Winners and Losers in a Facebook World

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LikeButtonIt has been a year since Mark Cuban, Internet billionaire and owner of the Dallas Mavericks, posed the question, “is Facebook the new Internet?”  In his article he argues that Facebook is everything that the Internet was five years ago.  I think he probably meant 10 years ago, but let’s not split hairs.

This question has haunted me for twelve months and caused me to observe the world from Mark’s perspective.  There is much controversy over whether Mark was just lucky or good.  Despite the luck he undoubtedly had, he recognized societal trends and how to capitalize on them.  His statement should not be taken lightly.

Over the past year I’ve made three observations that help me understand Mark’s statement and through the process, understand the future in a Facebook world:

ONE – The Corporate Embrace

In 1997 very few of my friends and relatives understood what I was working on and why I had gone back to business school.  I was fascinated by this Internet thing and knew that the traditional consulting work I was doing would not get me the understanding I wanted.  Right around 1998, the big consumer brands started to embrace their web pages as more than just a fad.  Their TV and print materials started to include “find out more at WWW.______”.  Suddenly my friends figured out how to get to the Internet from their AOL account and found out what I was doing.  In the past year I noticed that most of these brands have abandoned their WWW for “find us at Facebook.com/”  Just as in 1998 when the question changed from “should we have a web page?” to “what should our web page be?”  A Facebook strategy is not a question of “if” but “what?”

TWO – Inclusion

In 1998 I had a web page where I shared photos and kept my family and friends up-to-date on what I was doing.  A handful of my friends did the same thing.  To this day there are many people who believe that I am an incredible surfer because I found a picture of a pro that looked very much like me pulling a six foot aerial.  Today I have a couple hundred “friends” who share their many photos and daily life with me on Facebook although my previous surfing ruse makes me healthily skeptical of what they claim to be up to.   The discrepancy in the number of my friends that shared in 1998 versus today reminds me of William Gibson, author of Neuromancer, who told The Economist, “The future is already here – it’s just not evenly distributed.”  Sharing your life online was a desirable activity, but before Facebook, the barriers to entry were just too high for most people.  Facebook made it easy and hundreds of millions of people have signed up.

THREE – Just Because

Starting in 1998 when everyone decided that they needed a web page, they became obsessed with “hits” and “eyeballs.”  It didn’t matter why someone came to your site or what they were doing.  All that mattered was that they were there.  As a result, brand managers did all kinds of crazy things to get traffic on their website even though they didn’t know why.  I see the same thing on Facebook today.  Companies are obsessed with “fans” and “likes.”  Why?  If they were honest they would tell you that they are not sure but that it will probably be important or worse yet they will be left out if they don’t have them.

What this tells me about the future

I believe Facebook will continue to bring online activities to people who would not otherwise participate.  They have already done this (or at least made it possible) with gaming.  Hard-core gamers have been collaborating on-line for years.  It wasn’t until Zynga put Mafia Wars and Farmville on Facebook that a whole new set of consumers started gaming online.  If what you are doing is more easily done through Facebook, get on Facebook, yesterday.

I believe that eventually big brands will figure out how to better serve their customers through Facebook, just as they did on the web.  The question to ask is not what can Facebook do for me?, but what can I do for my customers through Facebook?  Your customers are already there, figure out how to serve them better with this cool new tool.   “Likes” will be the result of this activity rather than a goal in itself.

The Winners:

  • Companies that provide their services through Facebook in a way that is easier than any other alternative. (thanks Zynga)
  • Corporate brands that focus on using Facebook to better serve their customers. (“what do I think the next Vitaminwater flavor should be?  Well, let me tell you…”)

The Losers:

  • Companies trying to provide services that are better delivered through Facebook.
  • Firms who are pitching “I’ll get you more likes” will find they have much in common with Scient and Viant.  (look it up)

You can read Mark’s  entire post here.

 

What if Too Good to be True Really IS True?

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When too good to be true is really true.

“Train 2 miles to run 100.”  This is the claim of a new Crossfit Endurance training plan.  When I saw this I felt it was heresy.  I appreciated the shock value but I didn’t believe it.  I didn’t believe it for two reasons, first, it sounds too good to be true and second, it violates everything I ever learned about endurance training.

