Category: Internet/Web Companies

Bezos Interview: Publishing and Fire Phone

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I recently read this interview of Amazon CEO, Jeff Bezos.  It’s pretty interesting.  Some thoughts:

eBooks / Publishing

I had always assumed that the print/book industry was really struggling – similar to the music industry.  However, Bezos’s quote of, “…the facts are wrong. Publishers are having unparalleled profitability, and the book industry is in better shape than it ever has been, and it’s because of e-books” is interesting.  

It’s also interesting that they take such a long-term view for the Kindle.  As Bezos states, “The vision for Kindle is every book, every imprint, in any language, all available in 60 seconds.”  That’s quite a mission.  They are definitely doing really well so far. 

The Amazon Phone

He admits that it’s a flop but contends that it’s just the start of them being in that business.  He states, “The Kindle is now on its seventh generation. The Kindle Voyage, the new premium product, is just completely killer. Fire TV, Fire TV Stick — we’re having trouble building enough. Amazon Echo, which we just launched. So there’s a lot of activity going on in our device business. With the phone, I just ask you to stay tuned.”

I wonder how many times they plan on iterating on the phone.  He talks about bold bets with things like Kindle, AWS and third-party resellers, but building a phone and competing against Apple, Android (they aren’t using core Android), Samsung and others is entirely different.  While audacious, i’m not sure I see how they can differentiate. 

Drones

He did an interview with “60 Minutes” and showcased their drone delivery system.  It was awesome.  He was asked about it here.  As you’d expect, he thinks the main thing holding it back is the regulatory issues, saying, “The most interesting part of this is the autopilot and the guidance and control and the machine vision systems that make it all work. As for when, though, that is very difficult to predict. I’d bet you the ratio of lawyers to engineers on the primary team is probably the highest at Amazon.“

I think it’s the same for self-driving cars (I have a bet they’ll be here by 2023).  It totally works right now but the world is just not ready for it.  There are so many unanswered questions, such as: if someone gets killed or severely injured by a self-driving car, who’s liable?  Is it the person who bought the car, the company that built the car? Is there some level of insurance that you can get?  

Anyway, some good thoughts in there.  It’s worth a read.

 

 

Thoughts on Apple’s iPhone 6 & ApplePay

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I listened to the announcement last week and have a lot of thoughts on the upcoming iPhone. 

Apple’s launch event came, and delivered (mostly) what had been leaked and/or expected: a larger iPhone & a phablet, payments and a smart watch. The phones are mostly predictable: the customer is always right, and the customer has decided to optimise for pocket size and experience over thumb size (the changes in iOS7 & iOS8 have made it possible to do this, incidentally).

Why did they make it bigger?

Basically, Apple dominates the high end of the phone market.  They like it that way.  To date, there has been a few high-end Android phones eating away at their sales (mostly Samsung phones).  There are currently six reason people buy these phones (taken from Benedicts’s Blog): 

  1. Their operator subsidies an Android but not an iPhone – this has now ended, with Apple adding distribution with all the last significant hold-outs (Sprint, DoCoMo, China Mobile)
  2. They don’t particularly care what phone they get and the salesman was on more commission to sell Androids or, more probably, Samsungs that day (and iPhones the next, of course)
  3. They have a dislike of Apple per se – this is hard to quantify but probably pretty small, and balanced by people with a dislike of Google
  4. They are heavily bought into the Google ecosystem
  5. They like the customizations that are possible with Android and that have not been possible with iOS until (to a much increased extent) iOS8 (more broadly, once could characterize this as ‘personal taste’)
  6. They want a larger screen. 

The first has largely gone, the second is of little value to an ecosystem player and nets out at zero (i.e. Apple gains as many indifferent users as it loses) and the third is small. Apple has now addressed the fifth and sixth.  That is, with the iPhone 6 and iOS8, Apple has done its best to close off all the reasons to buy high-end Android beyond simple personal preference.  As Benedict Evans states, “You can get a bigger screen, you can change the keyboard, you can put widgets on the notification panel (if you insist) and so on. Pretty much all the external reasons to choose Android are addressed – what remains is personal taste.”

