Posts Tagged: Facebook
Virtually every start-up dreams of becoming a platform at some stage. After all, it is the most powerful position in the ecosystem. What has been the one rule to becoming a platform? Develop a killer app that gets you to scale: and then open up the platform once your reach is attractive enough for other developers to develop specific apps for your platform. This game plan has worked for consumer (Facebook, Twitter) and enterprise (Salesforce, Shopify) apps alike.
But recently, we have seen a new breed of platform emerging: platforms that are targeted at developers. Their mission is simple: solve the pain of integrating all the cumbersome and fragmented legacy systems, by providing an easy-to-integrate-with and easy-to-manage frontend for developers.
For example, we see horizontal platforms like Twilio that replaces all the telecom hardware with an API for phone, VoIP, and messaging. There’s Stripe and Braintree for payment processing, and Lob for printing. This is what Garry Tan has called the API-ization of everything: “Where there is paper to push, a call to answer, or a purchase to approve, there is an API coming to replace it.”
In addition to these horizontal platforms, there are also very interesting vertical players emerging: Spout for finance, Rets.ly for real estate, and Clever for education. While horizontal developer platforms are usually built around features, vertical platforms are usually built around data.
The traditional platform approach (i.e. Facebook, Salesforce) is still alive and well, but it feels like we are on the cusp of tremendous innovation in the field of developer platforms as the web is evolving into being entirely programmable.
Back in 2010, Mary Meeker and Morgan Stanley predicted that within the next five years, “more users will connect to the Internet over mobile devices than desktop PCs.” We’ve arrived at that milestone. The shift from desktop to mobile, whether smartphone or tablet, is happening across a variety of activities. For example, as of January 2013 Facebook has more mobile users than web users – as more and more people are checking their Facebook updates on their mobile device and skipping the desktop version entirely. Likewise in 2013, news consumption on mobile devices surpassed desktop, and consumers now spend more time interacting with online retailers on smartphone and tablets than they do on desktops and laptops.
Like any platform shift, this mobile wave obviously has major implications for any business. Here are four key trends that companies, whether web-first or mobile-first, need to be aware of.
1. Don’t just adapt for a smaller screen, but re-think UX
Most web-first companies have completely underestimated the radical change that mobile brings about. Many still think that mobile is simply an extension of the Web. After all, it’s human nature to view something new within the context of what we already know. That happened when we moved from radio to TV, print to web, and web to mobile. Luke Wroblewski speaks about this in a great talk (discussion of shift from one media to another begins around 10:30).
Every new medium needs a new way of thinking. A mobile device is not just a smaller or less powerful version of a desktop computer. It’s an entirely new form of media that’s unique to itself. For example, it’s always on; it’s always with us; and it offers more interactivity than ever before. Businesses need to invent new use cases and applications that make full use of the new platform, rather than just copying existing models from the web.
2. The risk of unbundling
Albert Wenger discussed the risk of unbundling as it relates to Facebook: “On my phone another app is just a button push away and there is relatively little that fits on each screen. So it is just as much effort to go to another part of the Facebook app as there is to go to a different app altogether.”
This means that each mobile app is continually competing for attention with countless other apps. It also means that one large platform/app doesn’t necessarily enjoy a monopoly, as users can just as easily opt for six best-of-breed point applications.
3. Distribution strategies are different
For companies looking to build a presence via mobile apps, there’s the matter of discoverability. Strong product market fit is often no longer enough to get to a large user base, instead “you need to master the “download app, use app, keep using app, put it on your home screen” flow and that is a hard one to master.” And many distribution strategies that worked on the web (like long-tail SEO), simply don’t work in an app ecosystem.
4. Customer support opportunities
Considering the fact that more than 50% of inbound customer service calls will be made from mobile devices by 2016, mobile presents a big opportunity to rethink the customer support experience. From a pure voice-call standpoint, it doesn’t matter whether a call originates from a landline or mobile device. However, mobile devices give companies even more ways to reach out and assist their customers. Customer service apps can provide a level of interaction not possible on a landline – including the ability to use video, send photos or instructions, chat, and voice. But companies need to think beyond what has been done before, and invent brand new experiences for mobile.
While the rapid pace of mobile adoption has caught many businesses off guard, there’s a big opportunity for start-ups to rethink a product or vertical in a mobile-first way. There’s also an opportunity to provide the infrastructure for traditional web companies to move to mobile.
More than half of Version One portfolio companies are either mobile-first or mobile-only companies, so it’s safe to say we’re excited about seeing the next generation of mobile businesses and experiences.
