness, optimism and agility than narrowness, skepticism and tension so adopting such a pose is less a matter of idealism and more one of self-interest.

Sweet and Sour Endings: Boston Crushes the Lakers

131 to 92.  Boston took the Lakers out to the proverbial wood shed for a good old-fashioned 39-point whipping.  In the finals, no less!  And you know what, it wasn’t even that close.

As a lifelong Laker fan dating back to the days of Kareem and Magic, this crash and burn ending is on one level a total bummer.

On another level, however, it’s a somewhat poetic, KOAN-like expression of essential truth.

Let me explain. The Lakers, and the Zen of Phil Jackson (PJ), are about an offensive scheme known as The Triangle, which is mostly about passing, cutting and spacing to create opportunistic, high percentage scoring situations.

Unfortunately, so much of the defensive edge in the triangle is predicated upon the offense clicking.

Thus, kill the triangle and you kill the Lakers.

Boston figured this out and plays true team D in terms of closeouts, spacing management and isolation avoidance so it was a bloody mess, and despite the Lakers winning two games in this series, there was never a full game where the Lakers were "The Lakers" in terms of flow, poise and execution.

The riddle for PJ and the Lakers in the off-season is with the Western Conference getting so much better, and Boston and Detroit being strong D types of teams, you need to have a DIFFERENT LOOK for when the opponent is crushing the triangle.

For all of the talk that PJ made after the Pau Gasol deal about all of the different styles the team could play depending on the opponent, there really was only one look that the Lakers threw out there.

It’s like the fastball pitcher who needs a second or third killer pitch to be lethal and invincible.

All of that said, I was actually pretty serene as the Lakers were getting killed. Why? They go into the off-season with no illusions that another year of the same pitch will be good enough to win the championship.

This is the KOAN, the paradox and the riddle that will stick in the guts of the (once) mighty Lakers in the coming months, like a fine meal turned rotten having been exposed too long to the elements.

And you know what, as hard as that truth is, they are pretty darn close to phenomenal if they can figure out the above riddle, and pick up an off-the-bench gamer or two (ala James Posey) during the off-season.

Honestly, I never understood why the Lakers were so heavily favored, as much as I love them and as proud as I am of their accomplishments.

It is generally a truism that the best D beats the best offense.

Nothing should take away from a great year, though -- one of the sweetest and most magical I have experienced as a Laker fan -- albeit one with a very sour ending.

A final note. I would be remiss if I did not give props to Kurt and the gang at Forum Blue & Gold, a site full of true, knowledgeable gamers.  This site really made the playoffs extra special. Here is their post on the finals blowout, ‘There’s Got to Be a Morning After.’

Related Links:

1. Lakers-Celts and the Sporting Metaphor: on sporting metaphors and rivalries.
   

Can Apple Manage iPhone Developer Expectations?

It is obvious to the outsider that Apple is accepting a limited number of developers into its iPhone Developer program so it can focus on working out the bugs/workflow in AppStore and the whole, integrated surround. 

Unfortunately, it hasn’t been super transparent on that process nor has it set expectations with developers in terms of when they might get their pass.

Add to the mix Apple’s overly secretive culture, and that puts developers in a pickle. 

On the one hand they are being courted and counted as a part of a growing number of iPhone SDK 'developer downloads.'  On the other, they are told to wait their turn, or more accurately, being told nothing.

This understandably makes some of them feel like they are being jerked around.

Paul Kafasis of Rogue Amoeba talks about this conundrum in 'A Broken System.'  Here's an excerpt (thanks to Daring Fireball for the link to this story):

Ultimately, the problem here is with communications, or lack thereof, from Apple. When Apple first announced the SDK, thousands of developers rushed to apply for the development program, a flood for which Apple may not have been prepared. However, since then, Apple has bungled the processing these requests. Confusing emails and a lack of useful correspondence have left us waiting to hear the status of our application for a full three months and counting. Will we eventually be accepted to the program, or will we ultimately be rejected, and barred from providing software for the platform at all? At the moment, we simply have no way of knowing.

I talk a lot about the good side of Apple, but I have also talked equally about their poor history with developer relations (see links below). 

Good will once lost is not so easily replenished, a truism that will only pick up velocity as the RIMs/Blackberry and Googles/Android of the world respond to the iPhone challenge.

