Decoding the new economy

Beating the first mover advantage

Not being first to the market doesn’t mean your product is too late.

Twitter founders Biz Stone and Ev Williams can’t be accused of standing still, along with having founded the Blogger service that made creating websites easy which they sold to Google, their company Obvious Corporation has been working on various new projects.

Branch and Medium are their two latest releases.

At first glance Branch is similar to the Quora service where people ask questions and followers. While Quora is reasonably successful, it hasn’t gained traction outside of the tech community.

Medium is a new blogging service, which superficially appears similar to Tumblr or even the Blogger service Ev and Biz founded in 1999.

It’s tempting to dismiss both Branch and Medium as they aren’t doing things that are new. both are iterations of older services but that doesn’t mean they can’t succeed. When Facebook was launched there was plenty of competition in services like Friendster and MySpace, the upstart blew them both away.

The same is true of the iPod, Windows and Google – all entered markets that were already crowded and well catered for. All of them succeeded because they were better than what was on the market.

In the tech industry is that the first mover advantage is illusionary at best, unless you have a compelling position in the marketplace your product is vulnerable to a smarter, slicker upstart. This is particularly true if the existing services have serious flaws.

Should Branch avoid falling into Quora’s trap of silly policies and overzealous administrators – the same trap that doomed the open source directory DMOZ and threatens Wikipedia – then it may well succeed.

Medium could also disrupt the blogging industry, Blogger is being neglected by Google while WordPress is becoming increasingly complex and difficult to use. The success of services like Tumblr, Instagram and Posterous shows people want an easy way to publish their ideas or what they are doing onto the web.

While it’s too early to say if Branch or Medium will be a success remains to be seen, but writing them off as being unoriginal would be a mistake.

Losing the hospitality battle

Are smaller hospitality businesses falling behind big hotel chains?

Travel review site Tripadvisor released its 2012 Industry Index examining the 25,000 responses from hotels around the world and 1,000 Australian hospitality businesses who took part in the survey.

The index covers a wide range of areas of how the hospitality industry is dealing with connected customers, the web and how hotels are dealing with the relative performances of markets in Europe, North America and Asia.

A disturbing part of the survey was how many smaller businesses are falling behind their bigger competitors with less than half of Australian Bed & Breakfasts agreeing the statement that an “ability to book via my property’s website on a mobile device is ‘very important,” while 70% of hotels agreed.

The failure of smaller properties to engage online is borne out anecdotally as well, at a recent business breakfast a B&B owner – whose main business was furniture retailing – moaned about the negative TripAdvisor reviews his place had.

When it was suggested he might want to engage with the unhappy customers, the proprietor threw his hands up and said “our solicitor told us that it was too expensive to sue.” He wouldn’t accept that the dissatisfied guests might have a legitimate complaint that should be addressed.

At the same time larger hotel chains have full time teams monitoring comments on Tripadvisor, Facebook and other online forums, fixing problems that are being mentioned and then telling the world they have resolved the issue.

There’s a good reason for this. Ask someone planning a major holiday and you’ll find almost all of them are reading reviews on sites like Tripadvisor, Fodors or Lonely Planet’s Thorn Tree before booking accommodation or flights.

While many of the hotel management responses are boilerplate – repeated replies like “Thank you for your review and we appreciate you taking the time to share with us your experience as we are always pleased to receive feedback from our valued guests” is not what social media or customer service is – at least there is a perception that senior management is listening.

At many establishments senior management really is listening, a country manager of one of the world’s biggest chains describes how his three person team sends him a report each day of any complaints being listed online. These are checked out and any systemic problems they find such as surly front of house staff, poor housekeeping or incorrect billings are addressed immediately.

Having a direct line to happy or dissatisfied customers is one of the major benefits social media offers businesses. That smaller hotels aren’t doing this while their multinational competitors indicates the independent sectors of the hospitality industry are falling behind the majors.

The furniture shop owner with a B&B investment illustrated the problem, not only was he not engaging with dissatisfied customers on TripAdvisor, he had no idea whether his businesses were listed on Google Places, Facebook or any other online listing service – “my wife does that” was his dismissive answer.

Possibly the most overused quote in modern business is ice hockey star Wayne Gretzky’s “skate to where the puck is going to be, not where it has been”. Those smaller hospitality businesses not taking the mobile web, review sites or social media seriously aren’t even in the skating rink in today’s game.

