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Metromile: A FitBit for Your Car

By - January 26, 2015
MetroMile staff

The Metromile staff in front of their SF HQ (Preston is in the red shirt in the back right).

Ever since writing Living Systems and The Information First Company last Fall, I’ve been citing Earnest, the financial services startup, as a poster child for what I mean by an “information-first” company. But earlier this month I met with another perfect exemplar: Metromile, a company that is already upending industrial-age assumptions about what “insurance” should be.**

I’m fascinated by the idea of “potential information” – flows of information that are locked away and unused. Potential information flows live in the imagination of every NewCo – once tapped, they create all manner of new potential value. Metromile is a stellar example of a company that has found a vector into a treasure trove of potential information – the automobile – and is busy turning that information into a new kind of customer experience, one that has the potential to completely retool the utility and value of the insurance business.

But I get ahead of myself. Let’s back up, and start at the beginning. Metromile began as the brainchild of David Friedberg, co-founder and CEO of yet another information-first insurance breakout, Climate Corp. Climate opened up reams of new information flows for the farming industry, and along the way was acquired by agribusiness giant Monsanto for more than $1 billion. Friedberg realized that the lessons of Climate were applicable to consumer insurance, and Metromile was born.

I met with Metromile CEO Dan Preston in his crowded and humming San Francisco headquarters (pictured above). I had heard about Metromile, but my knowledge was limited to their headline: car insurance you pay for by the mile. But I figured the company was up to more than just a cheaper insurance product. On that hunch my chat with Preston did not disappoint.

Metromile does have a deceptively simple premise: those who drive a lot tend to have more accidents, those who drive less, fewer. Simple, no? But it turns out, the way insurance products currently work spreads the risk of those high mileage drivers across the entire pool of the insured. Put another way, if you drive less than 10,000 miles a year, most likely your insurance premiums are higher than they need to be. That’s because insurance companies average out the costs across their entire base of customers, forcing the less risky drivers to cover the costs of those who drive more.

Metronome

The Metronome – Metromile’s vector into a goldmine of potential information flows.

Metromile is the only insurance product on the market that charges by the mile on a retroactive basis – it tracks your miles driven, then calculates your monthly premium in arrears. To do so, it needs access to your vehicle’s diagnostic port – the same access point used by mechanics when they service modern cars (every car since 1996 has such a port).  When you sign up, Metromile sends you a “Metronome” – the same kind of device made famous by Progressive Insurance’s Snapshot, which uses them for data-driven discount products.

If you drive less than 10,000 miles a year, and live in a city environment, chances are you’ll save a lot of money using Metromile. But saving money is just the start of the company’s ambitions. After all, once the Metronome is installed, Metromile begins to collect data about your car and your driving habits. And any good information-first entrepreneur knows that the true value of an enterprise lies in mapping potential information flows. And that little Metronome is a hidden goldmine of such data.

Preston and his team doesn’t see Metromile as just an insurance company. Instead, Metromile is “your friend and ally in owning a car.” An ally with sophisticated data science and a friendly app that delivers much more than monthly savings. From the company’s website:

We aim to make the urban experience of having a car as simple as it can be, by taking our deep understanding of data and transforming it into information and services that make having a car less expensive, more convenient, and simply smarter….With the Metronome in place, the free Metromile app functions as your personal driving dashboard. Use it to track and optimize your gas usage and trips, monitor the health of your car, and locate your car if it’s missing. You can even use it to get automated street sweeping alerts.

And there’s the difference between Metromile and the rest of the insurance business – Metromile sees itself as a services company in the business of helping drivers make more informed choices about their cars. It starts with insurance, but it quickly becomes the voice of your car. Metromile’s app opens a window into the previously opaque world of automotive data and helps you understand all manner of things about your car – if it’s close to breaking down, for example, or if you’re using it in ways that might cause unwanted expenses down the road. When you think about it, Metromile is a fitbit for your car. And that’s pretty darn cool. One to watch, to be sure.

**Because I believe so much in the company, I am considering a small investment in MetroMile. Anytime I write about a company where I am or might be an investor, I will make a practice of noting it – so far, this hasn’t happened yet. As I point out on my disclosures page, I am a fairly active angel investor. 

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Apple and Google: Middle School Mean Girls Having At It

By - January 20, 2015

THE-DRAMA-YEARS(image) I’m the father of three children, and two of them are girls. And while my first was a boy, and therefore “broke me in” with extraordinary acts of Running Headlong Into Fence Posts and Drinking Beer Stolen From Dad’s Fridge Yet Forgetting To Hide The Bottles, nothing, NOTHING, prepared me for Girls Behaving Badly To Each Other Whilst In Middle School.

Those of you with girls aged 11-14 know of what I speak: Middle school girls are just flat out BADASSES when it comes to unrepentant cruelty – and they are almost as good at forgetting, often within a day (or an hour) the rationale or cause of their petty behaviors. On one of my daughter’s wall is a note from a middle school friend. It says – and while I may paraphrase, I’m not making this up – “Hey Girl, I’m so glad we’re best friends, because I really hated you before but now we’re best friends right?!” And my daughter *pinned this* to her wall – her ACTUAL wall, in her bedroom!

Anyway, every so often girls in middle school end up squaring off – and the result is an embarrassment of small-minded but astonishingly machiavellian acts of cruelty. Little lies are let loose like sparks on a pile of hay, and soon a fire of social shunning rips through the school. Invitations are made, then retracted vigorously, and in public. Insults are veiled as compliments, and a girl’s emerging character strengths – a penchant for science perhaps, or a love of kittens for God’s sake – are expertly turned against her.

