2010 - The Year of Magical iPad Thinking

So this week I sold some Apple stock, but I think that may have been a mistake. I am so bullish on the much maligned iPad. Here’s why. I was at an entrepreneur round table reviewing an educational book company that was all electronic. You could replace the names of the characters and it would read or let you read the story to your kids. You could touch words and it would pronounce them for you. Not a very hard app, but great for kids.

How would you deliver that experience? On a kindle? Nope. Black and white is boring. On a LeapFrog, too hard to read and interact. The iPad is your best bet. Now if they added more interaction like choose your own adventure that would be even cooler (as I pointed out). Imagine a world you can explore, full of stories, interactive characters all in a learning environment. Would you really put it on a netbook? Probably not. Where are developers flocking? The iPad. Where will you have a rich library of these apps? The iPad.

Think of where else you would want an iPad in an educational environment. A while ago I wrote about FoldIt models.

Here is the YouTube embed:

Check out exactly what competitive protein folding is all about!

On an iPad, this is a much cooler interface to understand organic chemistry. Anatomy: imagine exploring a 3D model of the body with your hands vs. a text book. iPad. Physics: demonstrations where you can change the variables and create interactive problem sets. Geometry: exploring shapes, symmetries, angular relationships. What about music and composing? The iPad already has some wicked DJ apps. Now let’s focus on music learning. Drawing and sketching?

But beyond that, let’s look at some of the more traditional, not so visual subject. I always hated history. Sure the stories were good, and I was ok at memorizing dates. But I was never good at synthesizing the whole thing together. Was the assassination of Archduke Fedinand a response to Russian involvement or did it trigger it? Imagine exploring history like a mind map with timeline interaction. See the events, drill down, see what’s next. Zoom out. See a related timeline of English involvement. What was happening in America at the time. When you can quickly navigate data with your hands, you create whole new ways to organize, present and interact with data of all kinds.

The iPad is magical – yes I said magical. Multi-touch interaction, a rich and large screen and a small footprint is revolutionary. Yes, it’s a big iPod Touch. But it’s the best platform by far for so many interesting apps. At the very least, it will be the leading portable gaming device within a year, which is a huge market in and of itself. The excitement given the wealth of possibilities is deserved. No one else in the market can pull this off. That's market leadership.

I think I may go back in. AAPL it up people!

Facebook Is the New Internet

First off, I am borrowing a little from Mark Cuban on this, but I have been thinking about Facebook's latest moves and his article sparked my writing. It's an interesting time right now for Facebook as they release new functionality to extend its reach into every web page and service. Soon, everything we do on the net can be easily shared, incorporated into Facebook. Imagine a world where the NYTimes reports which articles your friends are reading and let's you easily spark discussions on the topic, just for you. Music playlists that are easily shared and commented on? What Facebook is doing is adding social connectivity to all our online activity, which is becoming most of our activity. And in doing so, it is plugging into our core existential social needs. Technology, which often is seen as taking us away from a social context, will now be bringing us back in and creating more meaning. And no one else can remotely achieve this. Facebook is the platform (which is also why I disagree with Mark Cuban on Facebook needing a mobile OS, they can just deeply integrate into the contact list because that's who owns our social connectivity. You can't launch a product without that).

And if Facebook defines our social connectivity, who are friends are to us, it inversely defines who we are to our friends. Why should I only be tagged on Facebook in photos or notes? What if this blog is tagged (besides me posting it to my activity feed) or a research article I write or a mention of me in huge story in the NY Times (see you this summer)? Check out Taggable, which does exactly that. Now the whole electronic universe can be captured on my Facebook profile and the work crowdsourced by friends. One day, it might be automated based on context and matching algorithms (this Trevor Sumner instead of this one).

Facebook encompasses so much. It's how we find out what's going on, what our friends are reading and recommending. As Mark Cuban points out, how often do you use Google anymore to find reading material ... If every service becomes social, is there a difference between the social web and the web itself?

Next up: Facebook is the new App Store.

Loyalty and the Emotional Side of Customer Retention

I just finished SmartMobs (a recommended read) and came across a wonderful little anecdote. In Tokyo, one of the busiest intersections is Shibuya Crossing, where there is a bronze monument to a dog named Hachiko. Hachiko followed his owner, Professor Eisaboru Ueno, every day to the subway station and awaited there again that evening for his return. Professor Eisaboru died in 1925 and never made it back, yet Hachiko faithfully waited for him there every evening until 1934. Nine years, or sixty-three in dog years. It’s a touching story about loyalty.

And while the story pulls on my emotional heartstrings, it also leaves me in wonder. What made Hachiko come back every day for so long, hoping for a different result than the previous day? Is that just foolish? What made Hachiko so loyal in the first place?

