One untold story behind YouTube's success

Five years after Google's acquisition of YouTube there's no doubt it was a great move. At 4+ billion views a day, YouTube is the first global living room. And if you're looking for businesses with headroom, it doesn't hurt to be playing in the $500 billion tv ads+VOD+subscription market. But when YouTube was first brought on board, questions didn't just come from journalists, some Googlers were raising eyebrows as well. "Eh, they just got lucky," was heard more than once, and certainly the price paid was the product of several factors, but that can always be said of an acquisition. Upon joining in January 2007 I personally discovered a reality that still hasn't really been reported: early YouTubers were amazing operators and don't get enough credit for building an incredibly capable team very quickly.

As a product YouTube was a runaway success -- growing to 100 million daily views during its first 18 months - and of course uploading & streaming video is much more intensive than just serving a webpage. Hypergrowth sites have one job to do: stay running under incredible load. Steve Chen still shivers a bit when you ask him about the rate at which new servers were being racked those days. YouTube managed not just to stay operational but continued to release new features at an amazing pace.

The quality and rapid growth of the team was the most significant factor in why YouTube succeeded. Almost all of the early technical/product/UX hires were previous colleagues or referrals. What a competitive advantage! Imagine being able to basically skip sourcing, interviewing, training, team building and fast forward to just working at a productive clip. As YouTube expanded they were able to bring on new talent very quickly. Attribute this not just to the fact it was a 'hot startup' but to the close relationships everyone had with one another. They just enjoyed working together at a personal level. And anyone that has spent time with Chad & Steve know there's a warmth, charm and charisma present.

The YouTube story is not just about luck or timing but execution, and that's part of the tale often ignored in their success. When we talk about founders we often like to hone in on their raw intellect but the ability to pull a team together is equally valuable and in the end, probably has more to do with success than any of their other talents. That's why it doesn't surprise me to see YouTubers sticking together at new startups such as Endorse and TheIceBreak. One gutcheck for entrepreneurs and leaders: would your former teams/colleagues work with you again? If the answer is "no," then you are going to have a very hard time succeeding.

The Growing Knowing<>Doing Gap

Knowledge has never been easier to obtain, and that's a wonderful reality. Facts and other people's expertise are available 24/7 through web services, social graphs, mobile apps. With just a few tweets, queries or posts, you can know anything.

But that doesn't mean you can do anything. That's the difference between knowledge and applied knowledge. And this gap is as wide as ever. Applied knowledge can come from experience - having done it before - or from an ability to quickly move from theory to practice. An adaptability that 20 years ago wasn't as important in business because folks tended to specialize, the pace was slower and information was less readily available. We've moved from a place where you could impress people with your smarts to where all that really matters is executing.

Over time I've seen hiring change to meet this new reality. Moving away from mere "interviews" to asking candidates to give a presentation on something they've studied or achieved. Structuring "try before you buy" periods as a contractor. A greater emphasis on references. Pushing beyond the bullet point resume. It's not just a focus on results, it's how did you get there.

Don't try to be the smartest person in the room anymore. The smart person isn't sitting in any room - she's out there getting shit done.

5 Essential Product Design Books That Aren't About Product Design wp.me/p25u9C-mM via @hunterwalk
— PandoDaily (@PandoDaily) January 25, 2012

My New App: Drive n' Text

So now there's a phone attachment which allows you to block certain phone functions while driving such as texting. Sure that's one approach but here's the way I look at it. Let's say you've got a fat guy and he just loves his In n' Out burgers. I mean just loves them. You want him to lose some weight - what do you do? Stop him from eating the burgers, right? NO! You make the burgers healthier - remove the sauce and cheese. Make them slightly smaller. Don't change behavior so much as reduce the risk profile of said behavior.

It's with this philosophy in mind that I introduce my new mobile app: Drive n' Text!!!!

What's Drive n' Text? It's an app that assumes you're driving a car while texting and thus takes steps to make sure you do so safely. Like enlarging the virtual keyboard by decreasing the text window display size. And knowing that you need to stop typing every once in a while to look up at the road, so we'll prevent the iPhone screen from going dark because who wants to fumble for the home or power button. Or giving you a default set of emoji characters atop the qwerty line.

