The Blog of Burgher Jon

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If you like old wines or vintage cars or antiques you know that some things only get better with age.  I have a certain respect for those who can appreciate something as it ages.  I have a collection of cigars and one of Scotch Whiskeys, both of which I cherish more and more the longer I’ve had them.  I also have an appreciation for history, in fact the inspiration for this post is the stream of consciousness sparked by noticing that the Mon Incline is turning 140 at the end of this month and at that ripe old age it is both a functional form of transportation and a tourist attraction.

The thought that this sparked is the fact (simple as that, it’s a fact) that the products and probably the companies that I work for in my career will probably not exist by the time I retire, let alone 6 generations from now.  Think about the IT systems (hardware or software) were in place 10 years ago.  These systems are considered old and ugly and few are still in place today.  There is very little reverence toward them, if you see a site that’s clearly built in FrontPage (the tool of the time) or one of its equivalents you turn your nose in a way very much unlike the way you look at your favorite car that they stopped production of ten years ago.

The good news is that this lack of reverence is a symptom not a cause.  We’re not insensitive chaps, it’s just that we leave little to be reverent about.  We, the IT world, are not changing IT the way the Mon Incline changed the world.  We aren’t taking a 100 year old concept (train/trolley) and applying it to a new problem (going up a hill).  We are creating new concepts as quickly as we find new problems to apply them to.  Think about something like social media, the very concept is no more then 5 or so years old (yes, I’m aware that it had its roots in other things, but I challenge anyone to find an example of social media as we know it that’s older then 5 years).  However, 5 years later the landscape is completely different.  Companies have come and gone and been acquired and people are already talking about HTML 5 enabling a Web 3.0 of sorts.

I love this type of climate, we’re not in the business of aging wine, we’re in the business of mixing great drinks and moving on to the next one.

The picture above is of my friends and I making sure that the referees in Tampa saw Santonio’s toes dancing in the endzone.  I love the Steelers, but I think many Pittsburghers have taken Big Ben’s troubles too seriously.  Ben Roethlisberger’s actions do not tarnish the image of this great city.  Big Ben is the arm of the Steelers, and the Steelers are the ring finger of this great city.  He’s a tiny part of a tiny part of the city’s identity.  While we’re all proud of the Steelers and we’d prefer all of their players deserve our pride, it’s not essential.

I’ve been in Charlotte for two Steelers seasons now, and I’ve become a regular at Dixie’s, the largest (but certainly not the only) Steeler bar in the city.  It’s always impressed me, and anyone who comes with me, how little of the conversation is about the game.  We cheer, but what people seem to enjoy most is being around other Pittsburghers.  The conversation always seems to go back home; it goes to our High Schools and our Colleges to our neighborhoods and our neighbors to our rivers and our bridges to our zoo and our aviary to our churches and our ball parks to our restaurants and our bars.

There’s something about our city that makes people in to good people and that’s the heart of our identity.  I guess Big Ben hasn’t picked that up in his few years here, but give him time he just might.  Were you the same person at 25 that you are now?  I’m not apologizing for the man.  He needs to get his shit together, own up to who he is, pay for what he’s done and try to learn what being a Pittsburgher is all about.

Chris Dixon is fond of calling the VC industry the R&D department of the US.  He did so on his blog, just a few days ago.  I don’t mean to catch him up in a technicality, but I have to disagree with the D.  The true power of what early-stage IT companies and VC funding do for the IT industry is allow (but not dictate) a separation of R from D.

For the sake of this discussion I’ll borrow the definitions for research and development from Henry Chesbrough’s book Open Innovation.

Research is fundamentally about the exploration of new frontiers, punctuated by occasional flashes of insight that lead to exciting new discoveries…  These highly trained professionals are able to monitor significant research developments in their professional communities and then apply them to the company’s business.

Development takes the output of research as an input into its own process.  It produces products and services that embody the research ideas so that they may be sold in the market.  Development managers seek to identify, characterize, and then minimize risks in creating new products or services.

There is no doubt that any early-stage IT company comes from a good idea.  Furthermore, every VC-funded IT company that has a favorable exit, comes from a good idea that tests well in the market.  These two tasks together (coming up with a good idea and matching it to its market) are the role of research in a typical organization.  The development of the product is another task, and not every early-stage or VC funded company moves in to, or all the way through, development.  Let’s look at three successful types of exits and draw the line between R and D.

