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Blog Entries from Mural Ventures Team Members
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Remember that chapter in your business textbook about the sales model? It probably looked something like this: 
For the most part, this model is still valid. All of these things still happen. The small, yet important difference between then and now is the result of social media, especially with web-centric and Software-as-a-service products. Before, a sales rep would handle just about every step of the process. He would discover new customers, then work with them as they asked questions and evaluated the product, and eventually convince them to purchase the product. As long as you had a good sales team that could connect with customers, you did well. And as long as you kept them supported well enough, they would stay. Google is the new Account Rep Fast forward to today. Like I said, these areas are still the same, but now instead of a skilled sales rep interacting with your current and potential customers, you have a computer screen. What do I mean? Well, what did you do the last time you were interested in a particular item or service? You probably looked it up on Google. After you found the company’s website, you probably also looked at the other links your Google search returned, including blog and feedback posts by others who had already used the product. Assuming you were still interested, you signed up for the trial version, and started playing around with it. You may have even checked out more blogs and message boards to ask specific questions about the product of other users. Finally, you decide you like the product, so you click the activate link, enter your payment info into the site, and purchase the full product. Sound familiar? Did you notice that you went through the first 3 areas without ever interacting with an employee of the company who makes the product? As many people know, my customer telling you I’m great is much better than me telling you I’m great. The opposite is also true. A company may have a feedback section of their own, but as Bruce Temkin points out in his Bank of America example, you should still look in more than 1 place before drawing your own conclusions. So customers are more empowered than ever with information about not just your product, but your company and the way you have treated others. Kinda scary. What does it mean? “I bought it because I use it” For starters, we’ve moved to a new level of buying. A customer will buy your product because they’re using it and it does what they want, rather than using a product because they bought it. Also, notice the immense impact these changes have on how important the Support area has become. It was always a good idea to keep your customers happy, but now it’s required. You want your customers to become raving fans. Raving fans tell their friends and post blogs and feedback to share with anyone who will listen. They do your marketing for you for free. When a potential customer does that initial Google search, you want them to see the blog posts from your raving fans. If you have angry customers instead of raving fans, guess what that initial search will bring back. Customer Service is the new marketing. Companies need to start treating customer service as an investment rather than an expense. The necessary “White Glove” level of service required to create raving fans is more expensive in the short-term, but in the long term you not only spend less supporting current customers, but their free word-of-mouth marketing will help you add more customers. Without taking away from the importance of Support, let me say that all is not lost with Discover, Evaluate, and Purchase. You still have a chance to make an impact. Discover: Online marketing is more important than offline marketing. Youtube, Facebook, and Wikipedia have moved into the top 10 most visited sites (www.alexa.com). If your marketing efforts can’t be found with a search engine, a lot of customers are missing you. Evaluate: Your micro-site must deliver. The web has kind of given us all ADD (http://www.useit.com/alertbox/9710a.html). We spend an average of less than a minute on a page, reading fewer than 12 words or so before we decide to click on to something else. Your site and pages need to be focused and do the job they were intended to do. This sometimes means breaking corporate branding guidelines. Purchase: If someone can buy your product without ever interacting with a human, then they can certainly not buy it that way too. The great blog postings and feedback may have convinced a potential customer to download the trial, but now your product has to sell itself. You must have the best product on the market, and for reasons other than price.
The New Sales Model
When you take into account the changes resulting from Social Media in the world today, the Sales Model looks more like this: 
Things have changed, but the new rules allow for many new and exciting ways to grow and enhance your business and marketing strategies. It also means that companies who can’t keep their customers happy aren’t going to do as well as their competitors with raving fans. Bottom line, customer support is the new marketing. Social media has moved much of the control you used to have from your sales rep to the web. My suggestion is to start with an experience audit. See what it’s like for your customers to deal with you. If it’s not a stellar experience, get some help to make it that way. The best part about the new world of selling is that it runs on happiness. And who doesn’t like to be happy?
