My 30,000 Foot View of Web x.0

I have been having many conversations of late with clients and friends about the evolution of web commerce.  I have been on the multi-channel marketing scene for over 20 years now and have watched the evolution.  When I was a teen or in my early twenties, I often heard from my parents about all the things I have which I take for granted that were not even on anybodies radar screen when they were younger.  The young rock stars of Web 2.o are doing some cool stuff which was not even imaginable 20 years ago or longer.  The reality is Moore’s Law is being challenged and new technologies are advancing more quickly.  Innovation is the key driver, along with an insatiable desire more content and control.

It is no longer about either push or pull marketing, but rather about collaboration, transparency and user generated content.  If you are not giving your customer what they want, someone else is waiting in the wings to steal them away.  Customer Loyalty is defined by stickiness.  Stickiness is defined by a transparent customer experience which makes customers want to engage with your product or service and telling their friends.  With great companies like BazaarVoice, customer reviews are becoming an ante for being seated at the big kids table.  Today we see a proliferation of social searches on Twitter and Facebook where people are asking close personal friends, Facebook friends and Twitter followers for advice and information.  Just yesterday, Robert Scoble said he was in the market for a new mini van for his wife and asked people on Twitter to tweet their opinions on a few different mini vans.  This is the future of social search.  Consumers will give you and others their opinions about your brand, good or bad, whether you want it or not.  The key is what you do with it.  Ignoring customers is a sure bet to share erosion in the future.  It is essential you embrace the two way connectedness being created on the web.  Whether you think you are a participant or not, you are, both personally and professionally.  I love the way Best Buys CMO uses both his blog and Twitter to engage with customers.  He has people tweeting him about stuff they like, as well as things they are not happy about.  He is transparent in his replies and ignores no one.  This is also done very effectively by the CEO of Zappos.  In web 3.0, this will be the rule rather than the exception so you better get some people assigned to following these guys and figuring out your own strategy.

In the early days of the web, Web 1.0, there were many retailers who wondered what they should do.  When should I get in, what should I be doing, how much should I spend.  Many companies figured out that Wall Street was rewarding those with a web presence, thus they began to shift spend and attention away from brick and mortar to web commerce.  Companies were splitting off their web divisions as different companies and the dotcom era of Foosball, pool, beer and pizza was created.  It was the cool place to be.  The dotcom crash occurred and things began to come back to normal, but it was a new normal.  Multi-channel retailing was part of the new normal and companies needed to figure out how the various channels, be it dual or tri, could and should best co-exist.   There is not a best practices guide, per se, however what has evolved is the need for companies to be channel agnostic, always on and provide a seamless, consistent experience for your customers.  Not many are getting this right yet, but they are moving in that direction.  The other thing that evolved with web 1.0 is the pure plays like Amazon who have been able to not only break rules, but create new rules where non previously existed.  Amazon is all about putting the customer first and using rich customer data to improve the customer experience.  Another winner in this arena has been Zappos.  These are two companies that have achieved annual sales in excess of $1 billion+ through a retail channel that did not even exist 20 years ago and they got there faster than any other traditional retailer.  What sets them apart, and makes them both a model to follow, is their commitment to customers, innovation, transparency and collaboration.  Their business models are different, to be sure, but the drive, passion and commitment to be category leaders and innovators is unmatched.

Web 2.o was in large part started by the likes of Facebook, Digg and other social media business models which have made participation and user generated content mainstream.  People have been freaking out of late about the newly launched site design of Facebook, but the jury is still out.  For the most part, I am a fan.  It is taking a bit of time to adjust to the increased noise from the various feeds, but that will settle itself in time.  Facebook did the right thing, however, in the next step of innovating and shaping its business model which will become a powerful commerce engine and source of rich social content, reviews, opinions and so much more.  Nobody understood what blogging was all about, outside of Silicon Valley, just a few short years ago.  Now we have powerhouse blogs like TechCrunch and Mashable to name a few, as well as the newest entrant to the party, Twitter in the form of micro-blogging.  Twitter is being embraced by celebrities, news anchors, professional bloggers and now every day people.  It was just announced today that SalesForce.com is partnering with Twitter to incorporate relevant tweet streams into their enterprise client solutions in an effort to monitor customer views, opinions and feedback.  This will be very powerful and a key point of differentiation for companies that rightfully embrace the notion of listening and engaging with their customers.  I read recently, in my tweet feeds, that people are starting to think in terms of 140 character thoughts and phrases.  This is a good thing, as it forces us to get to the point crisply and succinctly.  Isn’t that what it is all about.  We have a few precious seconds to get the attention of our audience.  How do you say something impactful in 140 characters, many have or are figuring it out.  To me, Web 2.0, is about the conversation.  It is about transparency.  It is about giving people control of what and how they receive content.  It is about user generated, user throttled and user filtered content.  We decide WHO we want, WHAT we want, Where we want it, When we want it and How we want it.   This is brilliant.  We see great new web companies by web experts being created to give us just that.  A few examples are Alltop.com by Guy Kawasaki and SocialMedian.com by Jason Goldberg.  Both have been successful with previous web ventures and are sure to be on the forefront of creating even more new brilliant business models and ideas in the future.  In web 1.0, it was about being channel agnostic.  In web 2.o, it is about being device agnostic.  Mobile commerce and communication will be ubiquitous in web 3.0.  You will need to figure out how to be there for your impatient customers when and where they want you or someone else will.

