Raja Jasti’s Blog - Renaissance Thinking

June 4, 2009

Twitter on Time Cover

Filed under: Internet, Mobile, Technology — Raja @ 11:01 am

Time says twitter will change the way we live. High praise indeed.

Evan Williams and Biz Stone of Twitter

The one thing you can say for certain about Twitter is that it makes a terrible first impression. You hear about this new service that lets you send 140-character updates to your “followers,” and you think, Why does the world need this, exactly? It’s not as if we were all sitting around four years ago scratching our heads and saying, “If only there were a technology that would allow me to send a message to my 50 friends, alerting them in real time about my choice of breakfast cereal.”

I, too, was skeptical at first. I had met Evan Williams, Twitter’s co-creator, a couple of times in the dotcom ’90s when he was launching Blogger.com. Back then, what people worried about was the threat that blogging posed to our attention span, with telegraphic, two-paragraph blog posts replacing long-format articles and books. With Twitter, Williams was launching a communications platform that limited you to a couple of sentences at most. What was next? Software that let you send a single punctuation mark to describe your mood? (See the top 10 ways Twitter will change American business.)

And yet as millions of devotees have discovered, Twitter turns out to have unsuspected depth. In part this is because hearing about what your friends had for breakfast is actually more interesting than it sounds. The technology writer Clive Thompson calls this “ambient awareness”: by following these quick, abbreviated status reports from members of your extended social network, you get a strangely satisfying glimpse of their daily routines. We don’t think it at all moronic to start a phone call with a friend by asking how her day is going. Twitter gives you the same information without your even having to ask.

The social warmth of all those stray details shouldn’t be taken lightly. But I think there is something even more profound in what has happened to Twitter over the past two years, something that says more about the culture that has embraced and expanded Twitter at such extraordinary speed. Yes, the breakfast-status updates turned out to be more interesting than we thought. But the key development with Twitter is how we’ve jury-rigged the system to do things that its creators never dreamed of.

In short, the most fascinating thing about Twitter is not what it’s doing to us. It’s what we’re doing to it.

The Open Conversation
Earlier this year I attended a daylong conference in Manhattan devoted to education reform. Called Hacking Education, it was a small, private affair: 40-odd educators, entrepreneurs, scholars, philanthropists and venture capitalists, all engaged in a sprawling six-hour conversation about the future of schools. Twenty years ago, the ideas exchanged in that conversation would have been confined to the minds of the participants. Ten years ago, a transcript might have been published weeks or months later on the Web. Five years ago, a handful of participants might have blogged about their experiences after the fact. (See the top 10 celebrity Twitter feeds.)

But this event was happening in 2009, so trailing behind the real-time, real-world conversation was an equally real-time conversation on Twitter. At the outset of the conference, our hosts announced that anyone who wanted to post live commentary about the event via Twitter should include the word #hackedu in his 140 characters. In the room, a large display screen showed a running feed of tweets. Then we all started talking, and as we did, a shadow conversation unfolded on the screen: summaries of someone’s argument, the occasional joke, suggested links for further reading. At one point, a brief argument flared up between two participants in the room — a tense back-and-forth that transpired silently on the screen as the rest of us conversed in friendly tones.

At first, all these tweets came from inside the room and were created exclusively by conference participants tapping away on their laptops or BlackBerrys. But within half an hour or so, word began to seep out into the Twittersphere that an interesting conversation about the future of schools was happening at #hackedu. A few tweets appeared on the screen from strangers announcing that they were following the #hackedu thread. Then others joined the conversation, adding their observations or proposing topics for further exploration. A few experts grumbled publicly about how they hadn’t been invited to the conference. Back in the room, we pulled interesting ideas and questions from the screen and integrated them into our face-to-face conversation.

When the conference wrapped up at the end of the day, there was a public record of hundreds of tweets documenting the conversation. And the conversation continued — if you search Twitter for #hackedu, you’ll find dozens of new comments posted over the past few weeks, even though the conference happened in early March.

Injecting Twitter into that conversation fundamentally changed the rules of engagement. It added a second layer of discussion and brought a wider audience into what would have been a private exchange. And it gave the event an afterlife on the Web. Yes, it was built entirely out of 140-character messages, but the sum total of those tweets added up to something truly substantive, like a suspension bridge made of pebbles.

