Archive | July, 2008

Social Climbing in Social Networks

30 Jul

Accepting Uncle Leo's friend request can bring its own set of problems for social network users

I had (briefly) planned to title this post ‘My Facebook friends can beat up your Facebook friends’ but thought better of it. Regular readers of this space will know that I am particularly conflicted when it comes to social networking companies. On the one hand I am increasingly impressed with how viral the better social networking platforms have become, how they can augment communications between broad groups of people, how they can facilitate social group overlap and instant information exchange, and how they can become–broadly speaking–quite robust as a communications tool. On the other hand, I’ve also found most to be vastly overvalued by the capital markets, too focused on branding and customer acquisition without sufficient development of applications and tools to help drive lasting, “sticky” value to users, and too vulnerable to being displaced by other social networks.

All that being said, as a lay consumer, I am endlessly fascinated by how emerging technologies typically alter cultural dynamics–both positively and negatively. We have all heard the lamentations in the popular media about how ubiquitous cell phone usage has turned us into a nation of unrefined bufoons blathering away about that evening’s dinner plans in line at the Post Office. In recent years, that might have prompted unapproving scowls from other patrons, but too often in today’s climate those “other patrons” are now too busy recounting their own details of last night’s cocktail party or their upcoming dental surgery on cell phones of their own to bother pointing out your faux pas. To hear talk radio tell it, it’s all become one big cacophony of jackasses.

Accept that premise of not, it’s hardly surprising to witness the crumbling of social peccadilloes when seemingly everyone is engaged in the same untoward behavior without any particular rebuke from society as a whole. Those of a certain age might remember when it was almost unthinkable for a gentlemen to enter a dining establishment sans blazer…and sometimes even sans blazer and tie. If one did, the penalty was to end up wearing the house blazer they kept in the coat closet, which typically was ill-fitting, came with a silly embroidered crest over the breast pocket, and had some vague coating on the right sleeve reminiscent of dried fettucine alfredo.

But times do change and in the current climate most dining establishments, with the exception of the most formal of restaurants, would fail if they insisted on adhering to that dress code standard today. Nowadays, in any given restaurant in New York, San Francisco or Los Angeles, the guys in the tailored suits are often not the power players—they are the accountants, agents and media consultants who work for the billionaires sitting next to them in the same booth wearing velour track suits, ironic T-shirts, and three-day razor stubble.

In the web 2.0 world, one social “slight” becoming increasingly evident among social networks has become the winnowing or “window-dressing” of Friends’ Lists. It’s subtle, but pervasive. One particularly cynical practice is for a new user to a social network to carpet bomb their friends’ email boxes with friend requests in the interest of getting a critical mass of friends and contacts and, by extension, links to other–ahem–more important friends and contacts. Once established the user then begins to quietly push the first batch of friends outside the herd, if you will. Indeed, de-friending has become such a common issue that a new wave of widget providers are rolling out new tools to manage this practice–secretly, of course.

To be sure, winnowing friends’ lists is to be expected in this new age of social networks. In some cases, it would be inappropriate not to allow the practice–particularly when it comes to removing an ex or former boss whose continued access to your updates and profile would be–gee, I don’t know–awkward? But I am not referring to that practice. Indeed, my comments are specifically around the ‘social climbing’ aspect of social networking. As more people use their social networking page as a business tool, this practice will only become more common. Two independent consultants who work with the tech start-up community confessed to me recently that they window dress their LinkedIn and Facebook pages quite regularly. Their rationale? A lot of their business comes from other VCs and successful entrepreneurs, so they felt that as they were Googled and Facebooked and LinkenIn’d by prospective employers, they wanted those prospective employers to see an impressive array of bold-faced silicon valley VC and CEO names…not crazy Uncle Leo. As such, these advisors strategically “friended” every tech industry notable, bold-faced or not, that they came across in the hope that they might be able to get to other, even more notable, bold-faced “friends” through that contact.

Cynical as it may appear, the practice of window-dressing friends has been going on since time immemorial. People were quietly dropped off the Holiday card lists,  return calls to unwanted parties–when returned at all, that is–were strategically timed in order to get voicemail, messages were conveniently lost by the maid, or the new admin, or due to “bad cell coverage.” We are all, to a certain extent, judged by the company we keep. Guilt by association, if you will. What web 2.0 social networks have done is simply take all the subtlety out of it. Furthermore, truth be told, we all do it to a certain extent. Next time you open your Facebook or MySpace or LinkedIn profile, chances are excellent that you’ve got a few friend requests sitting in your in-box aging like a fine wine. You are not ready to archive them quite yet, but you are not ready to admit them to the party either lest they make an ass of themselves once inside, put wine glasses down on your expensive stereo equipment, and generally embarrass you. So, they stand there behind that red velvet rope, waiting for your decision. I say, admit just about everyone whose call you’d return in normal circumstances. If they don’t merit that level of “friendship”, then listing them as a friend at all rather distorts the entire concept.