I recently spoke with a founder and CEO of a start-up that had just crossed the 200-employee milestone. Like so many others lucky enough to reach that level, he was complaining about how progress was coming to a halt as the organization grew and became more complex. I myself experienced this as COO at AbeBooks. It’s a cruel irony in business: the more people you add, the slower you get.
To help overcome this scale stagnation, I have three pieces of advice:
1. Overinvest in your management team
An ineffective employee is bad for the company, but the impact of an ineffective manager reaches across the organization, multiplied by the number of people he/she manages. For this reason, you need to hire the absolute best people you can get for managerial positions. Invest both money and time in developing their managerial skills, and have a strong employee feedback system in place to make sure you can identify and correct the “bad apples” right away.
2. Listen to Amazon: two-pizza teams and internal APIs
Few would argue that Amazon is one of the most entrepreneurial companies around and CEO Jeff Bezos has an uncanny ability to see patterns long before others. Two of the reasons Amazon is able to keep its momentum even as a 97,000-employee giant are pizza teams and APIs…
- “Two-pizza teams”: Bezos structured Amazon as a decentralized company where small groups can innovate on their own and be free from the inherent problems of groupthink. Company-wide, he introduced the principle of the two-pizza team. If a team can’t be fed by two pizzas, then the team is too large.
- Internal APIs: Every internal product should have an API, just as if it were developed for an external client. This decouples the speed of development between different product teams, as you can have a clean hand-off between the two.
The added bonus is that APIs lay the groundwork for the productization of internal tools. Bezos mandated that all IT assets be exposed as APIs. To quote a Forbes article, “That single, simple declaration created an IT (and cultural) architecture that catalyzed and stoked the stunning growth of Amazon Web Services, which is thought to be a billion-dollar business unit after only a few short years of growth.”
In short, small teams can run fast and innovate because of their size and the fact that they’re not reliant on the technology from other teams.
3. Focus your culture on speed over perfectionism
“Hackers try to build the best services over the long term by quickly releasing and learning from smaller iterations rather than trying to get everything right all at once…We have the words ‘Done is better than perfect’ painted on our walls to remind ourselves to always keep shipping.”
Prioritizing speed over perfection can be a very powerful way to keep momentum up as you scale, particularly as you add layer upon layer to the organizations and require multiple signatures to get things done.
One key message that can apply to any start-up is to never end a meeting without a decision (unless everyone determines that more data is needed to make that decision). If a meeting begins to succumb to groupthink and indecision, you need to ask why we can’t make a decision today instead of another day. After all, you just need to move forward.
- The 3 Books Amazon’s Jeff Bezos Asks His Senior Managers To Read (embargozone.com)
Repeat usage is one of the most important success factors for building a large, stand-alone company. It’s hard to grab people’s mindshare and create a loyal user base when people only need to use your product or service occasionally.
One of the best metaphors I’ve come across to describe this reality is Google’s “toothbrush test” – where Larry Page insists that new products must be important enough that people will use them at least twice a day.
The toothbrush test is definitely a great benchmark for any social networking site. It’s why Facebook, Twitter, and Pinterest have done so well. And it’s also why social networks for travellers or events have struggled to really scale. For the majority of users, there’s just too much time in between trips or events when the app is completely unnecessary (except those lucky few who spend a year traveling around the world).
The toothbrush test is valid for SaaS products as well. Products that are critical to the daily workflow, like business management software and collaboration tools, tend to have the lowest churn rates. Yet, both marketing automation and HR tools often struggle (unless they are addressing core functions).
Commerce is certainly a different beast when it comes to this benchmark. My own rule of thumb is that customers should have a reason to visit a commerce site at least once per month. Monthly subscription services like Julep have a natural touch point every time they send out their new products. Frank & Oak has created monthly-curated product releases that create an important monthly rhythm.
High repeat usage = large potential business
Repeat usage is the basis to build a large business and is generally driven by two things:
- How often people need to use the services/products your site offers
- If people remember your site in the moment they need the service/product
So think deeply about what kind of feature set and/or product depth and breadth you are offering in order to maximize the reasons why people visit your site (of course, you want to do this without completely diluting your brand in the process). In addition, find smart and scalable ways to remind people of your site’s offering…without crossing the line into becoming spam.
If you fail to give people a reason to visit your site and remember you, users will turn to Google to find the best products and services for their current need. And this is exactly why Google’s search passes the toothbrush test so easily…
P.S.: Which products you are using pass the toothbrush test?