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In working with startup SaaS vendor Sonian Networks (www.soniannetworks.com) I heard the CEO, George Nichols, use the term "Legacy SaaS" to refer to those OLD SaaS providers who build and operate their SaaS offerings the old fashioned way -- you know, using actual servers and databases and what not. The comparison between Sonian as a SaaS 2.0 company and existing SaaS 1.0 business is a good one. Sonian has built their entire offering atop the Amazon Cloud. Sonian uses EC2, S3, SDB, SQS and will soon be using the Amazon payment services as well. Here is a company that is literally betting the farm on the use of cloud infrastructure, and far from being on the fringe, this is quickly becoming the norm. Sonian has been in full production with their offering since January of this year, and is literally the first company out of the chute with an enterprise-level SaaS offering built on the cloud. Sonian provides email archiving and compliance as a service, and because of their solid use of the Amazon cloud, they can literally scale to any number of customers and users without having to worry about having the guys in the data center rack another server, install software, test it, bla bla bla. This IS the future of software-as-a-service where the computing infrastructure is also provided on-demand. Sonian's cloud-based infrastructure automatically scales up and down based on current load -- so they are never paying for computing infrastructure or storage unless they are actually using it. Wow. So the more that I thought about this, the more I realized that George wasn't only right about Sonian being a SaaS 2.0 company, he is also right to use the term "legacy" SaaS to refer to the SaaS 1.0 businesses. SaaS 2.0 business have an enormous competitive cost and scalability advantage over the "legacy SaaS" companies. This Sonian case also highlights something about some (not all) SaaS 1.0 businesses that we've known for a while - that the operational part of running their SaaS business is left to Managed Hosting providers and isn't really integrated into their software product development team. With cloud computing, the product development team must have a deep understanding of the operational environment. The cloud "layer" logically sits above the operating system, but across the entire cloud computing environment, and therefore the SaaS developers have to have expertise in developing applications for the cloud. SaaS Developer 2.0?
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I came across a very cool company the other day. It's called Trialpay and they have created a very clever affiliate solution with an interetsing angle on things.
For anyone marketing SaaS applications to small businesses and consumers, i suggest you take a look at their story.
Simple, powerful, and clever -- it seems to be a cool and easy way for SaaS vendors to potentially make an extra buck while leveraging the “bad news / good news" story wrought by the power of the modern web.
The Bad News...Software continues to commoditize and lot’s of free options exist. Therefore, fewer and fewer customers are willing to pay for subscription software (Stopzilla, ZoneAlarm, Basecamp, Workspace, etc).
The Good News...Customers have more choice than ever before and are increasingly deaf to traditional marketing messages This means COA is going up. Therefore, more and more companies (Netflix, Blockbuster, Gap, etc.) are willing to pay a handsome bounty to those who can deliver customers.
In my humble opinion, this is one to watch for sure.
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Small Businesses (SMBs) are historically skilled word-of-mouth marketers.
SMBs must transfer these skills from off-line to on-line distribution channels.
SMBs who succeed in making this transition will grow faster -- more effectively promoting themselves, networking with prospects, and transacting commerce.
To succeed in this transition, SMBs need access to simple and elegant tools.
The companies who provide these tools to SMBs will pioneer the market for social commerce.
These pioneering companies will be handsomely rewarded.
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In the context of our collective efforts to foster and develop BT Tradespace and the social commerce proposition – this was a truly amazing event -- and I wanted to share a few high level observations.
· The “Social Web” and “Social Commerce” memes are very HOT. Not just in the valley – but worldwide. The implications are potentially massive – and the key concepts inherent in the Tradespace proposition were repeatedly validated.
· Social platform vendors are at war! Although few people openly admitted it – the platform wars have officially started. The purpose of the war is to attract the hearts and minds of application developers. There are two main camps. The favorite: The Facebook Camp. The challenger: The Open Social Camp (led by Google and supported by a gaggle of others including MySpace, Bebo, Friendster, Hi5, etc.) I went into the conference thinking that the two camps were evenly matched. I left the conference feeling like Facebook is definitely ahead – and the Open Social guys have much further to go than I had imagined.
