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Thoughts On Alibaba

By - September 21, 2014

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(image WSJ)

A caveat before I think out loud, quite possibly getting myself into a running battle I know I can’t win: I’m not a public market stock investor, I’ve never been one, and take the following ruminations at the price they’re offered: IE, free.

But this Alibaba stock debut doesn’t smell right to me, and it’s not the company- which is certainly a huge success story inside China, driven by a scrappy founder with a laudable (if manicured) personal narrative.

That said, Alibaba’s star turn smells of collective greed, with a hefty side of whistling past the graveyard.

I wouldn’t be writing this post if I didn’t have some knowledge around the deal, at least as it relates to the culture of access enjoyed by those with relationships to investment firms. I’ve missed a TON of great deals over my career, mainly due to my being a journalist (or acting like one, as it relates to holding stock) for a large percentage of my working life. But over the past few years I’ve carefully gotten into investing, mainly in early stage startups. I don’t look to invest in IPOs, but every so often, about twice a year, they get offered to me.

This is what happened with Alibaba. I was given the opportunity to – possibly – invest a small sum in Alibaba about a month ago. I figured it was a no-lose deal, so I said “sure” and I didn’t give it much more thought.

But as the IPO drew near, I reconsidered that decision. Not because I thought the stock was going to tank right after the IPO  – I knew there was far too much money at stake, at least in the short term, for that to happen. No, I second guessed myself because I realized I honestly don’t understand the company, or the powers that control it. I pinged the fellow who had offered me the chance to invest, so as to recant my investment. But in the end, it didn’t matter. His fund didn’t end up getting an allocation of precious “at the open” stock anyway.

I can only imagine what it must have been like running that allocation, deciding who amongst all the wealthy, connected individuals and firms would get Alibaba stock at the opening price. It’d be like doling out rigged lottery tickets – everyone’s a winner! One thing I am sure of – it wasn’t a fair process, and I almost ended up benefitting from it by happenstance. So here’s why I am concerned about Alibaba, in no particular order:

1. Greed. The company was considered, by everyone I’ve spoken to, a “sure bet” that would “pop at the open” just like the Internet stocks of old (and it did!).  And yet, everyone that I have spoken with also believes that Alibaba is an offering that encourages the kind of negative Wall Street behavior none of us really want to see happen again. The book closed early. The stock priced above its initial range and moved up by nearly 40% on its first day of trading. Financial institutions, uncertain if they were going to get the allocations they wanted, started currying favor and hustling and pleading and whining. There was a frenzy of money making activity going on, and it felt like…pure greed. Alibaba is the ultimate insider’s stock – pedestrian retail investors did not get access to shares at the opening price, and most likely they will be the sheep to whom the wolves of Wall Street quickly sell (if they haven’t already). Insiders – wealthy people with access to early distribution of IPO shares at the open, have already made their fast buck. And the ultimate insiders have made a huge killing: a consortium of big banks poured $8 billion into Alibaba this June at a $50 price, a quid pro quo if ever there was one for giving a Chinese company access to the US markets. This kind of behavior adds questionable value to our society. I don’t doubt that everyone who held pre-IPO or at-the-IPO shares will make money, in fact, I’m sure of it. And that smells of a rigged game.

2. Shallow understanding. If you’re reading this, and you bought the stock at $93 (roughly the price of its first public trade, up from $68), tell me – have you ever used Alibaba’s services? Do you really understand the company? I doubt it, because Alibaba is a Chinese company. Most of us here in the US don’t speak Chinese, or have a reason to use Alibaba’s services. But for some reason we all seem willing to buy into the “Chinese eBay,” or the “Chinese Facebook,” as if throwing those successful public companies’ reputation over Alibaba’s frame somehow equates to quality. It’s a “bet on China,” as most of the press puts it. Certainly that sounds good, given the country’s growth and early stages, but it leads me to wonder… will most analysts who are covering the stock have done core due diligence on Alibaba – the kind where you go to the market in question and talk to customers, suppliers, and regulators? That would mean they have access and understanding of the culture that controls Alibaba, and I’m pretty sure that culture will not ever allow such diligence to occur (more on that below). What bankers and analysts will tell you is they’ve run the numbers that Alibaba has given them, and they are fantastic. Then again, so are the numbers on Chinese GDP growth – and most well informed people I’ve spoken to say those numbers are unreliable. (Oh, and by the way, if you think the $81 billion China just injected into its own economy was a shrug, I guess you should buy Alibaba without concern). Which leads to…

3. Controlled by a corrupt government. Do you know how China works? I don’t, but I’ve talked to enough folks who have lived and worked in China to get a pretty clear picture: The economic and government culture does not hew to US standards, to put it mildly. And like every other company in China, Alibaba is ultimately controlled by the whims of the Chinese government. It’s something of an open secret that Chinese corporate culture is definitionally corrupt by US standards. So…does listing it on the US stock markets change this fact? I could be wrong (see my caveat at the top), but I don’t believe it does. At least when companies are corrupt in the United States, we have a free and open press, and a democratic rule of law, to keep them in check.  One could reasonably argue that it’s a supreme proof of our capitalist system that now Alibaba is public in the US, so it will now have to play by US regulations. I wish I could buy into that narrative, but I sense all we’ll really get is a company well versed at playing our game, rather than a company that is an active builder of value in our society and in other free markets.

Let me put this another way: Here are a list of Internet leaders who decided to forego China, because the government has made it nearly impossible for them to do business in the way that built our capital markets: eBay, Yelp, Twitter, Google, Facebook….and that’s just off the top of my head. So by buying into Alibaba, we’re buying into a system that has, through government fiat, denied innovative US companies growth in the world’s largest market, then capitalized that fiat into a stock it’s now selling back to us. Again, that just seems wrong.

