Metrics on app downloads vs usage

Fred Wilson has an interesting post on metrics they see across tech startups.

We see a lot of metrics on web and mobile apps. [...] 

One thing that never ceases to amaze me is how similar some of the metrics are from service to service and company to company. I like to call these the web/mobile laws of physics. One fairly common "law of web/mobile physics" is the ratio of registered users/downloads to monthly actives, daily actives, and max concurrent users (for services that have a real time component to them). 

I call this ratio 30/10/10 and so many services that we see exhibit it within a few percentage points here and there. Here's how it works:

• 30% of the registered users or number of downloads (if its a mobile app) will use the service each month
• 10% of the registered users or number of downloads (if its a mobile app) will use the service each day
• the max number of concurrent users of a real-time service will be 10% of the number of daily users

We see these ratios across social web apps, social mobile apps, games, music services, and many other consumer web and mobile services.

Waiting for you to hammer it into shape

"The world is more malleable than you think, and it's waiting for you to hammer it into shape. "

-- Bono, musician

Are real identities important online?

Sometimes you can catch a good discussion on Twitter between some of its minor celebs. Around 1pm CDT today was one of those moments...

fredwilson Fred Wilson 

A Case for Pseudonyms eff.org/n/15092. I use my real name online, but I'm not a fan of them as a requirement in social services

jeffjarvis Jeff Jarvis 

@ 

@fredwilson Depends on the service & its role. Facebook with fake identities would be...MySpace.

fredwilson Fred Wilson 

@ 

@jeffjarvis I totally disagree. Facebook without structure and newsfeed would be myspace. Real names is totally overblown in terms of import

jeffjarvis Jeff Jarvis 

@ 

@fredwilson We do disagree. Facebook's strength is real people, real relationships.

jeffjarvis Jeff Jarvis 

@ 

@fredwilson Twitter is sitting on a goldmine in verified identity. #lostbusinessmodel

fredwilson Fred Wilson 

@ 

@jeffjarvis real people used MySpace too

jeffjarvis Jeff Jarvis 

@ 

@fredwilson But with no authenticity. People didn't value their identities there. That's why it turned junky.

Never tell me the odds

In reference to the odds of success in the startup world...

More humorous posters here.

Confidence is the difference

"In a decisive set, confidence is the difference."

-- Chris Evert, Tennis Champion

Muhammad Ali

Dave McClure's Startup Metrics For Pirates

The model, in overview:

• Acquisition: Users come to visit the site from various channels.
• Activation: Users enjoy 1st visit: 'happy' experience.
• Retention: Users come back, visit site multiple times.
• Referral: Users like product enough to refer others.
• Revenue: Users conduct some monetization behavior.

Be audacious

"Fortune favors the audacious."

-- Desiderius Erasmus, Theologian

Planet Of The Apes: A reflection of the world we live in?

I've noticed a cultural trend - of a dark world in which humans create self-annihilation. Perhaps it's a reflection of the global economic melt-down we've seen in recent years?

We see it in small places, such Google's “in-house philosopher” talking about the Manhattan Project, where physicists developed the nuclear bomb, as an obvious example where technologists should have thought carefully about the moral dimensions of their work. We also see it in the movies of the current times, such as the Rise of The Planet of The Apes...



PS. If you like this trailer, you'll also want to check out this one.

Finding jobs through weak connections

An interesting graph via the Economist describes how, on a per job vacancy basis, the amount of formal recruiting activity is historically low. Rather than jobs getting filled through formal recruiting, they are getting filled through referrals and other informal means.

In one of our early organizational behavior classes at Kellogg, we're taught that we're most likely to find jobs through our weak connections - the people we do not speak to as much. This is because with people we speak to often, we generally will have the same information as them. Weak connections have different information.

This latest research on recruiting intensity suggests in the current climate we need to rely on our weak connections more than ever.

