Sunday, April 30, 2006

Are You an Elephraffe?

I'm the most impressionable consumer ever. Amazon's auto-recommendation system is made for people like me. Every time I go to buy a book or a CD, I end up ordering 7 other things. This is how I ended up with The Irresistible Offer by Mark Joyner.

According to Joyner, the key to any successful marketing campaign is a compelling "touchstone". He illustrates this with three case studies: Domino's ("hot pizza in 30 minutes, or it's free"), Columbia House Records ("10 CDs for 1 cent") and FedEx ("when it absolutely, positively has to be there overnight"). A touchstone, he explains, is a brand-identifying message that clearly and succinctly conveys what you sell, why a prospective customer should trust you, and what's in it for him.

Joyner also likes Circuit City's "we'll honor the lowest price you can find for up to 60 days after your purchase", Caterpillar's "48-hour parts service, or we pay", and Nordstrom's "we'll take back anything you're not satisfied with without a receipt, no questions asked". The one surprise on his list of examples is RackSpace's "Fanatical Support".

I used to be a customer; their service was excellent! And recent press releases tout their 15% market share among Fortune 100 companies. So I think what RackSpace has are an excellent track record and a great reputation - but those factors don't make "Fanatical Support" a brand-building message.

As an experiment, I showed RackSpace's ad in the May issue of Wired to a few friends (there's no graphic, and the text just says "Fanatical Support is the Difference"). They thought "Fanatical Support" sounded like hype; it's not quantifiable. (And remember, one of Joyner's criteria for an effective touchstone is believability.) Also, if you look up fanatical on dictionary.com, its definition is "motivated by irrational zeal". Irrational is bad in a mission critical business environment. If I were the administrator of a huge, busy site, I think I'd be more interested in consistency than fanaticism.

RackSpace's website is not so great either. The alternating palm tree/swimming fish Flash movies are sort of pretty, but the look and feel is not consistent at all with the print ad's red and white color scheme.

DataPipe, on the other hand, ran a much more compelling ad in the same issue of Wired. It promised to "extend your IT resources on demand" - at "predictable costs" and with "guaranteed service levels". I have no first hand experience with DataPipe, but they sound like they really understand what hosting customers are looking for. Indeed, on DataPipe's website, they call this understanding "Operational Empathy". Now that's compelling.

But enough RackSpace bashing. They do have one really, really awesome marketing initiative; it's the "find your animal" game on RackSpaceCareers.com. First you're prompted to choose two personality traits from a list (I picked resourceful and clever). You're then told what kind of animal you are (I'm a KangOx, which is part kangeroo and part fox). And guess what? RackSpace provides a friendly habitat for your strange, special creature. The game sends two very powerful messages: we think your uniqueness is valuable, and we offer such an welcoming environment that even a Chameoceros can find its place. Recruitment is of course super important; RackSpace added 250 new hires last year. But a concept like this would have been great for their front page and print ads.

Saturday, April 22, 2006

GoDaddy 2.0

Recently I started volunteering at the National Women's Business Center, a non-profit that provides educational programs for women entrepreneurs. Earlier this week I was a guest judge at a business plan presentation session. Most of the ideas were brick-and-mortar (specialty retail, childcare, holistic health). The owners, likewise, came from "real-world" backgrounds (architecture, HR, law).

Believe it or not, the crowd was practically a GoDaddy fan club. Everybody's registered at least one - and in some cases several - domain names. And the consensus was that once you're planning to build a website, you should definitely host it at GoDaddy. It made me feel like Godaddy ought to do something in the meantime to maintain their high level of goodwill.

GoDaddy currently has 9 million domains under management. Tier 1 Research guesses that it generates $200 million in annual revenue. On April 12, MarketWatch wrote that GoDaddy's possible IPO could value the company at $250 million. A week later, another MarketWatch article reported that Greylock Partners' recent investment in Facebook was based on a $550 million valuation.

In theory, Facebook delivers a highly-targeted audience of super-desirable 18 to 24 year olds. Its 7 million members include 72% of American college students; two-thirds of its users visit the site daily. In March 2006, the site generated 1.4 billion pageviews in ad inventory. And social networks, says MarketWatch, are great environments for building brands and selling products.

After spending a few minutes on http://mit.facebook.com, I'm not sure I'm convinced. I kept seeing completely irrelevant banners, featuring:

1. KIDZ BOP 9 ("18 more kid friendly hits, sung by kids for kids!")
2. Register.com ("get your business online fir $5!")
3. 1-800-PetMeds ("save a trip to the vet!")
4. Traffic.com ("up to the minute report for your commute!")
5. Orlando ("perfect family vacation destination")

The only advertiser that might have derived value from MIT undergrads was Monster.com. Even so, its "find a healthcare job" message didn't quite resonate next to the profile of a Class of 2008 Urban Planning major. While Facebook doesn't seem to deliver on its promised value proposition, might Godaddy be able to take advantage of its formula?