4. Hazy growth outside core markets. Many observers are expecting Alibaba to come into the US and other large markets, and either buy or compete its way in, so as to fuel its long term growth. This I find to be difficult to believe, on many levels. Sure, Alibaba could try to buy…Yahoo!, Yelp, Twitter, hell, maybe even Box or Square or one of the other heavily funded “unicorns.” But…does anyone really believe it can *manage* those companies to success post transaction? To get a sense of how odd that sounds, imagine Google or Facebook buying a slate of Chinese companies and then managing them well. Sounds pretty risky to me.

Anyway, I’ve gone on long enough, and undoubtedly I’ve managed to piss off any number of friends and colleagues across multiple industries. So let me repeat: I’m no expert in Chinese markets, nor am I a professional public market stock investor. I’m just an industry observer, making industry observations. Caveat emptor.

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A Print Magazine Launch? What?!!! California Sunday Is Coming

By - September 15, 2014

CaliforniaSundayMag_Logo_JPEGA year or so ago Chas Edwards, a colleague, pal, and member of the founding team at Federated Media, came to my office for a catch up. I had heard he was cooking up a new venture, but I didn’t know the details.

Little did I know what Chas and his new partner Douglas McGray had up their sleeve – a new *print* magazine built specifically for California.

But…print is dead, right? Apparently not. Chas and MacGray have a thesis that California is ready for a well-written, beautifully designed print publication, and all that was standing in their way was the cost of circulation, a major impediment in today’s market. They solved that issue with a clever hack of today’s newspapers – California Sunday is distributed free inside selected California newspapers. In essence, they’re piggybacking the launch of their brand, adding a valauble new product to what is a staid and attenuated newspaper brand.

But that’s not the only asset the team is bringing to bear. California Sunday also has a successful event strategy – it’s folding McGray’s popular “Pop Up Magazine” series into the company as well. And it has built a studio to help brands execute content marketing inside the magazine’s pages. Oh, and it has some of the best talent in the state, from Michael Pollan to Farhad Manjoo, as contributors.

Back in 1991, I prototyped a magazine called “The Pacific” based on similar goals to California Sunday. Ten years later, I taught a course in magazine publishing with Clay Felker, the late publishing legend who retired to Northern California and always dreamt of creating a pan-state publication (he tried, and failed, with New West). Now Chas and Douglas are giving it a go, and I think they have more than a fair shot at making it work. And yes, I’m an investor!

California Sunday launches October 5. You can read more about the publication here, and follow its Twitter feed here.

Early Lessons From My Mobile Deep Dive: The Quickening Is Nigh

By - September 06, 2014
chiclets

Do you really want to eat them one at a time? Me, I prefer mashing ‘em up.

Recently I began a walkabout of sorts, with a goal of ameliorating my rather thin understanding of the mobile marketplace. If you read me closely, you know I’ve been more than frustrated with what I call the “chicletized world” of disconnected mobile apps. It’s rise was so counter to everything I loved about the Internet, I’m afraid as a result I underestimated its impact on that very world.

My corrective starting point – the metaphorical bit of yarn upon which I felt compelled to tug  – was the impact of “deep linking” on the overall ecosystem. The phrase has something of a  “dark pool” feel to it, but it’s actually a rather mundane concept: Developers tag their mobile apps and – if relevant – their complementary websites – with a linking structure that allows others to link directly into various points of entry into their applications. This is why, for example, you can jump from a Google search for “Tycho” on your phone to the “Tycho” page inside your Spotify app.

So far, I’ve had more than a dozen or so meetings and phone calls on the subject, and I’ve begun to formulate some working theses about what’s happening out there. While my education continues, here are some initial findings:

1. Deep linking is indeed a Very Big Deal. Nearly all the folks I spoke with believed deep linking in mobile was the beginning of something important, something I’ve started to call…

2. The Quickening… which I believe is nearly upon us. Mobile app developers are humans driven by business goals. If the business opportunity is large, but proscribed by narrow rules, they will follow those rules to gain the initial opportunity. For example, when the convener of a new market (Apple) imposes strict rules about how data is shared, and how apps must behave with regard to each other, app builders will initially conform, and behaviors will fall narrowly in line for a cycle or two (in this case, about five years). However, once those rules prove burdensome, businesses will look for ways around them. This is happening in mobile, for reasons that come down to new competitive players (primarily Android) and to a maturation in distribution, revenue, and engagement models (more on that below). The end result: The market is about to enter a phase of “quickening” – a rapid increase in linking between apps and web-like backends, harkening a new ecosystem in which both foreseeable and unforseen “life” will be created.

2. App Installs Rule. Till They Don’t. The market for mobile apps is – predictably – driven by app installs. And unless you’re the teen viral sensation of the moment, the only reliable way to get app installs is to buy them – almost exclusively via advertising on mobile devices. Facebook figured this out, and holy cow, did the market love that. But app makers are now realizing they have to do more than get their app installed. It’s actually just as critical to get their current installed base to actually engage with their app – lest it be forever relegated to the dustbin that is our current (deeply crappy) mobile desktop metaphor.  Hence the rise of  “re-engagement advertising,” which is serving as something akin to search-engine marketing (SEM) in the desktop web.  Several folks I spoke to told me that 80% of the money in mobile advertising is in app installs, but they quickly cautioned that installs are a house of cards which will not be sustained absent the rise of re-engagement advertising.