The last of the moguls

The media business is changing. Our media content - which shaped our thoughts and opinions - was once controlled by a few media moguls. Today, the Internet has smashed this control to a vast array of Internet players.

As today's issue of The Economist points out:

The media industry used to be full of powerful families. London had the Rothermeres; Los Angeles had the Chandlers. The Hollywood studios began as family outfits. But a combination of regulation and technology has broken media monopolies. Beginning in 1948 America’s courts smashed the old, vertically integrated studios. The internet is undermining the dominance of mass media and handing power to start-ups, bloggers and companies like Google and Yahoo! for whom news is a peripheral business, not a consuming passion.

This is just a small after-thought on a more comprehensive Economist report on the future of news:

THREE hundred years ago news travelled by word of mouth or letter, and circulated in taverns and coffee houses in the form of pamphlets, newsletters and broadsides. “The Coffee houses particularly are very commodious for a free Conversation, and for reading at an easie Rate all manner of printed News,” noted one observer. Everything changed in 1833 when the first mass-audience newspaper, the New York Sun, pioneered the use of advertising to reduce the cost of news, thus giving advertisers access to a wider audience. At the time of the launch America’s bestselling paper sold just 4,500 copies a day; the Sun, with its steam press, soon reached 15,000. The penny press, followed by radio and television, turned news from a two-way conversation into a one-way broadcast, with a relatively small number of firms controlling the media.

Now, as our special report explains, the news industry is returning to something closer to the coffee house. The internet is making news more participatory, social, diverse and partisan, reviving the discursive ethos of the era before mass media. That will have profound effects on society and politics.

Google, Apple and Facebook: a battle for our hearts and minds

Some people have always known this, but it's recently become crystal clear to me that there is a gigantic battle taking place between Google, Apple and Facebook - a battle for our hearts and minds. This realization came about after I recently switched from the iPhone to Android.

Switching from iPhone to Android gave me a second perspective on the world of mobile technology. With Android, Google has integrated other services into the mobile OS in a way that is eye-popping. For example:

• My contact list on my phone is the same as my contact list on my GMail
• When I take a photo, I can instantly upload it to Picassa web albums
• Search is front and center - with a dedicated button and on screen widget for doing web searches.

Suddenly, Google's vast array of services are in my every day life - and easily accessible.

In contrast, Apple's devices - such the iPhone and PCs have begun working themselves into our lives, but they do not hold the massive stores of data on us that Google does - through email, search history, docs etc. The other company that does hold a gigantic store of data - Facebook - is releasing its own phone, reportedly integrated into its platform in a way in which Android integrates with the rest of Google. In the past few month, Apple has reported that they're getting into the massive online data game themselves - iCould.

All there of these companies are positioning themselves to be the integrated platform - from devices to data - for all our Internet needs.

iPhone VS Android: Just a difference in marketing?

I recently switched from the iPhone to Android, largely because Virgin Mobile's smartphone plan is ludicrously good for bootstrapped entrepreneurs such as myself. I was expected to be thrown back to the middle-ages of smart-phone experiences. I was surprised - Android has some neat features and, in my view, is a comparable - yet different - experience to iPhone. It occurred to me that the difference between these two is, more than anything else, their marketing.

The biggest difference between Android and iPhone is the user experience. While the iPhone has only one button - a Home button - Android has four. One of these is the Home button that we're familiar with on the iPhone. However, the most interesting button is the Back button. In every android app, you can use this button to move back to the previous screen -- and it's incredibly useful. Most apps are just a series of screens with menus, os it makes great sense to have a universal way to navigate backwards on these. I use the button so much, I almost don't know how the iPhone manages to get away without having it.

A second universal feature is the notifications bar. At the top of the screen is a bar that updates with statues of applications, e.g. if new mail arrives etc. You can pull this bar down to access the notification. It's an order of magnitude better than those frustrating iPhone pop-ups that jump out at you, for example, when you arrive at a new place with wi-fi networks available. In fact, it looks like iOS 5 will incorporate this feature.

