Monthly Archives: August 2012

General Zuckerberg’s Last Stand

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Is it me or is there a growing concern about Facebook’s murky future?  Oh… wait… it’s… not … just… me.   To make matters worse, current employees now seeing their net worth drop each day, are blatantly being encouraged to stay the course by both their boss and the media.  Facebook’s mounting challenge seems to be worrying a lot of people lately, and the more I read the more I see everybody has their own opinion.

Well FWIW, here is mine.

As Facebook’s General, Mark Zuckerberg famously said:  “we don’t build services to make money; we make money to build better services.”

Mark would do Facebook Nation a solid by finally acknowledging ads annoy people and are not a “service” to users.  Ads might have worked as Band-Aid revenue generation during infancy and adolescence, but now they are proving insufficient as the company matures and struggles in it’s transition to mobile.

First, I have a bone to pick with advertising and why it should not be the future of Facebook.  The main problem with advertising is not rooted in inadequate technology; it’s rooted in the fact that it doesn’t actually add value to you or me.  Ads are meant to interrupt our natural pattern of thought in an effort to imprint a commercial message on the neurons of our brain.  An imprint that, in fact, I wasn’t wanting or I would have sought it out first.

Simply put, ads are an annoyance of life.  Ads are peddling at its purest form and humans have an inherent distaste for peddlers because the act reeks of desperation.  Innovating around ads won’t help either.   Trying to squeeze as many ads as you can in front of people, even deceivingly placing a friends picture on the ad to trick the user for a measly click won’t change the fact that ads suck.  And it doesn’t matter if we can develop a quasi-cool concept like “Pre-Ads” similar to the “Pre-Crime” concept in Minority Report, it will still be a net negative on our society.

(On a side note, propositioning people to buy things they may not be able to afford could be why our country finds itself in the precarious situation we are in today.  But I digress…)

Yet I am no Pollyanna, suggesting Facebook immediately turn off advertising entirely since this is the main revenue source, but they need to find a new self, and quickly.  Mobile is becoming the primary means of access for a growing number of users and Facebook is in desperate need of a long-term solution if it’s going to be a viable business.

So with that behind us, I sure hope Facebook can turn their attention towards more fruitful business models.

My answer: Add value to the consumer, not the advertiser.  Because Mark, I’m afraid under your leadership the servant is quickly becoming the master.

Adding Value To Users
So what does “add value to the consumer” actually mean?  Adding value means making what I do each day, as a consumer, easier and more pleasant to complete.  The success of any product or service lies is the richness of value it creates for me, as a consumer.  Early on (and arguably still true today) Facebook added much value to life by connecting us with our friends.  And that was all nice and neat back in the day before social networking became commoditized.  It’s become clear Facebook needs to stand up, rediscover, redefine, and re-institute a business model around the value it creates in its users lives.

So rather than ads – which I will continue to dodge and evade like the plague – why not focus on commerce, payments, purchases and creating value with the resulting data?  Why not, since Facebook already has my identity and interests all figured out, make my life as a consumer easier and more efficient rather than further interrupted?  I would appreciate things like saving me time, saving me money, helping me understand more about myself and my purchasing habits and then aid me in putting that information to work?  Help me identify where I buy things and why?  And maybe identify what brands I am attracted to and which ones I stay away from?

Further, Facebook could then quickly assist me in accessing specific brands I respect and usher in repeated interactions/purchases for me.  These are the things that matter to us as consumers.  These things help us better manage our lives.  And believe me, I would use Facebook more if it added more value to my life.

Again, we hate ads… but we like buying stuff!   A subtle but HUGE difference lies between those two concepts and if Facebook can dig deep enough into why there’s a difference they will discover the answer is found within the delta.

General Zuckerberg needs to plot a game plan for Facebook that is not only a sustainable but growing future as a business.  A number of business models – outside of the traditional “lead generation” advertising we’ve come to despise – are possible.  Here’s just a few focused on adding value to the everyday consumer.