3. We’ve Seen This Movie. Which got me thinking. Jeez, have we ever seen this movie before. It’s called publishing. You can buy crappy circulation, crappy audiences, and crappy one-time visitors, and you can also buy great audiences, but the true gauge of a publication, a service, or an app is whether folks keep coming back. And even if you have a great app/service/publication, you need to remind them of your existence more than a few times before they are hooked (this is why classic magazine circulation has three phases – marketing, sampling, and conversion). The link-economy of the open web allowed this process to happen rather naturally, but there is no such economy in mobile, at least not yet. Thanks to early decision made by the conveners of the mobile ecosystem, mobile is deeply shitty at providing business owners with a way of reminding consumers about the value of their proposition, which is why they are frantic for some kind of channel for doing just that. This leads me to hypothesize that…

4. The App Store’s Days Are Limited. Remember when Yahoo! owned Web 1.0, because it had the entire Web in its directory? Or when Google owned Web 2.0, because it put the entire web in RAM? Yep, both those models created massive companies, along with massive ecosystems, but neither hegemony lasted forever. Apple’s App Store (and Google’s) are subject to the same forces. The model may be dominant, but it’s not going to last. As one senior executive in mobile media put it: “The app store is a weigh station, not an end point.” What might replace the App Store as a model for distribution? That’s a fine question, and one I don’t have a strong opinion about, at least not yet. But I sense the Quickening will lay the groundwork for new vectors of app adoption and engagement, similar – but not identical  – to the link economy of the web. Which is why I believe…

5. Re-engagement ads open the door to new topologies (and economics) across mobile. A pretty obvious point, if you’ve managed to stay with me to this point, but one I think is worth restatement and elaboration. Re-engagement advertising is driven by a fundamental business (and consumer) need, and Facebook, Twitter, Apple, Yahoo!, and Google are all responding with deep linking topologies that enable re-engagement. This is a relatively new development, and it’s hard to predict where it might go. But one thing’s for sure – deep linking is good for both the developer and the consumer. It’s just a better experience to go directly into the exact right place inside an app that’s already on your phone. And for marketers, deep linking enables far superior “landing pages” inside their apps, driving a conversion path that is measurable and repeatable. It’s not hard to imagine that re-engagement is the beginning of a more robust economic model for mobile, one that will re-integrate much of the goodness we created when the Web broke wide open ten or more years ago. And that makes me wonder if….

6. The home screen of “chiclets” is mutable. Broadly established consumer engagement models don’t shift rapidly, and the colorful, 16×16 sudoku model of App World isn’t going away anytime soon.  But do we really believe we’ll be poking at squares representing apps forever? I don’t. A more fluid experience based on declared and modeled intent makes a lot more sense – one in which we flow seamlessly from need to need, serviced in each state by a particular application without having to pull back, chose a new app, and then dive back in. I’ve not yet spoken to many UX/UI folks, but I sense this is coming, and deep linking is a first step in enabling it. Somehow, I sense that…

7. Search is key to all of this. Hey, this is Searchblog, after all. It strikes me that search on mobile is pretty broken, because it forces the entirety of the web onto a model that has far more specific – and useful – parameters to work with. The signals emanating from a mobile phone give search entirely new use cases, but so far, we’ve got precious little to show for it. This can’t stand for long.

I’ve got a lot more thinking going on, but it’s too nascent to be of much use at the moment. Topics I’m also thinking about include mapping the dependencies of the mobile ecosystem, grokking the concept of “agency” and how it relates to search and mobile data,  the role of programmatic in mobile, and understanding the flow of money between the big platforms and the little guys.

As you can probably tell, my comprehension of this space is still very limited, but I hope this update sparks some of your own thinking, and that you might share those insights with me in comments or via email or other forms of media. I will continue my walkabout in coming weeks, and I’ll keep writing about it here. Thanks for reading.

And thanks to the many folks I spoke with so far, many of whom are working on stealth projects or agreed to our conversations on background. Hence, I’ve not quoted anyone directly, but again, thanks, and you know who you are!

Else 9.2.14: Don’t Worry, The Robots Are Our Friends. But the People?

By - September 01, 2014
Blade-Runner_610

“All these moments…will be lost in time…”

Else is back after an extended summer hiatus – thanks for taking the time off with me. I wasn’t sure if I was going to return to this newsletter, but its a good ritual for me to condense and annotate my daily and weekly reading habits, and enough of you have subscribed that I figured you might be missing the updates. I kind of was.

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The pieces I most enjoyed over the past week or so certainly had a theme: How will we resolve our increasingly uneasy relationship to the technology we have embraced? From automated newsfeeds to drones to AI, this stuff isn’t science fiction anymore, and the consequences are getting very real. To the links….

“Facebook Is a Weatherless World” (Searchblog)

In which I think about automated newsfeeds and a world without agency.

Inside Google’s Secret Drone-Delivery Program (The Atlantic)

Well, not exactly  secret anymore, as Google certainly wanted this particular story to get out, as it’s in a mad scramble for the future of “everything delivery” with Amazon and others. Still and all a fascinating look into one of Google’s many strange and disparate moonshots.

Robots With Their Heads in the Clouds (Medium)

Berkeley prof. Ken Goldberg lays out the quickening sparked by the combination of cloud compute and intelligent on the ground (or in the air) robots.

Wednesday Aug. 20, 2064 — What’s Next (Medium)

One of my favorite writers (Paul Ford) imagines what it might be like if all these drones and robots actually work in an optimistic scenario feature driverless cars, compostable made to order clothing, and, of course, budding romance.