· Facebook Platform Facts: The head start is huge…
o 200,000 developers actively evaluating or working on FB platform
o 20,000 different FB apps have been developed to date
o 900,000,000 = number of unique installs
o 35,000,000 = number of times in the last 24 hours that the apps were used
o 68,000,000 = number of unique active users in the past 30 days
o $15 billion = valuation of FB in Oct 2007 when MSFT invested $250m for
o $300 = value per active user.
· The Main Monetization Meme - Advertising. Most people (especially app developers) are thinking that advertising is the way to monetize social networks. There was a passive acknowledgement that ads inside of FB thus far have not been well monetized (few clicks) – but there were numerous examples of app developers doing very well with ads inside of FB – Speed Racer, Scrabulous, etc. There was a ton of conversation about why big ad buyers are not spending more on social media. What’s holding them back? What’s taking them so long? My informal poll suggested that most people think it is merely a matter of time – before either (A) advertisers wake-up and smell the coffee, or (B) the platforms and networks themselves get better at creating a truly powerful inventory driven by socially contextual ads. (e.g. we no longer have to guess at what ads you might want to see based on what we know about you from your social profile – instead we can serve ads to you based on what we know about your friends, and friends of friends – because, after all, they are the people that you know and trust.)
· The Other Monetization Meme – Commerce Transactions: A small, but seemingly vocal, group of people were pushing back on the advertising meme – suggesting that the real lever for social media would be commerce transactions between buyers and sellers. Ultimately, I think the answer is both.
· Everyone is going SCRUM / AGILE: Agile/SCRUM is increasingly the preferred method for developing!
· UI/UX and Design are Critical to Success: A critical area for investment. If you don’t get it right – your app will fail.
· A Few Areas of Consensus – One Massive Opportunity for Tradespace. I discovered strong consensus around the following ideas:
o mass markets are dead (fractured into millions of markets of dozens)
o mass media is dead (micro messages are needed for micro markets)
o consumers are spending more time on the web socializing with trusted groups
o consumers are bombarded with more choices than ever before
o consumers are increasingly deaf to traditional marketing messages
o SMBs, historically, could not afford to advertise via traditional media
o SMBs, historically, have depended heavily on word of mouth (social) marketing
o SMBs must learn to transfer off-line word of mouth marketing skills to on-line environments (promote, network, transact)
I think that huge rewards await those who can successfully facilitate this transformation.
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Anyone familiar with this blog, with me, or with my company will know that I am passionate about a few things – including my steadfast belief that global telcos and broadband service providers – despite being underdogs in the fight against facebook -- possess a unique and powerful legacy that makes them very capable of becoming a serious player in the race to blend online advertising and social networking.
Over the past few years a number of different people – mainly VCs -- have reminded me that Telcos have a horrible track record of delivering application services innovation – and it would be much wiser to build SMBLive by taking our application services directly to the market. A direct quote from one person was “don’t weigh yourselves down with telco bureaucracy”.
To be fair, I certainly understand and appreciate the perspective, especially when I continue to read fascinating articles like this one published on the cover of this week’s issue of Information Week. The story recaps how the world’s telco giants – fat, dumb, and slow – gathered in Monte Carlo this past spring for some fun – and, oh yeah, highly strategic planning pertaining to IP Multimedia Subsystem, or IMS -- the technology that big telcos had once identified as the platform for creating web based applications quickly and easily. According to Graham Finnie, author of the article, IMS was the long awaited savior that would “enable telcos to finally escape their dependence on a handful of commodity services”. Yet for all its benefits, IMS has been slow to progress into practical reality. Simultaneously, outside the telco castle walls, web innovation has progressed at lightning speed.