This leads me to big 'ah-ha!' - Apple is marketing the notifications bar as though this is something they've invented. When iOS 5 is released, there will be massive chatter on the social networks and cult-like enthusiasm. Yet this little innovation - and many of the innovations emerging from the Apple garage - aren't breakthroughs. They are just marketed as such.

The difference between iPhone and Android is just the marketing.

The Third Open Innovation Summit

August 10th to 12th sees the third Open Innovation Summit take place, right here in Chicago. Organized by World Research Group, I was lucky enough to attend the summit last year. This year's conference promises to be even more interesting.

With the recession not quite yet over, R&D labs continue to face pressure on showing greater ROI. Booz Allen reports [PDF] that R&D spend in the US declined in 2010 by 3.8% to $194Bn. In this environment, it is becoming even more important for companies to accelerate and develop successful open innovation practices that leverage external resources to develop new innovations.

Open Innovation is defined as the act of a company tearing down the walls between its R&D organization and outside companies and innovators. In doing so, companies are able to bring in new innovations that the company might not have previously considered. These new innovations may also be more mature and proven than options a company might consider developing internally from scratch.

Nevertheless, there are many challenges to companies successfully executing open innovation programs. I've spoken to a number of companies over the last year and found the most pressing challenge to be the 'not invented here' syndrome that some internal R&D researchers exhibit. Companies have found it slow going to bring about the cultural change to make open innovation work. As P&G's Chris Thoen notes, support from the highest levels of management is necessary.

The impressive line up of speakers at the upcoming summit are sure to light fresh perspectives on current issues in the open innovation space.

The Fantasy Entrepreneurial Life

I've run into a few people recently who seem to be living this life...

From this edition of Dilbert.

Profit-motive is good

"If we had to point out one single notion that is calculated to damage industrial performance... it is the idea that profit is somehow wrong. "

-- Margaret Thatcher, British prime minister

Getting Chicago's big businesses as customers (CEC event w/Juergen Stark, COO of Motorola Mobility)

"Be clear. Be relevant. Be informed. Be realistic." This was the message Juergen Stark, COO of Motorola Mobility, had for an audience of startups targeting 'big business' in Chicago. The event, taking place on Friday 15th July 2011 and organized by the Chicago Entrepreneurial Center (CEC), was introduced by CEC President and CEO Kevin Willer. Willer articulated the unfilled potential of Chicago's startup ecosystem: The Midwest and Chicago have more Fortune 500 companies and large businesses than almost any other region of the US. Yet startups in the Midwest struggle to turn these businesses into customers.

Stark's central thesis was that startups are often too preoccupied with their own cash flow urgency and interest in targeting the highest level executives possible to understand the lifestyle of the executives they target. Stark recalled being doggedly called on his cell phone over and over again while in a meeting. Thinking it was perhaps a family emergency, Stark stepped out to finally take the call. He found the caller to be a startup salesperson asking if he had received the sales email the startup had sent him. Needless to say, Stark was furious.

Stark's prior experiences includes leading a startup himself, CenterPost, so he had empathy for the challenges entrepreneurs face. His advice was simple:

• Be clear. When approaching large companies, make your value proposition absolutely clear and avoid the techno-speak that is all too common with tech startups. It should be as simple, e.g. "We sell buses". It should not be, "We're the leading mobility technology provide for visualized …".
• Be relevant. Before making contact with the company, make sure to do your homework. Is this something the company needs? If so, how is it differentiated from other offerings? It's hard to inject something new into existing businesses, because they have many existing systems. Is it worth the change effort?
• Be informed. If it's not a top five priority for the person you are targeting in a large company, then you are targeting the wrong person. Instead, target the person down in the hierarchy for whom it is a top five priority. Busy executives have over 300 emails a day.
• Be realistic. Don't hype up and oversell what your product or service offers. Be realistic and win the trust of those you deal with.