After college I started running because I wanted a way to stay fit.  I was never a runner so I did some research to learn about how to train.  There was a wealth of information available and it was consistent.  One of the key aspects of every training plan was the long slow runs.  The theory is that the long slow runs build your aerobic capacity.  This plan worked for me.  I significantly reduced my race times from middle-of-the-pack to 95th percentile levels.  I qualified for the Boston marathon and could run a 5K in under 20 minutes.

Fast forward to today.  I haven’t run a race in three years.  In fact I haven’t run at all.  For the last year, all I’ve done is train at Hyperfit.  There is some occasional running in the workouts but never more than 400 meters at a time.  After seeing the Crossfit Endurance claim, I decided to try it out.  I ran the Evans Scholars 5K trail run.  I did it in under 20 minutes.

I’m 7 years older, I barely run at all, and I can race just as fast as I could when I did nothing but run.  Too good to be true.  How is this possible?  The answer is high intensity interval training.  I found that since I had done my initial research on running, much more has been discovered about the effectiveness of high intensity interval training.  It is still far from mainstream but word is getting out.  The Crossfit Endurance site does a nice job of listing the pros and cons of traditional aerobic training and interval training on their FAQ page.

Sometimes, too good to be true, is really true.  If you are still skeptical, I challenge you to try it.

 

How to tell if a Sales Pitch is Real – The Power of Passion

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I recently took a sales call from a software company out of Austin, TX.  The salesperson reminded me of an important lesson.

His pitch was pretty good.  He started with his value proposition, asked me a couple of questions about my business and related the benefits of his product to my situation.  His descriptions were clear and reasonable.

Then I asked him about living in Austin, TX.  He loved Austin, and this led to his fatal mistake.  His tone and delivery changed.  The passion he had for the culture of outdoor activities and music in his city was palpable even over the phone.  The contrast between the description of his city and his product was clear.  One evoked passion, the other did not.  If you are not passionate about what you are doing, it will show so skip the acting classes.  Find something you care about and do it well.

 

Free Tools for Startups

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I’ve taken on an advisory role at a local startup that is currently bootstrapping their existence.  As a result, free stuff is worth a look.  I’m extremely impressed with two free tools that we are using, Zoho CRM and WordPress.  Neither of these existed when we started Janeeva.  At Janeeva we are using an open source CRM solution that gets the job done but has many drawbacks.  Zoho CRM solves every problem we’ve had.  It is hosted so we don’t have to deal with the download.  The interface is very friendly.  It is very configurable.  And to top it off, the mobile app is great.  It is only free for a couple of users but the pricing is very reasonable as you add employees.  My favorite feature the integrated email.  This costs $5 per month but is well worth it.  Every email to or from a prospect is automatically linked to their CRM profile.  It is seamless and beautiful.  The second great tool is WordPress.  The company’s website it built using WordPress which started as a blog but has become a great CMS platform.  The site was easy to build, easy to customize and most importantly really easy to update.  At Janeeva, our site is built using traditional HTML and it is not at all easy to update.  Wordpress is an outstanding solution.

 

When Markets are NOT Efficient – Why your Gym looks the way it Does

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I was advocating strength training to a friend who is a believer in “efficient markets.”  He asked, “Did your barbell strength training fall out of favor because better methods replaced it?  Hasn’t the market spoken?  Aren’t today’s modern methods better than the simple barbell?”  Fair questions.

Gyms today are filled with machines that are supposed to make us “fit.”  These complex high-tech looking contraptions must be better than a simple barbell.  Right?  Wrong.  These machines were designed to prevent you from hurting yourself, not to maximize your strength.  In some cases they were designed to isolate a specific muscle for the purpose of bodybuilding or rehab.  These idiot-proof machines give gyms a way to scale.  They can fill a room with “the latest” in fitness equipment and sell thousands of memberships without having to bother with teaching anyone how to use them.  So the machines are optimized for the gym’s income statement, not your strength training.