But this post isn’t really about middle school girls. Because we all know middle school girls – with love, patience, and copious wine (for the parents) – eventually grow up and out of such behavior.

Apple and Google? Not so much. And as an avid consumer of both these company’s products, I’m tired of it.

It’s the little things that pile up, the unnecessary lies and petty inconveniences. Like the fact that you need to install a javascript or browser extension to make Gmail the default mail application on your Mac. Because, you know, everyone knows how to do that. Or that you need a third party app (and a degree from General Assembly) to make music and movies purchased on Google Play work in iTunes, or vice versa. Or that Apple won’t let Google index apps in the iTunes store, because, you know, that Google mission of making the world’s information useful and accessible sounds suspicious, right?

Or – and yes, this is the one that pushed me to write this post – that you have to follow an utterly convoluted five-step process just to make group texting work between iPhones and Android users – only to learn it doesn’t really work every time, and in fact, if you’re expecting an important text from someone with an iPhone, well, you better just man up and buy a f*cking iPhone too, loser.

I’m not even scratching the surface of the bullpucky these two companies are putting us through to create “user lock-in” and discourage consumer choice. I mean, we gave up on the easy stuff, like, oh I don’t know, a universal power cord that can charge any phone. Because, you know, why have standards when you can take forty bucks from some poor loser every time he misplaces his charger? Or, if you wanted to change your default browser to Chrome, you had to root around in Safari to do so (Google has since gotten around this)? And don’t get me started on Apple Contacts and Calendar…and getting them into Google’s universe. Yeah, it’s supposed to work. And no, it really doesn’t, not so much, and not so well. I’m six months and thousands of dollars into trying to make that work. Um, Google – tell me please why there’s no Google Calendar app for iPhone? Is it because…you know, Apple’s not cool anymore? Gah.

I bet I’ve missed tons of examples, but given the state of diplomacy in the Apple and Google worlds, I’m not expecting a solution anytime soon. The two companies clearly don’t want to play nice – Apple’s DNA is to lock you into their pristine, walled garden user experience, and Google certainly isn’t eager to encourage Android users to interact with iOS. Apple has kicked Google out of the default position for mapping in iOS, and many expect search to be next. The walls are getting higher, and the middle school girl behavior is likely to get worse.

To Apple and Google, I say simply this: For the sake of folks who love both of your product lines: Grow up. Please!

App Stores Must Go

By - January 11, 2015

appstores2014 was the year the industry woke up to the power of mobile app installs, and the advertising platforms that drive them. Facebook’s impressive mobile revenue numbers – 66% of its Q3 2014 revenue and growing  – are a proxy for the mobile economy at large, and while the company doesn’t divulge what percentage of that revenue is app install advertising, estimates range from a third to a half – which means that Facebook made anywhere from $700 million to more than a billion dollars in one quarter on app install advertising. That’s potentially $4 billion+ a year of app installs, just on Facebook. Yow. That kind of growth is reminiscent of search revenues a decade ago.

But as I’ve written before, app installs are only the beginning of an ongoing marketing relationship that an app publisher must have with its consumer. It’s one thing to get your app installed, but quite another to get people to keep opening it, using it, and ultimately, doing things that create revenue for you. The next step after app install revenue is “app re-engagement,” and the battle to win this emerging category is already underway, with all the major platforms (Twitter, Yahoo, Google, Facebook) rolling out products, and a slew of startups vying for share (and M&A glory, I’d wager).

Over time, app install revenue is bound to wane, and app re-engagement revenue will wax, to the point where the latter is inevitably larger than the former. Neither will disappear entirely, of course, but as the mobile model matures, it’s likely they will take new form. But the following three steps will remain constant – they were true before apps (when we called Internet services “websites”), and they were true before the Internet itself:

  1. Get people to notice your product or service, and engage with it for the first time. 
  2. Get people to come back, and keep sampling your product or service. 
  3. Get people to regularly give you their money for your product or service.

We’ve now got a reliable model for #1: It’s the combination of the app store platform and app install advertising. #2 is coming along as well, as I mentioned above.

But what of #3? It’s one thing to get someone to give you a few bucks for your app, but how can you keep them giving you money (or doing things that make you money, like ordering on GrubHub)? If app makers are spending an unhealthy percentage of their capital on advertising, innovation in product will suffer, and we won’t get apps that people are willing to continually pay for. It strikes me, after any number of conversations I’ve had around the state of mobile, that mobile markets in the US will slowly but surely evolve toward the norms currently in place in Asia, where advertising is a minority of mobile revenues, and in-app commerce of all kinds is the standard. After all, that’s how it is for business in general – advertising is a small but significant percentage of overall revenues.

But for this to occur, our process of app discovery and engagement has to rationalize – it’s simply too expensive to build a loyal audience in mobile, and the top 1-2% of apps can afford to price the rest of the market out. This is the great failure – or cynical intention – of Apple and Google’s hobbled app store strategy. There simply should not be one app store per platform – they’re what Steve Jobs would call “orifices” – monopolistic constructs created to consolidate control. App stores stifle innovation – they are damage, and the Internet will eventually route around them. 2015 should be the year that becomes evident.

My other recent musings on mobile can be found here.  

The Three Golden Rules of Naming Something

By - January 06, 2015

10645727_s(image) I love being part of naming something. It’s probably the flat out most fun you can have legally with your clothes on – but for many folks, including entrepreneurs, it’s the source of endless consternation.

It doesn’t have to be. Here’s how I think about coming up with a name for something – a company, a new product, even a project you might be working on.

Rule #1: Don’t Overthink It. A name means nothing till those using it make it mean something.

