FutureTech Business

It Takes Two To Tango!

A classic mistake for start-ups is to ask one name to fly solo. It’s usually the product name. Since entrepreneurs have to be obsessed with their product to start a business, that’s probably to be expected. But then how can you be sure you’re talking about the company when it has the same name as the product? Which brand promise do you want to imply or express?

Apple Computer owes its name to a small apple farm where Steve Jobs spent time each year with friends in the mid-70s. And it was the name of both the product and the company until the Lisa, Mac and other new products came along. That’s the typical pattern for start-ups. It was also a long time ago in terms of today’s marketplace.

Today you need all the brand power you can get to claim and hold a place in customer minds, and you need this the minute you start marketing.

Products can be treated as brands - given proprietary names and a brand platform as the backbone of marketing communications efforts. Or they can be given descriptive names and associated with a brand. But they’re missing out if they are denied the halo effect of a corporate brand.

The corporate brand is the face of a business strategy – what the company wants to be known for. In time, it becomes the organizing principle that simplifies the complexity of multiple products and the umbrella that facilitates new product acceptance.

The cost need be no greater for two than for one if you do it right – and you’ll build a far stronger foundation for ongoing sales and profits with both.

The New Advertising: Frictionless Sharing

By Eleanor Haas

Privacy – “the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively,” according to Wikipedia” – has become a marketable commodity for millions of consumers, it seems.  Given the right “value exchange,” these people can cheerfully accept “frictionless sharing” – automated distribution by marketers to their social networks of their personal information and online activities

What’s the right kind of value exchange   That depends on the individual.  It can, for example, be as simple as a sense of self-esteem, coupons or a 4Square badge.

It’s typically all ok to the people involved as long as the process is transparent, and they know who’s doing the distribution and trust them.  Some consumers actually interact with brand pages on social networks, in effect, broadcasting their endorsement of the brand to whomever.

What are the chances of legislation or FTC regulation?  Probably zero.  Technology is growing too fast for legislators or regulators to keep up with it.  Ultimately, the market self-corrects anyhow.  All marketing benefits from frictionless sharing depend on relevant targeting and willing users.

These were my principal takeaways from this morning’s Gotham Media Ventures discussion at Frankfurt Kurnit by Daniel Berkowitz, of 360i; Jordan Franklin, of Clickable; Marc Hayem, of MicroStrategy; Kathy Leake, of Local Response, and Brett Martin of Sonar.  Terri Seligman, of Frankfurt Kurnit, was moderator.

 

A Time for Transformation, not Mere Change

By Eleanor Haas

Once upon a time – about a year ago - traditional publishers fell in love with the colorful screens of mobile devices as a solution to their battle with the popular assumption that information on the Internet wants to be free.  Here at last was a way to once again produce a unique product, charge traditional single copy and subscription prices and restore profit margins. 

Jason Pontin’s describes the rude awakening in “Why Publishers Don’t Like Apps,” Technology Review, 5.7.12.  (http://bit.ly/JgoAAm)   

Today, most tablet machines are Apple, and publishers have to pay Apple to sell their products – which means actually losing sales on individual issues.  Most serious, when they sell through Apple, they lose direct connection with their readers – the lifeblood of magazines and newspapers.

Technical problems also made adapting print publications to apps challenging.  Many publishers ended up with five digital versions of their products to accommodate diverse devices, viewing options and ordinary website HTML pages.  And they found the unbudgeted cost of app development both expensive and time consuming.  Without their own digital readers, they had no audiences to sell to advertisers and so insufficient incremental revenue to offset the app development cost. 

Worst of all, publishers discovered their stories in apps in fact disappointed reader expectations because the stories do not link; they live in walled gardens, closed off from other digital media.

The outcome?  Most mobile device owners read news and features on publisher websites, now coded to adapt to smaller screens or using glorified RSS readers.  “The paid, expensively developed publishers’ app, with its extravagantly produced digital replica, is dead,” pronounces Pontin.

What happened?  Publishers tried to impose old print formats on digital channels – to make an adaptive change, not a transformation.  “I hated every moment of our experiment with apps, because it tried to impose something closed, old, and printlike on something open, new, and digital,” writes Pontin.