Not safe? Big liability risk? I'll just note this is FOR PASSENGERS, definitely not advised for drivers. No, I would never imagine drivers using this, just passengers.

Opportunity knocks!

#BlackoutSOPA recap: how i learned to love Ashton Kutcher

On TechCrunch today I posted a #BlackoutSOPA wrap-up. Shares learnings about building a web service that scaled to 85k+ users in <10 days.

Don't Wait. Donate.

I applaud those who are well off financially and also state they're willing to pay higher taxes if only the government would raise their rates. But why wait? It's called charity. Don't wait, donate.

Confessions of an Unsuccessful Digital Pirate

My vocal opposition of PIPA/SOPA doesn't equate to believing stealing content is ok. I've spent my last dozen years working on people-powered platforms which intend to help creators distribute and monetize their IP (Second Life, AdSense, YouTube). Two motives seem to catalyze digital piracy by consumers:

"I didn't want to pay for that movie because [I don't have any dough; it's too expensive; content deserves to be free; it probably sucks]

"It wasn't available on my [ipad, tv, computer, country] so I just downloaded it"

Neither of these rationales are legitimate. Stealing is wrong. End of story. However even the strictest laws aren't as powerful as societal norms. Bigger fines, longer sentences just create more sophisticated tools to steal. So how do we change perceptions among some of us that it's ok to steal? Well certainly by exerting peer pressure in our social circles and refusing to participate in the consumption of pirated content. And cleansing the sins of our past (I'm Jewish, don't really know how this confession thing works). So here is my meager history of digital piracy.

Books

Never have downloaded anything pirated. Probably purchase between $500 - $750 of books each year from Amazon and local bookstores.

Movies/TV

Again pretty clean. Can't recall ever torrenting a movie - I rarely see films in theaters and tend to rent/buy from iTunes for consuming on my iPad during travel. Same thing for most tv series. If a particular piece of content isn't available that studio just loses out on my dollars. I assume that studio has withheld digital distribution because their models suggest doing so wouldn't be revenue maximizing. But I think their math is likely flawed. Let me explain:

We pay for basic cable from Comcast. Two years ago I was getting into 'It's Always Sunny in Philadelphia.' Missed an episode and DVR didn't record. Since it's on basic cable, episodes don't appear on Hulu or iTunes instantly because I certainly would have paid $1.99 to see the show (even though I was already paying Comcast). Was it on the Comcast VOD service? Who knows, that UX is horrible to navigate. So I turned to the Internet to see if I could stream it illegally from somewhere. But couldn't find it (wanted to stay away from any downloads) so you know what I did? Started caring less about "It's Always Sunny." I was forming a habit, becoming a committed viewer but the lack of availability severed those ties. Fox didn't just lose my $1.99 for that one episode, they lost my eyeballs and dollars ongoing - my lifetime value as a customer decreased. There's lots of content out there and I'm okay spending my time with the video available on my terms.

Music

Studying at Stanford during the Napster years meant I had great download speeds and thus probably several hundreds songs on my hard drive (hope that statute of limitations has expired!). At the same time I was still buying dozens of CDs every year - the downloads were more about content discovery and one-hit-wonders than replacing purchase. Now I buy fewer than 10 CD/digital downloads every year but I haven't pirated a song since 1999. So what changed? Well I pay Pandora $36/year and Spotify $60/year for all I eat. And ~$175 to Sirius for satellite radio in my car. 

So that's it. I've come clean. Pretty lame I know. I'm not a very good thief and lucky enough to live in a country with lots of media availability plus some disposable income. But if we are to be credible in our insistence that SOPA/PIPA are wrong, we have to put our money where our clicks, err mouths, are. Direct dollars to the distributors and creators who are treating us respectfully. I was happy to give Louis CK my $5 for his digital download. I love to pay creators. I hate to pay corporations. These bills are being written by corporations that seek to preserve their slice of economic rents. That's a very different motivation than solely trying to protect intellectual property.

Don't steal. Because it's wrong. And because you lose credibility when you oppose laws like SOPA/PIPA.

The "Not Caring" Crutch

"Yeah, that didn't work out so well but it's ok, I didn't care that much."

