• May 3, 2012
  • With the Facebook IPO just around the corner some people have started wondering if a “Facebook killer” might be lurking in the bushes and the new photo sharing website Pinterest has become the new darling.  Well, maybe.

    I got a message from an industry watcher today, Kenneth Wisnefski, social media expert and founder / CEO of WebiMax, that said Pinterest was up and coming and a threat to Facebook’s IPO, but I disagree.  Here are some bullets from the email and my thoughts.

    • I expect Facebook’s stock price will soar in the beginning of the trading session, however once investors look closely at their fundamentals they will realize that Facebook really lacks a solid revenue stream (90% of revenue stems from advertising).
    • Facebook’s dependency on advertising revenue in addition to their vulnerability from smaller social media firms, like Pinterest, decreases my confidence in their long-term sustainable growth that we once expected.
    • Pinterest’s ease of use makes it more attractive to small businesses and we have already seen small business marketers shift toward using Pinterest and divert away from Facebook.  If this is sustained, consumers may gravitate toward Pinterest versus Facebook.

    Well, then, here’s what I think.

    1. Advertising is not necessarily a bad business model.  It’s done good things for the likes of Google but as more companies enter the space and become good at the model, the demand for ads will prove to be less elastic than the supply and we will see tightening in the market and a decrease in profitability for the model.  Nonetheless, Facebook is early to the party and I believe their SEC filings make the point that they want to diversify so calling the business model a liability at this point is overblown.
    2. “Vulnerability from smaller social media firms”?  This sounds like somebody is trying to repeal the law of gravity.  It doesn’t work this way.  Certainly markets are open to disruption and certainly small companies disrupt bigger ones.  But for disruption to occur the disrupter has to demonstrate superior attributes in a market slightly adjacent to the disruptee.  Salesforce disrupted Siebel not in CRM but in the delivery mechanism.  I don’t see a sustainable difference between Pinterest and Facebook, especially since Facebook bought Instagram.  I think Pinterest will be a niche player in photo sharing.
    3. Pinterest might have the ease of use thing down simply because there is less of it than there is of Facebook.  When Salesforce started out with just four tabs they claimed ease of use and simplicity.  But that doesn’t say anything about the richness of the product or the experience.
    4. There is also the issue of switching costs which most people take into account when they consider going with a rival.  Facebook is a network and according to Metcalf’s law, networks are valuable because they have lots of connections.  A new network by definition has fewer connections than an established one, which makes switching more problematic.  Switching here gets you less not more and for the vast majority, Facebook’s network is a walled garden.

    As I look at Pinterest I see a consumer site for sharing photos whereas Facebook has developed from those roots to a budding platform for doing real business and for hosting applications.  This platform is what enables Facebook to look toward other revenue forms and what makes it a better business solution.  So while Pinterest might very well be better than Facebook in some ways, to say it is superior or that it is a disrupter is to overstate the case.  It is a mistake to think that better technology wins the day.

    Time after time we see that the company in first and with greater marketing resources is the winner.  If you doubt this, check out “The 22 Immutable Laws of Marketing” by Trout and Reiss.  It was published in 1994 and while it shows some wear and tear, it still gets this idea right.

    Published: 12 years ago

    On April 23, 1516 in the duchy of Bavaria (thank you Wikipedia), the Germans put a law on the books governing the purity of beer.  The Reinheitsgebot stipulated that beer could be made of only three ingredients: water, malted barley and hops.  That may have been the highpoint of European tinkering with technology through government fiat.

    The low point for government technology tinkering might be another German law enacted in the last few years Verpixelungsrecht or the right to be pixilated.  I got this nugget from Public Parts a book that takes on our various ideas about privacy in the modern world by Jeff Jarvis published last year by Simon and Schuster.

    The right to be pixilated stems from Google’s efforts to map streets all over the world using cameras so that you can Google-up a street and see it.  How cool?  But the Germans have this thing about privacy and didn’t want anyone’s face captured for all posterity.  So they came up with the right to be pixilated.  What’s interesting, and what Jarvis makes very entertaining, is the contrast: the Germans’ favorite indoor sport, the sauna.  Naked.  Co-ed.  Sauna.  Go figure.  At least no one gets pixilated.

    All this is brought into sharp focus by the latest effort at hemming in Google and other Web properties for their privacy practices.  In an article in today’s New York Times, it appears that Google’s upcoming changes to privacy rules are not up to snuff for the French, of all people!  The French are not known for their saunas but…oh never mind.

    According to the Times:

    “… the French privacy agency, the National Commission for Computing and Civil Liberties, said in a letter to Larry Page, Google’s co-founder and chief executive, that the proposed policy was murky in the details of how the company would use private data.”

    Privacy agency?

    If I understand this right, Google takes a zillion pieces of data, strips out the identifying characteristics (let’s say they pixilate it, ok?) and then use analytics to look for patterns so that when you browse a page they can suggest ads.

    Isn’t this just a big focus group masquerading as a science project masquerading as real work for politicians who can’t get their economy moving because they’re wedded to draconian economic ideas that were last tried by Diocletian?