What’s the deal with ApplePay?

A lot of people are saying “they are going to make a ton of money with ApplePay!” and “They are going to crush PayPal!” – both are not even close to true.  If you look at what they are actually doing here, it’s not to take on banks, credit cards or any actual payment system.  They are taking on the wallet.  If you look at what they did with music – they didn’t put Universal Music out of business, they didn’t come up with a better way to be a label, they just crushed the music store (like Tower Records).  It’s the same here.  You still need a credit card.  You still need a bank to issue thecard.  You just don’t have to pull it out or even have it when buying something.  

 

I just pre-ordered my new iPhone 6 (not the Plus) to get it on Friday.  What about you?  You buying one?

 

The Secret Behind Snapchat’s Popularity

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I was chatting the other day about why Snapchat is so popular.  Most people think it’s because of sexting and the fact that the photos disappear, but i think it’s more than that.  I recently came across a speech by the Snapchat founder (Evan Spiegel) and thought it was pretty enlightening as to how he sees usage occur.

He talks about how people today don’t want to fully recreate their offline experience online. They want to be online but understand that their online profile isn’t the sum of them.  It’s a pretty different view.  A highlight of the speech:

Traditional social media required that we live experiences in the offline world, record those experiences, and then post them online to recreate the experience and talk about it. For example, I go on vacation, take a bunch of pictures, come back home, pick the good ones, post them online, and talk about them with my friends.

This traditional social media view of identity is actually quite radical: you are the sum of your published experience. Otherwise known as: pics or it didn’t happen.

Or in the case of Instagram: beautiful pics or it didn’t happen AND you’re not cool.

This notion of a profile made a lot of sense in the binary experience of online and offline. It was designed to recreate who I am online so that people could interact with me even if I wasn’t logged on at that particular moment.

Snapchat relies on Internet Everywhere to provide a totally different experience. Snapchat says that we are not the sum of everything we have said or done or experienced or published – we are the result. We are who we are today, right now.

He then also talks about how when you take the photo away, it’s more about the feeling and not the photo.  It’s subtle but powerful difference.  He says: 

Snapchat discards content to focus on the feeling that content brings to you, not the way that content looks. This is a conservative idea, the natural response to radical transparency that restores integrity and context to conversation.

Snapchat sets expectations around conversation that mirror the expectations we have when we’re talking in-person.

That’s what Snapchat is all about. Talking through content not around it. With friends, not strangers. Identity tied to now, today. Room for growth, emotional risk, expression, mistakes, room for YOU.

I like that concept.  And with that it’s clear why people, especially teenagers, would want a more forgiving medium. 

Note: blogged about Snapchat almost a year ago and the massive growth they are having: http://loo.me/2013/06/lets-talk-about-snapchat/

Foursquare Swarming and the death of the Mayorship

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I’m a big FourSquare user and i have been since they launched. I think I was one of the original 10k users to sign up for the service. Looking at my profile, i can see that i’ve done over 5700 checkin and am the mayor of over 20 venues.  I’m all over it. 

I learned a few weeks ago that 4S was going to change up their business.  They discovered that there are two distinct personas that use their app:  (1) the user who checks in a lot and views where their friends are; (2) the user who uses the app to find places to go and search for tips. They found that they were constantly limiting each personas experience so they could wedge both into the service. They also recognized the rise of “App Constellations” where multiple services such as Facebook, Dropbox and others are producing multiple apps that deep link to each other (read this good Fred Wilson blog post about it). So, they announced that they are splitting their business into two apps: one for the checkin user (like me) called Swarm and another for the venue researcher called Foursquare (which will compete directly with Yelp).