Meanwhile, an AppStore starts to take shape.

Related Links:

1. The Scorpion, the Frog and the iPhone SDK: on Apple's somewhat tortured history with third-party developers.
2. Upward Mobility, Land Grabs and the iPhone Universe: red flag warnings on Apple's patent portfolio strategy wrt iPhone?
3. iPhone SDK - mobile reasons for optimism: why the iPhone Universe is a big deal.
4. iPhone 2.0 - swinging for the fences: an analysis of the WWDC Keynote by Steve Jobs.

iPhone 2.0: Swinging for the Global Fences

Since most of the startups that I have done are platform companies, and Apple has repeatedly defined what they are delivering as a mobile platform, a lot of my thinking around the almost two hour Apple WWDC Keynote is weighted towards the question of how compelling the iPhone is as a platform play.

Thus, I don’t look at the iPhone as simply a commodity device competing feature/price against the Nokias, Samsungs or even the Blackberrys of the world. 

Rather, I look at whether the value proposition is likely to translate to a thriving developer ecosystem; whether the applications that drop out of that ecosystem will engage consumers and enterprises; whether a real economy/marketplace is destined to form around this constituency; and finally, whether what Apple is doing in other segments of its business (i.e., Macs and Music) is creating a Halo Effect that translates to unfair advantages in the iPhone arena, and vice-versa.

I am a pragmatic simpleton so since Apple announced plans to roll out the iPhone SDK late last year, I have been tracking Apple’s stated strategic and tactical plan, how well they are executing on that plan and whether the proverbial “dogs are eating the dog food.”

(If interested in burrowing deeper, see links to a few posts below, which covers application scenarios, legal considerations, business strategy analysis, etc). 

First off, full props to Steve Jobs.  He is the consummate showman.   The entry point into the presentation began with Job talking about how it’s iPhone’s first birthday, how users love their iPhones to the tune of 90% customer satisfaction. 

He even touted the fact that some wacky high percentage of iPhone owners use 10 or more features, quipping that before iPhone, most people couldn’t figure out even two features on their phone.

At the same time, it was the appropriate mix of swagger and specificity grounded in a few simple recognitions and points of focus.

The underlying message codified and compellingly argued, IMHO, is that the iPhone represents the birth of a mobile platform that has changed phones forever.

Jobs was pretty transparent, in fact. He identified the market needs checklist that Apple has identified from talking to customers, developers and partners, and then proceeded to pick each item off.

Beginning with the end, the iPhone Universe (which includes the iPod touch devices as well) feels like an absolute home run, something I say in full recognition of what my business partner and friend, Snapp Networks, CTO, Alex Mostoufi, rightly noted about the challenge of executing so many moving parts simultaneously, as Apple is trying to do. 

I reach this conclusion, in part, because from watching the evolution of this thing, Apple has not changed their tune one iota, while at the same time embracing specifics and iterating as circumstances dictate.

Specifically, Jobs framed five challenges as the ‘next challenges’ for Apple to overcome for the iPhone to realize its potential:

1. 3G (+GPS) 
2. Enterprise support
3. Third party applications
4. More countries
5. More affordable

3G (+GPS) 
The announcement of 3G iPhone was the industry’s worst kept secret.  But the strong battery life, usually a negative with 3G, was a clear positive.  So, too was support for GPS, and it is clear that Apple is pushing GPS-enabled location-based services as a killer app. 

I am a huge believer in the goodness in local and location based services, and given Apple’s patent efforts related to this segment, I believe that they believe that it’s a strategic growth area for the platform, meaning it will be well supported within the iPhone SDK.

Enterprise support
An ongoing narrative promulgated by Apple has been that Apple is serious about penetrating the enterprise.  Previously, they announced support for enhanced security and access control functions, as well as the ability for the iPhone to function as a Microsoft Exchange client, which is key in corporate environments.

Truth be told, Apple has historically talked a better game about the enterprise than focused on it and executed accordingly.  Now, however, they appear in it to win it, in part because I believe that they sense a Trojan horse into enterprises, owing to Microsoft’s struggles with Vista.

Here, they did a good job of positioning the device as a safe choice, touting stability and maturity owing to the fact that it builds off of Mac OS X, and also how this gives developers leverage with the Mac platform (i.e., apps created for Mac OS are relatively easy to port to iPhone).  This is part of what I think is the Halo push (a point bolstered by the sneak peek demos of Snow Leopard, their next major OS release).

