Archive for the 'startup' Category

Twitter’s First Advertisement?

I’m one of those folks who cares about twitter’s business model. I care simply because I take the service seriously. So seriously, in fact, that I wrote an entire defense—an entirely tedious defense—of taking twitter seriously.

So, yes, here are a couple screenshots:



PS. If you take twitter seriously, you’ve got to check out tunkrank, explained here.

Insanely Great Startup Idea

If Digg distributed its comment threads to the blog posts themselves, that would be awesome. But if Digg also distributed the ability to do the digging to the posts themselves, that would be killer.

Digg is awesome. Disqus and other commenting services are awesome. Digg and Disqus would be awesome as one.

Those two feature sets are a match made in blogging heaven.

Want to race to see who makes this happen first, me or you?

Why I dislike micropayments, don’t mind charity, but really have a better idea

A sure-fire way to think up a great idea for the future of the news is think about the fundamentals. “What’s news?” That’s a good place to start. Dave Winer gets at the fundamentals really well.

Let’s ignore most of the fundamental components of the news and focus on a couple: users and creators. Very roughly, those map to readers and writers. But “users” and “creators” emphasize that readers are active and don’t simply passively consume the news. Users want to re-purpose the news, get more out of it. We also don’t want to forget that creators aren’t just writers; they’re also photographers and editors.

inverted_jennyOne pretty important fact is that users and creators are all people. And people can trust one another. Obvious? One would think so, but there’s been a big corporate wall between them for decades now. The publication has overshadowed the writer. We viewed newspapers as the creators. Writers and photographers were faceless bylines most people ignored.

For example, we once trusted the New York Times to give us all the news that’s fit to print. It’s an awesome slogan, containing a slant rhyme and some serious alliteration, sure, but it now works much less well as a promise. I doubt its author ever intended it to be strictly accurate, but now it’s no where near artfully true anymore. Only the internet can make that promise now. It is the great disintermediator.

And so creators of news are re-emerging as real people to their users, who are also real people. That relationship, however attenuated, is a better place to locate trust. Let me put it another way: there’s greater potential trust in user-creator relationships than in reader-newspaper relationships. Humans are built to trust other humans, personally.

Now, we certainly also have relationships with groups. I’m no anthropologist, but it would certainly seem that, as humans, the concept of group identity runs deep. We can trust a person because he’s part of a club or a tribe. It’s a good thing, then, that appreciating user-creator bonds doesn’t demand that we deny the existence of reader-newspaper bonds. The internet may erode—but it doesn’t destroy—the concept of a traditional brand, anchored in a group of people who share a common purpose. The internet supplements, or unlocks, the concept of a personal brand.

Why all the fuss about brands and user-creator relationships and, ultimately, trust? Simply put, trust is an economic good. It’s worth something. It makes markets work more efficiently. As a trader might say, trust is positively accretive to value. This is not just about peace, love, and harmony. Trust creates value. Value gets monetized. Money pays journalists. Journalists save the world.

So if there’s trust to be created, there’s money to be earned. Trust is the foundation for a value proposition. All else equal, it stands to reason that users will pay more for the news in which they have more trust. If so, then it follows that users will pay more for the news they use based on a relationship with creators, in whom they can place more trust than they can in newspapers as brands.

Whew, so all that was wildly theoretical, blurry stuff. Before moving on to something more concrete, let’s sum it up. Shifting the news relationship from reader-newspaper to user-creator increases potential trust, an economic good, and unlocks value, which people may pay for. But even the strongest value proposition does not a business model equal.

So let’s move to the concrete: the business model. How do we monetize this theoretical value tucked away in user-creator relationships?

You do it with an idea I’ve been flogging the past couple weeks. You do it with Mitch Ratcliffe’s idea, in which users pay creators for “added convenience or increased interaction.” Note the elegant fit: increased interaction between one person and another is what fosters relationships and trust. Giving paying users otherwise exclusive twitter access to the creator could work. SMS updates could work, as could a permission only room on friendfeed. Even something as simple as a gold star on paying users’ comments—a symbol that they support the creator financially—would provide incentive for the creator to reply. Tiers of stars—bronze, silver, gold—are possible too.