Whaaaat? The "not caring" crutch is corrosive. Once you learn how to "not care" it's a hard habit to break. Instead try living your life caring intensely. You'll find there's satisfaction in the very act of committing. And putting yourself out there will result in a whole bunch of good things: more energy, more momentum, increased probability of accomplishing your goals.

#Reinventing the Chamber of Commerce - from pandodaily.com launch

Excited to be part of the launch week content for Sarah Lacy's new PandoDaily. Wrote about #Reinventing the  local Chamber of Commerce. #Reinventing will be an ongoing series where I try to drag some old concepts into the future :)

Last saturday i woke up mad - a #BlackoutSOPA origin story

Last saturday i read that news networks were undercovering the SOPA/PIPA debate - in fact there was evidence that the networks owned by SOPA/PIPA supporters were less eager to cover the topic than their independent colleagues.

My friend @grex & I figured that if the media was going to try and blackout coverage, well, we'd try to #BlackoutSOPA and www.blackoutsopa.org was conceived.

The idea was simple - get people to change their Twitter avatar to a symbol of protest. Phase 1 concept was that a persistent and unified sign of anger among the technology crowd could spill over and draw media interest, curiosity from those not as aware.

We launched on Monday at 1pm. It's now Saturday morning and we're at 13,299 members with a combined Twitter following of nearly 24 million people. There have been several press stories. Our community is broad and diverse -- MC Hammer, Kevin Rose, John Perry Barlow, Tim O'Reilly -- plus hundreds of other people I consider friends, and thousands I'm meeting for the first time.

In this next phase we're focused on continuing to grow the community and starting to encourage people to take action beyond the avatar change. We'll get up some resources and specific ideas this weekend.

It's been really exciting to see folks respond - there are so many good organizations doing anti SOPA/PIPA work right now, Grex and I are just happy to do our part too.

I've also learned a lot during the past five days. Definitely a post-mortem to be written in the near future.

thanks for coming along on this ride - the goal is near: stop SOPA/PIPA!

(you can follow me on twitter @hunterwalk to get more #BlackoutSOPA updates)

Stars & Yipes: People More Likely to Vote Republican If Exposed to Picture of American Flag

Sorry, for all your advanced intelligence, the human brain is easy to manipulate. One technique is called "priming" where a future response can be impacted by seemingly unrelated material you were exposed to previously. A 2011 study provided one example of how priming can be used to influence voters.

Researchers assembled a group of potential voters in late 2008 prior to the Obama/McCain presidential elections. During the study, one group was shown a picture of an American flag while the other group was not exposed to this image. Post-election, the actual ballots cast by the participants were tallied up.

The flag-viewing group voted for Obama 73%-27% while the group who did not encounter the patriotic stars and stripes were pro-Obama 84%-16%. The fact that all participants skewed Obama is irrelevant for purposes of the study (Democrats dominated the sample pool), but the researchers couldn't otherwise explain the 15% difference between the two outcomes. 

The American flag is supposed to be an apolitical symbol of patriotism but somehow it's become a loaded icon imbued with Republican values. Years of the GOP stating they love America more than liberals might be paying off.

I think I'll start watching political ads a bit differently :)

Day 3: #BlackoutSOPA community now ~5k reaching ~12.8m followers

Whew, a fun Day 2 on Tuesday

1. Recruit these Tweeters!

• Go back to  http://www.blackoutsopa.org/
• If you're logged in, you can see a bunch of Twitter avatars for people we think should join #BlackoutSOPA
• Use the Tweet buttons to tell them "The Internet & our freedoms are threatened. #BlackoutSOPA by changing your Twitter avatar: http://www.BlackoutSOPA.org" [or create your own message]
• Try it out and suggest who else should be on that list!

2. Hit peak of 40 QPS & site stayed up all day (thanks @grex!)

3. Press/bloggers started to take notice
http://www.pehub.com/131197/can-this-googler-impact-the-fight-against-sopa/ 

http://www.avc.com/a_vc/2012/01/blackoutsopa.html 

http://parislemon.com/post/15586230594/blackoutsopa-org 

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/01/10/businessinsiderthe-craze-thats-taki.DTL 

http://techcrunch.com/2012/01/09/nosopaorpipa/

4. Other new features at http://www.blackoutsopa.org/

• You can now see total followers reached by the #BlackoutSOPA community
• We show top #BlackoutSOPA supporters (by # of Twitter followers) & give you easy ability to follow these folks

#BlackoutSOPA most followed members

Whether you have one million Twitter followers or just one, we thank you for joining #BlackoutSOPA and changing your pic at www.blackoutsopa.org.

