Waxing Philosophic » Business

Why Facebook has crossed the canyon, changed the way we communicate…and should buy Twitter

jguttman — Mon, 05 Jan 2009 15:49:33 +0000

Facebook has crossed the canyon. If the “chasm” is the leap from early adopters to mainstream, then the “canyon” is the leap from mainstream to mass commercial appeal. Facebook has taken that leap. In the past few months, my dad, uncle, aunt and the mother of a high school friend have all joined Facebook. Facebook has become, as I explained to a hold-out friend of mine last week, the most fun and efficient way to keep in touch with the people in your life. As recently as five years ago, I reserved most Sunday nights for catching up with people by telephone. That was the way I maintained friendships, particularly with people living in other cities, who I didn’t see face-to-face on a regular basis. I’d call them after dinner, speak for 20-30 mins, get an update on the past few weeks (or months in some cases) and then say goodbye, until the next time we called each other. Today, telephone conversations of this sort are passe. Why waste time on the telephone, a communication medium limited to audio, when we can peruse each others’ photo streams, see what events our friends have been attending, and most of all, from a single page, get a snapshot of their status’. The feature with which Facebook offers the summary view of our friends’ updates is called the News Feed. If we really care, we can review their historical status updates to get a more complete picture of how they’re doing. When’s the last time you received as complete of an answer to the question “How ya doin?” . Most industry wonks agree, the status update is Facebook’s single greatest achievement. It allows people to keep in touch with the absolute minimal amount of effort possible. It’s possible that Facebook makes it too easy, contributing to the loose ties effect that sociologists have been preaching, where our networks become less centered around a few close relationships and more around many looser ones. More than any other tool in my universe though, Facebook is having a significant impact on that shift in the social landscape. Their crowning achievement, the status update, is such a good invention that several companies have been formed around it, the most notable of which is Twitter.

Not surprisingly, Twitter’s growth trajectory has been similar to Facebook’s. Twitter virtually launched two years ago at SXSW in Austin, when it caught fire among a captive audience. Since then, it’s consumed the early adopter market and steadily made it’s way toward mainstream. In the past few months, several celebrities and consumer-focused orgs have caught on and grabbed ahold of Twitter accounts to communicate with their constituents. According to Compete.com, Twitter traffic measured by unique visitors is up 640% in the past year – though this figure doesn’t fully account for Twitter’s influence since a big chunk of their traffic flows through one of several messaging apps that feeds the platform. Like Facebook, Twitter is having it’s own effect on social behavior. I’ve recently noticed conversations taking place between groups and individuals that might be unlikely to converse otherwise. One example is GazaNews who has, not surprsingly, attracted a bunch of followers recently and engaged in some compelling back and forth. This is a good thing. Open dialogue and discourse between people that are geographically and/or ideologically far apart can only be healthy, and for a company as nascent as Twitter to be enabling this is a huge accomplishment. Twitter has essentially peeled off and borrowed a piece of Facebook by identifying and unleashing the full potential of this feature…not that there was anything Facebook could have done about it – it’s unlikely the status update could have been patented. Still, Facebook should buy Twitter to reclaim ownership of the feature and own the social media landscape that they’ve helped transform. It would re-establish them as owners of all things status update-related and give them another outlet for their ad sales activities. Better integration with Facebook would also expand Twitter’s influence exponentially, making it a far more powerful tool than it already is. The reality of Twitter is that it’s a feature that caught fire, but can probably only survive so long by itself. Facebook could likely acquire them for a reasonable price right now and quickly justify it by the further growth they can help fuel on the platform. It would also be a strong defensive move for them. If one of their competitors – in social networking, blogging or sharing – acquired Twitter, they’d essentially be stealing a piece of Facebook and I think that may come back to haunt them down the road.