June 2, 2009

Non-ad Business Model Case Study: Redfin

Filed under: Business, Internet — Tags: — Raja @ 10:46 am

From NYT:

Glenn Kelman, CEO of Redfin, an online real estate brokerage

There has been a lot of debate lately among Web entrepreneurs about online ads. As growth in online ad spending shrinks, ad-based start-ups are searching for new revenue streams and Twitter is explaining why it does not run ads.

Glenn Kelman, chief executive of Redfin, an online real estate brokerage, contends that Web start-ups that do not carry ads are forced to excel at certain things that are essential to Silicon Valley’s promise, like developing software that solves users’ problems and upending the way certain industries run.

Redfin lists homes for sale. Buyers can browse the listings and make bids online. Redfin agents help negotiate with the seller, then share the commission with the buyers. The company does not put ads on its pages in part because it competes with Realtors, its most obvious source of advertising, Mr. Kelman said.

Silicon Valley once had a “swashbuckling attitude that we were going to change every industry and make it more efficient,” he said. “Once you become more like Madison Avenue, you become acutely sensitive to what’s going to annoy your clients.”

When engineers need to figure out how to guide a visitor through a Web site to make a transaction — in Redfin’s case, to make an offer on a house — it presents a different type of challenge than amusing a visitor for a minute or two to sell an ad. “It’s 30 hoops, and if they don’t jump through the 30th hoop, we make zero from them, whereas other Web sites, as soon as you land, they’re starting to make money,” Mr. Kelman said.

Selling online ads can be a hugely successful business, of course, and as a result, venture capitalists have been particularly excited about ad-based businesses for the last several years. When Redfin raised venture capital several years ago, Mr. Kelman said, “it was a little bit like being in the twilight zone, just because everyone expected us to have a different revenue model.”

Lately, he has noticed a shift in thinking. Today, he said, Redfin’s business model is often seen as an asset instead of a flaw, because the tech world is more open to alternative Web business models.

Apple’s iPhone App Store, which charges small fees for some applications, has helped prompt this shift, he said. “Steve Jobs knows how to hold his hand out, to build beautiful products and make people pay for them,” Mr. Kelman said. “That’s really coming back into vogue.”

But can Redfin’s philosophy pay off? It does not make money on the vast majority of visitors to its site. Mr. Kelman said that Redfin earned an average of $7,500 per client, but that only 100 to 200 visitors out of every million ended up becoming clients.

Redfin is not yet profitable, but Mr. Kelman said he suspected that it had more revenue and was closer to profitability than it would be if it were relying solely on ads for revenue. “The number of people who have to visit for $1 million in revenue is less than if we were ad-based,” he said.

Startup Stories: LinkedIn

Filed under: Entrepreneurship, Internet — Raja @ 10:37 am

CNN Money has the story on how LinkedIn got started and became one of the success stories of social networking.

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LinkedIn founder Reid Hoffman

After we sold PayPal to eBay (EBAY, Fortune 500) and I kicked free, I decided to start LinkedIn because the professional space was really interesting. I already had money from PayPal, so I was financing the early portion of it. When there isn’t capital in the bank, there is some anxiety over, “Is this thing going to fly at all? Are we going to get enough money to even to go to the venture capitalists?” I personally bankrolled LinkedIn at the start, so that wasn’t as much of a concern.

I have a strong belief that starting businesses during an economic downturn is the exact right time to do it because it gives you runway. It’s harder to raise capital, but if you can do it, it gives you an advantage.

The mood in the valley in 2002 was dot-com winter. Consumer Internet ventures were scoffed at, but that just added to the competitive advantage. We could show them we had something interesting.

We started slowly in the first few days because we wanted to make sure the systems worked. I think the 13 people associated with the company invited 112 people.

We had this initial challenge of, “How do you get a million people?” The first challenge was getting enough people so that functions like searching for people or sharing information had enough people in it to be valuable. The year 2003 was all about tuning and viral growth.

I’m a huge believer in getting a million people, getting them engaged, and then building a business model on top of that. I knew I wasn’t planning on really trying to work on a business model until later.