On the web, I would argue that few things are more valuable than loyalty. With the breadth of services offered out there, you can buy books from someone else than Amazon, shoes from somewhere else than Zappos, movies from other services than Netflix. Often, it makes sense.

But the services that matter bring users back consistently and often without competitive consideration because of brand loyalty. And that’s what builds lasting value. It’s easy to buy traffic, just a click of the mouse. It’s really hard to build a service that people care about. If I were valuing a web company, the first thing I would ask for is repeat visits (visits per user per month, member retention/attrition, etc.).

So what builds lasting loyalty? There is utility and feel, the intellectual and emotional.

Apple has it through products that feel better. I don’t know if the roll wheel calendar on my iPhone is more efficient, but it’s more of a pleasure to use. I don’t think that the magnetic power cord in my Powerbook actually functions much better than a plug in, but the moment I connected them and the power chord literally jumped into the socket, I knew I was an Apple user for life.

FourSquare is another app that feels good. Its point system gives me that Pavlovian feedback, that slight burst of serotonin that makes me keep checking in. Intellectually I know it provides me no value. At the same time, I checked out Lewis Goldberg’s badge page and was actually kind of sad he had more than me. What do I really care about badges?

Now Apple provides me real utility. I am writing this on my Macbook Pro right now. FourSquare’s utility not so much, and I feel its hold waning on me. The gaming aspects have grown a bit old. I want more badges. New things unlocked. Feel can get stale. But if you mix positive feel with utility, maybe not even differentiated utility, then you get long-lasting loyalty. With every thing I do that’s helpful, I see it, more I feel it as a little bit more. A reinforcement of that initial joy, that satisfaction of a good product and of making a good choice. And that momentum gets a customer coming back for life.

Will I be using Apple products in 9 years? Who knows? But my stock portfolio is making a big bet for now that I will be.

Unique Problems With Uniques

Uniques are what make the world go around, at least the Internet world. Advertisers care about their reach, the numbers of unique users they get in front of on a campaign. 1 million is the magic number and all of a sudden getting advertisers becomes much, much easier.

Uniques are so important that marketers like me spend money generating cheap traffic to inflate uniques even at a loss. It's a sizable percentage of traffic if you do it right, enough to inflate the numbers without killing your click through rates and bounce rate (the rate people leave the website after the first page view).

It's all about uniques. How are you compared to your competition? Check the uniques on compete.com. How's the board think you are doing? Just show progress on uniques. But as someone who looks at web metrics and models businesses, unique growth and future prospects of most business have much more to do with member retention (churn, repeat usage), viral coefficients and cost of customer acquisition and value. With positive key performance indicators (KPI) along these lines and you know you have a business that has long term value.

Sometimes that means you make prioritization decisions in development to things that drive uniques even at the cost of longer term value. The reality is that for $500, I can drive 50,000 visitors. $5,000 then 500,000. Not much money to get you halfway to that 1 million unique magic number.

But a new report and analysis say that the whole industry could be overestimating our unique count by a factor of 2 or 3. That's just crazy. If that were accurate it could send shockwaves throughout the industry. Or not.

If the number changes, does it change the performance of existing campaigns? We can still measure ROI. It won't change tomorrow. It just means we are twice as effective at marketing to half the number of people we thought. Or will the new numbers scare off holistic marketers who compare the reach of traditional campaigns? If this plays out, it could be a very interesting year.

Facebook Takes Over My iPhone

Not surprisingly, Facebook has taken over my iPhone. Not the apps, but the phone itself, and it's about time. Facebook is where we are social. It's where our friends are. It's a contact list that updates itself. It fills out profile information with substantive info. So as the dynamic system of record of my social contacts, why hasn't it merged with my traditional contact list before?

Well, not all my contacts are on Facebook, so the approach they took is simple, just Facebook enhance the contacts they recognize. Now Facebook is in my iPhone contact list and can add all that data when I pull up their contact info. I now know not to suggest steak for dinner because I see from your status you had a ribeye at lunch. Combine that with FourSquare data and I might know roughly where you are. Give me Google Lattitude Access and I will know exactly where you are.

The point is that there are so many services that provide info about your friends and what they have done. Facebook is the defacto standard. By extending their reach into my contact list, they strengthen that position and make it easier for all of the smaller apps to get to the contact list, just integrate into Facebook you see.

It's a major move that hasn't received enough attention in my humble opinion. Now of course, Facebook is abusing this permission and sending me a constant stream of notifications that I am going to turn off. But they just staked out some significant territory and I am better for it (barring some serious privacy concerns, of course).