Thoughts from the sky

jguttman — Tue, 09 Dec 2008 23:23:25 +0000

I’m on UAL 673 from LGA to Chicago right now. It’s been a little while since I flew one of the old-school U.S. airlines – I’ve favored JetBlue and Virgin America recently – and while it wasn’t a carefully considered decision, now I know why. A few years ago, I lived on United. At one point, I had half a million frequent flier miles with them. When I arrived at the airport this morning, I brought my boarding pass directly to security, at which point they dismantled my bags in search of my toiletries. As they extracted my traveling toothpaste, shaving cream and moisturizer (especially important in the winter:), I asked him to stop, put it all back and let me check the bag. Having traveled with the exact same toiletry bag at least five times with its current contents, I was surprised by the lack of consistency and general inefficiency of our airline security screens, but that’s not my point here. When I returned to the ticket counter to check my bag, they charged me $15. Surprised, I objected and questioned the policy to make sure the employee hadn’t made a mistake. “No, we began charging for checked luggage two months ago. American did it first,” she explained. I can understand charging for food, headphones and even pillow kits, but charging for checking luggage? This seems a step too far. Now I understand why I’ve favored the newer, more streamlined airlines recently and have another reason to continue doing so. The flight I’m on, a 9a from LGA to ORD, that would be a popular business flight under normal circumstances, is about 40% full.

The American airline industry seems to me very analogous to the American auto industry. We have a few old entrenched companies who have survived – United, American, Delta, Northwest – who we’ll call the Vintage 4, and we have newer upstarts – Southwest, JetBlue, Virgin America – who we can call the Nouveau 3. The new companies are streamlined, have assembled more efficient business models and are slowly but surely, winning over American travelers. They’re winning over Americans because they’re offering a better service and the superior health of their businesses shows clearly. The Vintage 4 have aging fleets, union contracts that make it more difficult to compete, and maybe partially as a result of the above, pesky disgruntled flight attendants who are a far cry from the stewards and stewardesses of an earlier era. No need to elaborate there. In the auto industry, we have a few new upstarts developing electric-powered cars, albeit not quite ready for mass production, and we have entrenched players, who have consistently failed to innovate or evolve. I’m written about this several times already, but the airline industry is a perfect comparison for what happens over time when the incumbent fails to innovate and respond to the market. In today’s WSJ, Bob Lutz, Vice Chairman of GM, defended CEO Rick Wagoner, saying “To blame the American automobile executives for this frankly is ridiculous. How were we supposed to forecast this when the government doesn’t forecast it and the financial institutions couldn’t?” What a bullshit comment. He misses the point completely. Financial institutions fucked up and three of the largest five no longer exist. That’s what happens when you fuck up. The only difference is that with the financial orgs, it happened relatively quickly, over less than a decade as mortgage-backed securities gained in popularity. With the auto industry, it’s happened over 40 years, and yet they’ve spurned each and every opportunity to shift course. The federal government should demand specific milestones be met towards a greener and more efficient industry if GM and their brethren are to take loans funded by taxpayer money. If that means Wagoner, Lutz and existing management find new careers, that’s fine. The industry and the companies will be better off for it. In fact, I’m not sure they can execute a successful turnaround without new management. As long as they continue to make excuses for past performance though, it’s clear to me that they won’t be making the kind of progress we expect any time soon.

Obama, Detroit and The Bailout

jguttman — Tue, 18 Nov 2008 19:44:07 +0000

Everyone seems to have an opinion lately of how the government should handle the current economic crisis. Normally, these would be easy to dismiss, given our relative inexperience compared to the authority of those in charge, however watching Hank Paulson waffle back and forth, seemingly each week, on the best strategy to secure the economy, I’m less convinced that our leaders truly know what to do this time around. Granted, these are unprecedented times so Paulson deserves some slack, but I find it auspicious timing that we have a president-elect who has pledged put an unprecedented level of information on the web, detailing government spending and lending transparency to an institution that historically lacked it. Given the critical nature of the present, this may be the best opportunity we have to go one step further and leverage technology to harness the massive intellectual firepower of this country, and efficiently share ideas to find the best solutions. I hope Obama recognizes the opportunity presented by this crisis and wastes no time in putting his transparency/technology plan into action.