So be willing to consider non obvious, even crazy names. Google? I mean, really, Google? And….Yahoo?! Alibaba? APPLE?

In other words, don’t overthink the literal meaning of a name too much – a brand is nothing more than a cup you fill with meaning later – a vessel to hold what your brand ultimately becomes. (That cup metaphor, by the way, I stole from somebody famous at some point over the past three decades, and I can’t find the original source. Any help?!)

Rule #2: Narrative. The best names have a story behind them that evokes the purpose and mission of the thing being named. Google was a riff on a mathematical term that was almost unimaginably large (a googol, or 10 with 100 zeroes after it).  Big enough to tell the story of Google, which aimed to swallow and rationalize the entirety of the Internet. We gave my current company the name NewCo because it tells the story of how people are always striving to create new approaches to company creation, to do new things with companies – and often they call those things “NewCos” until they come up with a proper name. Sovrn was given its name because we wanted to evoke the idea of sovereignty on the Internet – our publishers are sovereigns over their particular domain, and our tools help those publishers be in control of their own fate.  And so on…. A name is just a word till it means something, and stories are how we give things meaning.

Rule #3: Find your Entendre. It helps when a name has a clever wink or nod to another meaning, an inside joke that your core community can believe in (and evangelize). Wired had this – it worked as an imperative “Get Wired!” – and it worked as a badge for insiders – “I’m Wired, are you?!”  The Industry Standard had at its core a goal of providing rigorous, high quality journalism to an industry overwhelmed with mainstream hype – so the name evoked old school newspaper naming conventions. Federated Media was so named because it told the story of federating many quality web sites together so as to have the power of one large site (Rule #2), but it also shortened to “FM”, which evoked the album-driven rise of quality rock’n’roll stations of the 1970s – and as founder, I always thought of blogs as the rock’n’roll bands of the Internet.

I could go on and on, but honestly, I think if you run a brainstorming session with these three rules in mind, you’ll find your name pretty quickly. Maybe in a subsequent post I’ll outline how to run these kind of brainstorming sessions. I still do at least half a dozen of these each year for friends and colleagues, and it’s a total hoot. The latest is a new publication called “Tincture.” More on that soon!

Predictions 2015: Uber, Google, Apple, Beacons, Health, Nest, China, Adtech…

By - January 04, 2015

1-nostradamus2015. My eleventh year of making predictions. Seems everyone’s gotten onto this particular bus, and I’m now late to the party – I never get around to writing till the weekend – when I have open hours in front of me, and plenty of time to contemplate That Which May Come.

There are several keys to getting predictions right. First, you need to pay attention to long term secular trends – big changes that have been in the works for a while. Second, you need to call the timing – will those trends break into the mainstream this coming year? Last year, for example, I predicted that 2014 would be the year that the Internet would “adopt the planet as its cause.” I think I was right on the secular trend, but utterly wrong on the timing.

Third, you need to pay attention to patterns that have yet to emerge, but have a high probability of breaking out in the near term. A good example of this is my declaring that Twitter would become a major media platform three years ago.

So what might happen in 2015? The year to come feels clearer to me than 2014, which I labeled “A Difficult Year To See.” Plenty of interesting technology, Internet, and media trends seem poised to break out in 2015. Here’s my cut at them.

1. Uber will begin to consolidate its namesake position in the ” The Uber-ization of everything” trend. When we think of Uber, we think of black cars, of getting around from one place to another. But Uber has the brand permission to expand its brand to mean more than transportation. If you think of Uber as a company that takes a previously expensive, complicated, and inefficient process and leverages the Internet, mobile devices, the 1099 economy, and logistics to create a 10X better offering, there’s no reason the company won’t identify and pick off one or more similar markets in 2015. Uber is already making moves in delivery, a natural adjacency, but I imagine the company may either buy or build its way into markets that feel – at least initially – a bit further afield.

2. Related, Uber will be the center of a worldwide conversation about the impact of tech and business culture on the world. Put another way, Uber will replace Google, Facebook, and Apple as the centerpiece of a debate around the change wrought by the powerful tincture of technology and capitalism. This has already begun, of course, but 2015 will be when it comes to a dramatic head. I’m not quite sure how, but it’ll be obvious when it happens.

3. Google will face existential competition from Facebook due to Facebook’s Atlas offering, to the point where Google will find a way to connect its search and personal data to its Doubleclick asset. This will require changes to long-held pillars of its Privacy Policy – and thanks to legal complications from its search near-monoply, these changes will be tortured and painful. But in the faec of Facebook’s superior personalization capabilities, Google will have no choice. Google has long owned web advertising through its consolidation of a universal adtech stack. It’s the default platform for both publishers and advertisers, the 900-pound gorilla of ad serving, measurement, and delivery. But Facebook is attacking Google head on here with a rebuilt Atlas product that allows advertisers to target users of its ubiquitous service across the web. It will take time for Atlas to grow into meaningful market share, but advertisers love high quality personalization, and that’s what Facebook offers. Google’s in a difficult position here  – its privacy position was crafted for a world where there was no meaningful competition in web advertising. Now there is. The phrase to watch is this one: “We will not combine DoubleClick cookie information with personally identifiable information unless we have your opt-in consent.”

4. The Apple Watch will be seen as a success. I know, I know, I’m wandering into a morass here, as many others have already predicted that the watch will or will not work in 2015. But the use case, to me, is simply too strong to ignore, and I believe Apple will be first to prove it. I think Fred’s post was misunderstood, he didn’t say Apple’s watch won’t succeed, he just said it won’t be an iPod, iPhone, or iPad. And he’s right – no way will Apple sell as many units as those hits. We’re talking fashion here, and not everyone wants an Apple on their wrist. But I think we’re all ready to stop pulling out our phone every time we get a new text, email, or social media update. And for a significant number of folks, the Apple Watch will be how we change that behavior.