There’s a social network lurking not too far below the surface. Because we’re in the business of fostering trust, transparency is paramount. So this social network would do best to require real identities. Users would have to be clear about whom they support, and creators would have to be clear about who supports them. Both users and creators would have personal pages of their own, identifying whom they support and who supports them and what dollar levels are being exchanged for what levels of interaction. This way, creators would have the ability to avoid potentially conflicted supporters. (Of course, a person could be both a user of some news and a creator of other news, paying for some and receiving too.)

Paying users of different authors would eventually form their own communities, if creators nurtured them well in the context of a supportive information architecture within the social network. Done right, membership in a community, which could suggest and debate tips for the creator, would represent its own value proposition for which users would be willing to pay up. Creators could have multiple communities, populated by groups of users characterized by different interests, areas or expertise, or even locations.

Creators would set their own prices, reaching their own equilibria between cost and numbers of paying users. Users would tend to pay less to a creator who offered less-value-added interaction by ignoring more questions and comments. But there would tend to be more users willing to pay a smaller amount than a larger amount. Users and creators would have to think about their elasticities of supply and demand. Over time, individual users and creators will find a balance that strikes her fancy. On the one hand, some creators might prefer a smaller set of users who pay more money and enjoy more interaction. Other creators, concerned about possible undue influence, might prefer a larger set of users who pay less money for a thinner relationship. And on the other hand, some users might prefer to be among a small community with better access or thicker relationships to the creator, while other users might prefer spreading themselves around and having thinner relationships with more creators. I don’t see any obvious reasons why a basically unfettered market wouldn’t work in this case.

Note that this represents an end-run around the problem that news is an experience good—you don’t know the value of an article till you read it. (New is not like buying a pair of pants.) This solves the problem that news itself is often nearly worthless the day after its published—yesterday’s news is today’s fishwrap. (It’s not like buying a song from iTunes. Also, ed. note: please, please, please follow that link to Doc Searls. The VRM parallels are clear and profound.) Finally, this also solves the problem that any given news article has myriad relevant substitutes—articles about the very same topic, event, or person and articles about equally interesting topics, events, or persons. (News is not like the Inverted Jenny. Yay philately!)

As with Kachingle, recently blogged by Steve Outing, this kind of freemium news doesn’t have to be the entire solution. It’s certainly compatible with advertising, though another feature might be a lack of it, just as it’s compatible with charity.

The point is that this idea and the business model on top of it are inspired by deeply human phenomona. Personal interaction and trust are constitutive of what it means to be human. They’re a large part of what makes the world go around generally, and we should look to them to save the news too. The right tools and insights can help right this airship called journalism.

Why Socialmedian, Twine, and Others Don’t Get the News

More than a year ago, I asked, “What Is Networked News?” I was thinking about how people really, actually want to get their news, and my answer came in three parts.

Let’s focus briefly on the first two. (1) People care about who writes it or creates it. In other words, people want their news from trusted publishers. (2) People also care about who likes it. In other words, people want their news from trusted consumers—their “friends.”

News in the modern era has naturally revolved around publishers. That part’s old-hat, and so people need little help from innovators in getting their news from publishers. But innovators have made tremendous accomplishments in helping people get their news from their friends. This is largely the story of the success of Web 2.0 so far, and many startups have engineered ingenious systems for delivering news to people because their friends like it.

FriendFeed is one such awesome story. Twitter’s another. Google Reader’s “share” feature and its openness, which has allowed others to build applications on top of it, make for another perfect example. The ethic of the link among bloggers is, in a very real way, central to this concept: one person referring others to someone else’s thoughts.

But I also wrote about a third way. (3) People want their news about what interests them. This may seem like a trivial statement, but it is deeply important. There is still tons of work to be done by innovators in engineering systems for actually delivering news to people because they want exactly what they want and don’t want any of the rest.

Twine‘s “twines” come close. Socialmedian‘s “news networks” come close. They’re both examples of innovation moving in the right direction.

But they don’t go nearly far enough. Twine looks like it’s got significant horsepower under the hood, but it lacks the intuitive tools to deliver. Frankly, it’s badly burdened by its overblown vision of a tricked-out Semantic Web application that’s everything to all people all the time. Twine is, as a result, an overcomplicated mess.

Socialmedian’s problem are worse, however. It’s simply underpowered. Nothing I’ve read, including its press release reproduced here, indicates the kind of truly innovative back-end that can revolutionize the news. Socialmedian wraps a stale social donut around Digg, and I’m afraid that’s about it.