Nicholas Kristof wrote last week that education was essential and shouldn’t be relegated to 5th on Obama’s list of priorities. Apparently, Obama’s website – Change.gov – took down an ordered list last week and replaced it with five domestic priorities, in no particular order:

The principal priorities of the Obama Administration include: a plan to revive the economy, to fix our health care, education, and social security systems, to define a clear path to energy independence, to end the war in Iraq responsibly and finish our mission in Afghanistan, and to work with our allies to prevent Iran from developing a nuclear weapon, among many other domestic and foreign policy objectives.

This past Sunday, 60 Minutes presented his priorities in the following order:

Economic Recovery
Energy Independence
Health Care
Social Security
Education

Personally, I disagree with Kristof and support this order. Certainly, the travails of the economy are hard to ignore and that’s why it needs to be a pervasive priority, but I believe energy independence is the single-most important issue facing our country and one that directly affects our ability to rebuild the economy, create sustainable and universal health care and indirectly help fix social security. As both Al Gore and Paul Krugman have recently explained better than I can, a robust clean energy economy can create millions of jobs, replace dying industries (read: auto) with a new and burgeoning one that’s full of promise, and create a vast new exportable good for the country. An equally important motive, reducing our dependence on foreign oil will boost national security because we’ll have less incentive to meddle in middle east affairs, making the country safer. During the campaign, Obama said he would eliminate foreign oil imports within 10 years. It was such a popular claim that McCain pledged to do the same. It’s an aggressive timetable, but one the country should commit to. We’ll all be better off for it.

As for the issue/question of the day – what to do with the ailing auto industry and specifically GM – Michael Levine lays out one of the best arguments I’ve read in today’s WSJ on why bankruptcy is the best option for GM. There partially exists an image problem for Bush/Obama because having already bailed out Wall Street and AIG, not doing so for Detroit would seem elitist and contrary to the guiding principles of the Democratic party. Also, UAW did Obama a big favor by waiting til Nobember 6 to mention that GM had less than two months of cash in the bank. Doing so earlier would have made it a campaign issue, which likely would have hurt Obama’s chances. They also donated heavily to his campaign, which makes this Obama’s first real test. Will he cave to the pressures of Pelosi and protect traditional Democratic interests possibly leading to an appeasing administration that never gets anything big done, or will he do the right thing from the start and set his presidency in motion?

His mantra during the campaign was Change and allowing GM to go bankrupt would represent a much-needed one from the politics of old that are dragging down our country. Fundamentally, GM is not a competitive organization. We’ve all watched their market share consistently slide for the past several decades. If the smartest pe funds aren’t interested in the investment, why should the tp fund (tax-payer) consider it? I visited Detroit twice in the past year and the pervasive urban decay that’s impossible to miss tells the whole story. The best course of action is to help GM engineer a well orchestrated bankruptcy plan with federal assistance. Directing federal funds towards unemployment insurance and pension guarantees is a far better use of cash than life support for a dying business. As Levine explains:

If GM were told that no assistance would be available without a bankruptcy filing, all options would be put on the table. The web could be cut wherever it needed to be. State protection for dealers would disappear. Labor contracts could be renegotiated. Pension plans could be terminated, with existing pensions turned over to the Pension Benefit Guaranty Corp. (PBGC). Health benefits could be renegotiated. Mortgaged assets could be abandoned, so plants could be closed without being supported as idle hindrances on GM’s viability. GM could be rebuilt as a company that had a chance to make vehicles people want and support itself on revenue. It wouldn’t be easy but, unlike trying to bail out GM as it is, it wouldn’t be impossible.

Levine goes on to point out that a GM bankruptcy will make addressing health-care coverage more urgent, which is a good thing – it will lend a hand to the next major priority on Obama’s to-do list. To President-elect Obama: this is your first test and it’s coming before you even take office. If you get it right by doing what’s unpopular within your own party, you’ll win the respect of some of your foes and set a strong precedent that will commence your presidency the way you ended your campaign, seeking to repair what’s wrong with America, without missing a beat.

Andrew Lahde’s goodbye letter (and what’s wrong with our country)

jguttman — Fri, 17 Oct 2008 20:01:24 +0000

One of my next posts, that has been coming together in my head for a while, will be on the role hedge funds play in our economy and what responsibility, if any, they should assume for current conditions.