Will artificial intelligence destroy humanity? Here are 5 reasons not to worry. (Vox)

It’s not easy to be human, so relax. The AI-driven roboto-verse will serve us, in the main.

ICREACH: How the NSA Built Its Own Secret Google (The Intercept)

Then again, we might want to worry about our own power structures. Imagine how the NSA might use the fantasy infrastructure that Ford creates in Medium. Yikes.

Why Uber must be stopped (Salon)

A few things about this piece. First, the headline is wrong. It’s not about stopping Uber, it’s about understanding the role of regulation when capitalism otherwise goes unchecked. Second, it appropriately wonders what happens when capital (Uber’s $1.5billion from Google, Goldman, et al) is used to crush competition, in particular, when the company that is doing the crushing has, as its end game, control of our automated transportation system (there are those dern robots again). A theme for our coming age. It’s not the cars, the drones, the tech – it’s the people behind their use. But sometimes, the way a society regulates people is to regulate the tech they employ.

SHOULD TWITTER, FACEBOOK AND GOOGLE EXECUTIVES BE THE ARBITERS OF WHAT WE SEE AND READ? (The Intercept)

Should journalists use all caps in headlines?! Apparently yes. This story is consistent with the others in this issue of Else, the debate is in full throat. See also The Atlantic’s The New Editors of the Internet.

The Facebook-ification of everything! Sex, authenticity and reality for the status update era (Salon)

Continuing my headline clickbait complaint, this headline is a total misfit for the unfortunately dry story, written by noted informational academic Lucian Floridi. He’s got a new book out, the 4th Revolution, which I plan to read. Then again, I have five books ahead of his…

Supercomputers make discoveries that scientists can’t (New Scientist)

See, we’ve found a great use for computers: Reading the stuff too dry to read ourselves.

Seeing Through the Illusion: Understanding Apple’s Mastery of the Media (9-5Mac)

My first job as a reporter was in 1987 covering Apple. For more than a decade after, I continued covering the company, through Jobs’ return. It never wavered in its philosophy around how it treated the press – as a nuisance and a threat. I’ve always thought Apple could have done better. This multi-part post fails to go as deep as I’d like, but it’s a decent overview of how Apple’s PR machine works.

Minecraft players build working hard drives (Cnet)

Minecraft has been on my “watch this closely” list for about a year. Here’s another reason why.

The Matter With Time (NY)

If you like your inside baseball with a side of dish, here’s a great read about the travails of Time Inc., the once great publishing house.

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NewCo New York 2014: My Chairman’s Picks To Visit

By - August 25, 2014

newcony

Last week I created my schedule for NewCo San Francisco, and wrote about them here. What many folks don’t know is that there are now nine confirmed NewCo festivals around the world. Three weeks after San Francisco, nearly 100 New York companies will be opening their doors and welcoming festival goers in our second annual NewCo New York, Sept. 30th-Oct. 2nd. If you live in NY, or are going there for Advertising Week this Sept.29-October 3rd, please register and visit some of your favorites.

With that in mind, here are my picks for New York.

Day One, Weds. October 1st

tumblr9 am - Tumblr. I knew the company back before it was acquired by Yahoo!, but I have not been back since. I cannot wait to grok the vibe of the place again. This is perhaps the most compelling part of NewCo Festivals for me – the vibe of the company you get simply by being inside the place. Tumblr has not yet uploaded its session description (tick tick, folks!), so I don’t know who is presenting, but it doesn’t matter – I want to get smart about this company once again. Runners up:  Simulmedia and Dstillery. Both are run by great colleagues of mine – so I already know a lot about their businesses. But both are worth a look – as they are disrupting media models in television and advertising, respectively.

foursquare10:30 am – Foursquare. Founder and CEO Dennis Crowley will be presenting Foursquare much-anticipated reboot, and I’m looking forward to hearing about the strategy from the founder’s mouth. Crowley has ridden the hype cycle up, down and now back up again, and I plan to learn as much as I can from that experience. Runners up: Evoke Neuroscience and General Assembly. Evoke is all about wearables and health data, a field I want to learn – but I’ll have to wait. And GA is re-thinking education in the tech space, a burgeoning market that I’m keeping an eye on.

Chartbeat12 pm – Chartbeat. I keep hearing great things about this “attention metrics” company, but know precious little about it. What a great opportunity to learn more and connect to its leaders – as with most NewCo sessions, the presentor is also the CEO. Runners up: Basno, a bitcoin blockchain company, and Glimpse, whose founder is doing a session on the ups and downs of running a startup.

retoy1.30 pm – Retoy. This is a flyer, but who doesn’t want to see a new kind of toy company? The CEO of Retoy will present on overcoming the “jar jar effect” of groupthink inside companies of all sizes. Runners up: RebelMouse and Zeel. RebelMouse is one of my investments and has a great founding team. Zeel is bring massages on demand everywhere – including the NY NewCo session!

MRY3 pm – MRY Group. I’ve always marveled at the work of agencies in the media world, but not spent much time with the creative side of that industry. MRY sounds like a new kind of agency that is rethinking how to work with cutting edge brands. Runners up: The New School and Startup Institute. Both are educational in nature, but very unique. I’ve always wanted to get to know the New School – I may change my sked, it was really a toss up between MRY and The New School. And Startup Institute sounds like a very New York place to hang.

LHV4.30 pm – Lerer Hippeau Ventures. One of the most connected and successful New York venture firms. I just could not pas sup a chance to see how they do what they do. Runners up: Yahoo! and OrderGroove. Yahoo! is always interesting, and I’d love to learn how the New York office feels compared to the Valley. And OrderGroove seems to be onto something really important when it comes to the conversation economy – connecting brands to truly loyal customers.