Here are our current most followed members:

@MCHammer 2,402,333 folowers

@sacca 1,335,124 folowers

@kevinrose 1,308,243 folowers

@jess 372,291 folowers

@Chad_Hurley 364,486 folowers

@rsarver 276,601 folowers

@pakman 269,799 folowers

@fredwilson 201,149 folowers

@johnbattelle 162,201 folowers

@mattcutts 150,767 folowers

@todsacerdoti 138,159 folowers

@davemcclure 71,836 folowers

@parislemon 67,804 folowers

@strobist 60,852 folowers

@zephoria 54,708 folowers

@spolsky 45,740 folowers

@bfeld 40,185 folowers

@pgoss 39,895 folowers

@alexia 38,570 folowers

@KatieS 38,545 folowers

@summertomato 38,025 folowers

@fishmark 37,068 folowers

@photomatt 36,002 folowers

@rhys_isterix 35,225 folowers

@greghsnow 31,545 folowers

@joshk 30,418 folowers

@shultquist 29,101 folowers

@jeff 28,316 folowers

@narendra 23,548 folowers

@shervin 23,520 folowers

Day 2: #BlackoutSOPA now reaching 7.1 million followers

Wow, overnight we had our first two 1m+ Tweeters join #BlackoutSOPA: entertainment icon & entrepreneur @MCHammer & angel investor/raconteur @Sacca. With their help - and the 1800+ other #BlackoutSOPA members - we now reach 7.1 million Twitter users (yes there are some dupes in that count). Today's goal is to keep the site up and tip it (a) global and (b) to the music/arts/video community.

Some new features on www.BlackoutSOPA.org and scaling notes from the amazing @Grex who chugged through the night on this stuff:

• Right out of the gate yesterday we hit > 30QPS -- everyone hates SOPA even more than I realized :)
• major speed revamp! now with load balancers, even more caching, and the whole kabang. (we had no clue/expectation that we were gonna get that much attention on day0. that poor single amazon box was getting beaten up until the evening when it was finally decommissioned...)
• SOPA resources at bottom of page
• added a rotating list of "and thanks also @..." which randomly pulls from the top30 most popular users of the service (by follower count)
• add a follow button

If you can help in any way - especially getting this adopted by people outside the tech community - pls let me know in the comments. 

Launch Post-Mortem: #BlackoutSOPA

Update: We peaked at > 30QPS right out of the gate. Doing work tonight to scale because i think we can tip this on Tuesday with your help!

---------
Politicians are starting to realize that SOPA/PIPA are toxic but we need to stay top of mind. Did you know that the news networks owned by media companies are ignoring the debate and not reporting on SOPA/PIPA? This media blackout pissed off me & grex so much that we decided to do something about it.

Blackout on SOPA? Fuck that, let's BlackoutSOPA! 

At 1pm today we launched www.BlackoutSOPA.org which lets you replace your Twitter avatar with one of several choices to protest SOPA. It also lets you change it back with one-click so don't worry about losing that awesome pic of yourself :) We're trying to get 10k people on-board this week in order to show the world this matters. Yes, it's just a small gesture but take the step with us

Quick launch post-mortem:

• 1pm: I tweet out the call to action. Pretty cool that immediately folks like @bfeld, @fredwilson & @parislemon change their avatars and RT.
• 1:15: Not as cool when www.BlackoutSOPA.org gets pounded with several thousand hits over the course of the next few minutes. We thought it would be a slow, gradual build of demand, not a burst. Site goes down.
• ~2pm: Site back up. Work tonight to increase stability.

Since launch i've been poking a few people via Twitter. Also trying to get a few companies to adopt #BlackoutSOPA on their corporate account.

Artists, bands, video folks - SOPA really would mess up your world so i'm trying to get the word out in your communities too. Targeting journalists also.

I'll report back on Tuesday as to how stuff is going.

10,000 strong!

Sadd Digg

Reading Steve Blank's incredible post on why the movie industry's failure to innovate has lead to SOPA, and noticed this sad sight.