Payments
The world is rapidly going mobile and an incredible opportunity is looking Facebook right in the face.  They have almost one billion identities of people around the world.  Amazingly, these Facebook users are also consumers who pay for things. And I bet if you polled a large enough subset of them about their online/mobile purchasing experience they would tell you much is to be desired.  I often wonder why we need to plug in the same damn information (name, phone number, card number, email address, physical address, phone number, billing address, first born, mothers maiden name, etc.) again, again, and again, again and again… and again, just to buy something on a website with Facebook connect sitting right there!?  I bet Facebook already knows that information about me…

This “revelation” is not lost on Facebook and they have already been dabbling in the digital payment experience over the last few years.  But something seems amiss.  Recently stated quarterly numbers show payments flattening due to people rapidly shifting to using the site from mobile alone, or at least spending a lot more of their time on mobile than desktop where it shows more ads.  Ah, there’s that damn mobile device again!

So with the Zyngapocalypse upon us, most are wondering what comes next.  My view focuses on tying a mobile experience into our consumer experiences, namely real world payments and transactions.  It all comes back to consumer ID and expediting the payment experience.  Yes, I am talking about the same trillion-dollar market Square, PayPal, LevelUp and many others including my company Seconds are aiming to re-create.  Using the device we carry with us all hours of the day – the very same device we are always logged in as a Facebook user – these emerging business are actually adding value by solving a problem and making life more efficient.  More importantly, they figured out a way to make money while not annoying us!

Donations and Giving
A mobile payment doesn’t just mean buying a latte with my phone.  Donations, giving and social gifting are another potential home run for Facebook payments, since these are transactions people want to talk about and share with friends.  Donations are unique in the fact that the desired outcome is to influence others to join us and make a similar purchase.

So how big is this opportunity? Charitable giving is a $300 billion market, and Facebook would be wise to understand greater than 2/3 of that total – more than $200 billion per year – was given by individuals or household donors.  In fact, gifts from individuals represented 73 percent of all contributed dollars.  Wouldn’t it be great if we had a quick and easy account from which to give to our favorite charity without having to plug in those damn credit card numbers or be required to mail a check that we don’t have, (kinda like a pay button?)

It will be interesting to see what they do with Karma, the social gifting business they purchased the day of their IPO.  Social gifting and quick mobile based donations present a very promising opportunity and the Karma acquisition could be a beachhead to the milestones Peter Volgel predicted, where Facebook’s revenue from payments will double every year for the next five years.

Social Commerce
Finally, a low hanging fruit example for Facebook is the often propagated but yet to be commercialized social commerce concept.  If you think about it, it seems as if we are still in the stone age of social commerce, and have been for years now.  Facebook has been around for almost a decade and before that we had Friendster and Myspace.  What most don’t realize is how close we actually are to merging social and commercial actions, by simply talking about products and purchases with our friends.

How many times have you read a Facebook update from a friend, for instance, saying something like “I just saw ____ and it was the best movie I’ve ever seen.  Or what about the posts that show off a new car or recently purchased clothing?  Those posts, in a small way, are the beginnings of social commerce.

I discovered one startup in particular, Note Social, seeming to be gravitating towards all the ideas of value I bring forth above and from the looks of it they are just about to launch their solution.

Social commerce will usher in a totally new shopping experience, by sharing things such as a new purchase or a cool new movie you are influencing your friends’ commercial interests, which can quickly turn into another purchase.

Commerce taking place on and off Facebook, utilizing the social graph they built over the last 8 years, could be another huge business for them.  Imagine if they charged a 20 or 30% fee on any purchases within the platform?  With a half a billion daily people interacting on the site each day, that’s quite a bit of potential revenue just from social commerce relationships.

So Facebook and General Zuckerberg now stand at a crossroads.  Looking left, they hang onto advertising and hope people can deal with more unwanted interruptions on a smaller screen, leading to Facebook’s demise.  Looking right, they peer down a road full of potentially new and innovative social commerce businesses, ones which actually add value to users and possibly a brighter future.