My perspective is that Stark's talk is a sign of the times. It's easy to find a sales book from even ten years ago that would advocate many practices that now - in world where the busiest people are even busier - do not necessarily make sense. It's too easy for startups to make mistakes in this area. The CEC event with Stark is a small step in helping Chicago's startups connect to big businesses. However, Chicago will need more infrastructural support in this area if it is to become the US's hub for startups that serve big businesses.

--

Cross posted on Built In Chicago.

Kellogg Dean Blount marks her first anniversary

From the Dean's blog:

Raise your game

Have you ever come across a task that you had to do, but did not feel entirely enthusiastic about doing? You know it needs to be done, so you go through the motions and do it. Yet, your lack of passion for the task means it takes longer to complete than it should. You go through life, doing this task and producing above average results. You are happy. Everyone is happy.

Then, one day, you meet someone you loves to do what you think is arduous. They revel and take pride in completing this most boring and uninteresting of tasks. You're surprised anyone could love it. But they do. And you know they do because their output is outstanding. Their output blows your mind. In that moment, you you have to make a decision.

Do you decide that you're in the wrong job - you're doing someone else's job - the job that this other person performs exceptionally well? Or do you decide that a learning opportunity has arisen - that through this person you may be able to raise your game? That, though you may be in the wrong job, an opportunity has arisen to sharpen some of your all-round skills?

Starting a company is like playing the slot machine

I sometimes reflect that starting a company is like spinning a slot machine. A slot machine has a number of dials with different colored labels. The player only wins when the labels line up across the dials. If they don't there are no winnings.

In the game of entrepreneurship, these dials are things likes the product, the team and the market. The product needs to be something the team is able to execute on. The team needs to be able to take the product to market. The market has to want the product that is offered. All three dials - of team, product and market - need to line up. When they do, you hit the jackpot.

In most cases, the dials do not line up. This means you play the slot machine again, putting in more money and resources. Sometimes two line up, but the third is missing, so you spin the dials again. Eventually you may even hit on something where everything dials up - yet the labels that line up are not high value labels. The winnings are not worth it, and you spin the dials again.

On, and on the game goes. The game is so pervasive, it has some official lingo to describe it, pivoting. The game seems never ending not just because the chances of lining up the right labels are low. The game is never ending because there are more than three dials. To take one element, the team - for example - in reality it is more than just one. Each team member is a dial, and each has to fit all the other dials. Mentors and others are also other dials.

In reality, this is not a slot machine with a few simple dials that need to be lined up. It is a massively complex machine where the most intricate of spins can make or break the line, and the possibility of winning the jackpot. This is entrepreneurship.

Stuxnet: Anatomy of a Computer Virus

An interesting video on the Stuxnet computer virus.

Stuxnet: Anatomy of a Computer Virus from Patrick Clair on Vimeo.

Manipulating Social Media

Since the early days of consumer reviews against books listed on Amazon's website, we've become more and more interested in, and believing of, the opinions of others -- particularly strangers. I remember that once buying books from Amazon because on the basis of whether the books had been given five stars out of five by readers. Only later did I realize that most books on Amazon seem to have four or five stars, and that savvy publishers had begun gaming the system to promote their books.

As with those ratings on Amazon, we're now seeing savvy marketers attempt to manipulate social media for the same purposes. Signs and shortcuts that we might have once trusted - such as a referral from a friend - we're now not as sure we can trust. Three examples of these are LaunchRock, Like-gating and Web-advertorials.

• LaunchRock is a pyramid scheme for driving traffic to a website. You can only get access to a hidden beta of 'some cool new thing' by referring three of your friends. This is before you yourself know what you are referring your friends to!
• Like-gating is a strategy brands, such as The New Yorker, are using on Facebook. If you Like a page, you are given access to fan-only only content and goodies. In essence, your approval of a brand to your friends is exchanged for personal rewards. There was once a time when the ethics around this would have been questionable. Not any more.
• Web-advertorials, such as this one, are websites that look like real news sites, and pose themselves in a way that make the viewer think it is an authentic and impartial site. They even have fake comments seconding the article's supposed real experiment.