One aspect of transformation is to go back to basics – to understand the essence of the product and release it from traditional trappings.  Barnes & Noble made a major change with its superstore bookstores containing pianos, coffee shops and sofas.  Amazon achieved transformation by eliminating the bookstore altogether. Pontin’s solution, like that of Financial Times is to launch an HTML5 version of its website, optimize it for devices, incorporate many applike features and functions and, ultimately, kill the app.  What will the new revenue model be once digital content is free?  That’s yet to come. Innovations evolve.  You don't always get all the answers at once.

As author/futurist Daniel Burrus has said:  “There are two primary uses for technology by business and government. The first is to accomplish more with less―to be more efficient and productive. That's how most people use technology, and it's a good use of it. But the second major use of technology―and it's not that common―is to use it to create new products, services, markets and careers.”  

Learning to accomplish more with less is an important first step - and it's still happening.  But more and more of us now understand enough about technology to create the new, to innovate – that’s transformation, not mere change!

Politcs 2012

By Eleanor Haas

That the Internet has changed everything is a truism.   Some stunning – and sometimes alarming - take-aways from “Politics, Tech & Decision 2012,” the most recent Gotham Media Ventures panel discussion, bring this home with a bang.

• Online presence is everything.  The first hire in today’s political campaigns is the website team, not the campaign manager.
• Privacy has become a quaint illusion.  Database techniques now make it possible to serve and measure advertising and other messages to increasingly specific market segments.  The next step in targeting will be knowing what you think right now. Target is already trying to understand and sell to pregnant women specifically in the 3^rd trimester.  Credit cards companies can predict divorce rates two years before they happen with 95 percent accuracy. They see changes in consumer patterns.
• “We all live in a yellow submarine.”  Personalization and digital targeting surround each of us in a membrane of filters so that there is less and less discursive conversation.  We each tend to be always talking with like-minded individuals and to be less and less exposed to opposing views.
• More money buys more influence than ever before.  Super PACS in 2012 are dirtier and more powerful than ever before.  They are funded by huge donations - $20 million – from really big donors.  They often support shadow campaigns of tweets and viral videos that are user generated but paid for by PACs.
• Polls no longer speak truth.  Online polls are now skewed because of technological flaws.  They’re all misleading. We each live in our own echo chamber (see the bullet before last).  Automated polling has under 10 percent response; it’s illegal to call cell phones for research and 35 percent of people have no land lines.
• One thing hasn’t changed.  TV is still the most effective election all for all demographics, while social media are the most persuasive tools on issues.
• Speed counts.  The Internet has increased volatility to an unbelievable extent.  Being nimble has become more important than planning.  How can you anticipate a potential crisis?  How can you respond in Internet time?
• Two kinds of power.  It’s become a bimodal world, where you either have to have the big donors locked up or have huge online broad-based support from celebrities and/or grassroots.  That at least provides a ray of hope for the masses! 

To give credit where credit is due:  Richard Hofstetter, partner, Frankfurt Kurnit Klein & Selz was moderator. Panelists were:  Michael Bassik, managing director and US digital practice chair, Burson Marsteller; Taegan Goddard, founder and publisher, Political Wire; Eason Jordan, former chief news executive, CNN founder and CEO, Poll Position, and Eli Pariser, board president and former executive director, Moveon.org.  Frankfurt Kurnit hosted the event.

Branding: It's the Muscle in Marketing

By Eleanor Haas

“In the end there is no brand until the clients recognize it after it has been marketed.” So said a dear friend as we debated start-up priorities.  To him, branding appears to be fluff and of no consequence to a start-up.  But even friends as smart as this one can be wrong.  In this case, my friend has confused brand image with the branding process.

He’s absolutely right that brand image exists solely in customer minds, the result of repeated experiences with the brand, and marketing is generally key to building brand awareness, if not brand preference.

But there can be no effective marketing until you’ve laid the strategic base for it with branding.

