Quick Thought on GDC San Francisco 2009

It was clear early on at the San Francisco Game Developer’s Conference that the vibe was a bit different than previous conferences. Some of the events feel a bit more personal, as travel budgets have been cut. Regardless one announcement drew a good amount of buzz: the launch of Onlive, a subscriptions revenue alternative to buying or renting video games.  Bigger picture here – what’s most interesting about the announcement is the gaming industry as a whole embracing an all-you-can-eat model for content, which the recording industry has long fought (to their deteriment, many would say).  The idea seems to be gaining traction to combat both piracy as well as the margin erosion of secondary market sales.

And a few (admittedly grainy) iphone photos of the conference while I’m at it. Enjoy:

Due Diligence Makes a Comeback

As the financial crisis takes its toll, mise-en-scene plays out, finger pointing of course is inevitable. Some point to “rabid or turbo capitalism” some point to government busybodies involved in the private markets. The real culprit, I’ll argue, is lax due diligence on the part of people who should have known better. That’s the real message in Jon Stewart’s epic evisceration of not just CNBC in particular, and the “experts” in general.  This is somefunny stuff – enjoy.

more about "Daily Show: CNBC Gives "Advice"

Who Owns Your Cloud?

Ed Sullivan, Aria Systems‘ CEO passed along a blog post of his to me today – a good one which dovetails nicely into a blog post I’ve been meaning to write about social web on the cloud and continuity planning. Cloud computing, or ubiquitous computing as a utility provides some clear cost savings and clear benefits, but there are certain things to watch out for before you sign on the dotted line. I’ve involved in software as a service (Saas), Web 2.0 and Cloud the overwhelming majority of my career, and I’ve found the savvy business unit owners I’ve worked with always ask the same two questions. Here’s the cliffs notes on what they ask, which is what you should too before putting your social web startup on cloud services:

Do I Own My Customer List?

The short answer is maybe – it entirely depends on the provider’s master service agreement. One service we’ve been asked about frequently is Amazon’s Devpay. The service’s Processing Agreement contains a number of boilerplate terms, but one two sections stand out which should concern anyone looking to jump on the cloud computing bandwagon. Take a look at section 8.2 in the processing agreement below, to which I’ve added highlights to key sections

8.2 Purchase Data. In order to allow you to manage Subscriptions, we may provide to you certain information pertaining to End Users, including, the name, e-mail address and any other information that we make available to you (“Purchaser Data“). We own all Purchaser Data that we provide to you and you have limited rights to disclose and use Purchaser Data. Specifically, you will not directly or indirectly: (a) sell, barter, disclose, transfer, convey or make available any Purchaser Data (except you may disclose this information as necessary for you to perform your obligations under a Subscription or under this Agreement and provided that you ensure that every recipient uses the information only for that purpose and complies with the restrictions applicable to you related to that information); (b) use any Purchaser Data for any purpose, other than as is necessary to manage Subscriptions you sell through the Service, including, without limitation, marketing or promotional purposes;

So I’m no lawyer, but it seems under the Devpay agreement, you do not own your customer list, because any customer information provided to you as a customer would come through DevPay’s servers. Hence, they are technically providing that information to you as per contract terms. Any attempt to “transfer” customer data for marketing reporting purposes is ground for contract breech. What if you need to populate a production server with user data? Tough luck. Further more, if you walk away from the Devpay service, you’re also walking away from your customer list per this agreement, at least part of it if not all of it. And of course, here is what happens if you’re found in breech:

7.2 Suspension or Termination by Us. We may suspend or terminate the Service, for any reason at any time without prior notice to you. Termination of the Service will result in the closure of your Payment Account and termination of this Agreement. Without limiting the foregoing, we may suspend the Service and access to your Payment Account (including without limitation the funds in your Payment Account)

No customer list, lost funds, and from what I can tell very limited rights to maintain operation while the misunderstanding is sorted out. The goal here by the way is not to pick on Amazon – several of the folks I’ve met from Amazon are great people. However, the goal here is to highlight onerous terms in cloud services contracts. The kind you should laugh at and walk away from.