Web 3.0 is going to be about bringing it all back together again; introducing two key elements which are just now being dabbled with in Web 2.0 – measurement and monetization.  The who, what, where, when and how need to be understood and analyzed, ultimately resulting in insights which create a path to monetization, whether it be products, services or ad revenue. But, as in web 2.0, unlike  web 1.0, the customer must be at the center of the decision-making process.  Chat groups, Twitter, Facebook and other have made it unavoidable to be part of the conversation, engaging, transparent and on your game 24/7.

In another 20 years when my kids are my age and potentially pondering these same types of issues with an entirely different innovators dilemma’s, it will be fun to sit back and say to them, well you know when I was …

I hope you enjoyed my post from 30,000 feet, I welcome your comments.

Y!a (WHO)

Once a darling of Wall Street and Silicon Valley, is Yahoo! the latest of wanna be Good To Great casualties. As Jerry Yang and the Y! Board respond back to Microsoft with a “thanks, but no thanks” reply because the “price” was too low, what happened with the denominator of the P/E ratio… The current Y! bloated P/E of 63.5, compared with an industry average of 44, sector average of 24 and S&P average of 18.5, it seems to me that it is less about price and more about earnings. What is Y! doing to return value to its shareholders, has it lost its way. Has it tried to become all things to all people, making it a bloated company without a vision or mission. As the #1 trafficked site on the web today, how has Y! not figured out how to better monetize its assets. Should one call into question the assets Y! has built. I subscribe to the adage of quality over quantity. It should be less about all the things Y! is doing, or has tried to do, but more about the quality of its execution. At best, I give Y! a C- in execution.

I love the brand and I love what they are capable of doing, but they just are not getting it done. How has Google been able to eat their lunch over the past 5 years, stealing significant share and seemingly making more strategic acquisitions, and most importantly better monetizing the assets of their acquisitions. I submit, however, that Google is not immune to the problems of Y!, they are just not as old. They too must not lose sight of who they are and they too must be sure to be strategic in their future strategy and business direction. For both Y! and Google, it is not all about a land grab of who can acquire more and spend the most, but who can make the right, or best, investments based on fit, scale and future value. Once acquired, who will succeed best at integrating and maximizing the enterprise value of their conquest. To date, the scorecard seems to heavily favor Google. They have been more aggressive, more opportunistic, seemingly had a better and bigger vision and stayed closer to their core.

But what of Y! and Microsoft. Will Microsoft go hostile, does Microsoft win if it goes hostile. A fellow Facebooker, Jason Goldberg, made the following thoughtful post yesterday which raises several valid questions in that regard.

An excerpt from Jason’s post:

I’m sure that there are many rounds of this to still be played out.

Having lived through the aftermath of the AOL-Time Warner merger as a manager who was charged with helping integrate the companies post merger, here are my top reasons as to why I think this deal should not happen.

1. Microsoft is going to F*ck it up. See reasons 2 – 8.
   
2. Microsoft does not have any sort of merger integration of this scale in its DNA. Microsoft likes to build not buy. Sure, Microsoft has done some small acquisitions in the past, but most of them were to acquire talent or a technology, nothing of this scale. Only the aQuantive acquisition comes anywhere close but that was a small small fraction of a buy compared with this.
3. Integrate aQuantive and Yahoo at the same time? No way.
   
4. Microsoft is in Seattle and Yahoo is in Silicon Valley. Microsoft is very much a Redmond or bust sort of company. Yahoo will be the bastard step-child in a post merger world.
5. Top Yahoo talent are going to flee immediately and Yahoo innovation will be stifled.
   
6. Microsoft does not have consumer Internet in its DNA. Microsoft is a software company, not a web company.
   
7. Microsoft is an arrogant company. Managers at Microsoft are not going to mesh well with the team at Yahoo, especially when the mother ship is telling the silicon valley office what to do.
8. This was a hostile takeover! For Microsoft and Yahoo to work, they would need the teams to be jazzed up and excited to make it work. I don’t see how that happens with a hostile takeover as it will always be Microsoft in charge.

The question of whether Microsoft can pull this off is valid. Certainly Microsoft has the cash to get the deal done and can easily up its bid and likely win a hostile bid, but is that winning. Can Microsoft and Yahoo co-exist, can they team up to beat, or at a minimum grab significant share back from Google. I applaud the very bold move of Microsoft, which Michael Arrington hypothesized less than one week before the announcement, however the very relevant observations of Jason Goldberg cannot be ignored. It is not likely that Google will become a White Knight and the discussions of a deal between Y! and AOL make no sense, so what will it be. Y! as we know them today will be no more, they have been outed and must do something, either by choice of by force. Kevin Johnson of Microsoft seems to be the mastermind behind the notion of MSFT bidding to acquire Y! to bolster its position against Google. With all that is on Kevin’s plate, does he have the horses, and the leadership support, to not only get the deal done, but the ability to make it work. Only time will tell and it should be a fun ride. I am anxious to see how the landscape shakes out and if the shareholders of the ultimate acquiring and acquired company(s) win.

At this point, I think something needs to and will happen, however I am concerned of the stakes, including acquisition cost, resulting enterprise value, integration and monetization, morale and shareholder value. This is certain to play out over the coming months, but I am not seeing anyone else raising their hand to make a bid, perhaps others think that if they add some of their ingredients to the current Y! secret sauce they will make it worse and not better.