Obama Needs Your Help

So my last post was pretty funny, mostly for the ads that popped up.

Obama needs my help. Donate now to get healthcare reform passed.

Obama, here's a little hint. I donate twice a month to help you get helpful policies passed. It's in my paycheck and it's over 30% of everything I make. I hope that's friggin enough!

And this is the core problem. My vote no longer determines what policies are going to be passed because of the people I elect. Instead, my vote decides who will later collect my money when I "vote" for which policies I care about by sending in more money.

Democracy and capitalism are naturally at odds. Democracy is one man, one vote where in capitalism, money is power. Now we have this weird hybrid and we're voting for who gets the money that determines policy. It's all just a sham then that comes down to money.

Strange, sad and makes you apathetic, especially when even the supreme court isn't there to protect democracy. Who's left?

The Role of Government in a Short Term Nation

I thought Obama's State of the Union was decent. He's a good orator. It's nice to know the economy is back on the table since the stock market tanked (as I predicted) and joblessness keeps getting worse. But to a certain extent, I think we all went into it wanting to be inspired but in acceptance that even inspirational words would fall flat on apathetic ears. It's hard to watch these children that we call Congressman and Senators battle for turf like it's a late night game of Settlers of Catan. Seems like there is more at stake. Yes people are dying. Yes people are losing their homes. Yes people are losing their jobs. And that's just healthcare.

The Republican talking points after the speech were somewhat predictable, running off the familiar playbook. But it seemed Obama's preemptive attempts to mitigate their attack script on deficit spending, taxes and the like dampened the blow. Gov. McDonnel kept talking about the role of government with his smug grin.

Now as a libertarian, I generally agree. Get the hell out of my life. But the world has gotten so big and so complex, there are literally millions of ways you are being screwed right now. I was talking with CJ Kettler this afternoon, who serves on a board of a charity aimed at protecting children from harmful chemicals. She is about to petition for reform of an organization that formed in 1970 to ban hazardous substances in New York. In 30 years, they have banned 4 of them. Must be a nice job to have. I can name 4 substances that should be banned right now - diet coke, twinkies, Polly-O string cheese and fat free chocolate. Not that fat free chocolate is bad for you, but come on now!

I tend to like Bill Maher, and I remember on one of his shows he went off on a rant (paraphrasing):

"Why can't we be honest with ourselves in this country? We look around and see increased rates of disease and try to point the finger at a cause, but we all know the truth. America causes cancer. We pollute our air. We pollute our waters. We inject our livestock with hormones, drugs and genetically engineer our crops to withstand shipping and be nutrient-less. We eat and drink chemically engineered products like high fructose corn syrup. And then we are so naive as to say, 'I wonder why we have higher cancer rates than Chernobyl.'"

I agree. It's like what my roommate Brett said last week. "I can't drink diet soda. It tastes like cancer and makes my teeth tingle until I shiver." Ok, the shivering is a bit much, but from the moment I taste diet soda, I knew it was very wrong.

You can agree or disagree with aspartame if you wish, but the reality is that all these companies are incentivized for short term profits. They will try to get away with anything. Most don't care about your long term health, and the 'anything for a buck' attitude means that they will hide any subtle, hidden or long term negative effect for the greater good of the near term balance sheet.

But having a smart government to enforce those laws is difficult in a land of the uneducated. The temptations to reduce meaningful debate into trivial one liners of effective marketing is too great. The desire to do whatever it takes to get re-elected in the short term IS more important than the long term good of our nation. Honor and integrity are gone. You almost don't even remember what they looked like.

Where did the integrity go? It used to be that you could trust journalists. Now you have major "News" "anchors" make up stories about concentration camps after Katrina and no one goes into an outrage. Where's the intellectual honesty? Who are the protectors of truth any more? The short term profits for entertainment news outweighs the long term harm of a misled public. Maybe we should trust the BBC who have less of a vested interest?

We can't take the time to read the fine print of a credit card or loan and how they will jack rates to 30% at the first opportunity. For a major financial decision that could bankrupt you it's probably worth the time. Then again, it's not like I read every license agreement in a software update either. I sign legally binding agreements I don't read all the time. The need for instant gratification outweighs the considerations of long term benefit. And of course we know that we are being misled by all these parties. Yet we can't even legislate basic protections against financial institutions from clearly deceptive and malicious practices. We've come to accept it because the short term lazy acceptance is easier than the longer term fight to reform.

That's because we are a short term nation. A short attention span nation. A short bus nation, if you ask me. And in a world where truth is undervalued, underrepresented and underground, what is the role of government? I would like to say that the role of government is to help represent the truth, but the government can't have that responsibility or you're back to 1984. Some transparency would be a nice start.