Swarm screenshots

I like this change.  Since it happened, i found myself using Swarm a lot and because it didn’t have the other stuff in there, it’s more streamlined and easier to use.  They also were able to add a few extra features like “Where are you going to be?” because they have the room.  In short, I love the new strategy and like the new app.  

Also, the mayor is being killed off. From the foursquare blog: 

Mayors 2.0. We wanted to get back to a fun way to compete with your friends instead of all 50,000,000 people who are on Foursquare. With these new mayorships, if you and a couple friends have been checking in to a place, the person who has been there the most lately gets a crown sticker. So you and your friends can compete for the mayorship of your favorite bar, without having to worry about the guy who is there every. single. day. Mayors 2.0 means that places can have many different mayors, one for each circle of friends, instead of just a single mayor at each place.

I am mayor at 20+ places and found daily enjoyment in that fact. This change is a bummer. I guess it reflects society’s need for everybody to be a winner, which is also stupid. But I understand why they’re doing it, but i also hate it.  It’d be nice to have a global mayor. 

As a side note: I’ve currently checked in to Illegal Pete’s for 79 consecutive weeks.  I feel like that’s some sort of record. 

Related Posts from Loo.me:

The craftsmanship between a great idea and great product

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Saw this from Dixon’s blog over the weekend. It’s a good clip from Steve Jobs in 1995 where he talks about how building great products and thought it was worth a repost.

As the head of Product at Kapost, it really resonates to me as we often start off with a product idea and through months of discussion and design, come out at a different place – one that is always better than where we began.  I also like the talk of keeping things out of product.  In my opinion, that’s one of the hardest part of design product – trying to intentionally remove or not include parts that customers claim they want.  

The Jobs quote:

 

There’s just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous tradeoffs that you have to make. There are just certain things you can’t make electrons do. There are certain things you can’t make plastic do. Or glass do. Or factories do. Or robots do.

Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.

That’s one thing I love about product.  You need to understand design, your business, competitive landscape, your customers, technology and how to get things done.  It’s one of the more interdisciplinary roles a company has. 

 

Two Pieces of Business Advice

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An employee recently left Kapost (sad to see you go T) and i was out to lunch with her and she asked some advice. I thought back to two pieces of advice that I was given or things that i have witnessed from successful colleagues.  Here’s what popped up:

“90% of Power is Taken not Given”

This is a quote from my old boss Bill Raduchel.  Bill loves saying phrases like this to me, and this was one juicy nugget he spat out in 2002 when I was working at AOL.  I took it to heart. I was a product manager at the time and aspired t

Bill at the Inn at Little Washington

o have even more responsibility within the company.  He noticed that and delivered this great quote.  What he meant was that nobody is going to give me extra responsibility.  If i want it, i have to go take it and earn it.

That’s what i did. I wanted to run video services within the company.  There were lots of people running bits and pieces but nobody was owning it.  Instead of waiting for a title and position to be created, i just started acting like i was the defacto video product manager. I had weekly all-hands meetings with the other stakeholders, came up with a product roadmap, and basically acted like the product owner.  What happened? Eventually the company realized i was the product owner and rewarded me with that title.

In small companies there are too many things to do.  In big companies there are lots of ambiguity, swirl and gray space. In both instances, there’s an opportunity to do what you want.  Just be proactive and go do it.  In real estate, ownership is 9/10 the law.  In startups, doing is 9/10 the position.

Don’t Eat Alone

This is just something i’ve realized. Most of the people we hire at Kapost come from referrals.  Most of the opportunities i’ve been given in my career come from contacts of friends of friends.  The size and strength (i.e. authenticity) of your network matters in today’s work world and in your career.  I’ve seen people (Nick O’Neil) go crazy about this where they actually track in a spreadsheet the people they’ve met and want to keep in touch with and make sure every X number of days that they give them an update.  It may sound excessive but it works.  He has a ton of connections who regularly help him out.

There’s even a pretty good book, called “Never Eat Alone” which talks about the power of these connections.