There’s a lot more interesting ideas in the TripAdvisor report that should have any hospitality thinking about how customer service and marketing are evolving in a connected society. It’s worth a read.

Chasing away the astroturfers

Recent court and industry regulator rulings are good news for honest businesses using social media.

Yesterday we heard the collective gnashing of teeth as social media experts, lawyers and business owners complained about the Australian Advertising Standards Board’s ruling that companies are responsible for comments on their Facebook pages.

The ASB ruling (PDF file) was a response to complaints that comments on Diageo’s Smirnoff Vodka page breached various industry codes of conducts and encouraged under age drinking.

While the board found the complaints weren’t justified – something that most of the hysterical commentators overlooked – the ruling contained one paragraph that upset the social media experts and delighted the lawyers.

The Board considered that the Facebook site of an advertiser is a marketing communication tool over which the advertiser has a reasonable degree of control and could be considered to draw the attention of a segment of the public to a product in a manner calculated to promote or oppose directly or indirectly that product. The Board determined that the provisions of the Code apply to an advertiser’s Facebook page. As a Facebook page can be used to engage with customers, the Board further considered that the Code applies to the content generated by the advertisers as well as material or comments posted by users or friends.

The key phrase in that paragraph is “over which the advertiser has a reasonable degree of control”. Obviously someone posting on Twitter, their blog or someone else’s website is beyond the control of the advertiser.

With Facebook comments, the onus is on businesses to make sure there is nothing illegal appearing on their streams and any misconceptions or false statements are answered.

In many ways, this is common sense. Do you, as a manager or business owner, want your brands tarnished by idiots posting offensive or illegal content? Sensible businesses have already been dealing with this by deleting the really obnoxious stuff and politely replying to the more outrageous claims by Facebook friends.

What’s more important with both the ASB ruling and the Allergy Pathways case the ruling relies upon make it clear that ‘astroturfing’ on social media sites won’t be tolerated.

Astroturfing is the PR practice of creating fake groups that appear to support a cause or product. A group paid for by an interested party appears to grow naturally out of community interest or concern – a fake grassroots group so to speak and hence the word ‘Astroturf’ which is a brand of artificial grass.

Organisations like property developers and mining companies have been setting up Facebook pages and websites that appear to be community groups supporting their projects and many smaller business have been inducing friends, relatives or contractors to post false testimonials. In the run up to major elections in 2012 and 13 we’re seeing many of these fake groups setup to push various political agendas.

For a few consulting groups, astroturfing has become a nice line of business and those of us on the fringe of the social media community have been watching the development of ‘online advocacy services’ with interest.

While no-one has claimed Allergy Pathways or Diageo were posting fake testimonials on their own Facebook pages, the rulings in both cases are a warning that the courts and regulators are prepared to deal with those getting clever with social media.

For honest businesses this ruling is a non-issue, it’s timely reminder though that web and social media site are not ‘set and forget’ but need to be regularly checked, valid customer comments replied to and inappropriate content removed.

The ASB ruling reaffirms what sensible social media experts have been advising all along, and that’s good news for them and their clients.

Verified Jerks

Anonymity is the problem on the Internet, accountability is.

When you work in customer service you quickly learn that some people are just rude jerks. Depending on how bad a day you have it could be 2, 5 or 10% of the population.

For these people the Internet has been a paradise with almost anonymous forums and newsgroups allowing them to be rude and obnoxious with little risk of being held accountable for their spiteful behaviour.

One of the hopes of social media services was that forcing people into using accounts tied to their real identities would impose some self discipline among these trolls and haters,

Sadly The argument that verified identities would stop people being irresponsible is wrong.

The sad story of seemingly mature people insulting and wanting to beat up a five year old participant on a reality TV show illustrates how manners, good taste and style are beyond some people.

It’s depressing, but unsurprising that this demographic can’t figure out that ‘reality’ TV shows are anything but real. The programs are carefully edited to suit the dramatic narrative of the producers with some of the participants being portrayed as villains and others as heroes.

The little girl in question could be in a spoilt little brat, but you’d want to be careful making that judgement from what you see on TV.

Many would put the spiteful behaviour of the Facebook commentors down to being another example of social media destroying our society, but this behaviour pre-dates the web.