Day Two, Thursday, October 2

wichcraft9 am - ‘wichcraft. Ya gotta throw in a few curveballs at any NewCo. This is a food purveyor, one I’ve never heard of. But they focus on local and seasonal ingredients, and it’s always good to start your day with a company that has great food! Runners up: NYC Media Lab and NextJump. The NYC Media Lab sounds fascinating – a connector between NYC’s universities and its workplaces. And NextJump is a very “newco” NewCo – it’s mission is dead on to NewCo’s philosophy: “To change the world by changing the workplace.”

casper10.30 am – Casper. “Taking back sleep on bed at a time.” A new kind of company disrupting the totally bullsh*t mattress industry? Yes please! Runners up: Kickstarter and DonorsChose. One has redefined how projects get funded, the other is one of the most powerful and agile philanthropic orgs around. So many great choices!

pave12 pm – Pave. A better way to borrow money for a generation that grew up with the Internet. Fascinating. Runners Up: Parse.ly and Atavist. Both are editorial companies, the former focused on editorial analytics, the latter (and I am an investor) on story telling platforms and quality narrative product.

purpose1.30 pm – Purpose. How do “movements” come together? I hope to learn that and more at Pave’s session, which includes case studies on movement-building around gun safety, the Syrian humanitarian crisis, marriage equality, climate, and more. Runners up: MPOWERD and Aviary. My kids use both these companies’ products, one to solar power his phone, the other to edit her photos on her mobile device.

sprinklr3 pm – Sprinklr. Companies like Sprinklr help brands manage their content marketing streams. As someone with a bit of history in the field, I’m looking forward to finally meeting the team behind Sprinklr. Runners Up: SeatGeek and Animoto. SeakGeek helps fans figure out if they are getting scalped for tickets, and Animoto helps anyone make great videos (I could use the help!).

grubhub4.30 pm – GrubHub. Did anyone think food delivery would be a massive business after Kozmo fell down? Well, it is, and I want to see how GrubHub did it. Runners up: Kenshoo and Capital One Labs. Kenshoo is a very smart marketing automation company, and I’d be quite interested in learning how an old school credit card player is innovating these days….

Once again, 12 companies in two days. And consider this sked subject to change, there are so many great choices, I may well move it around a bit. Then again, as with last year, sessions will fill up quickly, so if you haven’t already, go register and fill out your sked now! NewCo New York promises to be an incredible experience.

AdTech Is Alive and Well: I’ll Have the Full Stack, Please

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National-Pancake-Day-at-IHOPReading The Information’s piece on Facebook’s reported re-introduction of the Atlas ad-serving technology, I wondered – Does the market really need six or more full stack adtech solutions?

Google is the undisputed leader in the field – it’s spent nearly ten years stitching its own technology into acquisitions like DoubleClick (the original ad server), AdMeld (supply side platform), AdWords (search), AdMobs (mobile), Teracent (targeting), Invite Media (demand side platform),  spider.io (anti-fraud), Adometry (attribution) and many others.

So why would anyone want to challenge Google’s dominance? Because if you’re a major Internet player, you can’t afford to hand Google all the leverage – both financial as well as data and insight. If you have hundreds of millions of logged in customers (all of whom create valuable data), you need to be able to understand their actions across multiple channels and offer those insights to your marketing clients. And that means you need to own your own ad stack.

This is why Facebook is building its own adtech stack. This is why Yahoo! and AOL are once again investing in their stacks. And this is why Twitter is building out a similar stack with MoPub (mobile), AdGrok (search), RestEngine (email marketing), Bluefin (video analytics), Trendr (social analytics), Gnip (analytics), Namo (native ads), TapCommerce (retargeting), and certainly more to come.

I think the most interesting one to watch in all this is Apple, which has a rather Microsoft-like approach to advertising – it’s in the game, big time, but seems uncertain of how it wants to play in the space. Apple has made significant purchases – Quattro (mobile) and Topsy (analytics) come to mind, but it hasn’t fully committed, and its data use policies and general philosophy are famously confusing to marketers.

And beyond Apple, there’s Amazon – which is quietly building out a full stack solution of its own. Oh, and there are several point-solution companies that are now public, or near-public, who want to play as well – AppNexus, Turn, Rubicon, and RocketFuel, which recently bought DMP X+1. Not to mention the consolidators – Oracle, Salesforce, Adobe, IBM, even SAP – any of which may decide they want to get into the full stack game as well.

Given my point of view on what adtech really represents, I think the truth is no major Internet company can afford to outsource its ability to gather, process, leverage, and exploit real time information on the database of intentions. Adtech may be today’s poster child of stock market slumps, but I think the market is failing to understand adtech’s true value proposition. And that means more deals are on the way.

Why I’m Watching Deep Linking In Mobile

By - August 18, 2014
first web page

The first ever web page, created by Sir Tim Berners Lee to explain, naturally, the WWW.

We are at a turning point in the mobile app ecosystem where deeplinking is becoming a priority and not just a feature.URX blog

This week marks the beginning of a journey I’m taking to understand “deep linking” in mobile. I’ve kept one eye on the space for some time, but it’s clearly heating up. Last Spring three major mobile players – Facebook, Google, and Apple – all announced significant developments in deep linking. Twitter has also fortified its deep linking capabilities of late, as has Yahoo.