On the selling front, it seems that they recognize that they can’t succeed with a pure frontal assault on the enterprise so they seem to be identifying verticals and pursuing a beachhead strategy. 

Specifically they demonstrated applications and touted customer successes in Pharma, Medical, Entertainment, Higher Ed and the Military.  They even had a guy from Genentech referencing iPhone as an enterprise-class mobile computing platform, for what that's worth.

There will be a lot of chatter and skepticism about Apple’s ability to penetrate the enterprise, but my guidance is to focus on both the vertical segments and workgroups that are likely to be early adopters.  As these segments toggle and realize real productivity gains, more of the main of the enterprise market will start to shift in their favor.

Third party applications
This is all about the iPhone SDK, which they repeatedly touted as the ‘most feature-rich mobile platform,’ and leveraged the demos by third party developers to spotlight how easy, quick and with limited developer resources it is to create native applications.

The demos that they showed in the keynote impressively showcased the capabilities of the iPhone platform. A couple of the gaming apps simply rocked (check out ‘Cro-Mag Rally’ and ‘Kroll’ – see YouTube video). The different medical apps were akin to something out of Star Trek (check out ‘MIMvista,’ a multi-modality medical imaging application); and ‘Band,’ a music studio app for the iPhone, spoke to the earnestness and fun spirit of the platform.

Part of what makes this all work is Apple’s bear-like embrace of ‘the Cloud,’ the premise of always-on, service aware connectivity, and their efforts to ensure that everything works over the air wirelessly, such that cellular or Wi-Fi, it doesn’t matter.  Having bought many a song via the iTunes wireless store, I can tell you that this will overnight open the door to micro-transactions of all kinds.

In parallel, their thinking on AppStore continues to evolve and get better. It is a HUGE opportunity for Apple as well as developers in the sense that it enables developers to reach every iPhone/iPod touch user on the planet. 

In addition, Apple has now added support so that enterprises can use AppStore for their internal apps, sort of a roll-your-own marketplace, and they introduced an AdHoc model for developers to informally roll out applications to very small groups (i.e., <100 downloaders). 

Very slick, and with Apple keeping 30 cents on the dollar that these apps generate, it can realistically grow into a multi-billion dollar market in its own right.

In addition to the earlier mentioned support for the iPhone to operate as an Exchange client, Apple announced MobileMe, a push-based contacts, email, calendar, photos and files synchronization service that replaces .Mac, and dynamically (and over the air) syncs Macs, PCs, iPhones and iPod touch devices, all of which is also accessible via a really nice Web front end located at Me.com so users can access their online information anywhere, anytime and always be sync’d up.

MobileMe is positioned as ‘Exchange for the rest of us’ since you don’t need an Exchange server or an IT department for the service to work. Here is a link to detailed demo of the service.

Noteworthy here is the strategic tie-in between Microsoft and Apple. On the one hand, the ‘Exchange for the rest of us’ positioning seems like an assault on Microsoft but in reality, it formally recognizes Microsoft’s dominance and brand, and is complementary to direct Exchange support within iPhone.

Plus, it is an app that will work equally well with Microsoft Outlook on the PC and Apple Mail on the Mac.  It is suggestive of growing maturity within Apple and Microsoft, and an alignment of interests in an age where Google has looked increasingly like the de facto organizer of all online information. 

Given the richness of functionality and how the demos showed MobileMe as seamlessly integrated into different iPhone and Mac/PC services, if I’m Google, I see this as a clear assault on Gmail, Google Maps support, notwithstanding.  The dynamics between Google and Apple are a topic which I have blogged about extensively (see links below, if interested).

One final note is that Apple announced a unified push notification service that will be rolled into the iPhone SDK in the Fall.  This is Apple’s answer to the need for event-handling services that can remain persistent even when the event-aware application that it serves, such as an IM application, is not running. 

This is somewhat of a technical topic, but basically it reconciles the paradox between real-time/always-on and the need to maximize battery and performance by limiting the iPhone to one application running at a time. 

The service, which works over the air, is unified in that sense that all developers will have to have to use it for asynchronous, persistent event handling.  Incorporated into the SDK will be customization options for Badges, Alert sounds and Textual Alerts.