In a world in which manipulation is becoming the norm, it will be interesting to see how social norms in the online world adapt to account for these.

You can't do it unless...

"You can't do it unless you can imagine it."

-- George Lucas, director

Does Facebook's valuation make sense?

Facebook's valuation is astronomical. Even if they had $1Bn in revenue, they are currently valued at x100 of revenue. Assuming Facebook can make between 10% and 30% on its revenues, by traditional valuation models, such as multiple of earnings, Facebook is valued at x300 to x1000 of current earnings. For venture investors, it would needs to return a 5x multiple within a five year period. Even if this were a more growth-equity investment, achieving even x300 to x1000 of earnings seems impossible. Surely no company can be expected to transform it's earnings in such a way?

There is only really one scenario in which such a valuation could be deemed justified: if Facebook becomes the Internet. If we start using the Internet, like we flocked to Microsoft Windows, leaving little use for any other websites, Facebook cab become a platform that is able to tax all the commerce that takes place on it. Can this happen? I'm skeptical. The real money in apps is, I think, in business applications. Salesforce.com and Google seem better placed for those opportunities.

Design Goes Mainstream

Google was perhaps the last bastion of speed and algorithmics over design and usability. Arguably started my incredible success of Apple in recent years, there are now even startup accelerator programs that emphasize design. In what feels alike a renewed assertion of its position among a landscape of growing competitors, Google is revamping its suite of products. Here are the design principles they're working against.

• Focus: With the design changes in the coming weeks and months, we’re bringing forward the stuff that matters to you and getting all the other clutter out of your way.
• Elasticity: The new design will soon allow you to seamlessly transition from your desktop computer to your mobile phone to your tablet, while keeping a consistent visual experience. We aim to bring you this flexibility without sacrificing style or usefulness.
• Effortlessness: Our design philosophy is to combine power with simplicity. We want to keep our look simple and clean. But behind the seemingly simple design, the changes use new technologies to make sure you have all the power of the web behind you.

More on the Google blog.

Character

"Character is the ability to carry out a good resolution long after the excitement of the moment has passed."

-- Cavett Robert

The Org Charts of Major Tech Companies

From Manu Cornet via Business Insider.

Sleevecandy - A Kellogg Startup

Sleevecandy aggregates classic, used, hard-to-find t-shirts. It is a model that has similarities to the way in which Groupon aggregates coupons and promotions.

The magic of Groupon is not that it has made coupons something used by the mainstream masses. Instead, in the long run, I think the value of Groupon is in aggregating coupons and other promotions that companies run anyway. Coupons and promotions have always been present and around, yet it has been physically difficult to find all the coupons and promotions that are going on around the world. Groupon has created a critical mass - a central marketplace - where companies post their coupons and promotions. Suddenly the work of find coupons and promotions is reduced to almost no effort. Are there other situations to which this mass aggregation model can be applied?

Some of my classmates at Kellogg have launched a similar aggregation model. They've noticed that there is a sizable population of people across the US that visit Salvation Army shops to buy classic t-shirts that are no longer available in high street shops. Yet it is a huge effort to easily see all the classic t-shirts that are available across all the regional Salvation Army stores. Their company, Sleevecandy, picks up classic, hard-to-find t-shirts from across Salvation Army stores, initially across Illinois and Wisconsin, but in future across the US, to make it easy see and buy these t-shirts online. As an added bonus, they donate 30% of the sale price of every shirt back to the Salvation Army.

The Sleevecandy team has put together a sophisticated operation; a sneak peak at their warehouse is below. Check out their website,, and consider: where else can this aggregation model be applied?