Most of these major players are supporting deep linking for commercial reasons – their business is driven by advertising, and a huge cut of mobile advertising revenues are in turn driven by app installs. Marketers want to be able to link directly to specific places inside their apps, so they can drive qualified leads to convert (and measure effectiveness/optimize campaigns). To be clear, these are the ads that show up inside apps on your mobile phone encouraging you to download a free game or service. These install ads make up a huge percentage of mobile advertising revenue, though it’s hard to find hard figures for exactly what percentage. Current estimates range between 30 and 50% - either way, that makes them the largest category of mobile advertising, period.

This all reminds me of how search played out on the desktop Web – search was a huge percentage of overall “online advertising” revenues in the early days, but it took a while before analysts started breaking search out as a category independent of “online advertising.” Twenty years into search, that category still represents more than 40% of all online ad revenues. So yep, I’m watching deep linking, because I think there’s a big there there.

But there’s a funny hitch to the evolution of linking inside our mobile ecosystem. On the Web, the link is pretty much the atomic unit of value – from the get go, *anyone* could create a link from one web page to another. The web was built on links, and in the early days those links were built, for the most part, by *users* of the web – people like you and me. We built link-heavy websites, we blogged and linked profusely, we emailed links around, and in doing so we connected static web pages one to another, all in the name of navigation, discovery, and ease of use. It was only later, as search rose to prominence and people started to realize the commercial value of links, that the SEO industry became a commercial monster. In short, linking behavior predated commercial exploitation.

But in the mobile web, commercial exploitation is driving linking behavior, and I find that fascinating. Certainly there’s any number of reasons for this, from Apple’s early iOS design decisions to the fact that apps are, for the most part, personalized experiences that are not driven by the early web’s model of static pages meant for consumption by any and all comers. Regardless, I’ve got a hunch about deep linking – I’m hoping it’s the seedbed for a major shift in how we experience mobile computing. For now, mobile deep linking is the purview of developers and savvy mobile marketers. But I think in time this may change. I wrote a bit about that hunch here:

…while developer-driven deep links are great, the next step in mobile won’t really take off until average folks like you and I can easily create and share our own links within apps. Once the “consumers” start creating links, mobile will finally break out of this ridiculous pre-web phase it’s been stuck in for the past seven or so years, and we’ll see a mobile web worthy of its potential.

I imagine a time when applications encourage their users to share links from inside apps, and everyone finds that sharing behavior will create a positive feedback loop similar to the one that drove the rise of the original Web. From there, any number of innovations will arise, speculating on what those might be is worthy of several future posts.

For now, I’ve come across a crop of startups focusing on deep linking as well various industry efforts in the field (I have Semil Shah and Roy Bahat, among others, to thank for my early lessons in the space). In the coming weeks, I’m meeting with many of them, including URX, Kahuna, DeeplinkAppboy and several stealth startups, and of course larger players like Twitter. As I get smart, and if I find interesting stuff, I’ll report back here. In the meantime, if you’ve got any suggestions for me, please leave them in comments or ping me on Twitter. Thanks!

My 2014 NewCo SF Schedule: Hard Choices

By - August 14, 2014
NewCoAward

The NewCo award, given to host companies who join the NewCo festival this year.

As I did last year, I picked my NewCo San Francisco schedule early, so I could prepare in advance of the festival this September 10-12. There are nearly 130 extraordinary companies to choose from, so it’s not easy to decide where to spend your time. But decide we must. Here are my choices for this year’s SF festival (there are festivals in Amsterdam, New York, Silicon Valley, LA, Detroit, Boulder, London, and Istanbul so far).

Haven’t heard of NewCo? Learn all about it here. In short, we pick extraordinary companies that are mission-driven and changing the face of our city and our society, and they open their doors to the public for a one hour session on a topic of their choice. It’s free, but if you want to insure that you get into the companies you care about, you can pay a small fee to jump to the head of the line right now. Some companies are already full, others are almost full. When we open General Admission, which is free, they’ll all fill up quickly. So it’s worth $90 to get in where you want to go. Here are the ones I plan to visit:

Day 1 – Thursday September 11

M_128_black9 am – Medium. I’m fascinated by Medium’s rise as a reliable place to find thoughtful and well crafted writing. Founder Ev Williams has been improvising on the theme of publishing platforms for nearly 15 years – first with Blogger, then with Twitter. Medium is a place in between those two, as it relates to the point of view of the creator. It has yet to develop a full throated business model, but I sense one emerging. I’m going to find out more about the company and its people and community. Medium is also one of the Yahoo Media Innovation sessions – a curated track that Yahoo! and NewCo put together to highlight innovative media companies who are participating in NewCo SF.  Runners up: GitHub and Brigade. GitHub has always fascinated me – sure, it’s a code-base repository and developer community, but more importantly, it’s the center of an emerging power class in our society. And Brigade has at its core a mission that fascinates me – it asks the question: Can we leverage new technologies to change our political system?

ACT10:30 am – American Conservatory Theater/The Costume Shop. Look, how often do you get a chance to actually see the backstage magic that creates first-class theatre productions? I’m a total theatre geek, though I don’t get to shows nearly as often as I’d like. I’m hoping to re-kindle my love affair with the stage by seeing behind the ACT’s curtain for the first time. Super excited. Runners Up: The Moxie Institute and Chute. I am a huge fan of filmmaker Tiffany Shlain, who is a pal. Her “Let It Ripple” films on AOL are a huge hit, and her “The Future Starts Here” series is up for an Emmy. And I’m on the Board of Chute, which is a promising startup in the visual discovery, rights management, and adtech publishing market. But for me, NewCo is about new – so I’m going with ACT.