5. And Apple Pay will not. Apple Pay is slick, and it works, according to those I’ve talked with (I don’t use an iPhone, so I am certainly at a disadvantage here). But I’m basing this prediction on my sense of market need – does the market need a new way to pay? I’m not certain the current system – credit cards, cash – is so inefficient that it will motivate consumers to switch en masse this year, and for Apple Pay to be a success, I think that has to happen. I’m not saying the service won’t show good uptake and growth, it most likely will. But until there’s an orthogonal reason to use it that gives us all a much stronger value proposition, I don’t think Apple Pay will take over the world. In five years, I’d say the reverse will be true, but by then, we’ll have universal expenditure tracking and integration with a larger ecosystem of financial management tools, an ecosystem that is still underdeveloped and fractured at the moment.

6. But Beacons will re-emerge and take root. Remember iBeacons? They created quite a fuss when launched some 18 months ago, but since then, no one’s really paid them much nevermind. That will change in 2015 as ambient intelligence starts to be part of the fabric of everyday life. By year’s end, beacons will be a red hot market, and a platform for many a startup funding round.

7. Google’s Nest will build or buy a scaled home automation service business. Nest is a home automation business, but it’s also invested in rolling trucks to help its consumers install its growing suite of gadgets. Why stop there? The modern home is now a complicated mess of mismatched technology – there’s spotty wifi that works in one room but not another, dumb phone systems that don’t integrate with anything, and AV systems that break down more than they work. Shouldn’t someone 10X the home technology platform? Yes! And Nest is the brand with permission to do just that. It won’t hurt that by becoming the best home system integrator in the world, Nest will sell a shit-ton of its own devices.

8. A breakout healthcare startup will emerge in the consumer consciousness. Hard to say which one, as there are a ton of them, but the time is ripe for a startup to breakout that changes how we view our relationship to health data and services. One such startup will become the darling of the press and the exemplar of how healthcare services “should work.”

9. A breakout mobile startup will force us to rethink the mobile user interface. The time feels right for a new approach to mobile interfaces, and tons of startups are busy rethinking the space (see my posts on the subject here). I’m not predicting that the “chiclet-ized” approach to apps and OSes will break down in 2015, that’d be too much change to happen in one year. But as with healthcare above, a startup will break out that opens the industry’s eyes to new ways of interacting with our mobile devices. It’s about time.

10. At least one hotly-anticipated IPO will fizzle, leading many to declare that the “tech correction” has begun. Will it be Box, Dropbox, or Square? Spotify, Pinterest, or even Uber? I don’t know, but with so many deeply funded startups in the IPO zone, and our current tech boom entering its fifth year, the cycle is poised to pendulate. And yes, I just used “pendulate” for the first time in my writing life.

11. China will falter. This may be controversial, but again, using my keys of “secular trends, timing, and emerging trends,” it strikes me that China is due for a correction of its own. The US tech markets have a complicated and fractious relationship with China, and now that Alibaba is public and reportedly acquisitive, all manner of issues will be forced to the front burner. The Valley is anticipating a flood of Chinese tech competition and lucre in 2015, and I can’t imagine this comes without policy ramifications. Used to be, China regularly spied on US corporations, and we shrugged it off. No more. China is widely understood to have a brittle, centrally controlled, and deeply corrupt power structure. I expect this mix of illegal behavior (the spying and corruption) and easy money will cause powerful companies in the US to lobby Washington for relief, and I expect Washington will be willing to take action. One to watch, to be sure.

12. Adtech comes back. Adtech, a sector that took a beating this past year, will once again be seen as a strong, investable market. The sector has matured, and is no longer dominated by one-note business models dependent on a culture of fraud. This trend has already begun to play out with acquisitions in 2014 – LiveRamp, Datalogix, Blue Kai come to mind. With major players like Oracle, Salesforce, Facebook, Adobe, SAP, IBM and Google battling it out over marketing automation, it’ll be a very good year to be a differentiated adtech startup.

Well, there’s a dozen predictions for you, and I feel like I could do another twelve. But I think I’ll leave it there, and leave it to the fates to see how I did in one year’s time. Happy New Year everyone, and here’s to a great 2015!

 

Related:

Predictions 2014

2014: How I Did

Predictions 2013

2013: How I Did

Predictions 2012

2012: How I Did

 

My Predictions for 2014: How’d I Do?

By - December 31, 2014

2014Each year around this time I look back at the predictions I made 12 months ago, and I score myself with some combination of objectivity and defensiveness. And each year I do pretty well, batting somewhere between .500 and .750, depending on how you keep score.

This past year was different. First off, my predictions were unusually sparse. I started the year in a funk – I was depressed by our industry’s collective ignorance of climate change, and it showed in my writing. I called 2014 “A Difficult Year to See,” because my vision had been clouded by a deep anxiety over why tech hasn’t tackled what seemed to me to be the world’s most pressing problem.

One year later I find myself in a more patient stance. But given the goal of this post is to review how I did, and not how I feel today, let’s get to the score card.

1. 2014 is the year climate change goes from a political debate to a global force for unification and immediate action. It will be seen as the year the Internet adopted the planet as its cause.

Well, maybe not. I think I wrote from a place of “I wish this was the case” as opposed to “I think this actually will happen.” What I can say is this: Climate change is now a front burner issue for all thinking people on this planet, and that’s certainly a shift for the better. California, cradle of the tech industry, is in the middle of a severe, inescapable drought, one that weighs heavily on everyone working here. Sure, California has had cycles of drought in the past, but this one is different – in just three years, we’ve eclipsed draught data from as far back as 1,200 years, and as persistent as seven years in duration. Data like this starts to change how people think about their impact on the world.