Marketing consists of techniques and tactics that drive sales.  Branding is the business strategy that grows out of the art of differentiating your business, your product or service in a compelling way.  It’s the strategic process that gives direction to marketing and makes differentiation actionable.  Without differentiation you’re just a commodity with no choice but to sell on price.

“Think Different” epitomizes the branding strategy that enabled a computer hardware company to turn its reputation around by differentiating it from dozens of competitors.  Establishing a brand image as an innovator and supporting that with one innovative product after the other turned Apple’s business around beginning in 1997.  The ad slogan would be no more than clever words without the brand strategy behind it. 

Blue Ribbon Sports was just another athletic shoe company until it developed the branding strategy that made it the company we know of as Nike today.  Nike was the Greek goddess of victory, and that was the image the company used to differentiate its products – first, by naming its first shoe design Nike, then changing the company name to Nike and, soon after, beginning to sponsor professional athletes.  Marketing led to the great “Just Do It” ad slogan in 1988 and the rest is history.

Cadabra, one of the early online bookstores, designed a strategy of diversification, choosing to symbolize its vision with the name of the world’s largest river, Amazon, and then living up to that name to become the country’s largest retailer.

So, think different – just do it – become the biggest, the best or both by differentiating your business with the right brand strategy and then implementing this with effective marketing.

Future Shock “Deja Vu All Over Again”?

By Eleanor Haas

Being “in transition” - i.e., jobless - becomes an everyday occurrence and socially acceptable.

Therapy loses its stigma but is being rapidly overtaken in popularity by reinvention.

Happiness is increasingly linked to experiences, not having things.

Collaborative interaction for the good of others, both online and off, is finding a place alongside, even instead of passive TV viewing or addictive electronic games.

Big money and fame cause both superathletes and superbankers, first, to lose touch with reality and then to fail as people and superstars

Environmental sustainability, a radical, controversial new idea 40 years ago, becomes a basis for companies to increase sales in an economy where others are in decline.

Starting a business either to support a lifestyle or to build something with growth potential becomes commonplace.

Authenticity – speaking truth in a human voice – becomes a widespread marketing standard, replacing hype for thousands, perhaps millions of people.

Obesity becomes a national trend – but so do fitness and yoga.

“Future Shock” was Alvin Toffler’s phrase for the state of mind of people and societies in the 1970s as they experienced "too much change in too short a period of time.” Yogi Berra’s immortal phrase comes to mind because the same thing seems as true today as it did then.

Branding in the New Economy

By Eleanor Haas

It began as a stamped mark of ownership on cattle.  It went on to become a banner waved in advertising to help sell more products.  Now the brand is at the heart of the creation of value, where the customer, business and product come together.

It remains a prized marketing communications tool of marketing executives and their branding and ad agencies.  But for thoughtful business executives attuned to the accelerated pace of change introduced by the widespread use of IT and the Internet and intensified by what Chris Anderson has called “the diseconomies of size,” only recently perceived as a result of the financial crisis of 2008-2009, the brand is gaining recognition as a specialty in its own right - a specialty that has implications for corporate business and operating strategies.

What is a brand?  The very essence of a business imprinted in the minds of people through their personal experience – the perceived identity. In other words, it’s no longer what a company says about itself.  Now it’s what people feel in their gut regardless of what the company says.

What justifies the new importance of this brand and its role as a specialty in its own right?  (1) The need to differentiate in a world where giant companies are downsizing and turning loose hundreds of thousands of their employees, creating an immense wave of both entrepreneurs and their new businesses and independent contractors and their businesses as well. (2) The need to be identifiable in a world where technology makes it surprisingly quick, easy and even comparatively inexpensive to create new products, some of them truly innovative, many of them all too similar to each other.  Together all these businesses and products represent an overwhelming flood of names competing for attention.  (3) The need to sustain relationships with investors, employees, suppliers and customers beyond buying and selling transactions in this world of constant innovation, commoditization and change.  (4)  The need to live the brand for it to be authentic and therefore effective.

Today’s new economy is totally different from that of the 1990s.  The latter was an illusion based on misunderstandings about the new technology.  The former is grounded in the realities enabled by that technology and the gradual dismantling of the old economy.