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Fast, Cheap, Reliable – Pick Two!

22 Jul

This busy Tuesday morning, I am persuaded to make a short post provoked by — of all things — a bumper sticker I came across this weekend on the back of a race car ahead of me at Sears Point Raceway (aka Infineon). 

On first read, the bumper sticker alluded to the obvious trade-offs weekend racers must continually make in the delicate balance of speed, performance and safety. More broadly, however, it speaks to the management of risk and reward in a world tightly governed by constraints — constaints made by physical laws (pretty much non-negotiable), those constraints that are financial in nature (what economists would call scarcity), and those having to do with sheer will, nerve, or guts. As the sticker laid bare, one almost never gets all three at one time. Which two one wishes to have at any one point is the ultimate decision a company leader (or race car driver, for that matter) must make, and make time and again.

In the start-up world, the parallels are fairly obvious: Start-ups teams typically eat, breathe and sleep constraints of some form or another. Some believe this need to manage constraints is a rite of passage and focuses the mind of management teams to develop their core products and services without distraction and temptation brought about often by too much available capital, too many idle resources, and too many chefs in the kitchen. As an early mentor — a renown venture investor in his own right — taught me years ago, start-ups rarely fail from being too focused. Indeed, it is often the distraction and the temptation to ‘boil the ocean’ that gets young founders and their companies into trouble. Awash in opportunity, management teams can fall victim to wanting to pursue every initiative, every possible new revenue line item, every new partnership possibility, at the risk of diluting the company’s core focus and value proposition.

Cheap, Fast, Reliable – Pick Two. The key point here (and, hence, the irony) is that most emerging growth companies will ultimately never survive in the long term without possessing all three characteristics in their business model and processes. How to reconcile the Catch-22 depends upon how a management team makes the key early decisions about what is most important to focus on, and when it is most important to focus it there. Does being the low-cost provider make the most sense at launch, or should one launch with a bullet-proof product that is fast and responsive, build a customer beach-head, and then drop prices as volume increases? Then again, will the focus on building a bullet-proof, fast and responsive product take so much development time and so many resources that one will miss the window of entry and end up playing catch-up to a cheaper, inferior product that launched earlier and is now far ahead in terms of users/customers and is rapidly erecting switching costs around that user base? Tough questions.

Clearly, there is no uniform right answer. Each market is different, there are different issues and drivers at play, and one can rarely plot a strategy from a conference room table and execute it by rote without regard to how quickly the sands shift. Management teams (and their advisors and venture investors) must be supremely flexible in the current environment and be able to navigate a world where one rarely has everything one needs when needed. Some technologists are loathe to release any product that is not perfect. Some investors think it’s anathema to launch certain initiatives without a full team in place ready to manage the onslaught of orders, press inquiries, resumes, etc. The truth is that those proclivities on the part of certain leaders and investors are something of a luxury. One reads often in the business and trade press about risk management and personnel management. A less well-trodden subject that is arguably even more relevant for start-up management teams is, for lack of a more pithy term, “constraint management.” How a team manages being deprived of resources for long stretches of time can be the difference between an ultimately successful large enterprise, or another start-up bust. In future posts I will endeavor to spend more time on the issue of the unique stresses start-up founders and their teams must face and overcome in order to be successful. If you have interesting stories of your own challenges and stresses experienced in the pursuit of building your companies, I’d like to hear them.

Enough with Retro…Innovate!

9 Jul
The--ahem--NEW Dodge Challenger

The--ahem--NEW Dodge Challenger

I’m a car guy.  Always have been. As a penniless student I was one of those people that would make the (false) economy of happily subsisting on a steady diet of Top Ramen and Pop-Tarts if it meant I could pay for that new performance chip on my banged-up 911. But with age comes wisdom, and one reaches a point in life where the Bohemian pleasures of hitch-hiking or crashing on friends’ couches just does not hold the allure and proletarian nobility it once did. It was maybe that or the free breakfasts at Holiday Inn Express. Can’t decide.

In any event, get a car guy to reminisce about early Steve McQueen movies or discuss the plot twists in gear-head classics like Vanishing Point or Dirty Mary Crazy Larry and you’ll be there a while, so get comfortable. Car guys love to wax poetic about vintage horsepower and the evocative shapes and visceral, fry-your-loafers, bugs-in-your-teeth driving experiences inherent in 1960s-70s GT cars. It is perhaps not surprising, therefore, that the auto industry cleverly exploited the graying of the baby boomers by re-issuing versions of its most famous badges – Charger, Mustang, Beetle, Thunderbird, and now, Challenger.