But it takes time. Last year I hoped that “…the lessons of disruptors like Google, Twitter, and Amazon, as well as newer entrants like airbnb, Uber, and Dropbox, can be applied to solving larger problems than where to sleep, how to get a cab, or where and how our data are accessed. We need the best minds of our society focused on larger problems – but first, we need to collectively believe that problem is as large as it most likely is.”

Such a shift requires more than one year to happen. I’d judge myself harshly here – what I predicted simply did not happen. However, I do believe that 2014 was the beginning of it happening, and I reserve the right to come back to this post a few years from now, and claim that I called the beginning of a multi-year, secular shift toward “the Internet adopting the planet as its cause.” At least, I certainly hope I can.

Score: .000

2. Automakers adopt a “bring your own” approach to mobile integration.

Automobiles are in the “mobile experience” market, and until recently, it looked like they were going to try to keep their customers from bringing Apple, Google, and other tech brands directly into the driving environment. I noted that the auto industry changes painfully slowly, but 2014 would be the year things shifted to one where consumers began integrating their own smartphone environments directly into their driving experience. And while there is still a long way to go, it seems I was right.

Just this month, for example, Ford announced it was dropping its seven year partnership with Microsoft for a Blackberry’s ONX operating system. Seems like small news, till you look under the covers and see what it really means: using QNX allows Ford’s customers to easily integrate their iPhones or Android devices with their cars. Apple and Google seem to be taking a dual-pronged approach to the automobile – work with the industry to allow simple integrations between the phone and the car (contact lists, phone calls, some apps), while at the same time announcing far more ambitious plans to become the entire operating system for those cars in the future (for Apple, it’s CarPlay, for Google, it’s Android Auto).

Overall, I think I got this one largely right.

Score: .750

3. By year’s end, Twitter will be roundly criticized for doing basically what it did at the beginning of the year.

Twitter went public in November of 2013, and in my predictions two months later, I wrote: “The world loves a second act, and will demand one of Twitter now that the company is public…its moves in 2014 will likely be incremental. This is because the company has plenty of dry powder in the products and services it already has in its arsenal – it’ll roll out a full fledged exchange, a la FBX, it’ll roll out new versions of its core ad products (with a particular emphasis on video), it’ll create more media-like “events” across the service, it’ll continue its embrace of television and popular culture…in other words, it will consolidate the strengths it already has. And 12 months from now, everyone will be tweeting about how Twitter has run out of ideas. Sound familiar, Facebook?”

For the most part, this is pretty much what has happened. For Twitter, 2014 has been a year of piling on, in particular for Twitter CEO Dick Costolo, who was given a vote of no confidence in the Wall St. Journal this November.  And what has Costolo failed to do? Apparently, the same thing everyone else has failed to do over the past seven or so years: Define exactly what Twitter is supposed to be, even as the service kept growing and delighting the world. But let’s get real: in the four years Costolo has been CEO, Twitter has gone from zero to more than a billion in revenue – a feat that puts the company in the rarified air of Google, Facebook, Uber, and precious few others.

It strikes me that Costolo’s biggest error in judgement was to let Twitter go public in an environment where the stock was vastly over-valued. His stock debuted at $26, closed above $40,  and was pushed past $70 before it was retreated to its current price of $36 or so. Unfortunately, the market’s expectations of Twitter far outpaced the company’s true value, which was extraordinary to begin with. And so, one year later, Twitter is “roundly criticized for doing basically what it did at the beginning of this year” – struggle to define just what Twitter actually is, but at the same time, produce an invaluable service that has managed to grow revenues at a blistering pace. My own view boils down to this: Ignore Wall Street, and focus on Twitter’s plans in mobile services. More on that in my predictions post.

Score: 1000

4. Twitter and Apple will have their first big fight, most likely over an acquisition.

Well, I have no idea whether this one was true. It certainly didn’t break out into the mainstream news if it did happen. I mentioned that entertainment would most likely be where the two companies diverged, as I view that to be an area both want to play (most notably music and video). Apple certainly made its play there with Beats, but there’s not been any word of a “fraying relationship” between Twitter and Apple that I’m aware of. As far as I know, I whiffed on this one.

Score: .000

5. Google will see its search related revenues slow, but will start to extract more revenues from its Android base.

Yep. Search revenues have been slowing for years, but 2014 was the year everyone woke up to it. As the NYT reported this October: “The thing that worries investors, though, is that the company’s golden goose — its search engine — is showing signs of age.” Put another way, search revenues are not growing as quickly as they once were – Q3 grew 17% y/y, compared to Q2, which grew 25% on the same measure. But the piece also noted a strong uptick in Google’s Android-based Play store revenues – up 50% year on year. Combine that with Google’s focus on consolidating its control of the Android ecosystem, and I think I got this one pretty much right.

Score: 1000

6. Google Glass will win – but only because Google licenses the tech, and a third party will end up making the version everyone wants.

Whoa. What was I thinking? I was right in some details – in the post I suggested the price will go down by half, and sure, you can get used Glass for half price or better on eBay – but I whiffed again here. Not much happened with Google Glass this year, and no third party ended up making the version everyone else wanted. And I’m not sure anyone ever will.