More countries
Jobs lead this topic off somewhat humorously noting that while they only have six countries officially launched so far, the unlocked iPhone data suggests very potent global demand (something like 15% of all iPhones have been 'unlocked,' a term that means they have been activated in a way that allows them to run in carrier networks and countries not sanctioned or supported by Apple).

From here, he talked about the need to get the iPhone launched in more countries and how they had set a goal of 12 countries by end of year, and a stretch goal of 25, prompting the audience with a “So how’d we do?”

Then a global map popped up onscreen with ‘It’s a Small World After All’ playing in the background, as 70 countries (but not mainland China) showed up on the map.  They are well on their way here.

More affordable
Jobs closed with $199 as the maximum price of the iPhone 3G (they will now allow carrier subsidies to take the price even lower), touting it as, “Twice as fast for half the price.”

Experience suggests that $199 is a magic number for mass consumer adoption so I think that they hit their mark here.

Netting it out
I think of the WWDC Keynote as Apple's moment when they announced to their constituency base that they are committed to swinging for the global fence.

I have little doubt that carriers will sign up en masse now that some of the business model restrictions are gone, customers will see $199 as a relatively easy impulse buy, and once a couple 'have to have' iPhone apps start flooding into the market, Apple is going to do some crazy, game-changing volume.

Related Links:

1. Jobs and iPhone: The (second) greatest unintentional head-fake in tech history?
2. iPhone SDK: Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
3. iPod touch: the first mainstream Wi-Fi mobile platform?
4. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
5. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
6. Upward Mobility, Land Grabs and the iPhone Universe: on Apple's mobile patent strategy.

Jobs and iPhone: The (second) greatest unintentional head-fake in tech history?

There is a passage in “The New New Thing,” Michael Lewis’ biography of Jim Clark, founder of Silicon Graphics, Netscape & Healtheon, where  before the dawn of the web, Clark’s zeal leads the entire cable industry to chase after a proprietary, cable-centric vision of the Information Superhighway.

Following a serendipitous meeting with Marc Andreessen, Clark realizes that in fact, cable is not the on-ramp to online nirvana, but rather, a web browser-based Internet is.  So unceremoniously, Clark simply veers left, leaving the rest of the industry heading off to a road that would be dead-ended for years to come. 

Lewis refers to this moment as the greatest unintentional head-fake in tech history, as Clark’s willingness to completely switch gears when new data presented itself left a bunch of industry titans chasing windmills when they could have secured the gold that Clark ultimately laid his hands on.

One wonders if the second greatest unintentional head-fake was the revenue sharing and exclusivity deal that Apple did with AT&T in rolling out the iPhone. 

Based on Jobs’ presentation at Apple WWDC, where he unveiled iPhone 3G, the App Store and MobileMe/Me.com (near and dear to my heart), Apple is now starting to give up revenue sharing to gain subsidized pricing and moving away from carrier exclusivity (read: cheaper iPhones to secure the mass market).

What’s the head-fake here?  Namely, that by setting the bar so high for what a mobile phone could be (thanks, in part, to Apple’s ability to dictate integration requirements with the carrier’s network) and extracting rich financial terms from AT&T (and the first wave of international partners), Apple seriously baited the hook for carriers hungry to get into the excuse-free mobile Internet game today but looking for more traditional economics (i.e., a heavily subsidized phone but no revenue sharing).

The wait is (almost) over, and consumers get a $199 3G iPhone, which has historically been a mass-adoption pricing sweet spot.

For Apple, this is about three things:

1. Reach; namely, growing its unit volume and global footprint coverage with a 2.0 offering at a time when the rest of the market is struggling to get to 1.0.
2. Halo Effect acceleration; iPhone sales beget Mac sales, and vice versa.
3. Heralding the dawn of a new platform; a core part of the SO WHAT here is that the iPhone SDK is driving apps and application developers to the Apple universe.  Not only will many of these apps encourage consumers to lock themselves into the platform, but as Apple stands to capture 30 cents on every dollar generated by these apps, the proverbial ATM machine will be incessantly throwing cash until the end of time.

Net-net: the game now becomes about growing unit volume (the flat fee side of the business) and growing AppStore revenue per user (the annuity/variable income side of the business). 