I know it's been a challenging last few years for Digg but really sad to see every other social sharing service with some participation and the Digg button there at zero. The challenge for Digg, Yahoo, etc is that you can't play catchup but instead need to try and skate to where the puck is going. Which of course, if you could do well, means you probably wouldn't be in the predicament to begin with anyway. Tech turnarounds are very hard but that's another longer post coming soon. In the meantime, best of luck to Digg!

Don't Touch the Shopper

"Getting touched by a fellow shopper—even an apparently accidental brush—makes consumers less likely to buy the product they're considering, a new study suggests.

Researchers approached nearly 150 men and women, in a retail district, saying they were interested in general attitudes toward shopping. They asked the shoppers to browse in a luggage store and to evaluate one small bag in particular. As the shopper looked at the bag, a male or female confederate of the researchers walked closely past him or her. Half the time, the confederate brushed lightly against the shopper's right shoulder blade.

Consumers who were touched rated the brand of the bag only 3.3, on a 7-point scale, while those who were not touched gave it a 4.9. Shoppers who were grazed also spent roughly half the time in the store (82 seconds) as those who weren't (158 seconds). A male touch had stronger negative effects than a female touch." - via WSJ

"A Stranger's Touch: Effects of Accidental Interpersonal Touch on Consumer Evaluations and Shopping Time," Brett A.S. Martin, Journal of Consumer Research [pdf]

The Post-Web 2.0 Era Doesn't Have a Name -- And That's a Good Thing!

Whatever happened to Web 2.0? It occurred to me this afternoon that I've heard the phrase less and less. And a quick Google Trends search confirms that we're in a post-Web 2.0 period (the graph for "Web 2" isn't quite as pronounced but trends downwards as well).

But while we're more obsessed than ever with technology and the role it plays in our lives, no single terminology has replaced "Web 2.0" in our vocabulary. Are we in the midst of a nomenclature transition or is there a new shorthand to describe the Internet in 2012? Posed this question to the Twittersphere. Responses included a few suggestions of "mobile," "html5," "apps," "post-PC era" -- all certainly important components of the age we live in - but several people honed in on what I think is a keen observation. This era doesn't have a colorful descriptor because the Internet has ceased to be a phenomena - as Uber founder Travis Kalanik responded, the new term for the Internet is the Internet. Always connected means that there's no longer the need to invent vocabulary around the Web. It just is. And that's the most wonderful thing technology can do - fade to the background and just integrate into our lives.

Or you can believe Maya Baratz of Wall Street Journal who suggests the lack of an era-defining name might just be part of the boom-bust cycle. "If web 2.0 is any indication, the sequence is: 1. big crash that makes everyone lose hope 2. a comeback 3. comeback name." Um Web 3.0: Web Harder?

Sorry Mike, Facebook could reboot and we'd mess it up again

Update 1/6: Wow, this made top of HackerNews! I'm honored. Hope you enjoy this post - let me know what you think in the comments. Besides this blog, I can also be followed on Twitter @hunterwalk

Michael Arrington wrote a compelling piece suggesting Facebook's continued success is dependent upon allowing users to wipe their friend slate clean and rebuild their graph. This second time around he suggests, we'd do a better job of curating the relationships to create a high signal, low noise set of friends. Mike even pinky swears that he'll stick to his guns. Unfortunately, and this is no statement about the credibility of Mike's pinky swears, I believe most social communication products - from Facebook to Twitter to Path are designed in a way which causes us to all slowly ruin the quality of our experience.

Basically we say we love high signal, low noise services but then proceed to bring the noise. When people say something like "Oh Path is great, it's just my close friends" it's because we start out any product by using it with just our close friends. When he invented the telephone, Alexander Graham Bell called Watson, not someone he barely met at the town bar. However for a set of reasons I'll outline below, we keep adding relationships and activity until it no longer resembles the initial value proposition.

So what compels us to ruin our own social communication tools? And what are the product design implications?