Finney remind us that Mark Zuckerberg unveiled the Facebook Platform just 4 weeks after the ill fated telco gathering in Monaco and suggests that Facebook is the perfect surrogate for the types of issues that inherently prevent telcos from rapidly innovating. It’s a well told and fascinating story that I happen to agree with on many levels – especially the conclusion which suggests that despite the rapid rise of Facebook in the midst of continued telco stagnation – the game is far from over.
Consider innovative new services such as BT Tradespace which is a simple way for small businesses to promote themselves on the web so they can attract more customers, sell more things, and manage important relationships with prospects and friends -- with no IT expertise required. Still not convinced, consider what actual small businesses are saying – “ Tradespace incorporates both an area to advertise, and a community area…BT Tradespace looks like it will be the sort of place to kill two birds with one stone.”
While Telcos continue to struggle with service innovation – it would be a mistake to forget their highly exploitable strengths such as brand awareness, big balance sheets, millions of customers, and long-standing regulatory privileges. In the end, I continue to believe that telcos in general have what it takes to give Facebook and others a run for their money by blending online advertising and social networking into easy to use service offerings. The question is who among them are brave enough and fast enough to adapt???
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The more I think about it, the more I am convinced that Facebook is a fascinating dichotomy – and far from a guaranteed success.
On one hand, with a reported 60 million user generated profiles, thousands of third-party developers creating innovative new apps every day, and a $15 billion valuation – Facebook is clearly on fire. A true force in the business of “social networking” facilitating conversations among online communities of people.
I am not naïve about Facebook’s position of strength – and I am not suggesting (even for a second) that they are going to disappear tomorrow. I am simply suggesting that it’s very early in the game – and that the web is a killer platform for connecting people which is open to everyone in the world for rapid innovation. In that sense, I believe that the dynamics that helped make FB an overnight success -- could easily accrue to the benefit of experienced players who are well positioned to facilitate conversations and connections among online communities of people at a massive scale.
Idearc is one example of a formidable, publicly traded, player with > $3 billion in revenue and literally millions of consumer and business listings already populated in their collection of online and offline directories. While these guys don’t have a developer ecosystem, and they can’t hold a candle to Facebook in terms of innovation – they do have decent technology, they know how to sell directory ads to “main stream” small businesses, and they have the muscle necessary to put listings in front of lots and lots of eyeballs, both offline and online.
Another example of a formidable player is Yellowpages.com. The company is led by Charles Stubbs, an old school telco guy who seems to deeply understand the importance of driving “commerce centric” value for small businesses on the web. In a recent interview Stubb’s said he “wants to deliver what small businesses want most -- customer leads”. How’s that for a simple and powerful value?
While Facebook is well positioned to continue to grow as a facilitator of “socially centric” networks of people – I think that global telcos are even better positioned to succeed as facilitators of “commerce centric” networks of small businesses and people. I also believe that this “commerce centric” battlefield is where the “social networking” war will be won or lost.
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This just in from the WSJ. Mark Zuckerberg, the founder and chief executive of Facebook Inc., issued an apology -- delivered via the company's blog -- for mistakes the company made in rolling out the Beacon advertising system.
In a purely naked post Mr. Zuckerberg wrote "We've made a lot of mistakes building this feature, but we've made even more with how we've handled them," Mr. Zuckerberg wrote. "We simply did a bad job with this release, and I apologize for it."
With > 30 million users around the globe -- and with a newly minted $15 billion valuation -- Facebook is clearly the early favorite in the race to blend social networking with online advertising.
In a race like this -- i am not sure if it is better to be the favorite, or, the underdog? Don't get me wrong, i'd kill to be in Facebook's shoes because they clearly have the scale and an amazing opportunity to define an entirely new game on the web. That said, i think the beacon fiasco and the events of the past few weeks show that it is still very early days and Facebook's world domination is not going to come as easy as some people think.
So while it's definitely better to be the favorite -- i truly believe it is dangerous to under-estimate the underdogs, of which there are plenty of very large and capable players learning every step of the way from Facebook's good, and bad, moves.
