Posts Tagged: twitter

The programmable web and the future of platforms

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.

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Jelly app: the challenge of immediate primetime

When Jelly launched a week ago, it was amazing to see how quickly the app got traction – over 100K questions were asked during the first week.

Certainly, Jelly’s high profile team (co-founder Biz Stone, and individual investors like Jack Dorsey, Bono, and Al Gore) helped spark widespread speculation and buzz leading up to the launch. In addition, Jelly leverages users’ existing social graphs on Twitter and Facebook, so it immediately overcame the cold-start problem most platforms and marketplaces face when trying to build a user base at the beginning.

However, digging deeper into the quality of engagement during Jelly’s first week reveals some potential problems with this rapid ramp-up. Only 25% of questions posed ever received an answer. The daily active user count has been trending downward as the media buzz surrounding the initial launch tapers off. And, the number of people asking questions has outpaced the number of people answering them – pointing to a potentially unbalanced marketplace. You can find more data about Jelly’s first week from RJMetrics.

When an app’s user base ramps up so quickly, there’s no time for a community to form or for the product to mature. Immediate primetime is often a real risk for both. Jelly’s users are still trying to figure out how to make use of the service beyond identifying spiders or asking “What does the fox say.” And the very public nature of this launch may turn off casual users before its power users have a chance to hash out the most meaningful use cases.

At a time when growth hacking is top of mind for everybody, the Jelly experience reminds me of the value of growing slowly during the early stages of a product. A closed beta and/or delaying the push into existing social graphs might be two strategies to go back to.

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It’s not easy to sell into an industry being disrupted

Looking to sell into an industry that’s currently undergoing disruption? At first glance, it sounds like a great idea. After all, companies getting disrupted are experiencing some very real challenges and pain points; they need to adapt quickly and could be looking for that silver bullet to save them.

During my time at AbeBooks, I was working in the book industry when it was undergoing a major disruption from Amazon. And many entrepreneurs thought at that time that they could offer products and services to offline bookstores to compete against Amazon’s growing power.

Likewise, over the past 5 years, I’ve seen dozens of start-ups trying to sell different tools and technologies to help newspaper companies keep up in an online world.

However, selling into a disrupted industry rarely works for three key reasons:

1. Whenever there’s a complete disruption of the business model, it means that the underlying rules for that vertical have dramatically changed. Just adding a website to now offer books for sale will not suddenly make an offline bookstore a serious competitor to Amazon. Likewise, a recommendation engine that tries to keep readers on a specific online media site does not change the fact that most users today now use aggregators like Twitter or Google News to find stories from a wide range of sources.

2. A company that’s being disrupted certainly feels the pain that their business model is under attack. Yet, at the same time, they most likely also have declining revenue and profits. In other words, they don’t always have the money to invest in a new solution, no matter how promising it may be.

3. Companies that get disrupted are often disrupted for a reason: they failed to be proactive enough to changing conditions. In many cases, this means they didn’t invest enough in technology or other solutions in the first place. It’s hard for slow adopters to change their culture, so you’ll need to be prepared for long sales cycles and indecision with these customers.

In short, while selling into a disrupted industry seems like a great opportunity, the reality is much harder to pull off.

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The engagement threshold: transforming one-time customers into repeat business

Are you focused on new sales or bringing in loyal, repeat customers?

Whenever a business is completely dependent on new customers, it’s vulnerable. Not only are customer acquisition costs high, but new customers are just as likely to turn to any new competitor that enters the market.

The better a company is at turning one-time customers into repeat business, the more successful they will be in the long-term. Many startups already understand this, but aren’t quite sure how to make it happen.

For most businesses, there’s often a single point in the customer engagement lifecycle where there’s a higher likelihood that a one-off purchase will turn into a loyal customer. This is what I call reaching the ‘engagement threshold.’