Those are two things that immediately came to mind.  I’d be curious if any of you have heard any other nuggets of great advice that you’d like to share.

Twitter Stock and Slowing Growth

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In mid-December I bought Twitter stock for ~$45 a share.  Here’s why: 

  1. I’m bulling on Twitter as a social network. I think it has lots of great use cases that almost anyone could benefit from.  It will only grow in popularity once people start realizing what it is. 
  2. I think Dick Costolo is a great CEO and product person. I’ve watched numerous interview with him (including this great PandoMonthly one), have followed his path since Feedburner, and I believe he has the company running on the right track and is doing a great job.
  3. Twitter is just now starting to monetize but I think they’ll be able to pull in a good amount of money.
  4. When I bought their market cap was 20 billion.  At 10x multiples, that means they have to have yearly revenues of $2 billion.  That seems feasible for me that they’ll get there.

I was happy with my purchase. Then, on Wednesday night Twitter announced their first ever earnings since going public.  What a disaster it was.  First off, everyone compares them to Facebook even though they are completely different.  Second, they have seemed to have stopped growing.  Look at this chart:

That’s not good.  They need to grow.  They only added 1 million US users in Q4.  Wow, that is a crazy low number. 

So, while I am still a believer, I think it might be a tough year or two (or three) until they hit mainstream.  Trust me, it’ll be a better world when they do.  

Yahoo! is on it’s way back

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I had pretty much written Yahoo off.  I thought they were dead.  They hadn’t done anything new and interesting for over 5 years.  Their webpages looked like crap.  They were just treading water.  That all changed lately.  Specifically in the past 6 months, they’ve done some things that really make me think they’ll be a player in the future.

First, let’s talk about Flickr.  I’ve always used it as my default photo service where i store all my photos online.  It used to be the best (in 2003-2006) and then it got abandoned.  I still kept putting my photos there because i was locked in, but i knew it was dead.  They added one small feature a year. I had seen that playbook at AOL.  It means it’s only a matter of time before it’s time to leave.  Then something magical happened.  They pushed out a new iPhone app for it that was actually decent.  Then they updated it to make it really slick.  Then they announced 1 terabyte of free storage.  Then they announced automatic iPhone uploads of photos.  Whoa.  All of the sudden, it was one of the best photo apps on my phone.  All in about a 6 month period.

12015673175_1291382eb9_b

Second, they released a new News Digest app that is basically The Week magazine but a daily app.  It aggregates 8 to 10 recent news stories and sends them to you twice a day.  Once you’ve read the morning stories, you have to wait for the evening delivery. It’s beautifully made and is really easy to consume.  It’s not the main way I get mainstream news.

Finally, they launched a new Tech site that claims to be different than current tech sites.  The premise being that all tech sites today are focused on the top tier tech enthusiasts and people who care a lot about Silicon Valley.  Yahoo Tech will be focused on the other 90%. People who want to know what the best TV is, not which Palo Alto exec just changed jobs.  I think that’s a great idea.

So, it’s good to have another player back out there.  Someone is building new things and innovating.  I’m excited.  It seems that Yahoo! is indeed earning the exclamation point on their name.

 

YouTube is Huge and Sketchy

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I wrote a few weeks ago a post about just how massive the site is.  I listened to a good interview with Jason Calcanis recently where he shared his experiences working with them as a potential partner.  

The short of it is that YouTube has not been at all interested in accommodating any partners because of their size and scale.  One thing that i found interesting in this talk was just how powerful the future of YouTube is. Some interesting points:

  1. Cash. They have an amazing amount of cash at $50 billion  (Forbes)
  2. Nobody’s in charge. Google is great at this in general.  It is very hard to identify who is setting the direction and strategy for each group and the company as a whole.  Because of this, they can’t be critiqued for lack of execution or for being evil. 
  3. Avoiding Anti-Trust. They can’t buy any large players due to the fear that the government would block it for anti-competition reasons.  
  4. They are copying competitor’s strategies.  These competitors are getting lots of video channels around a niche and selling ads around it.  YouTube is now doing just that and will probably do more. 