• Let’s look at the example of Agnilux.  It was picked up by Google while it was still in stealth mode.  They probably had a good idea (based on the founders’ history it likely had something to do with server chips).  They MAYBE made a working prototype or maybe just a couple good designs, and Google snatched them up.  In this example the successful startup never even exited research.  They didn’t get anywhere near development but the way the VC/early-stage ecosystem works allowed them to research an innovative concept that may have received a VERY early red light inside any corporation.
• Let’s look at the example of Grand Central.  The communications company came up with the concept behind Google Voice.  They were a semi-successful company, just barely breaking even on charging international fees when Google acquired them.  They took a very innovative concept all the way through the research phase and in to the development phase.  The problem came when it became obvious that the product had more potential then Grand Central by themselves could possibly capitalize on.  So, Google acquired a company that had done all of the research and some of the development and continued to develop the product.  What used to be Grand Central now integrates seemlessly with my gmail account/address book as well as my Chrome browser and one day soon it will have skype like features too.  In this example the ability of a good idea, already in development, to move through the market to the firm that will make the best use of it creates ideal innovation.
• Finally, let’s look at Google itself (the search part).  With the code behind Google already developed (essentially, the research complete), Sergey Brin and Larry Page could have sold to any number of companies (Yahoo! or AOL for example) for development.  Any of these companies would have benefited from having the Google engine driving their search.  Instead, Google took on financing and moved in to development themselves.  In this case venture capital saved Google from having to sell its ingenious innovation to a company that would not have made the most of it in development.

As I said at the beginning, it’s not my intention to get caught up in semantics, but I do think it’s worth noting that early-stage and venture capital industries, fundamentally, only supply the research that makes America tick.  Who develops the great ideas that come out of this research is, and should be, decided by a market of developers with different ideas about what they can do with each innovation.

The appeals for a dislike button on Facebook are mostly emotional. People want to be able to dislike their ex’s new relationship. From an entrepreneur/business perspective of making a better internet (something I discuss here), this serves no purpose. I can learn little about a person from a marketing perspective based on their “dislikes”. Now that facebook is expanding across the internet through open graph though, the dislike button is becoming a useful tool for facebook.

Consider the following situation where open graph (and the internet as a whole) would benefit from a dislike button. Someone has liked Jay-Z and Snoop. Can we assume they like B.I.G? Well they probably do. Say 80% of people that like Jay-Z and Snoop would like B.I.G. and if they haven’t already liked him, it’s just because they haven’t been presented with the option. However, that 20% doesn’t like B.I.G. for a very specific reason. They find him annoying for some reason, in spite of the similarities to Snoop and Jay-Z. If you can’t “dislike” in an open graph, they will keep showing up.

The essential thing here is that a ‘dislike’ is just as valuable as a like. Not showing someone an advertisement that they dislike is just as important as showing someone something they like. This is because you only have so much space, you don’ t want to waste any of it on something that an individual would tell you they don’t want to see if you gave them the opportunity.

At the end of last month, Erik Schonfeld of TechCrunch noticed a Sysomos report that included the graph above.  He noted that it gives evidence to an important trend.  People tend to pick up their use of Twitter, months after they first start.  Schonfeld, explains this by suggesting that people sign-up out of curiosity, get confused/overwhelmed, and then take a few months to find enough friends and get comfortable enough to become prolific.  I’m going to go ahead and buy his theory, which leads me to follow up question.  What’s that mean for Twitter?  What does it mean for businesses that market on Twitter?

For Twitter it’s a good thing and a bad one.  It means that a hefty percentage of the people who sign-up for the service eventually become regular, theoretically monetizeable customers.  The bad news is it takes them months to do that.  I believe this will begin to fade naturally.  When people join now and run their google contacts through Twitter’s database, they’re a whole lot more likely to find a few matches then they were a few months ago; and not nearly as likely as they will be a few months from now.  They’re also more likely to already be familiar with Twitter and/or short messaging or microblogging (through Facebook or texting or any number of other places).  Twitter, for their part, is taking a few steps that will shorten the adoption lag for each user.  They are setting up sites that are tailored to specific types of users and providing detailed instructions and case studies (I wrote about the site for media users a few days ago).  They’re trying to integrate things like URL shortening and mobile clients more seamlessly.  These steps and others along with the natural reasons discussed will hopefully reduce the adoption gap.

In the mean time though, what does the adoption gap mean for businesses trying to market on Twitter?  It means that there is definitely a “dip” (to borrow a term from Seth Godin’s book).  What I mean by this, is that advertising on Twitter is not going to bring instant gratification.  You will likely experience some of the confusion/frustration that comes with being a new Twitter user and you will need to power through it.  The quicker you can get in to the veteran category, the better.  Additionally, your users will have this same learning curve.  You are likely going to need to be their champion.  Helping bring them along, and showing them what Twitter can do.  Reach out to your more novice followers, bring them together with your more vetran ones.  Overall, this adoption gap is an opportunity to build a community around your business, if you’re willing to put in the effort.