    Look, my name is Denis.  For the first forty-odd years of my life, before people met me they assumed I was a girl because Dennis is the ‘correct’ spelling of my name.  Every year the first day of school had a predictable little drama when the teacher read the roll.  Let’s not go there.

    Sometime in the late twentieth century something changed.  Writers and actors (Lehane, Leary) with my spelling made enough of a dent in the culture to make having a single ‘n’ acceptable.  Perhaps more importantly, we all began collecting and crunching enough data that even those who try to market on autopilot realized that I might like beer over white wine or whatever.

    Let’s be clear.  There is a big brother threat from all sorts of things in our culture, some driven by computer.  For example, bank foreclosures accelerated by robo-signings and lost paper work, but no one thinks about this in a big brotherly fashion.  Why?  Just as Ayn Rand’s economics is fictional, so is Big Brother.  We’re going to have to work harder to find those excessive intrusions on our privacy than reflexively flogging Google and Facebook.

    So, all you Europeans in the sauna, if you want privacy, put your pants back on.

    Published: 12 years ago

    Peter C. Whybrow, M.D., is a neuro-psychiatrist and director of the Semel Institute for Neuorscience and Human Behavior at UCLA, or at least he was when he published American Mania: When More Is Not Enough in 2005.  In the book he quotes numerous economic thinkers and writers from the last 300 years including Adam Smith (The Wealth of Nations) and Alexis de Tocqueville (Democracy in America) as he analyzes how we behave in modern business.

    Whybrow’s book is definitely relevant today though it was researched just before the social explosion of the last half decade.  But that perspective gives added weight to his observations of humans as social beings before we became economic actors.

    Whybrow’s chief assertion is that Homo sapiens evolved on the savannah as highly social creatures living in small hierarchical groups that provided mutual security (both protection and food), emotional support and served as a repository of knowledge.  The time between when we lived in those small societies and today is infinitesimal in evolutionary terms and thus, one of his conclusions is that the human being performing as an economic actor today is virtually no different intellectually or emotionally from our ancestors on the savannah.

    One of the big differences today is our communications reach.  Small groups of our ancestors were about the size of a soccer team or an army platoon and communication was face to face.  Social media may hugely increase the size of one’s intimate community, but it does not change our social approaches or approaches to intimacy.

    This is all highly important when figuring out optimal uses of these new technologies in business.  To a high degree, businesses and individuals have very different reasons for approaching social media.  Businesses see it as a nearly frictionless way to “meet” customers and possibly sell something.  Regular people may just want to hang out and hook up.  In other words individuals seek community and for many of the same reasons that our ancestors aggregated.

    We all know that modern social communities enable people to compare notes about vendors, products and services as well as to provide support for many of the vendor conundrums customers face in the marketplace.  Of course, people also approach the internet and its social communities in their new incarnations as Homo economicus but one should not assume that.

    Given that slight misalignment of reasons for engaging in the social sphere, vendors are well advised to tread carefully when leveraging social communities for commerce.  Two new books by respected thought leaders in the space offer their wisdom and advice for trading in this brave new world.

    In The Like Economy: How Businesses Make Money with Facebook, Brian Carter presents a primer on marketing and selling through Facebook.  While Carter does a good job covering the basics the feel of the book is like reading some marketing 101 treatise moved to social media.  The assumption seems to be that this is a tool more or less expressly for business, all other considerations not withstanding. You can read self-help styled chapters like “FaceBucks: Five Ways Businesses Achieve Profits with Facebook” and “How Not to Fall on Your Face: Six Mistakes That Block Facebook Profitability”.

    Carter’s approach is all business, which is fine, provided the reader has already understood that social media is not exclusively about marketing and sales and that people can turn you off like a light.  Carter recommends many tactical things you can do to optimize your sales and marketing efforts but I would have preferred some nod to the need for listening to customers or sponsoring real community give and take that may not be directed toward buying the next shiny object but to answering questions about the current one.  In other words blending in with the natives, so to speak.

    A more rounded approach comes from Chris Brogan in Google+ for Business: How Google’s Social Network Changes Everything.  At first glance, it’s funny that both authors seem to have a need to state in direct terms why the social network, which is their subject matter, is the first-best-and-only one for the assignment.  Perhaps it is an artifact of the publisher the each uses, Que.  While we’re at it, the cover designs aren’t that different either.  But I digress.

    What’s useful, to me, about Brogan’s effort is the more holistic approach he takes to commerce on the Web.  Brogan starts at the beginning indirectly reminding us about some of our savannah heritage with sections like “Businesses Are Made of People, Connections Before the Sale” and How You Appear to Others.”  Most important there’s a whole chapter on Circles, those aggregations of community members that have like reasons for being in some kind of a relationship with you to start.

    There’s more too, like Chapter 8 “The ‘Warm’ Sell” with sections like “Attention is a Gift” and “Make It About Them”.  I could go on but if I had my druthers Brogan’s approach, regardless of the social network I choose, would be my preferred way of getting the job done.