When it comes to the news, people demand (1), (2), and (3). They want their most trusted publishers and their most trusted friends, and they want to personalize their interests with radical granularity. That takes an intense back-end, which Socialmedian simply lacks. That also takes an elegant user-facing information architecture, which Twine lacks.

We’ve had (1) for years, and I’m thrilled at the advances I see made seemingly every day toward a more perfect (2). But a killer news web application has yet to deliver on (3). When it does, we’ll have something that’s social and powerful and dead-simple too.

The trend is your friend (@vctips)

“…demonstrate how a market is or will be growing in alignment with your business. timing is everything.”

And so I say this: The concept of “following” made popular by twitter and friendfeed is an increasingly natural concept for users. Friendfeed has pushed the boundaries with its “hide” feature, allowing users to personalize the flow of information from their friends.

It’s time to expand beyond the notion of following friends and merge it with subscribing to feeds in general. The market for web apps where we “follow” and control the stream of information that’s most interesting to us is growing. It’s time to get ahead of the curve and get serious about following the news, personalized.

The Great Unbundling: A Reprise

This piece by Nick Carr, the author of the recently popular “Is Google Making Us Stupid?” in the Atlantic, is fantastic.

My summary: A print newspaper or magazine provides an array of content in one bundle. People buy the bundle, and advertisers pay to catch readers’ eyes as they thumb through the pages. But when a publication moves online, the bundle falls apart, and what’s left are just the stories.

This may no longer be revolutionary thought to anyone who knows that google is their new homepage, from which people enter their site laterally through searches. But that doesn’t mean it’s not the new gospel for digital content.

There’s only one problem with Carr’s argument, though. By focusing on the economics of production, I don’t think its observation of unbundling goes far enough. Looked at another way—from the economics of consumption and attention—not even stories are left. In actuality, there are just keywords entered into google searches. That’s increasingly how people find content, and in an age of abundance of content, finding it is what matters.

That’s where our under-wraps project comes into play. We formalize the notion of people finding content through simple abstractions of it. Fundamentally, from the user’s perspective, the value proposition lies with the keywords, or the persons of interest, not the piece of content, which is now largely commodified.

That’s why we think it’s a pretty big idea to shift the information architecture of the news away from focusing on documents and headlines and toward focusing on the newsmakers and tags. (What’s a newsmaker? A person, corporation, government body, etc. What’s a tag? A topic, a location, a brand, etc.)

The kicker is that, once content is distilled into a simpler information architecture like ours, we can do much more exciting things with it. We can extract much more interesting information from it, make much more valuable conclusions about it, and ultimately build a much more naturally social platform.

People will no longer have to manage their intake of news. Our web application will filter the flow of information based on their interests and the interests of their friends and trusted experts, allowing them to allocate their scarce attention most efficiently.

It comes down to this: Aggregating documents gets you something like Digg or Google News—great for attracting passive users who want to be spoon fed what’s important. But few users show up at Digg with a predetermined interest, and that predetermined interest is how google monetized search ads over display ads to bring yahoo to its knees. Aggregating documents make sense in a document-scarce world; aggregating the metadata of those documents makes sense in an attention-scarce world. When it comes to the news, newsmakers and tags comprise the crucially relevant metadata, which can be rendered in a rich, intuitive visualization.

Which isn’t to say that passive users who crave spoon-fed documents aren’t valuable. We can monetize those users too—by aggregating the interests of our active users and reverse-mapping them, so to speak, back onto a massive set of documents in order to find the most popular ones.

Features vs. Benefits: Don’t Forget

See here, slightly annotated with a humor joke:

Note the difference between features and benefits—and think about them. For example, a house that gives shelter and lasts a long time is made with certain materials and to a certain design; those are its features. Its benefits include pride of ownership, financial security (ha!), providing for the family, and inclusion in a neighborhood. You build features into your product or service so that you can sell the benefits.

Benefits are hard to write about concretely, almost to the point where thinking about their value becomes merely speculative. What’s pride of ownership really worth? What would people really pay for the marginal units of neighborhood inclusion that a house can impart over an apartment? Close to bullshit.

Only comparisons to similar cases really count. The comparisons can be direct, or they can be indirect and more creative. To the extent that they’re creative, however, they’re presumably less reliable, all else equal.

If your comparison is spot-on, but really creative, what makes it compelling to others, I suspect, says more about who’s listening than its internal logic.

So keep looking for listeners. Hard to know when to stop.

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