We launched three revenue streams in 2005. The first was job listings. The second one we figured would help us get to profitability fast: We launched subscriptions, which was enhanced communications and search capability. People need to talk to people they don’t already know in order to get the job done. That’s the plural majority of our business today.

We had originally not even thought about doing advertising. But two things persuaded me to launch advertising as well. One of them was that our demographic was so good. The second one was that we began to realize we could build unique business products.

Growing pains

In the summer of 2006, I realized I had two serious problems. One was I needed to scale the company. The other one was I needed to move our product group from being mono-threaded to multi-threaded. Have these guys on search and profile, these guys on platforms, these guys on groups, these guys are on address books — we couldn’t do one at a time. We needed to do them all at the same time.

I said, “Which of these challenges is it going to be harder to get a person who knows what to do?” I decided it was going to be harder on the product side, so I would step over to the product side and I would hire someone for the CEO side. I went through the whole process and hired Dan Nye.

Then by luck and hard work and fortune, we ended up hiring Deep Nishar from Google (GOOG, Fortune 500) to be vice president of products. [Less than two years after Hoffman took over the products job, Nishar's hiring relieved him of that responsibility.]

Part of the way I make my own personal decisions is, “What are the areas I can make the most personal impact on the world?” I decided LinkedIn is that thing, more than investing, more than anything else. What I want to do is lead more with LinkedIn and help drive innovation. When Dan and I were talking about it, he said, “You standing right behind my elbow and going ‘Do that and do that…’ We should make this more effective, more efficient.” It was a joint decision for me to come back and be CEO and chair.

June 1, 2009

Innovation in China

Filed under: Entrepreneurship — Tags: — Raja @ 10:00 pm

Sarah Lacy wrote a post on the china startup scene after just returning from that country.

What makes China so staggering is that everything that happened to corporate America over decades—think the television and media studios build out of the 1950s, the greed of the 1980s, the dot com bubble, the build out of physical and IT infrastructure, current Web 2.0 and CleanTech innovation—is all happening to China at once.

Imagine: At the same time eCommerce is getting sea legs, TV Home Shopping is also getting hot. Online ads are growing not because people are TiVoing through commercials—both TV and online ads are growth markets at the same time. Ditto for entertainment and piracy: While Hollywood sees the Internet as a threat to its cozy legacy business, China’s entertainment industry is just now building amid a world where piracy is already rampant. No one assumes anyone will buy a CD, so they just look for other ways to make money. The wonder of China right now isn’t just the size of the market. It’s the rate at which dozens of “old” and “new” economies are all maturing amid one another, and the hyper-network effects that such economic progress is having throughout the country.

As for China’s start-up ecosystem , it’s working to build its own Valley-like infrastructure, but it doesn’t have the luxury of growing it steadily over several decades. Experts say there’s at least $20 billion in venture capital sloshing around the country right now. It’s probably double that if you count angels and unofficial or very local funds, says Rocky Lee of DLA Piper, a law firm that represents much of that venture money in China.

That’s why calling China merely “the next Silicon Valley” misses the singularity of what’s happening there. The Valley has never been like this, and I don’t say that to knock the Valley. In many ways,  our steady development has been healthier. But it’s also a lot less electric. In the next ten years or so way more money will be lost amid the China chaos, but I’m betting way more money will be made too.

It reminds me of the distinction between start-ups who develop products in “parallel” and those who develop them in “serial.” In the former, you raise a bunch of money, hire an army of coders and develop your whole vision at once. In the latter, you build one product, prove that one works and can make money, then raise more money to develop a second. Typically in a time of economic plenty and investor froth everyone pushes for parallel. When the funding and revenues get tight, the serial approach comes into vogue. Parallel is always more exciting; serial is always more rational.

Silicon Valley tends to develop start-ups in “serial waves,” if you will. There are always outliers and waves can coincide in timing like CleanTech and Web 2.0 did, but investors and entrepreneurs tend to jump on dominant high-growth bandwagons and ride them until a few billion companies come out of them and many more fail. Then they wait for the next wagon.

China, as a country, is developing in parallel. The wagons are running constantly and going in nearly every direction. It’s a time of chaos that can burn people out, but it’s also one so unique in the history of modern economics that many ambitious people can’t ignore it. That’s why most transplants from the West who survive their first two years in China tend to stay for more than ten.