    Like Carter book though, I would have appreciated it more if Brogan had managed to insert a bit more of community away from the sales process into his offering.  In the future of Web commerce, I doubt companies will have one community for service and another for sales and marketing.  It’s all becoming one and some of the best marketing can come from listening to and understanding a customer’s problems or issues especially if you can turn that issue into a need.  Each book is missing a discussion of the new role of the community manager and a bevy of people whose job is to listen and administer the communities.  Regardless of how frictionless this kind of commerce is, it does require work.

    I think the more we regard the community as something with roots on a real savannah, the more successful we will be in the new cyber savannah.

    Published: 12 years ago

    Marc Benioff’s Facebook page says that is a rising leader in the effort to get carbon out of business.  I didn’t know there was such a survey or report but I am glad there is.

    Getting carbon out of your business processes is hugely important.  While most people will view this as an anti-pollution idea and good corporate citizenship — and it is — it has an even more serious driver and consequence.  As important as carbon abatement and climate change limitation is, it is secondary to the idea that the planet is running out of fossil fuels like petroleum and coal.  Why secondary?  Because without the affordable fuel to grow food and bring it to market (just to name one idea) you’ll die in a food riot long before the planet heats up enough to threaten your grandkids existence.

    You might like to think that the earth has a limitless supply of fossil fuels but for that to be true the earth itself would need to be limitless.  Of course nothing is limitless though some things are so big that they appear to be.  In fact, the earth was endowed by about 2.5 trillion barrels of crude oil which we began tapping in earnest in the 1850’s at Titusvill, PA to be precise.  Since then we’ve discovered all kinds of uses for petroleum as fuel and as raw material for numerous materials from rubber and plastic to paint and pharmaceuticals.

    But we’re running out of the stuff.  Estimates from petroleum geologists and others in the industry are that the planet now contains about 910 billion barrels of crude and it’s in harder to reach places of extreme weather or ocean depths.  Oil and therefor transportation will never be as cheap again as they are today.  Check that, transportation that is not tied to fossil fuel has a chance of being this cheap again but that will require a massive investment in infrastructure and I doubt anyone has the stomach for that — yet.

    So that leaves it to the business community to fend for itself.  Taking carbon out of your business processes is not simply good environmentalism but smart business.  If you can find ways to visit customers over an IP connection or replace the visit with a video you are taking carbon out of that process.  That’s where this report fits in and why it’s so important.  The tech sector is about to be called on to pull our collective chestnuts out of a big fire and those who lead this process stand to make a lot of money.  Google, Cisco and Salesforce are all at the top of this stack and your company ought to be trying too.

    Published: 12 years ago

    I am on a Virgin flight coming home from Dreamforce to the Boston area and while I’m in flight I have a loaner of a Google Chromebook computer.  I am writing this review on the device itself and plan to turn in the machine when I land.  This is a rather creative approach to marketing and Google should be praised for this,

    As delivered the mouse pad is too sensitive and too fast and you find yourself doing wacky things to do the right things.  IT’s sort of like over steering until you either crash, get the hang of it or best outcome, find the settings screen.  Having founod the settings and adjusted thin, I am into the third phase of my Chromebook life.

    The keyboard is the opposite of the mouse pad.  It seems to be fullish size with big keys and space between them for my fat fingers and that helps me avoid most spelling/typing errors.  The screen looks to be thhirteen inches and it is fine for most uses.  It is glare free and crisp enough,  Navigation is fair.  The mouse pad is one though think to get the hang of and I found myself skating off the reservation and not getting mouse-like things to happen.

    The big difference between the Chromebook and a conventional notebook PC is the OS but those differences are completely covered up because you live in the Chrome browser.  The full Google Apps suite is what’s available an what you use to write or do other things you might often use Microsoft Office for.

    Speed is good, I don’t find the machine slowing down or unable to process my instructions unless I’m trying to access the net but that might be more of a function of the wireless internet available on the plane.  The screen dims periodically to save battery and that’s fine.  I suspect the display is a thing you can adjust but I have not bothered to find the place for that.

    The Chromebook gets good marks for ease of use once the mouse pad is squared away to suit your needs.  It is light and the battery will last throughout this flight without charging which is good because the slipcase doesn’t hold one or much else other than the device itself.  I understand that it has a hard drive but it boots in under 8 seconds.  I can live with that and I suspect that it’s easy for Google to hold the OS in memory to make booting quick.

    I think the price is $430, about the price of an iPad with WiFi only.  It’s a different form factor than the tablet traditional if you will.  This book is good for travelers and anyone else who needs a real keyboard to operate conventional apps.  As a traditional device it is used for both consuming Internet traffic and for content.  Tablets are for a different but related market of consumption and I find that’s a question you need to ask before you buby on.  It’s the question we all should ask whenever buying things, not just electronics. Too many of my friends bought tablets — iPads — and discovered they needed to buy wireless keyboards to write.  Before theey knew it they were building and buying their own laptops and carrying around two separate pieces.  Where’s the advantage in that?

    So this is the end of the review.  I wrote the whole thing on this little computer and it’s ok.

    Published: 13 years ago