As we used to say back in my days in the embedded device space, "Secure the Design Win; Protect and Grow the Run-time Revenue."

Related Links:

1. iPhone SDK: Mobile Reasons for Optimism: why the iPhone Universe is a big deal.
2. Holy Shit! Apple's Halo Effect: how Apple has turned gravity into its friend.
3. Sub $200 Wi-Fi Touchscreen iPods by Fall? iPod touch goes mainstream.

Innovation, Inevitability and Why R&D is So Hard

Federico Faggin, whose critical contributions at Intel led to the game-changer that was/is the microprocessor once spoke to the ‘inevitability’ of certain innovations, noting that, “Because these inventions have a certain inevitability about them, the real contribution lies in making the idea actually work.”

Thus, we can look at PCs, iPods, Google, eBay, YouTube, et al as inevitable in the sense that if the gorillas behind these innovations hadn’t broken through with their industry dominant offering, someone else would have.

In fact, Malcolm Gladwell (of ‘The Tipping Point’ fame) argues pretty convincingly in ‘IN THE AIR: Who Says Big Ideas are Rare?” that the history of science is chock full of ideas that several people had at the same time.

Far from minimizing the importance of the BIG BANG impact of wholly new ideas, this simply spotlights the truism that most “inventions” don't come from wholly new principles, but spring forth instead from the synthesis of existing principles. 

Just about everything is derivative, and the magic is in how (as Faggin puts it) “the new form expands the previous one in both predictable and unpredictable ways,” adding that “typically, the unexpected consequences are the most valuable.”  Indeed.

Consider, for example, the iPod.  Apple did not create the MP3 player category, and it clearly benefited from a bunch of core technology, Internet infrastructure and licensing model innovations that proceeded it.

Yet, it took Apple to execute on the hard problem on getting workflow, UI and usability just right.  It took them integrating device, PC and service layer in a synchronous, intuitive and user-friendly fashion; and even armed with all of that best practices data, no other competitor has yet emerged with a compelling alternative. Otherwise, the iPod would be a commodity, right?

My point is really three-fold.  One is that pure, unfettered originality usually isn’t.  Entrepreneurial-types, such as myself, might deign to pretend it were otherwise but that just aint so. 

Truth be told, I regularly disavow customers, co-workers, partners and investors that, at least in most cases, it can and should be any different specifically because there is a tendency to undervalue the process and pseudo-defensibility of getting workflow, UI and usability both synchronously 'right' and on a rich evolution path.

Two is that execution, the act of making things work based on a codified set of outcome goals and metrics of success aligned around a consistently articulated ‘definition of the situation’ is hard.  Really hard. 

Consumers are notoriously unreliable when it comes to predicting their needs, what they will use and how much they will pay for it. 

Enterprises are simultaneously chasing innovation and running away from it, forcing a thread the needle approach that often bleeds across functional departments and org chart lines, each with their own ambitions, objectives and tactics for getting what they want and blocking what they don’t want.

And even the best of product teams still have to grope, ship the idea, fix it and iterate their way to finding the sweet spot that secures the hearts and minds of customers in a manner that keeps investors engaged.

This leads to my third point.  Most companies do a REALLY POOR job rolling out new products, creating new lines of business and building meaningful revenue lines from R&D seedlings. 

Those that have a serious R&D budget tend to either under-estimate the importance of innovation or take a Labs-mentality that projects so far into the future that innovation amounts to proof-of-concepts that will likely never see the light of day as revenue-producing products.

Other than the afore-mentioned Apple, which embraces vision as strategy and then tactically just executes really well, Google, which embraces lots of seeds and then feeds the winners and Cisco, whose R&D is M&A, who else is getting R&D right?

Related Links:

1. Holy Shit! Apple's Halo Effect: on the goodness of manufacturing leverage through strategic execution.
2. The Chess Masters - Google versus Apple: why partners Apple and Google are without peers, and (seemingly) destined to become frien-emies.
3. Googling Innovation:  on strategies to Seed, Select, and Amplify new ideas.
4. Best Practices - How to Build an Audience: a look at what the online innovators did right.

Why Social Nets Struggle to get Advertisers to "Show Me the Money"

Given the well-chronicled struggles of Facebook and MySpace to monetize their massive audiences, Valleywag ponders, “Why can't Facebook and MySpace make more money?”