The Best of Times

by Eleanor Haas

What’s great?  The opportunity.  What’s not so great?  The uncertainty.  But then, that’s what makes it great!  So concluded five wise, wise VCs and one very wise entrepreneur at today’s Digital Breakfast: Venture Capital Forecast 2010.

What does today’s environment feel like? 

·         In terms of technology disruption, 1987.  In terms of the economy, it’s uncharted territory.

·          Q2 of 03.  A flattish movement up.  A great time for financial technology.

·          Late 02/early 03 in terms of the opportunity, with the full contraction of VC yet to come.  Dramatic changes in the cost to launch an Internet business and how you build the company.  The use of real-time media and social media to build traffic is much less expensive than search.

 1994-1995 in terms of the opportunity and the low cost of entry.

Some highlights:

VCs

·          VCs have started intersecting with angels and finding they can get further with a company for less money and then take a smaller exit.  They are also co-investing with other VC funds.  Some VCs are doing investments as small as $100K and $250K. This enables them to do smaller exits, which in turn has implications for the funding model.  If new investors come in for later rounds, they pay a higher price and cannot make money with the smaller exits.  As a result, their interest is no longer aligned with that of the entrepreneur and early investors.  So, it’s best for the investor group to remain constant.

·          The VC dilemma:  the line between the seed round and A round Is blurred because of the speed with which things can be done.  Some VCs have moved their fund size down in order to make efficient use of capital..

Trends of the Moment

·          Entrepreneurs are building low-cost web-enabled businesses as vertical layers on top of Facebook.   The network effect of Facebook makes it essential that Facebook or a Facebook widget be a component.  Business-to-business sites all have Facebook Connect today.  You can build businesses like GolfTripGenius for a few thousand dollars.

·          Entrepreneurs have the opportunity to build good technology-enabled businesses – inexpensive to launch and profitable for the entrepreneur – but they may not necessarily be investable.

·          LAMP-plus infrastructure for hardware with Facebook has brought web site start-up costs dramatically down.

·          What’s important at this moment is “clever” technology as opposed to “proprietary” technology – technology that’s not necessarily costly and represents something done in an interesting way with a value proposition.  The package that creates value consists of traction plus the technology plus the skills of the entrepreneur.

·           Marketing is as important as technology – the ability to get customers. 

·          The value of patents is lower because they’re too hard to value and take too long to become effective.

  Mobile is a channel, not an investable vertical.  It will be part of everything, not just apps that are location-based.

The Digital Breakfast was organized by Gotham Media Ventures. The moderator was Gene DeRose, House Party.  The VCs were Charlie Federman Crossbar Capital; Howard Morgan, First Round Capital; Lawrence Lenihan Jr., FirstMark Capital; David Pakman, Venrock and Daniel Schults, DFJ Gotham Ventures.

Reinventing Journalism

By Eleanor Haas

With all the sturm und drang about newspapers dying under the weight of production and distribution costs and other media also economically challenged, it’s all too easy to forget there’s a lot more to news than mere business models undergoing radical change.

The amazing societal model the Founding Fathers established for the US has since Day 1 relied on news people to keep government honest.  It was the French – at the time of their and our revolutions - who called news people “the Third Estate” – with the corrupt government of elite nobles and the oppressed common people as the other two “estates.”  But nowhere in the world but the U.S. has the press been truly free.  Nowhere else has it held government feet to the fire.  Think Pentagon Papers.  Think Watergate.  News people are key to our way of life both for keeping us informed and for enforcing accountability by those in power.  But their effectiveness has been blunted by the erosion of public trust.

Jay Rosen, Associate Professor of NYU’s Carter Journalism Institute, had some telling things to say on the subject at a recent Digital Breakfast event organized jointly by Gotham Media Ventures and Frankfurt Kurnit Klein & Selz:

“To get people to recognize the real world, to recognize facts (and not just accept information that validates their point of view), we need trusted news tellers . . . To have a democracy, you have to try to engage people where they are.  The availability of alternative sources of information allows us to check accuracy . . . The failure of the press to hold government accountable on the Iraq war led to serious mistrust of the media.