Arnold Schwarzenegger is the other reason that strength training fell out of favor.  What?  Arnold was the epitome of fitness wasn’t he? It was actually his success and popularity as a bodybuilder that killed strength training.  Bodybuilding became so popular that it engulfed all forms of weight training.  Bodybuilding and strength training both involve lifting weights, however, this is where the similarity ends.  The objective of bodybuilding is to isolate a single muscle and overdevelop it so that it looks cool (or ridiculous depending on your perspective.)  This can lead to imbalances in the body, especially for amateur gym goers.  Ever see that guy with the huge biceps and the chicken legs?  The Olympic lifts in particular require that a huge portion of your muscles all work together very quickly.  Learning to do this well develops a strong, flexible, balanced and healthy body.  For the 99.9% of us who are not going to compete as bodybuilders, strength training will be a much more effective and beneficial.

A quick aside for women.  Most women do not do any strength training for fear of “bulking up.”  This is also Arnold’s fault.  Steroid enhanced, muscle isolating, bodybuilding will bulk you up.  Strength training will not.  Strength training will give you the much desired “toned” (insert body part here) that you want.  It is also beneficial in preventing osteoporosis.

The market, in this case, is not efficient.  It did not select the optimal fitness method.  Machines replaced barbells because they made gyms more money and quest for huge biceps replaced the pursuit of healthy balanced strength.

 

Why be Strong?

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I wrote earlier about five strength training movements and claimed they would make you a healthier, happier, and more productive person.  I was asked, “why?”  This is a fair question, and I should have known better than to throw out a claim without properly articulating the benefits.  I don’t expect anyone to buy my software just because I say it is great.  I’ll apply the same principle to my strength training claim.

Let me tell you my story.  A year ago, I’d come home from the office every day and lie flat on floor in my living room.  It was the only way to relieve the pain in my lower back  Then I started strength training.  I learned and trained the five basic movements, press, squat, deadlift, clean and jerk, and snatch.  Within six months, my back pain was gone.

It turns out that I was just weak.  I wasn’t strong enough to hold myself up behind a desk all day.  I know I was weak not just because my pain disappeared but because my strength gains have been dramatic.  I can now deadlift twice my bodyweight, a level that is one hundred pounds more than my first attempt at a maximum deadlift.  The key metric is not how much I can lift now, it is how little I could lift when I started.  You might say “well you’re just pathetic.”  But here’s the thing, I had just finished qualifying for and running the Boston Marathon.  I thought I was “in shape.”  Which along a single dimension of fitness is true, however, aerobic fitness is not enough.

Another word of caution here, DO NOT go to your gym to find out what your max deadlift is today.  It takes months of training and learning proper technique before you should even attempt a max lift.

These movements work because they are functional.  Think of each one of the movements in terms of everyday life.  A press is putting a box of photos on the top closet shelf.  The deadlift is lifting your couch.  The clean and jerk is picking up a bag of mulch.  Weakness, not age or anything else is the reason that you are sore for a month after spending the weekend cleaning your garage.  Get strong.

The Cure for Weakness

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I’m sorry to be the one to tell you, but you are weak.  Why?  Because strength training has fallen out of favor.  You probably don’t do it.  I’ve been lucky enough to meet some very knowledgeable people who have taught me the methods and benefits of strength training.  I’ve tried it and I’m better for it so I thought I would share…

Crossfit, and specifically for me, the talented coaches at Hyperfit USA, are bringing back strength training.  As with many fundamentally sound practices, the core principle of strength training is simple.  The only way to get strong is to lift something heavy.  There are five basic movements that will make us all healthier if we practice them:IMG_5517

1) Press (or overhead/shoulder/military press as it is commonly known)

2) Squat (a full squat, not a half squat)

3) Deadlift

4) Clean and Jerk

5) Snatch

These five movements, and maybe even just the first three, will make you a happier, healthier, more productive person.  You might have heard, or tried, the latest “core strength” craze.  I think that all of the new “core” exercises are more complicated than they need to be and they don’t always help you build strength in your arms and legs.  If you do the five exercises I mention above, you will gain core strength (no huge beachball required).  Notice that all of these movements are done when you are standing up.  Your “core” is what keeps you from falling over when the weights get heavier.