This farewell letter was sent to me recently by a friend in the industry. Andrew Lahde is a guy who formed a relatively small hedge fund, made an enormously successful bet on subprime (his fund is up 1,000% this year) and is now calling it quits. His insights are simple, yet profound and I find his comments about our government and legislation policy of particular interest.

Andrew Lahde’s Farewell – Get more Business Documents

The Mental Game

admin — Mon, 07 Jul 2008 23:39:14 +0000

So much of what determines success is the mental game. Having the confidence and self-encouragement to get the job done, under whatever circumstances present themselves. It’s the same in business, sports, relationships….it’s all the same set of mental tools. I recently heard of a woman who picked up tennis as a 3.0/3.5-level player and won the state championship two years later, through primarily focusing on mental exercises and, to a lesser extent, on-court practice. Last week, I played a league tennis match against a focused opponent of lesser skill. In both sets, I was leading early (2-0 in the first, 4-1 in the second), but he managed to claw his way back in. I ultimately lost in a tie-breaker (6-3, 5-7, 10-7) and played decently, but couldn’t help but think it was the mental game that dictated my outcome (or lack thereof). I immediately thought of this Nike Golf commercial, with Early Woods’ narration. Tiger has incredible raw physical skill, but so do each of the other top 100 PGA golfers. What really separates Tiger from the pack is his mental game. Mike Donald lost the 1990 US Open to Hale Irwin on the 19th hole of a playoff when Irwin sank a miraculous 70-foot putt. Donald virtually disappeared from professional golf soon after, while Irwin became the dominant senior tour player. The mental game has as much, if not more, to do with winning and losing a match, a negotiation, a sale as the raw physical circumstances.

$2 bill taped to Bear Stearns HQ entrance

jguttman — Tue, 18 Mar 2008 06:20:02 +0000

Just plain wrong….

SXSW – Recap from Austin

jguttman — Mon, 17 Mar 2008 04:40:14 +0000

Woah! Seven days in Austin for South by Southwest were all I could handle (in fact, more than I could handle as I escaped for one night to Dallas). I signed up for SXSW without knowing much about it, but with the general impression that it was a fun event and unique in the professional world. Both these assumptions proved spot on. By the second day, I was referring to SXSW as Burning Man for Business. In fact, there is significant overlap in attendance and I found myself discussing Burning Man several times over the week. The format of SXSW is very similar to Burning Man, with sessions and panels organized throughout the four days of the conference (and many people skipping the sessions altogether). While some of the sessions were entertaining and educational, the real meat of the conference happened outside the convention center at the parties, in the bars and throughout downtown Austin. In the evenings, tech stalwarts like Google, Apple, Adobe and a few upstarts in a Super Bowl ad-like move, throw parties at local bars where booze flows freely (as in gratis) into the wee hours. This scenario creates an extremely social ethos, not to mention makes for late nights and late mornings, all making SXSW a giant party for the industry. If you weren’t there, this might sound like a giant boondoggle, but interestingly, I found that more valuable networking and business actually happened that at your average conference. In an industry that is relatively young, where founders and execs in their early 40s represent the high end of the range, we’d all rather do business in fun, social environments than staid office-like conference halls. This proved out over the course of the week as I networked and connected with many dozen industry professionals from around the country. I also found these relationships more authentic and more likely to lead to friendship since the formality and forced interaction are lifted. I did manage to attend a few valuable sessions, my favorite of which was given by Jason Fried on Lessons Learned at 37 Signals. His message was overwhelmingly simple and the lessons he conveyed were mostly common sense. Sean Ammirati has a nice review of the session on ReadWriteWeb. Another session that scored high marks was The Worst Website Ever delivered by Merlin Mann which you can watch here on Viddler. Overall, SXSW was nothing short of awesome, and I’ll definitely be back in future years.