In the 1990s we saw a similar wave of insults aimed at President Clinton’s then teenage daughter Chelsea. In many ways it was far worse in what we are seeing today in that those encouraging that behavior were the leaders of political parties and their ideological fellow travellers in the media.

The abuse of Chelsea Clinton marked the rapid decline of standards in politics that leaves many of us now sickened by the behaviour of all parties – and that of the media that treats their shenanigans seriously.

Notable about the raucous political partisanship is that most participant are happy, even proud, to be named as they debase the institutions they’ve been elected to represent.

The reason is they aren’t accountable, they know most of us are rusted on voters and the few that aren’t can be conned long enough by expensive advertising campaigns to get them elected.

Should they not get elected, they’ll be welcomed into the arms of their corporatist friends who will find them a nice sinecure on a board, committee or think tank.

The real reason people act like jerks is because they think they aren’t accountable – the politicians know they aren’t and most Facebook users figure the odds are in their favour that they’ll never be held to account for their boorish behaviour.

Anonymity is the reason for bad manners on the net, accountability is. While our society doesn’t make people accountable for cruel, rude or corrupt behaviour then these people will thrive. With or without the internet.

Digg and perserverence

Is persevering with a failing business worthwhile?

A couple of years ago news sharing site Digg was one of the hot properties of the Internet. On the weekend Digg’s remaining online assets were sold for $500,000. So what happened to a service that promised so much?

The short answer is the business was overtaken by other services like Reddit, Facebook and Twitter. Coupled with that, the founders moved onto other projects. Running a business is tough and it’s understandable that founders would move away from an enterprise that doesn’t seem to have an exit.

In many ways this ties into the presentation by Ian Gardiner, Viocorp’s Co-founder and CEO, at Microsoft’s Bizspark APAC conference about perseverance. Where does a business owner draw a line with their startup baby? Should you pivot into another model or just move on from the idea altogether?

None of this is straightforward and the decisions will be different in every business. A local computer guy is going to have different factors to consider to failing doughnut franchise. Equally a fading media company is going to be very different to those confronting a declining department store – despite what the MBAs and management gurus steeped in the 1980s view that “all business is like soap” ideology.

For some like Ian, ‘pivoting’ to a new business model is the answer. At the Microsoft event last week, Sebastien Eskersley-Maslin of Blue Chilli described a participant of his Club Kid Entrepreneur who decided to sell paper airplanes and was so successful they started running out of paper to make new ones.

Faced with a shortage, the young entrepreneur decided to use the remaining planes as a target game – so rather than selling them, he charged a few cents to throw them at targets.

That’s the classic pivot, which the founders of Digg couldn’t execute with their web service.

All isn’t lost for Kevin Rose and the other founders of Digg though, while the headlines read about the $500,000 sale of the remaining assets they overlook that Digg’s other assets sold for sixteen million.

Choosing to persevere with a struggling business is a matter of faith – faith in yourself, the vision and the product you’re selling. It can be tough to let go of something you have so much faith in.

Hanging on the telephone

Is there a digital divide appearing in customer support services.

Ever tried to call an online company about a problem? As the New York Times explains, it’s often hard to find the telephone number, let alone someone to answer your call.

The NY Times article worries a new type of digital divide is appearing between those happy to do business using email or social media and those who who demand to speak to someone.

In reality, the truth is more subtle than just generational differences – it’s about the web2.0 service-free business model where few, if any, resources are spent on customer support. The idea is the an assistance can be given out on “self service” basis through a website or, better still, crowdsourced on a user forum where the customers work together to figure out solutions themselves.

For many of the web based cloud computing and social media businesses, this model is essential to their survival. If you were to add a customer support department answering telephones, the viability of the business would collapse.

While it’s uncertain if that business model is sustainable for many of these web based companies, it’s interesting to ponder how many phone calls most businesses could avoid by having relevant information on their website.

It’s worthwhile looking at call logs and asking your staff what are the most common questions to your business. Answering those on the company web site might mean happier customers and fewer staff distractions.

For some businesses, letting customers discuss issues in an online company forum might be a way of crowdsourcing support and giving ideas for future products or service improvements.

Rather than leaving customers and staff hanging on the phone, having relevant and helpful information on the website saves everybody time and money.

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