What Happens When the Cloud Turns into Rain?

This is my tongue in cheek way of asking what happens to a customer’s services if a cloud computing provider folds. “We won’t – we’re a big name and have plenty of cash” is a frequent answer. Rubbish. HP’s cloud services initiative recently folded, leaving customers scrambling to ensure business continuity. They aren’t the only ones in trouble. Yahoo Briefcase, the personal file sharing service also announced a shut down this month. Now granted, the Briefcase product was in dire need of an upgrade (Just 30MB ? Seriously?). But the larger point is that cloud services can and do get plug-pulled.

Now having ample resources or positive cash flow is one thing, but cloud services was an experiment for HP, and apparently an unprofitable one. So they pulled the plug on a line of business which isn’t core to their strategy. Which begs the question: is your cloud services provider in the business of providing cloud services? Or is the cloud service just another business unit, which can be shut down without bringing down the entire business’ strategy? Poor profitability or lack of solid market segmentation can bring down a cloud service just the same as lack of capital. In fact, it’s a bigger threat in my opinion.

Key Learnings:

1. Make Sure you Own Your Data. Devpay’s intention may not have been to take ownership of their clients’ customer lists, but a strict reading of their terms of service allows just that. If your vendor insists on such terms, promptly show them the door.

2. Insist on a Continuity Plan. Business can and do fold units or run out of capital. Ask yourself if your cloud services provider in the business of providing cloud services. A “no” answer should be a red flag. Also, think long term. To be sure, a discussion of a proper business continuity plan are beyond the scope of this post. However, code escrow, planned switchover to partners, web services or on-demand data extraction, and lengthy maintenance windows post-closure are all parts of a comprehensive plan.

The Social Web Tastes Like a Rainbow

What’s the first thing you do when you need information on a company as a consumer or an investor? Check out the website of course (if you answered “Twitter”, you’re as far gone as I am!)

So it takes particularly iron-clad set of dangly bits to redirect your primary website to a branded page with Tweet results, but that’s what Mars candy company did with its Skittles website. The move was designed to connect and drive buzz amongst its core demographic (teens mostly). What makes the chewy fruity candy web experiment is its boldness – no mainstream marketer has embraced social media to such a great extent. Social media and news sites have already covered the chaos of course (The Wall Street Journal, Techcrunch, Mashable, and others), but there’s a small twist to this blog post. I’d like to contrast what Skittles is with lesser-known LessAccounting. The differences in Twitter strategy are worth writing a case study about. 

Social Media to Build a Brand: Contain the Rainbow

Some hail the Skittles move, while others think the move is foolhardy. There’s no question either way the message Skittles is sending. The message is “What consumers have to say about our brand is more important than what we have to say to you about our brand”. By any rational measure, the Skittles experiment went far off the corporate website paradigm very quickly. However, as marketer Dave Berkowitz notes, ”Skittles.com isn’t exactly a top destination online. Compete, Quantcast and Google Trends respectively report the most recent month’s Skittles.com unique visitors as 18,000, 15,000, and too few to track.” Apparently the bold action drove attention.

Image courtesy WSJ.com

The problem is the way this move was implemented. First of all, why Twitter? It doesn’t make much sense, considering the core teenage demographic spends more time on Myspace and Facebook than Twitter, which caters to an older (busier?) demographic. The other oddity is why Skittles didn’t create a more elegant API-based social media environment to filter out the garbage (“noise”).  When Skittles opened up the main branded website to Twitter, they created an environment ripe for pranksters and jokers to hijack the message. To illustrate, here is the result of a hastily created , lazy link to the Twitter search page:

 

PIcture courtesy of the L.A. Times

I doubt Skittles wanted the brand message to include soylent green. Or drug references:

By the middle of the day, Skittles switched over to a Facebook-powered main website link, with Twitter as an option one could navigate to using the “chatter” button. The results were similarly hilarious: 