It’s your move General.

When Good People Do Nothing Innocent People In Africa Don’t Get Clean Water

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“All that is necessary for the triumph of evil is that good men do nothing.”

This is a favorite quote of mine from Edmond Burke.  Read it again, it speaks volumes and absolutely drives me as I go about my life.  It also comes to mind as I think about Charity:Water and their mission to bring clean water to millions of people around the world.

If you are not aware of Scott Harrison and his new mission, you need to do your research.  Watch him tell his story, it’s quite inspiring and touching.  This September they are focusing specifically on Rwanda, and with that founder Scott Harrison is calling people to donate their September to bring clean water to Rwanda.

“Kids are carrying dirty water back to their homes each day knowing it will make them sick.”

I urge you to get creative and figure out how you can bring together hundreds of people to help make clean water a reality for people who don’t deserve anything less.  In fact, you could have been born in Rwanda.  Think about that for a second.  I’m starting to think about what we here in the Seattle Startup scene can do to add to the cause….

Living With Doubt And Uncertainty As An Entrepreneur

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Entrepreneurial doubt can creep up on you like little critters in the night. One day you are on top of the world, thinking there’s nothing between you and 1 billion people touching your product. The next day you don’t know if you are still leading an actual company. Life can be pretty tough sometimes.

I have had my share of creeping doubt as of late, some worthy of mindshare and some not. But the biggest thing I have realized lately is that no matter what, shit hit fans. So it’s not a matter of when or how much hits the fan but more about how you deal with it. And you HAVE to figure out how to deal with it so you can continue on living and working towards your goals.

I have found 3 things really help me when times get rough:

Get Back to the Drawing Board

For a while there I was feeling very exhausted, lacking creativity and innovation at all points of the day. Seconds, as a company, has come to the point where we are growing (we’ve grown each and every month) but has obviously not found proper product/market fit necessary to take things to the next level. Not surprisingly, this was a very difficult feeling to experience. Results were not clear enough to shut down the business but it was also too foggy to continue the current plan. We had to make adjustments or risk losing the war.

So I finally had to force myself to break out of the rut, grab the marker and get back on the whiteboard. For those unaware, magical things happen at a whiteboard. Most products you are using today were wire framed on a board. Most of the successful companies you read about on Techcrunch and Mashable were conceived on one of those boards. It’s truly amazing what can be created when you place pen to board and allow it to lead you. Now, As a team or even just a few of us, we now regularly jump into sessions of brainstorm and idea generation. I will even lock myself in a room alone and just allow the entire board to engulf my thoughts… I will tell you some great new stuff is set to be released at the end of September and it’s all due to our energetic whiteboard sessions of this summer.

Get Back to Friends and Family

I recently have had the opportunity to spend more time with my family and it’s been a great. Long story short, as an interim roof I am staying with my sister and her 3 kids as I look for my next place. There was simply too much going on… I couldn’t deal with looking for another apartment and she kindly suggested I grab the spare room for a while. I though it was going to be a burden but it’s been a blessing. It’s amazing what is presented to you once you are in need of a miracle.

Also, looking back over the last few months I have been able to break away and spend some quality time with my friends. As a founder and dedicated entrepreneur, it’s quite easy to become so engulfed in pursuits I forget about the special people in my life. I am also blessed to have a solid group of friends from my youth and college years. These moments of getaway and relaxation are very re-energizing. I believe we will be lifelong friends so I feel the time with them is more of an investment rather than a expense on my life.

Get Back in Shape

My previous career was oriented around health and wellness, so health is a biggie for me. To be quite honest, I have really never been out of shape so my thoughts are more about the commitment and consistency of exercise over being overweight or out of shape. Though recently I noticed myself slacking on training and exercise. One day a week here… two days a week there. No patterns or schedule to depend on was really taking its toll on my physically as well as psychologically. And I started seeing and feeling the result.