”When media produce the same kind of news they did when they were a monopoly, this causes mistrust; yet new tools are adding new power for journalists, and journalists can be way better.

”Participatory journalism – citizen journalism – occurs when the news audience uses press tools to inform one another – the Internet, digital cameras, blogging and videos,.  Since they have the power and occasionally want to alert others to an opinion or experience, they have the ability to report.  It’s all one system with lots of people collaborating on a single story.

“I hope for a powerful combination of professional journalists working with distributed networks of caring citizens in spite of all the irresponsible bloggers and elitists complaining about the open Internet.”

Mr. Rosen’s hope is clearly shared by others.  We see evidence of this in the emergence of at least two organizations.  In New York,  ProPublica, a not-for-profit newsroom that produces investigative journalism in the public interest by using a pro-am model of professional journalists and a distributed network of 2,500 citizen journalists.  In Vancouver, NowPublic, now part of examiner.com.  Both are citizen journalist networks being used to create local news sites on a pro-am model with a positive cost model. 

Is the hybrid pro-am model part of the answer to cost-effective news gathering?  Might it also  help restore public trust in news tellers?  Only time will tell

Will We Pay for Online Media? Will Journalism Survive?

by Eleanor Haas

Yes and yes.  But there’s a lot more to these questions than that.

“People pay for things they value. Ask people to pay for content that’s worth paying for.  Some things publications once provided no longer have value, such as daily stories on ball games just played . . . people who care about the ball game know what happened before the newspaper comes out.”  So said Richard Tofel, General Manager, ProPublica, at a recent Gotham Media Ventures panel discussion.  Richard Hofstetter, partner, Frankfurt, Kurnit, Klein & Selz, was moderator.

ProPublica is a not-for-profit newsroom that produces investigative journalism in the public interest through an innovative pro-am model that relies on both professional journalists and a distributed network of 2,500 citizen journalists.  Stories are distributed by major media, who benefit by getting stories their readers can find worth paying for – and the media get these free of charge.  The organization deploys its amazing network to cover stories no one else has the manpower to cover, such as how stimulus money is actually being spent.  As a result, ProPublica has better data on this than the Government!

Merrill Brown, of MMB Media, a strategist who works for Journalism Online, among others, agrees about the value proposition.  “The business model will change profoundly,” he said.  “It will be successful only if the product changes.  People won’t pay for commodity news, sports scores or stock quotes.  They will pay or new products.”  Journalism Online will give newspapers tools that enable them to market their new products by providing an e-commerce platform that adds convenience for users by allowing users to register once and then click for specific subscriptions to multiple media.

Government funding for the arts or news is just not part of the American culture, the panel agreed, but the classic not-for-profit economic model of foundation grants could be.  That’s what ProPublica is testing.  “People support arts institutions.  Some kinds of journalism can be supported that way too,” added Mr. Tofel.

Beyond issues having to do with business models and even the role of journalism, however, is the fact of today’s polarization, as Neal Shapiro, president and CEO of WNET.org, pointed out.  “This is a polarized country with polarized debates.  A narrow group is gripped in its own feedback loop.”  Jay Rosen, Associate Professor of NYU’s Carter Journalism Institute, expressed concern that we have lost the common culture we once had.  “The only way to get it back is for people to want to live in the same world together,” he suggested.  “Some people can no longer be reached by fact – including one political party.  It’s up to the public, not changes in the media.”

Citizen journalism as part of a pro-am model appears to have a major role to play in cost-effective news gathering In addition to ProPublica’s distributed network, Mr. Merrell referred to NowPublic, a Canadian enterprise, that raised $10 million for a citizen journalist network around the world and sold it to examiner.com, a citizen journalism site   It will be used to create local news sites on the pro-am model with a positive cost model.

Start-Up Secret of Success No. 1: Learn and Discover

"In the early stages of startup, focusing on ‘execution’ will put you out of business. Instead, you need a ‘learning and discovery’ process so you can get the company to the point where you know what to execute."   Steven Blank, The Four Steps to The Epiphany