Score: .000

7. Facebook will buy something really big. 

Um….yup. Twice. I suggested it might be Dropbox or Evernote, but Facebook went for WhatsApp and Oculus, among many others. I suggested that Facebook needed to admit it had “become a service folks use, but don’t live on anymore,” and that the company would continue to buy its way to its core user base, as it had with Instagram. I was right, but I picked the wrong horses.

Score: .750.

So looking at all my predictions, how did I average? Well, on seven attempts, I whiffed three times, nailed it twice, and hit .750 on two more. An average of .570, if you use “hits” as your base, but a less impressive .314 if you just add up the numbers and divide by 7.  I’ll let you decide which it was, and meantime, look forward to doing better next year. My Predictions 2015 post is coming, but most likely will wait till this weekend. Happy new year, everyone!

What Will Search Look Like In Mobile? A Visit With Jack

By - December 18, 2014

I’ve come across any number of interesting startups in my ongoing grok of the mobile world (related posts: 1, 2, 3).  And the pace has quickened as founders have begun to reach out to me to share their work. As you might expect, there’s a large group of folks building ambitious stuff – services that assume the current hegemony in mobile won’t stand for much longer. These I find fascinating – and worthy of deeper dives.

First up is Jack Mobile, a stealthy search startup founded a year or so ago by Charles Jolley, previously at Facebook and Apple, and Mike Hanson, a senior engineer at Mozilla and Cisco who early in his career wrote version 1.0 of the Sherlock search app for Apple. Jack was funded early this year by Greylock, where Mike was an EIR.

I’d link to something about Jack – but there’s pretty much nothing save a single page asking “What Is Jack?” Now that Charles and Mike have given me a peek into what Jack is in fact all about, I can report that it’s fascinating stuff, and at its heart is the problem of search in a post web world, followed quite directly by the problem of search’s UI overall. Whn you break free from the assumptions of sitting at a desk in front of a PC, what might search look like? What is search when your device is a phone, or a watch, or embedded in your clothing or the air around you?

Jack is trying to answer that question, and the team is rethinking some core user interface assumptions along the way.

Search on mobile is by almost any measure broken – the core assumptions of what makes search work on the web are absent on your device. On your phone, there are no links to index, no publicly accessible commons of web pages to crawl and analyze. Just a phalanx of isolated chiclets – disconnected apps, each focused on a particular service. But that doesn’t mean we don’t need to search in mobile, in fact, we search a lot on our phones. But the results we get ain’t that great. In the main, that’s because when we search on our phone, we get answers from…the web. But as Jolley and Hanson pointed out, answers from the web often fail when presented to us in the context of mobile.

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Mobile search queries are just…different. Let’s explore why:

- Context. When you search on your phone (or later, on any “liberated” device), you’re more likely than not in completely different context from when you’re “on the web.” Mobile searches tend to be service related – “How do I get to this address,” and/or location driven: “What are good nightspots nearby.”

- Query & Corpus. Because of this context, *what* we want to search is focused in a far smaller potential corpus of material. Mobile searches tend to have one exact answer – we aren’t loking for a list of links that we then want to peruse, we want an answer to a specific contextual question – mobile searches bias toward service and action as the query result. That means search’s presumptive barrier of completeness (the cost Google bears of keeping the entire Internet in RAM, for example) is not a barrier on mobile. You don’t have to have ALL the possible information “indexed” – just the right information.  And what information is that? Well, that leads us to ….

- Signal. With mobile, rich new signals are available that could (and should) inform search results (but don’t). Certainly the most robust such signal is your current location, but that’s just the start. Others include your location history (where you’ve been), the apps loaded on your phone, your usage history with those apps,  and the structure inherent in those apps to begin with. Which begs a huge possible difference in…

- User Interface. Search on mobile, for now, is identical to search on the web. It’s a command line interface, where you type in your query, and you get blue links for results. Google’s been working hard to address this, and the combination of its universal search product, which surfaces “one true answer”, with voice search, is a real step forward. But the folks at Jack showed me another potential search interface for mobile, and I found it quite compelling. That approach? Well, I’d call it “conversational.”

The Conversational Search Interface

Way back in 2004 I met with Gary Flake, then a senior technology executive at Overture, a leading search firm of the day (Yahoo! later acquired Overture, which fueled Yahoo!’s search results until the Microsoft deal in 2009.) Even way back then, before mobile was a thing, I was frustrated with search’s interface.

I asked him why we couldn’t move forward in search interface – the “ten blue links” approach was so … flat. I wanted to ask one question, get results, and then ask another. Or better yet, I wanted the service to ask me a question – “You entered ‘Jaguars’ – did you mean the football team, the car, the cats, or something else?” Gary looked at me ruefully and said something I’ve never forgotten: “If only I had just one modal dialog box…”

What he meant was that search, at that point, was a race for the best ten blue links, and anything that got in the way of that, like a modal dialog box that popped up and asked a refining question, would mean that a very large percentage of folks would abandon the search. And abandonment of the search meant loss of revenue.

But that idea – of search as a series of back and forth exchanges, a conversation if you will – has always stuck with me. So imagine my surprise when Jolley and Hanson showed me a very early prototype of Jack Mobile’s search interface and it looked like….a conversation!

Jolley and Hanson have asked me to not report the details of their prototype interface, but suffice to say, it’s quite different, and it looks and feels far more like a back and forth than anything on the web. It’s delightful, and using the service is also cool. Jack knows where you are, so if you ask it “Guardians of the Galaxy” it’ll find showtimes near where you are, and return that information as the result. If you ask it “Italian restaurants,” Jack won’t give you a list of places with the most Google+ reviews – it’ll give you highly rated eateries near where you are right now, perhaps enhanced by reviews relevant to you given the fact that you have the GrubHub or OpenTable app on your phone.

