It’s interesting how technology changes the way we interact. In fact, the way we do a year in review is also changing as Google show here with their Zeitgeist 2010 video. I’m sure there is something in this for everyone, not just retrospectively, but the type of stuff that will matter in our business prospectively.
[youtube=http://www.youtube.com/watch?v=F0QXB5pw2qE]
It’s all over the news that Facebook has overtaken Google in terms of traffic in the USA.
But make no mistake, Google has not been overtaken by Facebook. Facebook is a long way off Google as far as commercial success is concerned. The importance difference, which isn’t about to change anytime soon is this:
People do business with Google.
People socialize on Facebook.
And just like any party, they tend to fizzle out. This seemingly small difference has a dramatic impact on their futures. My analogy is that of a fun park versus CBD. Facebook is being touted as the final platform, the social network to beat all social networks. And yes, it still has some laughable valuations ($100 billion) .
The reality is that numbers can be very deceiving, and when looked at arbitrarily like this, and I’m still certain the value of each Facebook visitor is marginal compared to that of Google. The question I asked myself is this: Could I live without Facebook? Yes. Could I live without Google? No. I’m not about to predict the future, but I want to leave startup blog readers with a reminder that statistics only have value when they are placed in context.
This is the sixth of my crowd sourced blog entry ideas as suggested by Ben Rowe. Ben wanted to get my thoughts on the following:
In a word, no. But given the task is to discuss, I’d say the fact that matters here is the word emotion. Does a brand generate an emotional response from the audience. Does it generate passion and fervor? Good or bad? If the response isn’t emotional. There will be no discussion.
The product or service may be very good, have a reasonable price and even be a market leader. Yes it may suffice or dominate it’s category, like cornflakes do as breakfast cereal, but I’m hardly about to email my brother with a link to the Kelloggs website.
We need to think about things that are emotional responses: Joy, Anger, Sadness, Elation, Fury, Disappointment, Love, Hate….
The heavy emotions every human is familiar with. A brand has to engender these type of emotional responses to get on the word of mouth agenda. Case in point is banks. They are seen to take advantage of their customers, and we have a strong distrust and hate for them. And even though the response is negative, it’s emotional and generates a great deal of discussion. That is, it’s not boring. It’s often the case that brands which have factional parties in the for and against camp (love / hate) generate the most word of mouth. Some recent examples of brands with this effect include:
All of these have been worth talking about. Our brand reputations as people wouldn’t be hindered if we mentioned these.
As far as start ups are concerned we should thinking less about trying to generate a viral campaign, and more about the emotional impact our offer has on our audience. Being new and innovative isn’t enough, it’s got to have an emotional impact on people. With boring brands we are simply indifferent, and so we just get on with our lives.
Our websites are no different to perishable goods at a supermarket. It’s not surprising given how well trained we are to check everything is up to date. From milk to computer hardware we want the latest version available.
So when someone finds your website via Google and the last blog entry is from last year, or the Copyright legal date is 2008, it’s a bit like the milk which got lost at the back of the fridge. We won’t touch it, there’s no limit of options and it is safer to elsewhere.
The good news for web entrepreneurs is this: It’s easy to keep things current. A simple blog entry once a week. A twitter feed in your side bar. Anything which shows your people you’re still in the game. That you have a pulse.
It’s easy to get caught up in the brilliant stories of startups going viral to gain awareness, and the simplicity and usability of certain websites turning into large revenue streams. How cool the actual product is, the fact that the founders just built it and the rest just happened. This is the veritable entrepreneurial myth.
Here’s a few things to think about:
How many sales and business development people do you think Google has? Answer = around 5000. And we all thought their non human automated adwords system did it all.
What investment has Twitter made in Public Relations? You think Oprah and Obama just happened upon it? No they were pitched to heavily with a large investment in leading PR firms.
How many Youtube videos were posted by company created accounts? Answer = Hundreds of thousands.
Who seeds the quirky auction items on ebay? Answer = ebay started the game very early on and let the media know.
Everything is not as it seems. Push marketing is alive wand well, just the tactics have changed. It feels very organic and community driven, but the often the community is created by it’s founders and leaders. Nothing wrong with that, it is the job of entrepreneurs to invent said communities. But it makes for better business articles to talk of such things occurring naturally, so the real story is rarely told.
The question for startups is – what tactics can we employ to garner the same momentum?
This blog is an example of compound effort. Yes, just like interest, effort compounds too. In the 4 years I’ve been writing it every month the readership has increased. With no real marketing of the blog. Just good solid writing, be open and honest, sharing insights, and letting the wondrous SEO of wordpress do the rest on Google for me. A few things worth considering if you’re into blogging and want to build an audience.
Of all things I have done in my career writing this blog has generated the most value. It has documented my thoughts, improved my thinking, built discipline, created a reputation, generated media coverage for rentoid, launched me as a business journalist in other business magazines, it places me number 1 in Google searches for the term startup blog in every country in the world and has built friendships and helped others.
If you read this blog regularly you are among 70,000 other people every month. So you’re in good company. Thanks for reading.
A favourite game of entrepreneurs, especially in the technology industry is discussing whether companies are worth the price they are bought out for. $1.5 billion for Youtube ………. Sales prices with infinite price earnings multiples (because there are no earnings, or they are loss making). Versus a company being sold for a few times it’s annual earnings with a long period of earnings history.
A more relevant discussion would be which school of business valuation was used during the transaction, and there are two:
1. Sale price representing believed potential
2. Sale price representing return on investment reality
Which is more valid? Well it depends on which side of the equation you are residing. I’d say when selling, we should be aiming for potential. When buying we should go with reality. When buying a business the simplest question to ask ourselves is this:
On current earnings, how many years will it take me to get back my original investment.
There’s no doubt certain industries are more likely to sell using the potential valuation method. Burgeoning industries like the internet, IPO’s and even railways 200 years ago are good examples. To get away with selling on ‘potential’ the industry needs to be growing, the future unknown and your company well known. If your startup ever gets enough traction to sell to an incumbent, then take what you can get – sell on potential.