Demographics are only part of the reason. Simply looking at the evolution of car names tells you a lot about the degradation of the automobile from a symbol of power, freedom and often excess to a dull, quotidian appliance. Cars used to have great names: Falcon, Dart, Fury, Cougar, Firebird, Mustang, Charger, Barracuda, Hornet, Starlight. Now we have Elantra, Sentry, Altima, Camry, Sienna, Corrolla, Tercel, Maxima. There’s even a Nissan SUV called the Murano. Murano is a small island off Venice famous for its artisans that produce delicate glass sculptures and figurines. Delicate glass is hardly something you want to equate with a muscular, go-anywhere, do-anything SUV. As Jerry Seinfeld might say, who were the overpaid branding geniuses that came up with that one? That’s almost as bad as the luggage manufacturer that—get this—launched a line of luggage named after Amelia Earhart. Yes, Amelia Earhart luggage. Luggage that honors someone most famous for getting lost and never being found. Braaaavo.

When the Beetle was re-imagined in the mid-1990s, I applauded. Smart thinking on VW’s part, I reckoned. The idea was a simple one: Resurrect the image and nostalgia of that instantly recognizable car that made your company famous–quick!: can you think of any other VW model?– and bring it into the 21st century. It worked wonders for VW. Ford followed suit shortly thereafter with the Thunderbird, although the line between tasteful homage and shameless exploitation was starting to blur. By the new millennium, the Mustang re-appeared and, with its success, the “retro” boom was in full swing. Some automakers that did not choose to resurrect a model from their glory days still played the retro card by simply launching new models that evoked the style and details of earlier road card, often not even their own models. Chrysler’s 300 and it’s PT Cruiser are the most famous and successful examples. The 300’s Bentley-esque front grill and the high waist of 1930s gangster saloons gave the 300 a sleek, slightly menacing stance. A clever marketing push followed and the 300 became (for a while, at least) the ride of choice for rap artists, athletes and urban hipsters.

But, with the Challenger, one must conclude that this trend has decidedly jumped the shark. Too often, what is worth doing is worth overdoing – at least for the Big 3 which have a terrible history of blowing huge strategic advantages by not pivoting quickly enough to address new market realities. GM’s recent shuttering of several SUV and light truck plants is another example of a bloated company not adjusting to changing market conditions. In a $4/gallon world, GM should have been throttling back SUV and light truck production for a while now. Everyone knew this day was coming. Instead, GM continued to stamp them out like CDs. Those blunders will continue to crush the SUV/light truck aftermarket and hurt its dealer network for years to come. How Rick Wagoner continues to hold a job baffles me.

The “new” Challenger epitomizes a troublesome trend of “retro rehash” that I have seen in too many markets now. The fashion and music industries are other segments where the pre-occupation with trotting out new spins on the golden oldies that worked for so long has eclipsed real intellectual work on their part in actually innovating new designs (fashion and apparel) or discovering and promoting new music that is not entirely derivative or referential. Interestingly enough, the woes of the music industry are eerily similar to those of the auto industry. Music industry execs love to whine about piracy, peer-to-peer file sharing, concert ticket prices, and a host of other evils to explain their troubles, but the real culprit is prevalent “me-too”-ism in signing artists and a lack of innovation and creativity on the part of the entire industry. The auto industry–and to a lesser extent, the music and fashion industries–have been for a long time utterly bereft of any real innovation. This “retro” boom is simply the most clear manifestation of this lack of innovation. Why bother creating new products that customers want when you can rest on old ideas that you can simply re-introduce with a little tweaking?

In the end, I think the “new” Challenger is as doomed as was its original namesake. Auto buffs will remember that what ultimately buried the 1970s Challenger was the one-two punch of a gas crisis and performance figures that did not break any new ground. The original Challenger simply debuted too late. By the time production ramped up, the muscle car boom that began in the mid-1960s was well on its way out. The 1973 oil shock was just the final stake through the heart. With the new Challenger, the similarities are ominous. $4 gas is killing the appetite for big, raw, powerful vehicles. Heck, even GM itself is considering selling the Hummer–the epitome of the brutish, thirsty, muscular SUV–and Ford has already sold Aston Martin, Jaguar and Land Rover. Perhaps now, the automakers, the music execs and the fashionistas will begin thinking more about innovation and how their very existence will likely depend on it. There simply aren’t any more bodies to exhume. Old wine in new bottles is simply not a sustainable strategy.

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