1) Vanity & Ego
Hunter's rule: Any communication service which publicly displays a metric serving as a proxy for popularity will cause users to take steps to increase that number. Number of friends on Facebook, number of connections on LinkedIn are two easy examples. First order derivatives are just as problematic: if you friend more people on Path (up to the 150 limit) you increase the number of people likely to see your posts which will increase the visible "viewed by" count and number of emoticons. On Twitter, you are tempted to follow back in order to solidify them as a follower. Or RT someone so that they'll RT you later. And these pressures are occurring just within the services themselves. If social influence metascores such as Klout gain prominence it will increase the problem as users seek to grow more popular to increase their score. Unfortunately publishing volume seems to be a compelling way to accomplish this as opposed to just quality

Product Solution: Hide those damn numbers!!! Let the account owner see them but not the general public. Imagine Twitter without public follower/following counts, Facebook without a friend count. I've argued before that Path's design choice here is counter to their stated goal of intimacy.

2) Boredom & Pleasure
You fire up Path/Instagram/Facebook/Twitter/whatever and, gasp, there aren't any new updates from friends. Hmm, that was unrewarding, so you decide to friend some more folks to decrease the chances of shooting blanks. It's equivalent to random reward cycles in game design - each time you log-in there might be a prize, and it keeps you coming back. In this case you can influence the rate of "prizes" by following more folks. The result becomes a noisy feed but feeds the addiction to "new" content.

Product Solution: Never leave the main feed empty of new items to review. Create an ephemeral experience for me when necessary. For example, instead of putting "popular" photos only behind a separate tab on Instagram, if I open the app and none of my friends have updated you might give me an element that shows popular photos I might enjoy (say four smaller photo tiles which allow me to select and click over to that person's photostream or to a trending tag). Or in G+, if there aren't any updates, popular posts or relevant clusters from Google News (they do a variation of this today but it's intersecting the middle of my feed which I don't like -- it's really hard to mix info types, my suggestion here is not to put at bottom of new feed items, but rather to only insert this element if there aren't any new items next time you log in - state-aware UX).

3) Reciprocation & Conflict Avoidance
C'mon, admit it, you've followed someone just because they followed you first. And you're afraid to unfriend/unfollow because you don't want to have THAT conversation with them. These issues are most prevalent in bidirectional systems such as Facebook but most services have this issue - I'm guilty a few times of DM'ing someone who then reminds me they can't DM me back because I DON'T FOLLOW THEM. Sheepish "oops." [Note, I know Mike probably has no problem with this one]

Product Solution: This is tough. Obviously in bidirectional systems, providing a unidirectional fallback is useful (such as "I won't friend you on Facebook but you're free to subscribe to me"). And environments like Twitter don't notify you when someone unfollows (although there are services which will). And G+'s Circles do a nice job of allowing me to pseudo-follow (ie you see that you are in one of my circles but it could be a circle that I never look at - just a holding pen for people I don't care about but don't want to offend).

The only other suggestion I have revolves around the service making it easier to decline by creating norms -- such as if Facebook had prefilled decline friendship selection which said "hey, I like you but I'm trying to keep my group here small. please feel free to subscribe." That would allow you to make more standard the denial of friendship and make it seem like something which happens every day plus give an option to stay connected.

4) I Like You But Not Everything About You
Social graph != interest graph. So I friend someone but eventually see noise from them - where noise is defined as "jeez, you really like to post dog photos." If it's a particular data source you can block it at the app level (no more castleville invites!) but when it's just generic media types, you can't block.

Product Solution: Another tough one because the act of trying to filter social graph items by some measure of your interest in them is (a) difficult technically and (b) confusing to users ("why didn't i see that"). Better is to design your feeds in a way which make the sharer more prominent than the item they are sharing - so it feels like you are learning something about your friend through the context of what they shared, even if you are not consuming the item they are sharing. The perceived value is in building stronger ties to your friend, not using them as a discovery mechanism for new content.

Other Issues
Obviously most of these services are also engineered for growth and expansion of the graph rather - "find and invite your friends" get built way before quality scoring of feed items. And API/platform integrations allowing folks to more easily publish into the feed, increasing the noise (game invites! new Oinks! I just weighed myself!). But for purposes of responding to Mike's piece, I wanted to focus on human factors, not inherent conflicts between ad-supported business' growth strategies and user goals. "This work is licensed under a Creative Commons Attribution 3.0 Unported License."