I was first introduced to the concept of an engagement threshold from eBay years ago. The online marketplace had discovered that a first-time buyer who makes a second purchase in another category within two weeks of their initial purchase is 70-80% likely to become a repeat buyer in the future. As a result, eBay focuses considerable energy to re-activate their first-time buyers within those first two weeks.

Likewise, I once heard that new Twitter users need to follow at least 7-8 relevant people before they end up “adopting” the service. That’s why Twitter’s “Who to Follow” feature actively suggests people/accounts you might want to follow and the service is particularly eager to get new users to follow others.

Every product will have its own version of this threshold point when a one-off user becomes a loyal customer. For enterprise software, it’s the moment where the software becomes so useful that it becomes entrenched in the user’s daily workflow.

It’s crucial for startups to understand where this threshold point is for their business and then focus extensive energy and resources on crafting the right user experience at that point in time to guide users across the threshold. When done right, payback will be rapid and there’s nothing more valuable than a lifetime customer.

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Don’t listen to most of the advice you are getting

Good Advice

Good Advice (Photo credit: Wikipedia)

Getting good advice is critical for any entrepreneur and fortunately there’s plenty of advice to go around. Unfortunately, not all advice is worth listening to. Angel investor Allen Morgan (@allenmorgan) summed it up in a recent Tweet: “It’s a power law relationship: for entrepreneurs, >90% of the advice worth heeding comes from <10% of the advice givers.”

The reality is that entrepreneurs should not listen to the bulk of advice that comes their way. Yet, good advice from smart people can be an invaluable asset when trying to navigate your most pressing questions, from how many board members to have, to how much money to raise in Series A, or how to build a monetization strategy.

The key to getting advice boils down to knowing how to filter the good from the bad. Here are four simple ways to weed out the 90% of advisors that you should ignore and focus on the best advice for your situation:

1. Stick to your core values

If you don’t have a clear vision for where you are headed as a founder or startup, it’s nearly impossible to evaluate the advice you get. I’ve seen too many people change direction with every new piece of advice they hear. Before you can really take in advice, you need to have a strong sense of your core values. Then, you can weigh each bit of advice within the framework of your own convictions.

For example, the core values of Twitter’s management helped guide them through the monetization question. Countless experts and pundits were pushing them to monetize via relatively obvious examples like paid premium products or CPM ads. Yet, Twitter took the time to come up with a native monetization model that is not only much better for the user experience, but is also more scalable in the long run. Twitter would be a far different experience today had their management team jumped on the first bit of advice they heard.

2. Listen to people who listen

People who give the best advice are good listeners. They try to understand your specific situation first, rather than instantly spouting off their words of wisdom without any context. Turn to people who ask good questions and seem genuinely interested in the particulars of your question or challenge.

Additionally, you should pay close attention to those individuals who refrain from giving you advice at times because they outright admit they aren’t sure or don’t have the right expertise. Such people will be far more trustworthy in future situations than those who dispense advice just for the sake of feeling important.

3. Change/expand advisors as you grow

Someone who gave you great advice last year could well be a trusted resource in the future, however you need to be cognizant that your needs change over time. Most advice givers are helpful in certain phases of the startup lifecycle, but very few are experts in every area or challenge you face.

For example, a mentor who helps you navigate early-stage product questions may not necessarily be the right person to ask about HR issues as your company grows to 100 people. Again, the most trustworthy advisors will let you know right away if they feel a certain situation is out of their realm of expertise.

4. The final decision is always up to you

There is no standard process for making a good decision. In some cases, you may need to talk to ten different people and weigh each option carefully. In other cases, the right direction will hit you instantly. In most, if not all cases, you need to trust your gut.

No matter how many advisors you talk to, the most important lesson to getting good advice is to never forget that you are running the show. Mentors and advisors can help you build your opinions, but they should never make decisions for you. Don’t listen to people who adamantly push for a certain direction as they most likely have their own agenda.

Lastly, remember that there’s no benefit in being able to blame someone else for a poor decision which is why you should never put an advisor in the position to make the final call. You’re running the show, which means final decisions are always up to you.

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