A word of caution however, find a good coach and learn how to do these movements correctly.  These are all very safe exercises but only if done correctly.  If you live near Ann Arbor, come to Hyperfit USA.  If you don’t, find a Crossfit gym or a USAW club.

 

SaaS Pricing

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I met a consultant from large advisory firm and specializes in negotiating pricing with Oracle.  This is fascinating to me.  A career built around negotiating pricing with Oracle.  She explained how complex it could be and how important it is to stay up-to-date on all the latest strategies.  My favorite story was about Oracle trying to double pricing on per processor licensed products that ran on servers with dual core chips.  Another great trick was bundling support contracts to get companies to pay for support on products they barely use.  I asked what effect SaaS pricing would have on these complex pricing maneuvers.  “Eliminate them” was her reply.  I left the meeting convinced that SaaS will change the world.

Why will SaaS change the world?  SaaS aligns incentives and creates a more efficient market.

By paying over time instead of a huge upfront license fee, the software provider is motivated to make sure that their product creates ongoing value. Gone is the temptation to convince a buyer with smoke and mirrors.

Since upgrades can be deployed seamlessly, they are more frequent. Great new features make it into the product more quickly, thus generating more value. Gone is the painful, wasteful upgrade nightmare.

SaaS pricing is inherently variable. You only pay for what you use.  If you thought that you would need 10,000 licenses but only ended up needing 300, you can stop paying for the 9,700 that you don’t need.

SaaS is good.

UPDATE: The market has agreed. When I wrote this post in 2009 Salesforce was selling at about $25/share. In six years the price has climbed around 600% (the share price is at about $60 but there was a 4:1 stock split in 2013) and now has a market cap of about $40 Billion.

The Importance of Fun

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Marketing of fitness is fascinating.  The most common message is easy.  I understand, easy is good.  When I sell software, I sell easy.  But fitness is different.  In order to be effective, it can’t be easy.  Easy is what requires us to find a fitness solution.  Cars, elevators, and escalators are all easy.  Fitness is hard but it can be fun.  “Hard” is a tough marketing message but fun can work.  I just started Crossfit at a gym here in town called Hyperfit.  Crossfit is fun.  It is not marketed as fun, in fact it is barely marketed at all.  I tried it because a friend told me it worked and it was fun.  So now I’m making the same pitch.  Try it, it’s fun.  Learn more at www.crossfit.com and www.hyperfitusa.com.  Have fun.

UPDATE: When I wrote this post in 2009 there were approximately 1,500 Crossfit Gyms, today in 2015 there are more than 10,000

Adventures in AdWords

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I recently launched an AdWords campaign and got some great help from our friends at Google AdWords HQ right here in Ann Arbor.  Our campaign is challenging because our key words are rarely searched.  Since not everyone is lucky enough to live next door to Google’s AdWords gurus, I thought I’d pass on a few good tips.

First a few basics.  There are two types of campaigns.  Search and Contextual.  We are all familiar with the search campaign, but the contextual campaign is not as popular.  A contextual campaign places text or image ads next to relevant content.  This is important for Janeeva because ORM software is not an often searched category.  In fact, none of the terms that we optimize on are highly searched.  This means that if we want to reach people who aren’t looking for us, contextual gives us that opportunity.  If you set up both as search and contextual campaign (as we have), keep them separate.  This makes them much easier to track and evaluate.

Setting up a contextual campaign give you the opportunity to use image ads, take advantage of it.  Build image ads of all sizes.  This takes longer/costs more but it maximizes placement.  Once you start the campaign, plan on monitoring it every day for a least two weeks.  It takes a couple hours a day to run the placement report and exclude the sites and categories that don’t make sense for your campaign.  Remember to exclude “parked domains” when you set up.  Expect a CTR of greater than 0.5%.  Less is just noise and probably a waste of marketing dollars.

Use the “Goals” feature in Analytics to track conversion.  You should have a web page that is presented when a goal is met such as the confirmation of a completed form.  Better yet, creating a “funnel” enables you to track traffic at each step of the conversion; info page, signup page, confirmation page.

Enjoy and good luck with your own AdWords Adventures.