What a $2.50 New York Times means to the future of Starbucks

This week the New York Times raised newsstand prices by 25% to $2.50 per issue. Home delivery prices were increased less than a dollar per week so this sizable change only impacts the daily buyer. Pricing is a fascinating art and science since it blends economic revenue maximization with a number of emotional considerations from our irrational human minds. Looks like this increase was driven by two realities:

A) The Times knows that general print advertising is decaying quickly and not coming back

The Times' operations are funded primarily by two revenue sources: what the consumer pays for a newspaper and what advertisers pay to reach those consumers. Theoretically, the lower the price of the paper, the larger the circulation would be. Historically advertising revenue has helped offset rising costs of production and distribution for the Times print copy (someone once told me that gasoline, not paper, was the Times #1 expense - don't know if it's true or not). A 25% cover price increase means that consumers need to step up and pay because advertisers are fleeing print. 

But by raising only newsstand prices and not home delivery, the Times is also looking to aggressively migrate folks from a relationship that's decided day-by-day to a longer-term model. One where they know the customer's name and address. One where they have your credit card number or other billing information. Where they can market and cross-sell to that person. Where they can bill you in advance for six months of papers. And where they are likely already driving through your neighborhood to deliver a paper next door. In a home delivery model you go from being a faceless consumer to a very specific line in their database.

B) Their elasticity curve is particularly interesting and they just screwed Starbucks & The Wall Street Journal

The switch to $2.50 might price out more cost conscious consumers, which is fine. Per above, general interest advertisers aren't knocking down the Times' door. But they still do a healthy amount of upscale advertising to the educated, urban, wealthy Times reader. Those folks can afford to pay .50 more per day and still be delivered at premium CPMs to Barney's, Tiffany's and Lexus. Someone at the Times concluded that the elasticity of demand supports an across the board 25% price increase and this would be tolerated by a % of their newsstand customers. Would love to see those models.

But perhaps even more interesting - and this is pure speculation - i bet those models don't look at New York Times purchases in a vacuum. They research how people buy the paper and what this means for the Times' share of wallet. That is to say, where and how are you buying the Times on a daily basis. Let me suggest that if you're already pulling out a $5 bill to buy a Starbuck drip coffee and the Times, or the Times and the Wall Street Journal, you don't care if you get back .85 in change or .35. It goes in the tip jar or a bowl on your desk. So look at these two scenarios

Pre NY Times price increase

Coffee and a newspaper

Coffee: ~$2

NYTimes: $2

Total: $4

In a state with sales tax on the paper: ~$4.16

Times and the Journal

NYTimes: $2

Journal: $2

Total: $4

In a state with sales tax on the papers: ~$4.32

Post NY Times price increase

Coffee and a newspaper

Coffee: ~$2

NYTimes: $2.5

Total: $4.5

In a state with sales tax on the paper: ~$4.67

Times and the Journal

NYTimes: $2.50

Journal: $2

Total: $4

In a state with sales tax on the papers: ~$4.88

Ok, so stick with me -- in both of the "post price increase" scenarios you can still get your two items for a $5 bill. The Times price increase - which substantial on a % basis - didn't push you to pay any differently than you did before so there's no perceived price increase. You didn't need to get out another $1 bill or pay with a $10. But when the Journal or Starbucks go to raise prices next you will likely hit the $5 barrier which triggers consumer awareness of a price change. And who will the consumer associate with that pain? Not the Times - last one in gets blamed - either the Journal or Starbucks will be the asshole.

This is what's so fascinating about pricing - you need to consider the circumstances of purchase in analyzing consumer reaction.

Would love to hear from some retail pricing specialists to tell me whether I'm crazy or not.

Why I Write

"You're blogging more because you're leaving Google. I've seen this many times - people start writing when they want to raise their profile before changing jobs."

That's what a friend suggested to me over the weekend - and it's usually a credible claim. I too have observed folks cranking up their social media engines in advance of a transition. In this case only part of that statement is true -- I have been blogging more lately and intend to continue. Writing for me has always been the path not taken. After years of school paper editorial roles and an internship on Late Night with Conan O'Brien I veered towards technology work instead, believing that code was the prose of the future. And I've been incredibly fortunate to work with great teams at Second Life, Google & YouTube to build wonderful platforms powered by people. No regrets.