When disaster is imminent

"Mickey Mouse popped out of my mind onto a drawing pad... when the business fortunes of my brother Roy and myself were at their lowest ebb and disaster seemed right around the corner."

-- Walt Disney, producer

Google's approach to STPing in online social networks

If LinkedIn and Facebook are essentially they same thing, social networks, except mutually exclusively targeting different personas, the 'work' and 'personal' personas - is this the best way to Segment, Target and Position (STP) in the world of social networks? How might a new entrant try and compete in this space?

When it comes to social networks, Google, at least, has found an entirely different way to segment Internet users. Ignoring the idea of segmenting against personas, or even niches, Google is simply segmenting between those that already use Google and those that don't. Google is launching a social network - and if you are already a Google user - you are already on it. Says Google's Vic Gundotra:

“Google, thank god, has a few assets. We have hundreds of millions people who love us — they love YouTube, they love Gmail, they love search. What if we were to go across each of those categories and rethink them? The things we have to do are obvious, but Google hasn’t done them. And so Bradley and I have the odd chance to help lead the company to go fix these sins.”

Google's launch of it's Plus product leverages Google's breadth of Internet properties, from Google Profiles to Contacts and +1 Recommendations. The new Plus product weave these properties together. Google is duplicating Facebook and LinkedIn, but in a way that brings your Google experiences together. It is segmenting, targeting and positioning on an entirely different dimension to that which others have tried before.

For its segment, Google is positioning itself with metaphors that more closely resemble real life. Hangouts are video chats where your social circle can drop in chat with you. Others who see you are chatting can join in. Other elements, such as managing contact lists, have also been more intuitive and easier to understand.

Time will tell if Google understands its target as well enough as Bounty understands its target. Will Google be able to Plus position itself against the targets' needs?

Segmentation, Targeting, and Positioning in online social networks

Can you imagine taking something that an established company is already doing, creating a duplicate product, and just marketing it differently for a different audience? This clearly works with paper towels. Can this work with Internet startups?

I think there are already some examples of this - the foremost being LinkedIn and Facebook. They are essentially the same thing: social networks. I am sure that there is a large percentage of overlap between some of my LinkedIn contacts and my Facebook contacts. Yet, the marketing experience, implicit in the product, and explicit in how they portray themselves, tells you that they are for different uses.

Most people do have two personas - their work and personal personas. LinkedIn and Facebook have managed to segment against these and target them mutually exclusively. Minor tweaks in the product allow them to fit those segments that little bit better - Facebook with more photo features, for example, and LinkedIn with more explicit company networks.

But are there only two personas that people have? Even more fundamentally, are these 'work' and 'personal' personas the only dimension on which you could segment Internet users? A number of companies have been started that take the basic social network concept and add tweaks for each of their niches. They each segment differently - some target academics, while others target music lovers. Yet, have these companies STP'd optimally? More broadly, have any of the social networks, including Facebook and LinkedIn, identified the optimal segment to target?

The opportunity in Segmentation, Targeting, and Positioning

In my last two posts, I first described the concept of Segmentation, Targeting and Positioning (STP) - as successfully used by Bounty to differentiate itself in a theoretically perfectly competitive market, users of paper towel. I then explained that STP can be problematic when a startup uses it. Often, a startup will mis-estimate who the target user is and how big the opportunity is. Yahoo would not exist today if the creators had first attempted to calculate the number of people it might be useful for, and intended to create something that was useful for the most number of people - the approach marketeers and MBAs often take.

Yet, on the flipside of the equation, there is an opportunity in STP for startups. What the Bounty case shows us is that you can take two identical goods and use marketing to create differentiation and usage of one product over others. There are now many areas of technology that have matured and where such an approach might allow for a new entrant. Can you imagine that: taking something that an established company is already doing, and just marketing it differently? Can this really work with Internet startups?

I think there are already some examples of this - the foremost being LinkedIn and Facebook. They are essentially the same thing: social networks. Tomorrow, I'll explore this a little further...