According to an article in today's New York Times, social networks tap into three passions of young people: expressing themselves, interacting with friends and consuming pop culture. (The article also points out that although MySpace generates one billion ad views per day, it produces less than 5% of Yahoo's revenue.) I think business owners have somewhat similar desires: to get the word out on their company, network with other professionals and find/purchase products/services that might help their business.

So here's an idea: what if GoDaddy rolled out a social network for small businesses? Currently, GoDaddy offers domain owners ad-support websites and blogs. But since users of these free services rarely produce compelling content, the resulting advertising inventory is limited in both quality and quantity. More importantly, GoDaddy derives no long term benefit from advertising to its customers' website visitors. A much more attractive audience is the domain owners themselves.

I'm envisioning a Linkedin-like service where domain owners could create company profiles which might include photos/descriptions of products/services, links to investors/vendors/partners, memberships in industry associations and networking groups.

The New York Times reported that MySpace is planning to turn advertisers into members of their community. Bands, movies, phone companies would have their own profiles, and teenagers could become "friends" with these vendors. I LOVE this concept, and I think it could have even greater value within a small business social network. Company owners could become "friends" with Dell and Staples and Citibank and receive discounts, new product announcements, invitation to events, etc.

In addition to creating ad inventory and strengthening GoDaddy's relationship with domain owners, a small business social network could encourage customers of other registrars to transfer their domains to GoDaddy. Last but not least, it would elevate GoDaddy beyond the ranks of Tucows and Register.com (Marketwatch noted these two domain registrars' modest valuations relative to their revenues) and give the company a much higher valuation.

Monday, April 10, 2006

You Should Meet (but not like this)

The Internet disintermediates and reintermediates; according to Wikipedia, such is its dynamic nature. But sometimes, it just... intermediates. In activities that you never realized you could use a web-based interface for.

A few weeks ago, I introduced my friend Nathaniel to my other friend Rodney. They're both interested in open source software development. And their small daughters might like each other. And they're the two smartest people I know in DC. I made the introduction the old fashioned way - by emailing them directly.

I just found out, though, that I could have gotten them together through YouShouldMeet.com ("YSM").I read about the site in Bob Allard's 'Care and Feeding of your Network' article on ChangeThis.com. Bob says that networking is not about looking for help. Instead, a successful networker looks for ways to help. What can you do for that new person you just met? Do you know of anyone who might want to hire him? Buy his product? Join his company?

This is the philosophy behind YouShouldMeet. You sign up, enter two friends' email addresses, and tell them they should get to know each other. A few weeks later, the system sends both friends a follow up email, asking them whether the introduction was useful.

I loved Bob's article, but I'm not sure I would ever use his site. Couldn't I just enter names of friends and introductory messages in Outlook or Gmail? YouShouldMeet does keep count of the number of introductions made. But neither the tally nor the automated follow up seem like compelling enough reasons to stick with YSM - especially since emails from the site show noreply@youshouldmeet.com (rather than me) as the sender.

I see two possible ways to make the site more interesting though:

1. Give it some sort of gate-keeping capability?I enter two friends' emails, and the system sends my introductory message to both. But instead of A and B automatically receiving each other's contact info, they have the option of accepting or declining the introduction. If both parties accept, email addresses are released. If one or both wished to decline, the system offers a list of canned rejection messages. "Sorry, I'm swamped", perhaps? Or "I'm afraid I don't have the [insert subject] expertise you're looking for".

2. Use it to enable multi-user communication?I enter multiple friends' emails, and the system sends my introduction to all. It also creates a private forum where all recipients can post messages. Each friend can choose whether their name or email is displayed, and whether they would like to receive copies of forum posts. This might help eliminate 'reply to all' clutter, and could facilitate bringing a group together for a specific purpose.

Saturday, April 08, 2006

302

302 rhymes with Sanrio, sort of, in Chinese. Growing up in Taipei, my friends and I used to skip out of elementary school to ooh and aah at bright pink trinkets at 302 shops on every street corner. It's been at least a couple of decades since Hello Kitty's come up in conversation. I got all nostalgic when I saw the Sanrio name splashed across... a Concentric Hosting white paper, of all places.

Sanrio.com, the 12677th most popular site on the web (according to Alexa), is powered by Concentric's clustered hosting platform. Here, Sanrio has on-demand access to CPU resources, storage space and bandwidth. Concentric's custom-developed technology offers beyond a box scalability, software-based load balancing and DoS attack protection. The company's developers have even created a usage metering system that's compatible with any billing product on the market, a feature that Concentric resellers no doubt appreciate.