The cool part of this is that YouTube could have bought Netflix or something similar.  Thus, they are just going to buy lots and lots of content and put it out for free.  My prediction is that You’ll see NFL and other sports content available there along with full tv shows – and it’ll be SWEET for all of us.  

Growth vs. Profitability and Kapost

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One of the more interesting learnings I’ve learned at Kapost is what makes SaaS business models work. Related to that I often get the question asked to me, “How is Kapost doing? Is it profitable yet?” implying that if it isn’t, things are bad and if it is, then things are good.  This post is an attempt to address that question.

When talking about a company’s performance, I’ve noticed that you have to talk about both its growth and profitability, and discussing just one in the absence of the other is dumb.

I recently did a post comparing Salesforce and Linkedin.  You’ll notice in there that neither company is profitable yet both are worth over $30 billion dollars.  LinkedIn makes a $1 billion a year in revenue, whereas Salesforce does $1 billion a quarter ($4 billion a year).  Why are they worth the same?  Because LinkedIn is growing at 60% a year whereas Salesforce is growing at 30%.

To investors, companies are worth what their cash flow is going to be in the future – not what it is now.  That’s all they care about.  If they think the cash flow will be huge, the company will command a huge valuation.

Let’s take Amazon.com as an example.  They have had no profits for years, yet it’s currently worth $166 billion.  One analyst even jokes about it, writing:

With every Amazon quarterly earnings call, my Twitter feed lights up with jokes about how Amazon continues to grow its revenue and make no profits and how trusting investors continue to rewards the company for it. The apotheosis of that line of thoughts is a quote from Slate’s Matthew Yglesias earlier this year: “Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers.”

The point here is that you need to understand why any company is not profitable. In the case of Amazon, it is making huge investments in warehouses to grow its retailing business and huge investments in data centers to grow its AWS business. It could stop making those investments and start generating profits. But doing so will sacrifice growth in the market they current work in.  Amazon’s doing $70 billion in revenue this year and did $34 billion in 2010.  Here’s Amazon’s revenue since 1996:

That’s doubling in 3 years.  That’s pretty amazing.  I’m sure it’d be worse if they were focusing on profitability.

What does this mean for Kapost?  Kapost has established itself as the market leader in content marketing software and hit profitability early in 2013.  However, we desired to grow and grow quickly.  Thus, we raised a round of funding and are using the those funds to accelerate our growth.

Why can’t we grow organically with our profits?  

The way SaaS businesses work is that they face significant losses in the early years because they have to invest upfront to acquire customers, but they recover the profits from that investment over a long period of time (the life of the customer).  What’s somewhat strange for people to understand about SaaS businesses is that the faster the business decides to grow, the worse the initial losses become.

For example, imagine a world we you spend $6,000 to acquire a customer, and then charge them $500 per month.  For one customer, you’ll get the money back after a year, but you need $6k up front first to get them.  And, if you want to grow faster and get even more customers, you have to spend even more money.  The graph below shows that the more you spend, the better the rate of growth is.

This is why Kapost did another round of funding.  Going forward, as long as we’re accelerating the rate of revenue growth, we’ll always be needing more money and more money that we’ll need to fund that growth.  That is, unless we don’t want our rate of growth to increase.

Now, of couse, profits are critical to the health of a business.  The key is to be able to be profitable if we want to be and to be profitable at some point in the future, at least hypothetically. So, when you hear that a company is losing money, don’t read that as a necessarily bad thing. It could be a very good thing. It all depends on why.

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Notes: Here are some good posts on this topic that helped me out:

  1. David Skok is awesome.  I stole his graph and a lot of his thoughts.
  2. Wikivest
  3. From Eugene Wei’s blog
  4. From Fred Wilson’s blog