Non-existent API integration and poor choice of venue took an otherwise smart idea and made Patrick’s quip the brand message for me, when I logged on to the Skittles website. One Twitter user’s analogy seems to summarize the situation for Skittles new website launch:

True enough. A bit of preparedness and a more elegant integration could have avoided Skittles the embarrassment.  the L.A. Times notes that Twitter co-founder Biz Stone (@biz) agrees that the final product isn’t as innovative as it could be. “The implementation could be done in a more elegant way using our APIs,” Stone said in an e-mail, referring to the tools Twitter makes available to outside programmers. “We’ll get in touch with them and hopefully make some improvements.”

 

Social Media as a Competitive Weapon: Unleash the Horde

While Skittles should have controlled the message, LessAccounting understands the power of the social media chaos and launched social media as a competitive weapon. LessAccounting is a small business accounting package which competes with the larger, better established Quickbooks. As expected with a larger, entrenched competitor, a large user base is an asset. But that asset can also be a liability if leveraged by a savvy competitor who funnels Quickbooks complaints to a website called WeAllHateQuickbooks.

Here’s what happens when a company creates a portal delivering all discussions (complaints included) about a competitive product:

 

The above Tweet reads “Can someone walk me through Quickbooks? My memos are not printing on the checks again. Can’t remember the fix.”

Memos not printing on invoices? Sounds important, and may just warrant a deeper look when a bookkeeper or Financial professional might have otherwise picked up Quickbooks off the shelf at a local Staples. Even better, the bookkeeper can click on the Twitter user to speak directly to them about the problem and understand the limitations of the Quickbooks product. Brilliant.

I’m probably stirring up a hornet’s nest and will catch heat for this, but social media can also be used as an effective weapon. The key seems to be to deliver a raw, uncut and unedited message directly from frustrated customers using a competitive product. Contrast this with the Skittles brand-building exercise where filtering out the noise is critical. The genius of WeAllHateQuickbooks is authenticity – by design it encourages the accounting product market to search out and talk to people who are unhappy with the competing product.

 

Key Learnings 

Is the traditional corporate website dead? Yes and no – the corporate website as is today is dead, but will continue on in a different form. Corporate sites sans interactivity is quite likely to go the way of the dodo in the next few years as the GenY and millenial generations become more influential to marketers. These people are used to interaction and static websites are every bit as anachronistic to them as wind-up automobiles. There seems to be three key learnings to take away for marketers who need to get their corporate sites up to snuff quickly:

1. Know your demographic.  This should be obvious. Skittles should have targeted Myspace to attract younger social media participants. Instead they drove a good deal of conversation about the place of social media and corporate websites (not a bad thing but not really what Skittles was likely aiming for).

2. Contain the Rainbow to Build Brand Awareness. I’m a big proponent of not censoring conversations, but filtering out the jokesters and the noise is critical to providing a company’s customers with a place to stay and chat with other like-minded customers about products and services. Many companies have succeeded in this regard. The Skittles example demonstrates how a lazy social media embrace can be costly. Instead, use APIs to pull social media site data to provide customers with meaningful conversations (both praise and legitimate complaints). If using social media to build your brand, the key is to filter out the raw noise and provide a comfortable conversation space for your market.

3. Unleash the Horde Against Your Competition. Again, I’m going to take heat for posting this, but let’s be honest here. A competitor creating a negative-marketing platform will provide the disgruntled with a rather large megaphone to voice out their frustrations. The WhywehateQuickbooks.com example demonstrates how sticking your head in the sand is not a viable social media strategy. Can Quickbooks sue or otherwise take action to remove the site? I’m no lawyer, but I doubt it.  LessAccounting is simply a conduit for customer complaints, and taking down customer complaints, even if used by a competitor, would seem petty. The only defense is to take control and participate actively in the conversation. If using social media as a competitive weapon to tear down someone else’s brand, the best strategy is to deliver raw noise without filter.