The question is, how synergistic is such a complex software development project with the hosting business? There's no economy of scale. Since 1997, Concentric has invested countless developer-hours into creating, maintaining and upgrading its proprietary platform, but the product is monetized only through its own customers' and resellers' hosting fees. In comparison, other web hosting providers generate similar revenue streams with little or no in-house development resources.

Barbara Branaman, Concentric's GM, says I'm comparing apples and oranges. There are many kinds of web hosting business models: some companies focus on leasing state of the art hardware. Other see systems administration services as their core competency. Still others are primarily in the web design business. Concentric sees its clustering technology - rather than its data center, hardware, bandwidth capacity, etc - as its core product.

I think she's right; I was taking a too-monolithic view of the web hosting market. Because there are many types of website owners as well: some want direct control over the biggest and baddest web servers (I hear EV1Servers' 'Monster Servers' have been selling well. Dual core dual Xeons, anyone? With 12 GB of RAM and 2.4 TB of SCSI hard drives??). Others would like to outsource everything - from development to sysadmin - to a vendor. And still others are interested only in a specific set of apps. Sanrio's priority was beyond the box scalability. They had a website that worked; they moved it from another web hosting provider to Concentric because they wanted automatic, on-demand access to resources.

Sunday, April 02, 2006

Open Sunday

I'm thinking half-heartedly about buying a condo: not serious enough to get in touch with a broker, but when the weather is nice, I'll walk around the neighborhood and check out the open houses. Today there must have been 20 of them within a 3-block radius of my apartment. The problem is, the signs outside don't tell you much about the units for sale. Just now I saw a 250 square foot studio and a multi-million-dollar 3-bedroom.

So, where should buyers go to find out about open houses in their target neighborhoods? Realtor.com says there are 115 condos for sale in my zip code, but not which ones are available for public viewing today. Washington City Paper has 10 open houses listed in its classified section - that's for the whole city. But there are that many signs on my street alone. WashingtonPost.com is more like it: 49 open houses in NW Washington DC. But the list is sorted only by price, not by location.

Maybe buyers and sellers alike could use a repository of event-based rather than property-centric listings?

(a) Realtors and/or sellers submit listings for open houses

(b) Prospective buyer performs searches by specifying geography boundary, price and date/time range. Site outputs list of properties, calendar and map. (Have you seen how Trulia incorporates maps in its real estate searches?) Searches can be saved so that buyer receives updates of new listings.

(c) Buyer can sign up to receive follow ups from seller - or he can just show up/browse/leave anonymously. In either case, listing owner receives report of how many unique visitors have viewed his/her event.

Such a system would save buyers time by pinpointing opportunities to visit price/size-appropriate properties within their desired timeframe. It would also help sellers promote and track ROI from open house events. As for the business model... Motivated sellers could likely be persuaded to purchase enhanced listings. Realtors and mortgage companies might also be eager to capture the attention of buyers. Local businesses, too, could be interested in advertising to prospective new neighbors. Maybe?

UnClassifieds

Was reading this article in an old issue of Business 2.0. The future of e-commerce, it says, will be online classifieds. And heavy investment from Google and Microsoft in this arena will threaten eBay's long-term viability. Auctions are too complicated for most users, supposedly, and consumers prefer to buy locally. (eBay does own 25% of Craig's List, but the author dismisses it as not having adequate online payment/shopping search infrastructure, and not being eager to expand.)

Microsoft plans to launch a classified listing service (code-named Fremont) in mid-2006. It'll be tied in to MSN's mapping service, to help buyers and sellers pinpoint each other's locations. Google Base is "a place where you can post all types of content". Used cars, for example. There were 10 listings within 30 miles of my zip code; Google Base showed them on a map.

Traditional "stuff for sale" listings seem sort of drab, though, even when combined with maps. Someone ought to create a bi-lateral version of classifieds. Upon signup, users would specify their geographic location, list goods for sale AND request items they might be willing to buy. Let's say I'm looking for a cheap sofa. I could search for sellers within an X mile radius of my location, and the system would display possible matches on a map. I also have the option of

(a) Saving the search and receiving notification when appropriate items are added to the system

(b) OR, making my criteria (item/budget/location) available (on an anonymous basis, of course) to prospective sellers, who could seek me out and make me an offer

This could be a particularly useful tool for sellers who have a deadline (moving, leaving town, etc). They could search immediately for buyers in their vicinity, instead of taking time to list items without knowing whether there'd be any demand. What do you think?