Part of the problem is the ad agencies themselves.  Simply put, the big spends agencies like to make for the clients on TV go too far on social media.

Here is an excerpt:

With $100 million, Smiths said, he could purchase and track 1,500 TV ad spots for a client. Spend a tenth of that much on a social media site, and suddenly, "There's a huge wave of data we're not prepared to deal with." That overflow of information is one reason advertising on social media requires "more resources" from agencies.

More work to spend less of the client's money? That doesn't appeal to agencies.

Putting aside the conundrum for agencies (which is totally valid), I think the larger issue is that the current advertising model is ass-backwards relative to what will work in social nets.

Bottom line: you can not PUSH ads at this audience. What you need to do is give them reasons and contextually clear paths to engage with a brand and its products/services.

Whether that means giving consumers the tools to pick the types of products/services they want on their pages, incenting them to place them on their pages (or share with friends), giving them clear action paths to GRAB BROCHURE, GET COUPON or REQUEST INFO or other methods, it is more of an opt-in, or consumer PULL, type of model than a push based one.

Until that model starts to take hold, lots of confusion, waste-age of eyeballs and fiscal pain lie ahead.

Related Links:

1. Twitter-nomics: envisioning structured tweets.
2. Advertising 3.0: on Madison Avenue and social media marketing.
3. Channel Me and the Rules of New Media: old media versus new media rules and how they shape branding.
4. The Programmable Fan Site: a new media/ad unit model.

Lakers-Celts and the Sporting Metaphor

In the annals of sports, no rivalry stands the test of time like Lakers versus Celts, a rivalry that begins anew when the NBA finals start on Thursday night. 

Nothing can touch the history (count ‘em - 16 NBA championships for the Celtics, 14 for the Lakers, 10 head-to-head match-ups in the finals). 

When you utter names like Russell, Cousy, Chamberlain, West, Magic, Bird, McHale, Kareem and Kobe, so many magical moments come to mind.  It’s the proverbial smorgasbord of great performances.

And are there two more iconic and timeless leaders than Zen-like Phil Jackson and victory cigar toting Red Auerbach, both of whom are tied for an NBA-most nine championships?

As a fan, I love all sports because I love the drama, the angst, the heartbreak, the joy and the moments of triumph captured in time. 

As an entrepreneur, I love sports as a metaphor for winning, team, coaching, counter-moves, clock management and the indelible-ness of individual brilliant performances within the construct of winning.

Basketball, however, holds a special place for me.  As a lifelong Lakers fan, I grew up during the rise of the Magic-al Showtime Lakers, thrilled to the chaotic greatness of the Kobe-Shaq-Phil championships, and this year has been, oh so satisfying, akin to a virtuous performance.

Plus, basketball has always been to me the perfect blending of superstar talent, individual performances blended into team, speed, drama, between-game adjustments, and a series mindset that has no rival in football (and baseball is just too slow, too cerebral).

In any event, fingers crossed for the Lakers to reach the pinnacle in this year (and in the years ahead).

What follows are some random sports nuggets:

• Phil Jackson on leadership (from Sacred Hoops): Most leaders tend to view teamwork as a social engineering problem: take x group, add y motivational technique and get z result. But working with the Bulls I've learned that the most effective way to forge a winning team is to call on the players' need to connect with something larger than themselves. Even for those who don't consider themselves "spiritual" in a conventional sense, creating a successful team -- whether it's an NBA champion or a record-setting sales force -- is essentially a spiritual act... When players practice what is known as mindfulness -- simply paying attention to what's actually happening -- not only do they play better and win more, they also become more attuned with each other. And the joy they experience working in harmony is a powerful motivating force that comes from deep within, not from some frenzied coach pacing along the sidelines, shouting obscenities into the air.
• Two great books blending sports/leadership/strategy: Think Like a Champion (by Mike Shanahan); Finding a Way to Win (by Bill Parcells)
• Forum Blue and Gold: the best most insightful, knowledgeable, Laker blog, with great analysis in comments
• Kobe highlights reel from Lakers v. San Antonio on YouTube (click watch in high quality below player)
• John Wooden's Pyramid of Success Graphic (explained in detail in Wooden: A Lifetime of Observations On and Off the Court)