Rickshaw-BagworksNoon – Rickshaw Bagworks. It’s not a bad hop from mid-market, where ACT has set up shop, to Dogpatch, where Rickshaw Bags manufactures its wares. I met the CEO of Rickshaw at last year’s festival, and was inspired by his devotion to quality, community, and local manufacturing. I haven’t gotten a chance to see his digs yet, and I know the tour of his shop will be inspiring. Plus, I am a customer of Rickshaw, I love my Rickshaw backpack. It’s cool to be able to see where it was made.  Runners Up: PUBLIC Bikes and SVAngel. I’m a biker, and I want to understand the rise of the “city bike,” which PUBLIC Bikes creates right in the heart of SF. And while I know folks at SV Angel, I’ve actually never seen their space. It will have to wait till next year, alas!

Earnest-logo1.30 pm – Earnest. When someone leaves Andreessen Horowitz to start a mission-driven company, you know he or she must be pretty, well, driven. In this session, I get a chance to meet the CEO of Earnest, which is a new lending platform with the outsized goal of changing how lending works. Classic NewCo company. Runners Up: the melt and KITE Solutions. I’ve never had a melt sandwich, but I love how the company has grown over the past two years, and wish I could be in two places at once. And KITE, run by my pal Mark Silva, is matching innovative startups to large brands, a business I love. But again, the new beats the known at NewCo for me.

lit-motors-c13:00 pm – Lit Motors. I was so bummed to miss Lit last year, and thrilled they are back at NewCo SF this year. Lit makes new kinds of vehicles, not exactly cars, but not cycles either. I can’t wait to learn about the ideas which inspire these creations. Runners Up: AdStage and City & County of SF. AdStage is a super promising platform for managing marketing – but I’m an investor so I know a fair bit about it. And I love that the Mayor’s office is part of the NewCo platform – their session will provide insights on how the city works with entrepreneurs to tackle big civic problems and opportunities.

Twitter_logo_blue4:30 pm – Twitter. Sure, I get inside Twitter from time to time to meet with friends and colleagues, but this session is going to be different. Twitter is focusing its NewCo session on how it is leaning into community development and philanthropy. This is a critical issue to the mid market area, as well as to all cities who are experiencing a tech-driven boom. Not to be missed. Runners Up: Yahoo!, Pinterest, and DocuSign. Yahoo! continues its reinvention, and this session is an opportunity to learn how it’s going. DocuSign has a tiger by the tail, I’m deeply impressed with what Keith Krach and his team have done there (Krach is a speaker at our VIP Plenary kickoff party, which you can attend by buying a VIP ticket here). And Pinterest is on FIRE. Tough choices here.

Day 2 – Friday, September 12

175686-29c2d3209bfc05aa95c9c509d5bc31b3-medium_jpg9.00 am – Tumml. I’m taking a flyer here, as I know very little about this startup, but I love their mission, which is all about addressing issues of urban environments through public/private partnerships. Also, the session is taking the form of a pitch session, where entrepreneurs in the Tumml program pitch the audience. That should be a blast. Runners Up: Bloomberg and Blossom Coffee. I went to Bloomberg last year and loved seeing behind the scenes of how TV gets made. And who doesn’t need a good cup of Joe at 9 am?!

lemnos10:30 am – Lemnos Labs. This speciality VC firm funds hardware startups. What do I know about hardware? Almost nothing! And that’s why I’m heading to this session. Runners up: TechShop and Salesforce.com. I went to TechShop last year and learned a ton about the new culture of DIY and Big Machines. And Salesforce, which is hosting our plenary VIP event, is a great company doing well by doing good.

FCCNoon – Founders Circle Capital & Shasta Ventures. I’m an advisor to FCC, so I’ve been to their South Park offices. But it’s always good to hang at a homebase during NewCo, and I love FCC’s model of founder-driven secondary financing. A much needed innovation for fast growing companies, plus I get to meet the folks at Shasta. Runners Up: Automattic (just a wonderful company well worth the visit) and Yerdle.

airbnb1.30 pm – Airbnb. OK, so I’ve been wanting to see the new offices ever since they opened last year. I can’t wait to get inside and see how one of the most valuable startups in the world gets its business on. Runners Up: Backplane and Hightail. Backplane has built a platform based on the insights from creating Lady Gaga’s Little Monsters community, and Hightail is competing in the world of Box and Dropbox. Both are run by fascinating entrepreuners.

cloverpop3:00 pm – Cloverpop. Another flyer, but this one seems super cool. The company is attempting to “upgrade how we make decisions” using social data and storytelling. There’s a special invite for their private beta for those who come to the session. Now that’s pretty awesome. Runners Up: SEAGLASS, Delectable, and Scoot. In fact, this is the most difficult hour of the whole festival – so many amazing companies. Please head to SEAGLASS, last year they had pure honey dripping from actual honeycomb. It’s an incredible restaurant. And Delectable is all about wine, and my guess is there’s wine to be had there. And Scoot is just a super cool idea – electric scooter sharing.

jawbone-logo-display4:30 pm – Jawbone. I’m eager to know what’s next from this innovative company – now that Apple has purchase Beats in particular. If not for NewCo, I doubt I’d ever get a chance to visit Jawbone – and that’s kind of the point! Runners Up: Comcast Ventures and Trulia. Comcast Ventures is making a move to be a player in SF VC, and I find any move by Comcast significant these days. And Trulia, recently merged with Zillow, is just a fascinating business.

Wow. That’s a dozen deep dives into companies in just two days. I really love the NewCo concept – I know, I know, I’m Chair of it, after all. But really, where else do you get a chance to get inside so many extraordinary organizations and really experience how they are changing our society? Please, join me and dive in. I’ll see you there!

 

NewCo Sizzle Reel, SF Sked Are Up!