So I determined to make a change. More importantly, i found a closer focus on running and working out more often and earlier (relatively) in the morning is keeping me aligned as my life is becoming more random and out of whack by the week. Even more interesting, the harder I push myself physically the more I push myself psychologically and mentally. Physical exercise is definitely the healthiest weapon against stress and I hope it stays that way throughout the rest of my life.

Creativity, Exercise and Friends and Family. These are all you need to stay aligned and deal with the uncertainty of entrepreneurship.

Hey Seattle Tech Startups, Should We Host Another Startup Crawl?

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Last year we threw a party called the Startup Crawl, and it was awesome.  On a Friday in August we had 4 various startups around downtown Seattle host for one hour and we crawled to successive parties.  If any of you made it you remember it was great times indeed.  Here’s a bit from last years event.

It will be in the form of a progressive party, with each host providing their choice of snack/beverages.  We will start at approximately 5pm with Cheezburger Inc./Decide.com as the first co-hosts.  After a drink or two, the group moves on to the offices of Estately/Nine-by-Blue to continue the festivities.  Next, around 7pm the group (probably growing at this time) will arrive at Habit Labs on 9th and finish up with a stop at Big Door in South Lake Union.  The afterparty will begin immediately afterwards, held downstairs (in the same building) hosted by Founders Co-op/TechStars.

So, should we do another one this year?  Please let me know and if enough people want another excuse to toss a few back and get social maybe we can quickly get it together.

Also reach out to me if your startup would like to host for an hour during the event.

Sharpening The Entrepreneurial Arrow

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It’s been tough go lately.  I managed to find a new place to live, move most of my stuff into storage, re-align the business, loose a few team members, all the while keeping the dream alive.

I want to talk about the last one for a little bit: keeping the dream alive.  At Seconds, we recently discovered a few things.

First, we indeed have built a kick ass mobile payment system.   The thing just works, and it works ridiculously fast.  People are very excited and using it repeatedly each month.  We have grown each and every month we’ve been in operation.

Next, after a number of meetings with investors it became clear we were onto something but not yet fully baked.  I kept hearing “but what market are you targeting?  Seconds is helping which market become more efficient again?”  This is the main reason we struggled to raised a seed round, we weren’t ready no matter how much I told my self otherwise.

Lastly, it’s tough to quit.  Once you have a working product and have daily usage, it’s extremely difficult to walk away.  Maybe I am programmed differently but I simply cannot quit something I have started just because it’s taking a bit longer than I originally thought.

Put all these together and what do you get?   A kick ass product, not yet fully baked but its too early in the game to quit.

It then became clear if I was to keep the dream alive it was time to sharpen the arrow and get back in the game.

1. Redefine the vision

Seconds had to look in the mirror and ask itself “what type of payments system did it wanted to be?”  We couldn’t be all things to all people so we are now choosing what specific market to zero in on and focus our energy, marketing and branding.  Invert the arrow above and that is what your market focus should be.  Extremely narrow at first, and only when you have nailed it with the first market do you extend your product to other markets and new customers to grow your business.  It took me a while to figure out how sharp our arrowhead needed to be.

2. Re-engage the team

Anytime a team goes through challenges there will be falloffs.  When sharpening the arrow a leader must revisit the commitment with each team member and determine if it’s still “go time”, or “time to go”.   There’s no right answer here.  All you are looking for is the maintained commitment of each member of the team.  If it’s still there then re-engagement on the new direction is a refreshing feeling of excitement.  If it’s time to go, all parties involved will feel better for parting ways respectfully.  With Seconds, I have actually tightened the team and sharpened the edges to form a team that better fits our current development requirements.

3. Redesign the product 

A new direction and tighter focus will result in needed product changes.  We have been hard at work redesigning the features and functions of Seconds, focusing on the speedy payment functionality and clean user interface.  Fred Wilson has a great post on determining “the atomic unit” of your product and doubling down on the specific functionality that makes up your unique product.  In fact, focusing on that one function and stripping out all other frivolous features will lighten your product and create a better overall user experience.

As an entrepreneur you should always be sharpening your arrows.