We no longer have vision. We no longer have long term goals. What should America be in 2020 or 2050? What is our generation's moon landing? What is our great emotional, intellectual or moral revolution? The role of government should first be to define who we are, what we stand for. It's been lost in the rhetoric and I don't even know the answer to the question any more, if I ever did.

I wish I could present better answers. I wish I could say, "aha, here is the solution." All I can say right now is that listening to the current political conversation makes my teeth tingle until I shiver.

Marketing's Dueling Duality About Trust

Moved on from Cialdini's book on Influence and am now reading Seth Godin's Permission Marketing, which is a must read for everyone in marketing. There was an interesting point of overlap: Americas sensual overload on ads. Godin does a nice job explaining how this came about from the emergence of mass media and the rise and diminishing ROI of "interruption marketing."

What was interesting is that it is clear that modern society is overloaded with assaults of information. Cialdini argues that what sets us apart from animals is the ability to make order of all the info coming at us. But with such an overload, we are particularly susceptible to techniques that take advantage of our instinctual responses. We've taken order and created chaos. We took reason and created an environment where there is no time to reason. We've turned ourselves into animals.

Godin puts aside mass media and focuses on being different and learning to earn the trust of a few power users while Cialdini teaches ways to leverage instinctual response to get that initial trust (Godin relents that such sizzle and tricks are still necessary to spark initial interest).

Together they provide an interesting framework to capture and extend the attention and loyalty of customers.

However, it's interesting to note that preying on customer instincts conceptually undermines trust, but when done right is more of a sleight of hand. So being a great marketer means being both a trickster and a trusted advisor. A magician and a mentor. Interesting mix...

Buying Healthcare vs. Buying Health Insurance

Saw an interesting poster in a subway station as I was on a train. It whizzed by so I didn't see the name of the brand. But what it said was that for $79.99 per month you could purchase healthcare with unlimited doctor visits, coverage of standard procedures (Gyn, electro cardiograms, colonoscopy, etc.) and discounts on prescriptions, and no copay.

But was interesting to me is that it said: "This is not INSURANCE." And that somehow struck me. When we think about healthcare as insurance, we naturally think about reacting to an incident, not preventative maintenance. We think about fault and liability, not compassion and treatment. We think it as something that is optional, a hedge, not something people have a right to. We think about it as a money matter, not a life matter with all the pain, profound limitation and fundamental fear associated with it.

Framing the conversation is key. The words we use have both subtle and overt consequences to the ideas we are thinking about, like renaming the estate tax the "death tax."

Take a step back. What we are really purchasing is healthcare, not insurance. How does that affect the way you think the industry should work?

Real Time Ad Optimization: Data, Speed and Optimization

There's an interesting trend forming in online advertising. Right now you can purchase ads from ad exchanges by bidding on them. But what is that banner ad really worth? Depends on the site, the page, the person, the time and lots of other factors. People have been optimizing on some of the static stuff and basic behavioral and contextual information too, i.e. where you've been and what that means to you (that's right Mr. Porny).

But what if you knew everything about the user and the placement before placing your bid. You could optimize your bidding strategy. Impossible? Well, we are getting there. But it's a fascinating problem. How do you get all that info, process it, and come up with a bid in real time? How do you get so specific that you take advantage of all information but not so specific that your target is too narrow? The more narrow your focus, the smaller net you cast. How do you deliver the exact right ad for a million impressions a second? Tough stuff.

So what really matters? Is there some secret sauce? Well people are playing around right now with all kinds of info. Media 6 Degrees uses demographic info mixed with who your Facebook friends are (and you thought that was private right?). eBay calculates your propensity to buy based on previous site visits and other factors. But it could be anything and everything. You might be amazed what every ad network knows about you and what if that information was shared to vendors? There's going to be a lot of interesting development in understanding what makes the "right customer" ready for that exact ad, and it will be decided in milliseconds.

And if your net is too small looking for that exact red fish with blue gills, 1 ft long in the medittreanean, you'll probably miss out. With all that data, you'll now be able to realize that there is another correlation that really matters and allows you to extend your net. Maybe it's red fish with a spiny dorsal fin. There is going to be a lot of interesting work going out there on figuring out what really matters, and finally there will be the massive amount of data and computing power needed to do it with.

So what does this all mean? It means ads you'll want to click on. Ads that provide you value and enrich your experience even. It also means less ads, since each ad will therefore be worth more. It will be an approach that is used on the Internet, your mobile device and TV (which will be the Internet essentially anyway). It will be everywhere where you can be tracked.

Be prepared for a more personalized Internet. And probably a massive privacy scandal on the Internet like we haven't seen before. 2010 is going to be an interesting year.