By - July 30, 2014

It’s hard to describe what it’s like to attend a NewCo till you’ve been to one, but this video, below, should certainly help. It comes right on the heels of NewCo’s SF schedule going up, which for those of you who’ve never been is like announcing the lineup at Bonnaroo for those of us in the NewCo world. In SF, companies opening their doors include Medium, Carbon Lighthouse, ACT, IFTTT, the melt, Lit Motors, Salesforce, Bloomberg, OpenTable, Scoot, NextDoor, and 100+ more.

Here’s a post announcing the schedule going live – companies fill up fast, and the only way to ensure you’ll get in is to get a VIP or Reserved ticket. But if you can’t pop for the $90 (Reserved) or $295 (VIP, including kickoff party), never fear. NewCos are always free to the public after Reserved and VIPs pick their schedules.


It’s Time For Twitter To Filter Our Feeds. But How?

By - July 27, 2014

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“We don’t put an algorithm between you and your feed.” – Twitter exec Adam Bain, March 2013

“Please do.” Me, today

Twitter has always appealed to tinkerers, to makers, to the people who first took up blogging, who championed RSS and HTML in the early days – you know, the people who created the open web. And because of that, Twitter has always had a strong dose of egalitarianism in its DNA. Twitter expresses that DNA in a particular way: it never decides what you might see in your feed. Whenever you come to the service, you are presented with everything. It’s up to you to figure out what’s valuable.

Compare that to Google, which decides what content you see based on your search query or, more recently, your location (and tons of other data), or Facebook, whose impassive algorithms sift through a sea of friends’ updates and determine what the service, in its ineffable wisdom, decides you will see. Both of these giant companies have, at their core, the idea of editorial judgement – they decide what you see, and for the most part, you have no idea how they made that decision, or why.

Twitter makes no such distinction. And this, of course, has always been both its declared strength and its obvious Achilles heel.

For it is in making editorial judgements that the edges of a media product emerge – and to most of us, Twitter is  a media product (it’s certainly an advertising product, which to my mind makes it a media product as well).

In the coming months, I expect Twitter will finally execute a major shift in its approach to our feeds, and roll out an algorithm, not unlike Facebook’s EdgeRank, which consumes the raw material of our feeds and process them into a series of media products that redefine our experience with the service. Doing so will solve for three of Twitter’s most critical business problems/opportunities: Its vexing “I don’t get Twitter” issue, its slowing user growth and engagement, and Wall Street’s ongoing uncertainty around how far the company’s current advertising model can scale (IE, whether it can grow to Facebook or Google level revenues, currently orders of magnitude larger).

Three years ago I wrote Twitter and the Ultimate Algorithm: Signal Over Noise (With Major Business Model Implications). My main argument was that Twitter has to figure out how to make my feed valuable to me – a point I’ve been talking about for years. It would take a lot of math, a lot of algorithms, and a lot of trial and error, but ultimately, I wanted Twitter to surprise and delight me each time I came back, and there’s no way a raw feed could do that. In short, I argued that it was time for Twitter to create algorithmically-driven editorial voice, one that presents me media product(s) that extract maximum value out of the feeds I followed.

It’s fair to say that three years later, Twitter hasn’t done what I wished for. Back then, Twitter wasn’t a public company, and its ad business was in its early stages. But today Twitter is a $24 billion public company with strong advertising revenues tracking at more than a billion dollars a year. So what do I know?

Well, I know that the problem still exists, and there’s no way Twitter can grow into (and beyond) its current valuation, much less compete with Facebook and Google, if it doesn’t tack into the waters of editorial judgement. This means Twitter has to stare down its existential DNA problem – it has to be willing to put itself between us and our  feeds.

And I think there’s all sorts of opportunity in doing so. I think nearly everyone wants Twitter to try, and while I have no inside information, I’m pretty sure that Twitter is working hard on doing just that. Ever since the company made it clear it didn’t want developers creating consumer facing applications that built new interfaces for the consumption of tweets, the responsibility for creating that value lies squarely with Twitter.

But even as the product and engineering folks at Twitter labor to create these new interfaces, there’s no need for the company to abandon its core philosophy of showing us everything – that should be a mainstay (and differentiating) feature of the service. We just want media products on top of those feeds that mine the best stuff and present it to us in a way that keeps us engaged, provides us significant value, and thereby keeps us coming back. This of course would solve for quite a few other pesky problems – user growth and engagement chief amongst them. Oh, and it’d create the kind of media product that’s rife with signals of user intent  – exactly the place where new Twitter ad products can thrive.

Earlier this year I argued that Twitter might encourage a class of “super curators,” a kind of crowd sourced approach to solving the problem, but that’s not enough. For Twitter to grow at Facebook or Google like rates, it has to build a media product that is automated, but feels uniquely “Twitter-y.” And to me, that means making something that exposes its inner workings to its users, and lets those users customize their consumption in ways that can be shared, celebrated, and even commercialized.  In Who Owns The Right to Filter Your Feed?, I wrote “No one company can boil the ocean, but together an ecosystem can certainly simmer the sea.”

It’s my hope that Twitter lets its tinkerers, makers, and users help make it better and better. The company’s roots are as a user-driven service. Users came up with hashtags, retweets, and other core Twitter features. One of its most valuable assets is its open DNA – and it needn’t abandon that to create an algorithmically edited version of its main product. In fact, given all the suspicions both Facebook and Google have fostered because of their black box algorithms, a more open approach could be a great strength for any new Twitter product. Show us why your algorithm created a particular media product, and let us play around with making it better. I’d bet that plenty of folks would love to do just that. I know I would.