Given all this, China is a lot more inwardly focused than other places like Israel and Europe where start-ups have to be global from day one to have a big enough addressable market. When it comes to the Web and mobile, the biggest surprises will likely come from local, non-English speaking entrepreneurs, maybe even those outside the largest cities. They probably don’t read TechCrunch and may not even know where Silicon Valley is on a map. But that won’t matter, because their local market will necessarily develop very differently than ours.

And while China gets a rap for ripping off U.S. Web start-ups now, I think we’re going to start seeing U.S. start-ups copying a lot of elements of Chinese entrepreneurs’ business plans, whether it’s unlocking the value in virtual goods, experimenting with alternative online payment methods or developing more social forms of e-commerce, where like-minded friends shop together.

The story in India is not too different. Sarah says she will be in India this November. I look forward to hearing her take on India.

CBS News now on ustream

Filed under: Entertainment, Internet, Media — Raja @ 8:32 am

CBS News strikes a partership to live stream its evening news and other breaking news on ustream.tv.

CBS News anchor Katie Couric
CBS Jun 1 2009, 12:09 PM EDT
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Partnering with startup Ustream, CBS News will today announce plans to live-stream all of its “Evening News” broadcasts and breaking news reports over the Internet. The deal is a non-exclusive, ad-revenue sharing deal.

It’s a first for any major media company’s broadcast news division, and a “validation” for both Ustream and the live-streaming industry as whole, Ustream President and co-founder Brad Hunstable told us.

To understand why the deal happened, you have to go back to January 15, 2009. That’s the day US Airways Flight 1549 landed in the Hudson River. Just as the news broke, a passenger on a nearbye ferry uploaded an image of the floating plane to Twitpic and linked to it on Twitter. Quickly, hundreds of thousands of people rushed to see the image and talk about it.

And that was just one, static image.

The vision behind today’s news is to make CBS News’s Ustream feed the place on the Internet for all those Twitter users and millions of others go for full-on, premium coverage when major news breaks. During such a major breaking news event, “Twitter will be going  crazy with everyone that wants to talk about it and the only place to watch will be on Ustream,” says Ustream CEO Brad Hunstable. He calls it “viral news.”

Today’s announcement also highlights Ustream’s strategy to focus on premium content — the kind that Ustream’s ad sales force, when it gets one, will find easier to pitch to agencies. Ustream also wants to add to the 10 million unique vistors it saw in the last 30 days.

Besides the “viral news” compentent, motivating factors for CBS included a new emphasis live video and a desire to reach a younger audience demographic, Vice President of CBSNews.com Mark Larkin told us. He said CBS went with Ustream instead of competitors like Livestream.com and Justin.tv because of Ustream’s superior tech platform and because of how “responsive” the site has been dealing with issues like pirated content.

The final interesting part of today’s announcement is that it involves CBS at all. Unlike the other broadcasters ABC, FOX, and NBC, which all have big cable businesses, CBS’s main business remains broadcast TV. This has made the company reluctant to stream its content through third-partie on the Internet; it’s the only of the major broadcasters not on Hulu, for example. So what did Ustream give up that Hulu, so far, won’t? Exclusivity. Everything CBS agreed to stream on Ustream.tv will also go live on CBSNews.com and all of the Web sites run by CBS’s owned and operated local TV stations.

This is a great move by CBS News. Live streaming services such as ustream and justinTV are becoming increasingly popular and it would be smart for media companies to leverage this and benefit from it. These services are hugely popular for watching live sports (most of the content is illegal). It makes a lot of sense for sport broadcasters such as ESPN, CBS sports etc. to strike similar deals with live streaming services and monetize their content on them. I would love to see legitimate cricket coverage on ustream or justinTV.

I like Bing

Filed under: Internet — Tags: — Raja @ 8:23 am

I checked out bing, the newly rebranded search service from microsoft, on a few searches today. I like what I see. The user experience was very clean and I see lot less spam and junk results when compared to google. I also like their thumbnail previews of the web pages and videos (is it legal fair use?). So may be there is still hope for microsoft in search market after all. Apparently I am not alone in having a positive experiene with bing.

Granted my initial reaction is based only a few searches, but my first impressions are surprisingly positive.

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