Takeaways

Jack is still in very early stages, but the co-founders had a number of key insights from their work so far. The first has to do with completeness – while long tail edge cases rule the roost in web search, mobile has far more distribution of “head end” search – which means you can narrow your indexing and your algorithms and still satisfy a large majority of queries.

Also, mobile search is deeply personal – there’s almost no such thing as one size fits all result. In mobile, results should be rewarded because they are the most likely answer, not because a ranking system has pre-determined them as most authoritative. Searching for “BMW 3 series” while standing at a Mercedes dealership should most certainly bring a different result than the same search from a Taco Bell on Interstate 5. While personalized search has become a mainstream attribute of Google, the truth is, it’s quite shallow – on the web, Google knows precious little about you. But your phone knows quite a bit. Unlocking all that data is still too hard, but it’s coming.

But perhaps the most interesting implication of Jack’s approach to search lies in how it might drive a new ecosystem between “publishers” and “audience members.” Web search, Hanson points out, is all about the consumer – the creator of the web page is a second-class citizen, stuck in a suckers’ deal of sorts: You have to “publish” your presence on the web, or risk irrelevance, but you are entirely at the mercy of black box forces you don’t understand when it comes to how people might find you. Hanson posits a different model for Jack’s index, one in which publishers deliver their app and content structures to Jack via a proprietary feed of discrete, small units tagged to specific query types.  If this sounds a bit like semantic search, well it is. Hanson, a veteran of open web standards fights via his work at Mozilla, told me he has “deep scar tissue” around the topic, but at the same time, he and Jolley sense that with mobile, a new kind of level playing field just might allow semantic, personalized search to truly emerge.

There are far more questions than answers hanging over Jack, but that’s why it’s interesting – here’s a small, well funded team of search, web, and mobile experts really leaning into a new way to think about a massive problem/opportunity set. It’s certainly one to watch in 2015.

What Media Must Do To Succeed

By - December 15, 2014
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Wired Founder Louis Rossetto at work in the early days.

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Man, there’s been a ton of hand wringing over “the media” of late, from all the fuss over First Look and the New Republic to questions about whether a publication can survive if it’s not at 20-30mm uniques and growing – like current darlings Vox, BuzzFeed, and Vice.

To me, just one question matters when it comes to a publication and whether it has a chance of long term success: Is it a must read?

Back when we were just starting Wired – 22 years ago – I remember coming into founder Louis Rossetto’s office with some pressing matter. I was the Managing Editor, and it was my job to have a lot of pressing matters – the majority of them tactical in nature. I needed to edit pieces, I needed to get pages out the door, I needed approvals on headlines and captions and budgets and scores of other details. I’m not sure what I needed from Louis that day, but I do recall what he was doing – he was sitting down, a Wall St. Journal spread out across his desk, and he was slowly and deliberately turning the pages, studying the newspaper from front to back.

I had seen him doing this enough to know it was a regular habit, and the pile next to him, consisting of the NY Times, New Yorker, and other long form, old school periodicals – told me he was going to be at it for at least another hour if not more.  As a harried Managing Editor of The Coolest Magazine In The World which covered The Digital Revolution, the idea of steeping myself in “old media” for an hour or more a day seemed insane. If an article in the Journal or the Times was really important, someone would tell me about it in email or on the Web. I interrupted Louis and I asked him: “How can you afford to take the time to do this every day?”

I’ll never forget his response. He looked up, genuinely nonplussed, and said “How can you afford not to?”

Looking back, with the benefit of having sat in Louis’ chair (as CEO of a media startup), I now understand his response. As CEO, Louis had to understand what the most important people in media were reading, and in order to do that, he had to read the Journal, the Times, and the New Yorker, at the very least. These publications were essential reading if he was to be fluent in his core community, the people in that club were the people who would determine Wired’s ability to get funding, to prosper, or to fail.

It may no longer be true that aspiring media chieftans must read the Journal to be fluent in their craft  (certainly not in paper form, any way), but the lesson of that exchange stuck with me. If a publication is going to succeed, it must be required reading for a core of influential people in a given market. At the end of the day, that is what matters most. It’s why Wired worked – lots of people may have wanted to read Wired, but a core group of them felt they had to. For four or so years, the same was true of The Industry Standard. And it was true of many of the best sites that aligned with Federated back in 2005-2010 – TechCrunch, Mashable, and GigaOm among them.

For me, the true test of a publication’s endurance is its convening power – does it bring together the most important people in a given community? If it does, it has the best chance of success, regardless of its overall reach or number of pageviews. Certainly it’s no guarantee of success – you still have to be deft and thoughtful when it comes to making money. But it all starts with that one simple question: Is it a must read? All else flows from that.

 

Google: The Information-First Conglomerate

By - November 21, 2014
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Larry Page on the cover of Fortune, Nov. 13 2014

Last week Google CEO Larry Page got the Fortune magazine cover treatment, the latest of many such pieces attempting to quantify Google’ sprawling business. The business press is obsessed with answering the question of whether we’ve reached “Peak Google.” (Clearly Fortune’s opinion is that we have not, given they named him “Businessperson of the Year.”)

“Peak Google” is what I like to call a “contagious misconception” – it seems to make sense, and therefore is worthy of consideration. After all, we’ve seen IBM, Microsoft, and other companies hit their peaks, only to drop back as they face the innovator’s dilemma.  Search is past its prime, Google is a search company, ergo – Peak Google.