NPR is impressive….and cool

jguttman — Thu, 28 Feb 2008 17:44:35 +0000

It’s always fun and enlightening to meet with companies that really have there sh*t together and are on the ball, particularly when they’re not necessarily the companies you expect. Such is the case with NPR, who I met with yesterday here in DC. As a non-profit with a strong core mission of

"creating a more informed public — one challenged and invigorated by a deeper understanding and appreciation of events, ideas and cultures"

they put many for-profit media companies to shame with their innovation and fresh approach to media. I was totally impressed by NPR’s innovative approach to media distribution – they are the uncontested leader in the podcast medium with 11M downloads per month and are way ahead of the game in mobile content distribution relative to others. Why are they able to get so much right as a non-profit, when others who allegedly have more incentive to innovate and produce profits, are slower to the plate? Maybe it has to do with a commitment to their core mission. I bet that a strong mission to which all employees subscribe is a more powerful form of motivation than any financial incentive, particularly when financial incentives are clustered at the top. Sergey and Larry have been quoted saying that their Google Foundation will pursue for-profit initiatives, which they believe are more efficient at innovating and producing desired results. I think that, for the most part, such is the belief in Silicon Valley, where missions are really masks for the real incentives, green. I’m not saying entrepreneurs aren’t passionate about building great products too (I fall into this camp at the moment because I’m certainly not working to save the world), but the prime motivation is different than when you’re building a great product to make a real difference in the world. They should check out NPR as an example of a non-profit model that outperforms its peers and achieves its goals – and I expect rewards its employees fairly well.

Doritos plugging into world of user generated content

jguttman — Tue, 10 Jul 2007 00:06:26 +0000

Doritos plopped themselves in the center of user generated mania recently with a campaign to name the next flavor of chips. There were several different flavors in circulation, but the one I picked up, code-named X-13D, had a char-broiled meaty flavor. The process of ID-ing the specific source consumed approximately 15-20 minutes and most of the bag of chips. In the end, my friends and I agreed it was the Whopper, in all its flame-broiled glory. For someone who is, for the most part, a vegetarian, this realization was mixed with some confusion and despair. Having read Fast Food Nation though, I remained confident that the flavor was manufactured from 100% inorganic chemicals. The truth be told, we wouldn’t have finished as much of the bag were it not for the challenge of ID-ing the flavor. I commend Doritos for this campaign though. They’ve designed a rich website, with lots of interactivity. In addition to selecting and naming the new flavor, they are empowering users to create the audio track for the video ad. As a product line, Doritos hasn’t done much since the revolutionary Cool Ranch flavor appeared in 1992. I take that back…Baked Doritos was a good idea, but they borrowed that one from Lays, and it didn’t seem to catch anyway. It seems Whopper didn’t make it to the final bracket of the Dorito challenge. The two finalists are wild white nacho and smokey cheddar BBQ. While I love BBQ, I’m pulling for wild white nacho in this match-up.

Following up on Westin….White Tea and Heavenly Cribs

jguttman — Fri, 18 May 2007 01:57:36 +0000

After writing the article on the Heavenly Shower, I connected with a friend who works on the Westin brand for Starwood. He read my article and shared the following perspective:

you have no idea the life the "brand culture" has taken
on.

we have our own scent (white tea) – memory being the strongest of
recalls and emotional ties, every time you set foot in a Westin they are pumping
the scent through the building.

the color, font size, lack of caps – all meant to evoke the brand
"feel"… the point being to make an emotional connection.

Westin Workout rooms powered by Reebok, working out in the privacy
of your own room equipped with a treadmill and pilates DVD.

The Westin Unwind hour…an evening ritual that changes for each
Westin location.

The Westin Breathe initiative… every Westin is smoke free, rooms
and public spaces.

The Westin Heavenly dog bed… because even your pooch needs a
heavenly experience

The Westin Crib… same as above but for your
child!

It’s endless…all Starwood brands have taken this initiative to
have their own brand speak, look, feel, smell all to create that "other place"
that Starbucks has so successfully created. A home away from home unique to
each brand and each brand touching a demographic.

Waxing Philosophic » Business

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Thoughts from the sky

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Obama, Detroit and The Bailout

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Andrew Lahde’s goodbye letter (and what’s wrong with our country)

The Mental Game

$2 bill taped to Bear Stearns HQ entrance

SXSW – Recap from Austin

NPR is impressive….and cool

Doritos plugging into world of user generated content

Following up on Westin….White Tea and Heavenly Cribs