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If you’re familiar at all with BT Tradespace and you’re interested in understanding some of the strategic drivers behind it – then I suggest you take a close look.
The blog has a cool name – plus it provides a truly interesting perspective on how a self professed digital strategist, entrepreneur, and intrapreneur is capable of leveraging agile methodologies and sound market research to persuade a large, incumbent, and bureaucratic organization to rapidly innovate in the race to combine social networking and online advertising – two of the internet’s most powerful forces – into a logical and elegant service for connecting people and facilitating naked conversations between small businesses and consumers.
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In the spirit of full disclosure, I personally and my company, SMBLive, are obviously betting that BT and other Telcos will indeed become significant and rightful players in the race to combine social networking and online advertising into a logical and elegant service for both small businesses and consumers.
Obviously there are lots of other competitors following Facebook’s lead to build application services that effectively tap into a social graph – but given the Telco’s legacy strength in connecting people via communication channels – and given their legacy strength with advertising directories in the old days of the phonebooks – I think it’s entirely reasonable to think they are well positioned to play a significant and rightful role in this critical game.
To be fair, I am naïve about the challenges inherent in working with Telcos as a primary distribution channel – and even casual observers of telcos would be right to question their ability to innovate rapidly and their appetite for protracted and agile investment in Web 2.0 software development.
Where does the canary go? And who will follow fastest? Only time will tell.
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The front page of today’s Washington Post states, “the merging of social networking and online advertising combines two of the most powerful forces on the Internet today”. Facebook -- with its eye popping $15 billion valuation -- is at the epicenter of this nascent, yet massive, opportunity.
Every major company in the world should be playing close attention – especially incumbent telecom carriers whose core business is supposedly about “connecting people” and whose legacy leadership in “directory advertising” has almost completely vanished.
At least one global telecom carrier, British Telecom, is paying attention and has already taken steps with BT Tradespace to elegantly blend “socially networked groups of people” with “small business advertisers looking for customers”.
As important as it is to learn from the positive lessons taught by FaceBook – it is equally important to learn from the negative lessons as well. This is especially true as Facebook continues to struggle with personal privacy issues associated with its recent Beacon Service, a core element of the Facebook advertising system. In one case, Facebook Beacon accidentally ruined Christmas for Sean and Shannon Lane when the service automatically revealed Sean’s purchase of a diamond ring to his wife Shannon – which was intended to be a surprise…ooops!
Like all things which have the potential to be massively disruptive, “getting it absolutely right” will take patience and investment. I am confident Facebook will be focused enough to fix the privacy issues associated with Beacon. I also suspect that innovative carriers such as BT who exercise the same patience and investment will also eventually get things right, thereby creating significant value for themselves and their customers at the intersection between social networks and business advertising. Time will tell if i am right or wrong.
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Receiving a phone bill in the mail – much like death and taxes – has become a virtual certainty for billions of people all across the world.
But I think things are changing – and I think fewer and fewer people will be getting phone bills in the coming years.
How could this happen, you ask? What type of force could be so powerful to actually kill off telecom billing systems? The answer is a $600 billion behemoth called the global advertising spend coupled with the emergence of the “ conversational web”.
While traditional Telecom networks are monetized via subscription and usage based billing -- the web has evolved into a killer platform where a wide variety of services (including communication services) are capable of being subsidized by advertisers.
A recent study by the Online Publishers Association (OPA) shows that a typical consumer internet user spends 47% o their time online looking at content, 33% of their time communicating, and 15% of their time shopping. These statistics show that “communications” are becoming increasingly contextual to the web itself. Whether I am shopping online, reading news, or looking at my friends on Facebook – I am now able to use the exact same interface to reach out and communicate with folks.
As Doc Searls famously said in the Clue Train Manifesto, “The web is about markets. All markets are conversations.” Who needs a phone bill when communications services, subsidized by advertising, are proliferating on the web and on mobile devices.
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