But as the Fortune piece argues (and yes, I’m quoted, for what that’s worth), Google has a lot more going on beyond search. And while it continues to milk that multi billion-dollar quarterly profit center, it’s built five additional billion-dollar businesses – some of which are directly related to its search empire, but others that are not. Google Apps/Cloud, YouTube/Play, Android, Ventures, and Adtech are already past the billion-dollar mark. Huge businesses in waiting include plays in home automation (Nest), healthcare (Calico), transportation (Chauffeur/self driving cars), and connectivity (Fiber). Beyond that group lie a dozen or so potential blockbusters in energy, robotics, AI, wearables, and the unknown moonshots behind the curtains at GoogleX.

It’s that stunning breadth of scope – what Fortune calls the company’s seemingly limitless ambition – that has caused a prolonged internal debate around Google mission statement:

“To organize the world’s information and make it universally accessible and useful.”

Page has been floating trial balloons about expanding Google’s mission statement for nearly two years. When Tony Faddell, CEO of Nest, announced Google’s acquisition to his staff in January of 2013, Page took the stage and took questions from the stunned audience. One staffer asked Page why Google had any interest in a home automation company – it seemed quite orthogonal to Google’s focus on search, apps, and mobile. According to sources at the event, Page answered by acknowledging that Google’s mission statement may not be large enough to contain his company’s ambitions.

Since that first admission, Page has been testing out the idea of an expanded mission, and with Fortune he aired his ambivalence in public, telling Miguel Helft that “it’s probably a bit too narrow.” And on first blush, that seems right – what does a thermostat have to do with organizing the world’s information, anyway?

Actually, quite a lot.

When you look at Google through the lens of what I call “information first” businesses, things start to make a lot more sense. By that measure, Google is not only an information-first company, it’s also the world’s first information-first conglomerate – starting or buying businesses in every market undergoing the transition from “matter first” to “information-first.”

We see the transportation business shifting to information first, for example. The currently maligned but nevertheless extraordinary Uber is proof of it, but so is Zip Car, Tesla, and the entire autonomous car industry. The true value of these new kind of businesses is in how they understand information flows in the transportation markets, then execute new approaches to old problems (how do I get from here to there?) using novel and/or more efficient methods based on information technologies. Uber doesn’t put cars (commodities) or drivers (means of production) first – it puts information processing first. The cars and driver then reorganize to the new information flows and – voila! – a $17 billion company is born in four years. Uber proves that if you solve difficult information processing problems in traditional markets, you can create world beating value. Airbnb, DocuSign, Lending Club, and many more are further examples of the same thesis.

So what markets are ripe for transition to an information first framework? Well, let’s break down what makes for a “ripe” market. I think there are two key attributes of a market ready to be radically shifted by an information-first approach. First, a market where there’s liquidity of poorly organized and processed information. In other words, there’s a ton of data, but it’s not well organized or computed. Think about the world wide web in 1998, for example. Sh*t tons of information, terribly organized and lacking a processing layer. Google came in and – voila – a multi billion dollar company was born in five short years. Secondly, look for a market currently controlled through centralized chokepoints, but with the potential to be rapidly reorganized if and when consumers gain control. Again, look at search – before Google, portals like AOL and Yahoo ruled the web. Everyone went to a chokepoint to “see what was on the Internet.” After Google, consumers took control of their own web surfing.

So…what markets have both data liquidity and are currently controlled by centralized chokepoints? Well, let’s look at mobile. Tons of data, terribly organized, controlled by the chokepoints of carriers and OS vendors. Check! Or, how about healthcare? Oh hellz yeah! Energy? Yep! Connectivity? Most certainly! Markets where there’s not yet liquidity of information, but there’s about to be – home automation, food, retail – are also ripe for reinvention.

The world is turning into information, and that information wants to be organized, accessible, and useful. I don’t think Google’s mission needs to change at all. Whether or not they knew it at the time, Google created a manifesto that I believe will prove to be dead on in the context of an economic shift to a information-first paradigm. And when the history of this era is written, I’d wager that Google will be seen as the first information-first conglomerate to both identify and exploit that shift.

The Web Will Kill Apps

By - November 17, 2014

wired web dead coverLots of the “apps are killing the web” meme going around these days, with the latest batch of casket sealant come from no greater validator of commonly agreed upon wisdom than the Wall St. Journal. “The Web Is Dying; Apps Are Killing It” argues Christopher Mims, and it’s hard to argue with him given the preponderance of current evidence.

I disagree.

I am in the midst of a long stew on the future of mobile, it’s taken me through deep links and intelligent links, to the future of search on mobile and beyond, and I’m nowhere near finished with either the reporting or the writing – so I can’t definitively counter the Journal’s argument – yet. But I feel it in my bones – apps, what I’ve disparagingly called “chiclets” – are not the model of how we will interact with information, services, or the world via mobile. The best of the web – open, low cost to entry, no gatekeepers, end-user driven, standards-based, universal namespace, etc. – will prevail.

Why am I so sure of this? Because just about every single person I’ve spoken to – some three dozen or so, to date – are convinced we’re in a secular shift from the app model to….something else, something new, something better. I had a great meeting today at the mobile search startup Jack, for example, with people who are super-qualified to have opinions on the matter (ex Facebook, Excite, Apple, et al, backed in a quiet $6mm round early this year by John Lilly and Reid Hoffman at Greylock). And they are not alone – the caliber of people I’ve encountered who share my point of view is extraordinary. Something big is brewing, and I’m deep into figuring out how to frame it. It’s  a big story, and I don’t know if I can tell it as well as it deserves to be told. But I’m going to try, and if you’re reading this, well, it’s your job to course correct my attempts.

Stay tuned. The web as we knew it ten years ago may be “dead,” but its core values and framework are alive, kicking, and poised to once again disrupt the current oligarchs of mobile.