But I do think back and wonder whether I could write for a living - nonfiction or journalism mostly. So I write again now to revive that part of me.

And because I have my first child coming in a few weeks so I'm feeling the need to create outlets.

And because 2011 was a wonderful but challenging year so I'm processing everything that happened, that I experienced.

And because I love the technology community so much that I hope to contribute to it not just by my work but via blogging, tweeting, sharing ideas in every way possible.

I write because it's inside of me and wants to get out. And I write publicly because that's one of the only things which still scares me. To be exposed. 

I don't write exclusively to be noticed but it's definitely nice to get kudos from people I know and new faces who find me because of something I've written. And I get a kick out of guest posting on TechCrunch or GigaOm or whomever wants me. The few minutes which someone spends to read a new post - I take that seriously. I want to give them something of value. Hopefully which causes them to consider an idea in a different way. To build on top of what I put out there because I probably built my layer on top of someone else's foundation too.

So I will continue to write and I'm excited if you continue to read.

FYI - here's my blog traffic since 2009 (not including feeds or pageviews on G+ or Facebook). Recent spike is when I started writing more frequently. My posts are now doing ~500 - 8k pageviews on my own blog when I push them to social media.

You don't get to decide if you're a platform

Seeing lots of startups pitch themselves as a platform play right out of the gate. The reality is, you don't get to tell people you're a platform, they tell you. The platforms we think about today (e.g. Twitter, FB, Android/iOS) all started out as services which attracted end user interest. Then they evolved into a platform in order to grow their business, solve non-core use cases and answer the demands of developers who were otherwise hacking at the product inelegantly or uneconomically.

A platform doesn't just mean that others can integrate or use your services, it means you have a compelling technical and business proposition which creates enough value for both you and developers to run sustainable and competitive businesses. I would push further and suggest that other companies are able to develop on your platform using a standard deal or terms of service -- if access and business rules require a negotiated agreement, it's not a true platform.

Businesses that start off calling themselves a platform often:

(a) fail because they cannot bring enough value to platform developers in order to get their attention. Or they attract developers but are unable to create enough additional value, meaning the platform cannot extract their own economic rents from the service. Note, in this case "fail" doesn't necessarily mean "your technology is not interesting" but rather you didn't find a business model. In these situations the technology is often eventually open-sourced or sold to another company via small acquihire or asset transfer.

(b) realize success not as a platform but as middleware or component technology. Somewhere along the path to Web2, being infrastructure became a dirty word. You wanted to pitch yourself as a "platform" because that was sexy and ubiquitous, but in reality if you're supplying, for example, lat/long data for a given location lookup, you're not a "geo platform" you're infrastructure. I don't think Twilio started thinking of themselves as a platform so much as a kickass piece of technical infrastructure.

So my best advice to entrepreneurs is to not anoint yourself a platform prematurely - it ultimately won't be good for your product or business. Start out with an API strategy and broaden to a platform strategy if it's the right strategic decision.

* Since it's the beginning of the year and everyone is piling on with "2012 Ones to Watch" type of posts, i'll add three potential next meaningful technology/service platforms (outside of YouTube which i normally don't comment on because of my employment).

• G+ -- not a surprise here as they've already discussed the API development. Platform value will be derived from access to audience, circle graph, one-click payment model via Google Wallet, identity authentication, cloud storage, etc
• Spotify -- they've started with the platformization -- i like their app strategy w/in Spotify although the UX is very clunky. What i'm even more excited about is Spotify as an external music OS - allowing users of music products to authenticate against their Spotify account in order to access full music streaming. For example, perhaps SoundTracking support full song listening for Spotify customers instead of 30s samples.
• Square -- Square has several interesting big dollar dollar opportunities (such as SMB CRM, dynamic pricing optimizations, loyalty programs, merchant discovery and promotion) beyond payment processing and i think they'll likely pursue those before any platformization occurs.

ZNGA hidden value in online gambling laws?

$ZNGA has 29 million MAU for Texas Holdem. If online poker is legalized in US (as seems to be trending towards), this is potential huge $$$. Hidden value? Keith Rabois passed along thoughts that casual poker players and gamblers are two very different segments. And that even for lead gen purposes, the value might not be substantial to ZNGA.


But speculate away :)